EXHIBIT 10.20
BLACKBAUD, INC.
2004 STOCK PLAN
1. Purpose. This 2004 Stock Plan (the "Plan") is intended to
provide incentives:
(a) to employees of Blackbaud, Inc. (the "Company"), or its
parent (if any) or any of its present or future subsidiaries (collectively,
"Related Corporations"), by providing them with opportunities to purchase Common
Stock (as defined below) of the Company pursuant to options granted hereunder
that qualify as "incentive stock options" ("ISOs") under Section 422 of the
Internal Revenue Code of 1986, as amended, or any successor statute (the
"Code");
(b) to directors, employees and consultants of the Company and
Related Corporations by providing them with opportunities to purchase Common
Stock (as defined below) of the Company pursuant to options granted hereunder
that do not qualify as ISOs (Nonstatutory Stock Options, or "NSOs");
(c) to employees and consultants of the Company and Related
Corporations by providing them with bonus awards of Common Stock (as defined
below) of the Company ("Stock Bonuses"); and
(d) to employees and consultants of the Company and Related
Corporations by providing them with opportunities to make direct purchases of
Common Stock (as defined below) of the Company ("Purchase Rights").
Both ISOs and NSOs are referred to hereafter individually as "Options",
and Options, Stock Bonuses and Purchase Rights are referred to hereafter
collectively as "Stock Rights". As used herein, the terms "parent" and
"subsidiary" mean "parent corporation" and "subsidiary corporation",
respectively, as those terms are defined in Section 424 of the Code.
2. Administration of the Plan.
(a) The Plan shall be administered by (i) the Board of
Directors of the Company (the "Board") or (ii) a committee consisting of
directors or other persons appointed by the Board (the "Committee"). The
appointment of the members of, and the delegation of powers to, the Committee by
the Board shall be consistent with applicable laws and regulations (including,
without limitation, the Code, Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or any successor rule
thereto ("Rule 16b-3"), and any applicable state law (collectively, the
"Applicable Laws"). Once appointed, such Committee shall continue to serve in
its designated capacity until otherwise directed by the Board. From time to
time, the Board may increase the size of the Committee and appoint additional
members thereof, remove members (with or without cause) and appoint new members
in substitution therefor, fill vacancies, however caused, and remove all members
of the Committee and thereafter directly administer the Plan, all to the extent
permitted by the Applicable Laws.
(b) Subject to ratification of the grant or authorization
of each Stock Right by the Board (if so required by an Applicable Law), and
subject to the terms of the Plan, the Committee, if so appointed, shall have the
authority, in its discretion, to:
(i) determine the employees of the Company and Related
Corporations (from among the class of employees eligible under Section 3 to
receive ISOs) to whom ISOs may be granted, and to determine (from among the
classes of individuals and entities eligible under Section 3 to receive NSOs,
Stock Bonuses and Purchase Rights) to whom NSOs, Stock Bonuses and Purchase
Rights may be granted;
(ii) determine the time or times at which Options, Stock
Bonuses or Purchase Rights may be granted (which may be based on performance
criteria);
(iii) determine the number of shares of Common Stock subject
to any Stock Right granted by the Committee;
(iv) determine the option price of shares subject to each
Option, which price shall not be less than the minimum price specified in
Section 6 hereof, as appropriate, and the purchase price of shares subject to
each Purchase Right and to determine the form of consideration to be paid to the
Company for exercise of such Option or purchase of shares with respect to a
Purchase Right;
(v) determine whether each Option granted shall be an ISO or
NSO;
(vi) determine (subject to Section 7) the time or times when
each Option shall become exercisable and the duration of the exercise period;
(vii) determine whether restrictions such as repurchase
options are to be imposed on shares subject to Options, Stock Bonuses and
Purchase Rights and the nature of such restrictions, if any;
(viii) approve forms of agreement for use under the Plan;
(ix) determine the fair market value of a Stock Right or the
Common Stock underlying a Stock Right;
(x) accelerate vesting on any Stock Right or to waive any
forfeiture restrictions, or to waive any other limitation or restriction with
respect to a Stock Right;
(xi) reduce the exercise price of any Stock Right if the fair
market value of the Common Stock covered by such Stock Right shall have declined
since the date the Stock Right was granted; provided, however, that any
reduction of the exercise price pursuant to this paragraph shall be subject to
stockholder approval (and stockholder approval shall be required for any
amendment to this Plan to eliminate the requirement of stockholder approval for
such repricings);
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(xii) institute a program whereby outstanding Options can be
surrendered in exchange for Options with a lower exercise price; provided,
however, that any exchange of Options pursuant to this paragraph shall be
subject to stockholder approval (and stockholder approval shall be required for
any amendment to this Plan to eliminate the requirement of stockholder approval
for such exchanges);
(xiii) modify or amend each Stock Right (subject to Section
8(d) of the Plan) including the discretionary authority to extend the
post-termination exercisability period of Stock Rights longer than is otherwise
provided for by terms of the Plan or the Stock Right;
(xv) construe and interpret the Plan and Stock Rights granted
hereunder and prescribe and rescind rules and regulations relating to the Plan;
and
(xvi) make all other determinations necessary or advisable for
the administration of the Plan.
If the Committee determines to issue a NSO, it shall take
whatever actions it deems necessary, under Section 422 of the Code and the
regulations promulgated thereunder, to ensure that such Option is not treated as
an ISO. The interpretation and construction by the Committee of any provisions
of the Plan or of any Stock Right granted under it shall be final unless
otherwise determined by the Board. The Committee may from time to time adopt
such rules and regulations for carrying out the Plan as it may deem best. No
member of the Board or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Stock Right
granted under it.
(c) The Committee may select one of its members as its
chairman, and shall hold meetings at such times and places as it may determine.
Acts by a majority of the Committee, approved in person at a meeting or in
writing, shall be the valid acts of the Committee. All references in this Plan
to the Committee shall mean the Board if no Committee has been appointed. From
time to time the Board may increase the size of the Committee and appoint
additional members thereof, remove members (with or without cause) and appoint
new members in substitution therefor, fill vacancies however caused, or remove
all members thereof and thereafter directly administer the Plan.
(d) Those provisions of the Plan that make express
reference to Rule 16b-3 shall apply to the Company only at such time as the
Company's Common Stock is registered under the Exchange Act, and then only to
such persons as are required to file reports under Section 16(a) of the Exchange
Act (a "Reporting Person").
(e) To the extent that Stock Rights are to be qualified
as "performance-based" compensation within the meaning of Section 162(m) of the
Code, the Plan shall be administered by a committee consisting of two or more
"outside directors" as determined under Section 162(m) of the Code.
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3. Eligible Employees and Others.
(a) ISOs may be granted to any employee of the Company or
any Related Corporation. Those officers of the Company who are not employees may
not be granted ISOs under the Plan. NSOs, Stock Bonuses and Purchase Rights may
be granted to any director, employee or consultant of the Company or any Related
Corporation. Granting of any Stock Right to any individual or entity shall
neither entitle that individual or entity to, nor disqualify him or her from,
participation in any other grant of Stock Rights.
(b) Special Rule for Grant of Stock Rights to Reporting
Persons. The selection of a director or an officer who is a Reporting Person (as
the terms "director" and "officer" are defined for purposes of Rule 16b-3) as a
recipient of a Stock Right, the timing of the Stock Right grant, the exercise
price, if any, of the Stock Right and the number of shares subject to the Stock
Right shall be determined either (i) by the Board, or (ii) by a committee of the
Board that is composed solely of two or more Non-Employee Directors having full
authority to act in the matter. For the purposes of the Plan, a director shall
be deemed to be a "Non-Employee Director" only if such person is defined as such
under Rule 16b-3(b)(3), as interpreted from time to time.
4. Stock. The stock subject to Stock Rights shall be authorized
but unissued shares of Common Stock of the Company, par value $0.001 per share,
or such shares of the Company's capital stock into which such class of shares
may be converted pursuant to any reorganization, recapitalization, merger,
consolidation or the like (the "Common Stock"), or shares of Common Stock
reacquired by the Company in any manner. The aggregate number of shares that may
be issued pursuant to the Plan is One Million Eight Hundred Fifty Thousand
(1,850,000) shares of Common Stock, subject to adjustment as provided herein.
Any such shares may be issued as ISOs, NSOs or Stock Bonuses, or to persons or
entities making purchases pursuant to Purchase Rights, so long as the number of
shares so issued does not exceed such aggregate number, as adjusted. If any
Option granted under the Plan shall expire or terminate for any reason without
having been exercised in full or shall cease for any reason to be exercisable in
whole or in part, or if the Company shall reacquire any shares issued pursuant
to Stock Rights, the unpurchased shares subject to such Options and any shares
so reacquired by the Company shall again be available for grants of Stock Rights
under the Plan.
5. Granting of Stock Rights. Stock Rights may be granted under
the Plan at any time after the Effective Date, as set forth in Section 16, and
prior to 10 years thereafter. The date of grant of a Stock Right under the Plan
will be the date specified by the Board or Committee at the time it grants the
Stock Right; provided, however, that such date shall not be prior to the date on
which the Board or Committee acts. The Board or Committee shall have the right,
with the consent of the optionee, to convert an ISO granted under the Plan to an
NSO pursuant to Section 17 hereof.
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6. Minimum Price; ISO Limitations.
(a) The price per share specified in the agreement
relating to each NSO, Stock Bonus or Purchase Right granted under the Plan shall
be established by the Board or Committee, taking into account any noncash
consideration to be received by the Company from the recipient of Stock Rights;
provided that such price per share shall not be less than the fair market value
of the Common Stock on the date of grant.
(b) The price per share specified in the agreement
relating to each ISO granted under the Plan shall not be less than the fair
market value per share of Common Stock on the date of such grant. In the case of
an ISO to be granted to an employee owning stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or any
Related Corporation, the price per share specified in the agreement relating to
such ISO shall not be less than 110% of the fair market value per share of
Common Stock on the date of the grant.
(c) To the extent that the aggregate fair market value
(determined at the time an ISO is granted) of Common Stock for which ISOs
granted to any employee are exercisable for the first time by such employee
during any calendar year (under all stock option plans of the Company and any
Related Corporation) exceeds $100,000; or such higher value as permitted under
Code Section 422 at the time of determination, such Options will be treated as
NSOs, provided that this Section shall have no force or effect to the extent
that its inclusion in the Plan is not necessary for Options issued as ISOs to
qualify as ISOs pursuant to Section 422 of the Code. The rule of this Section
6(c) shall be applied by taking Options in the order in which they were granted.
(d) If, at the time a Stock Right is granted under the
Plan, the Company's Common Stock is publicly traded, "fair market value" shall
be determined as of the last business day for which the prices or quotes
discussed in this sentence are available prior to the time such a Stock Right is
granted and shall mean:
(i) if the Common Stock is then traded on a national
securities exchange; or on the Nasdaq National Market (the "NASDAQ/NMS") or the
Nasdaq SmallCap Market, the closing sale price for such stock (or the closing
bid, if no sales were reported as quoted on such exchange or market); or
(ii) the closing bid price or average of bid prices last
quoted on that date by an established quotation service, if the Common Stock is
not reported on National Securities Exchange, the NASDAQ/NMS or the Nasdaq
SmallCap Market.
However, if the Common Stock is not publicly traded at the time a Stock
Right is granted under the Plan, "fair market value" shall be deemed to be the
fair value of the Common Stock as determined by the Board or Committee after
taking into consideration all factors that it deems appropriate.
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7. Option Duration. Subject to earlier termination as provided in
Sections 9, 10 and 13, each Option shall expire on the date specified by the
Board or Committee, but not more than:
(a) 10 years from the date of grant in the case of NSOs;
(b) 10 years from the date of grant in the case of ISOs
generally; and
(c) 5 years from the date of grant in the case of ISOs granted
to an employee owning stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or any Related Corporation.
Subject to earlier termination as provided in Sections 9, 10
and 13, the term of each ISO shall be the term set forth in the original
instrument granting such ISO, except with respect to any part of such ISO that
is converted into an NSO pursuant to Section 17.
8. Exercise of Options. Subject to the provisions of Section 9
through Section 12 of the Plan, each Option granted under the Plan shall be
exercisable as follows:
(a) the Option shall either be fully exercisable on the
date of grant or shall become exercisable thereafter in such installments as the
Board or Committee may specify;
(b) once an installment becomes exercisable it shall
remain exercisable until expiration or termination of the Option, unless
otherwise specified by the Board or Committee;
(c) each Option or installment may be exercised at any
time or from time to time, in whole or in part, for up to the total number of
shares with respect to which it is then exercisable; and
(d) the Board or Committee shall have the right to
accelerate the date of exercise of any installment of any Option, provided that
the Board or Committee shall not accelerate the exercise date of any installment
of any ISO granted to any employee (and not previously converted into an NSO
pursuant to Section 17) without the prior consent of such employee if such
acceleration would violate the annual vesting limitation contained in Section
422 of the Code, as described in Section 6(c).
9. Termination of Employment. If a grantee ceases to be employed
by the Company and all Related Corporations, other than by reason of death or
disability as defined in Section 10 or by reason of a termination "For Cause" as
defined in this Section 9, unless otherwise specified in the instrument granting
such Stock Right, the grantee shall have the continued right to exercise any
Stock Right held by him or her, to the extent of the number of shares with
respect to which he or she could have exercised it on the date of termination
until the Stock Right's specified expiration date; provided, however, in the
event the grantee exercises any ISO after the date that is three months
following the date of termination of employment, such ISO will automatically be
converted into an NSO subject to the terms of the Plan. Employment shall be
considered as continuing uninterrupted during any bona fide leave of absence
(such as those attributable to
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illness, military obligations or governmental service) provided that the period
of such leave does not exceed 90 days or, if longer, any period during which
such grantee's right to reemployment with the Company is guaranteed by statute
or by contract. A bona fide leave of absence with the written approval of the
Company shall not be considered an interruption of employment under the Plan,
provided that such written approval contractually obligates the Company or any
Related Corporation to continue the employment of the grantee after the approved
period of absence; provided that the foregoing approval requirement shall not
apply to a leave of absence guaranteed by statute or contract. ISOs granted
under the Plan shall not be affected by any change of employment within or among
the Company and Related Corporations, so long as the optionee continues to be an
employee of the Company or any Related Corporation. For purposes of this Plan, a
change in status from employee to a consultant, or from a consultant to
employee, will not constitute a termination of employment, provided that a
change in status from an employee to consultant may cause an ISO to become an
NSO under the Code.
In the event of a termination "For Cause," the right of a grantee to
exercise a Stock Right shall terminate as of the date of termination. For
purposes of this Plan, "For Cause" shall mean (i) "Cause" as defined in any
employment or other agreement to which the applicable grantee is a party, or
(ii) if there is no such agreement or if it does not define Cause: (A)
conviction of the grantee for committing a felony under federal law or the law
of the state in which such action occurred, (B) dishonesty in the course of
fulfilling the grantee's employment duties, (C) willful and deliberate failure
on the part of the grantee to perform his or her employment duties in any
material respect, or (D) such other events as shall be determined by the
Committee. The Committee shall, unless otherwise provided in an employment or
other agreement to which the applicable grantee is a party, have the sole
discretion to determine whether "Cause" exists, and its determination shall be
final.
NOTHING IN THE PLAN SHALL BE DEEMED TO GIVE ANY GRANTEE OF ANY STOCK
RIGHT THE RIGHT TO BE RETAINED IN EMPLOYMENT OR OTHER SERVICE BY THE COMPANY OR
ANY RELATED CORPORATION FOR ANY PERIOD OF TIME OR TO AFFECT THE AT-WILL NATURE
OF ANY EMPLOYEE'S EMPLOYMENT.
10. Death; Disability.
(a) If a grantee ceases to be employed by the Company and
all Related Corporations by reason of death, or if a grantee dies within three
months of the date his or her employment or other affiliation with the Company
has been terminated, any Stock Right held by him or her may be exercised to the
extent of the number of shares with respect to which he or she could have
exercised said Stock Right on the date of death, by his or her estate, personal
representative or beneficiary who has acquired the Stock Right by will or by the
laws of descent and distribution (the "Successor Grantee"), unless otherwise
specified in the instrument granting such Stock Right, prior to the earlier of
(i) one year after the date of termination or (ii) the Stock Right's specified
expiration date; provided, however, that a Successor Grantee shall be entitled
to ISO treatment under Section 421 of the Code only if the deceased optionee
would have been entitled to like treatment had he or she exercised such Option
on the date of his or her death; provided further in the event the Successor
Grantee exercises an ISO after the date that is one
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year following the date of termination by reason of death, such ISO will
automatically be converted into a NSO subject to the terms of the Plan.
(b) If a grantee ceases to be employed by the Company and
all Related Corporations by reason of disability, he or she shall continue to
have the right to exercise any Stock Right held by him or her on the date of
termination until, unless otherwise specified in the instrument granting such
Stock Right, the earlier of (i) one year after the date of termination or (ii)
the Stock Right's specified expiration date; provided, however, in the event the
grantee exercises an ISO after the date that is one year following the date of
termination by reason of disability, such ISO will automatically be converted
into a NSO subject to the terms of the Plan. For the purposes of the Plan, the
term "disability" shall mean "permanent and total disability" as defined in
Section 22(e)(3) of the Code.
(c) The provisions of subsections (a) and (b) of this
Section 10 regarding the exercise period of a Stock Right may be waived,
extended or further limited, in the discretion of the Board or Committee, in an
instrument granting a Stock Right that is not an ISO.
11. Transferability and Assignability of Stock Rights. No Stock
Right granted under this Plan shall be assignable or otherwise transferable by
the grantee except by will or by the laws of descent and distribution. An ISO
may be exercised during the lifetime of the optionee only by the optionee.
12. Terms and Conditions of Stock Rights. Stock Rights shall be
evidenced by instruments (which need not be identical) in such forms as the
Board or Committee may from time to time approve. Such instruments shall conform
to the terms and conditions set forth in Sections 6 through 11 hereof and may
contain such other provisions as the Board or Committee deems advisable that are
not inconsistent with the Plan, including restrictions (or other conditions
deemed by the Board or Committee to be in the best interests of the Company)
applicable to the exercise of Options or to shares of Common Stock issuable upon
exercise of Options. In granting any NSO, the Board or Committee may specify
that such NSO shall be subject to the restrictions set forth herein with respect
to ISOs, or to such other termination and cancellation provisions as the Board
or Committee may determine. The Board or Committee may from time to time confer
authority and responsibility on one or more of its own members and/or one or
more officers of the Company to execute and deliver such instruments. The proper
officers of the Company are authorized and directed to take any and all action
necessary or advisable from time to time to carry out the terms of such
instruments.
13. Adjustments. Upon the occurrence of any of the following
events, the rights of a recipient of a Stock Right granted hereunder shall be
adjusted as hereinafter provided, unless otherwise provided in the written
agreement between the recipient and the Company relating to such Stock Right.
(a) In the event of any change in corporate
capitalization (including, but not limited to, a change in the number of shares
of Common Stock outstanding), such as a stock dividend, stock split, reverse
stock split, share combination, recapitalization, merger,
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consolidation, acquisition of property or shares, separation, spinoff,
reorganization, stock rights offering, liquidation, disaffiliation of a Related
Corporation, or similar event of or by the Company, the Committee or Board may
in its discretion make such substitution or adjustments as it deems appropriate
and equitable under the Plan. Adjustments pursuant to this Section 13(a) may
include, without limitation, (i) adjustments to (A) the aggregate number and
kind of shares reserved for issuance and delivery under the Plan; (B) the
various maximum limitations upon certain types of Stock Rights and upon the
grants to individuals of certain types of Stock Rights; (C) the number and kind
of shares subject to outstanding Stock Rights; and (D) the exercise price of
outstanding Stock Rights; (ii) the cancellation of outstanding Stock Rights in
exchange for payments of cash, property or a combination thereof having an
aggregate value equal to the value of such Stock Rights, (iii) the substitution
of other property (including, without limitation, other securities of the
Company and securities of entities other than the Company) for the shares of
capital stock subject to outstanding Stock Rights, and (iv) in connection with
any disaffiliation of a Related Corporation, arranging for the assumption, or
replacement with new awards based on other property (including, without
limitation, other securities of the Company and securities of entities other
than the Company) for the shares of capital stock covered by outstanding Stock
Rights based on other securities or other property or cash, by the affected
Related Corporation or division by the entity that controls such Related
Corporation or division following such disaffiliation (as well as any
corresponding adjustments to Stock Rights that remain based upon Company
securities).
(b) Except as expressly provided herein, no issuance by
the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares subject to Stock
Right. No adjustments shall be made for dividends paid in cash or in property
other than Common Stock of the Company.
(c) No fractional shares shall be issued under the Plan
and any optionee who would otherwise be entitled to receive a fraction of a
share upon exercise of a Stock Right shall receive from the Company cash in lieu
of such fractional shares in an amount equal to the fair market value of such
fractional shares, as determined in the sole discretion of the Board or
Committee.
(d) Upon the happening of any of the foregoing events
described in subsection (a) above, the class and aggregate number of shares set
forth in Section 4 hereof that are subject to Stock Rights that previously have
been or subsequently may be granted under the Plan shall also be appropriately
adjusted to reflect the events described. The Board or Committee or the
Successor Board shall determine the specific adjustments to be made under this
Section 13 and, subject to Section 2, its determination shall be conclusive.
14. Means of Exercising Stock Rights. Except as otherwise provided
in this Plan or the instrument evidencing the Stock Right, a Stock Right (or any
part or installment thereof) shall be exercised by giving written notice to the
Company at its principal office address to the attention of its President. Such
notice shall identify the Stock Right being exercised and specify the number of
shares as to which such Stock Right is being exercised, accompanied by full
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payment of the exercise price therefor, if any, payable as follows (a) in United
States dollars in cash or by check, (b) at the discretion of the Board or
Committee, through the delivery of already-owned shares of Common Stock having a
fair market value equal as of the date of the exercise to the cash exercise
price of the Stock Right and, in the case of such already-owned shares of Common
Stock, having been owned by the participant for more than six months from the
date of surrender, or (c) at the discretion of the Board or Committee, by
delivery of the grantee's personal recourse note bearing interest payable not
less than annually at a market rate that is no less than 100% of the lowest
applicable Federal rate, as defined in Section 1274(d) of the Code, (d) at the
discretion of the Board or Committee, through the surrender of shares of Common
Stock then issuable upon exercise of the Stock Right having a fair market value
on the date of exercise equal to the aggregate exercise price of the Stock
Right, (e) at the discretion of the Board or Committee, delivery of a notice
that the grantee has placed a market sell order with a broker with respect to
shares of Common Stock then issuable upon exercise of the Stock Right and that
the broker has been directed to pay a sufficient portion of the net proceeds of
the sale to the Company in satisfaction of the Stock Right Exercise Price,
provided that payment of such proceeds is then made to the Company upon
settlement of the sale or (f) at the discretion of the Board or Committee, by
any combination of (a), (b), (c), (d), and (e) or such other consideration and
method of payment for the issuance of shares to the extent permitted by
applicable law or the Plan. If the Board or Committee exercises its discretion
to permit payment of the exercise price of an ISO by means of the methods set
forth in clauses (b), (c) or (d) of the preceding sentence, such discretion
shall be exercised in writing at the time of the grant of the ISO in question
and such exercise shall also be governed by any terms set forth in the written
agreement evidencing the grant of the Stock Right. The holder of a Stock Right
shall not have the rights of a stockholder with respect to the shares covered by
the Stock Right until the date of issuance of a stock certificate for such
shares. Except as expressly provided above in Section 13 with respect to changes
in capitalization and stock dividends, no adjustment shall be made for dividends
or similar rights for which the record date is before the date such stock
certificate is issued.
15. Surrender of Stock Rights for Cash or Stock. The Board or
Committee may, in its sole and absolute discretion and subject to such terms and
conditions as it deems appropriate, accept the surrender by an optionee or
grantee of a Stock Right granted to him under the Plan and authorize payment in
consideration therefor of an amount equal to the difference between the purchase
price payable for the shares of Common Stock under the instrument granting the
Option and the fair market value of the shares subject to the Stock Right
(determined as of the date of such surrender of the Stock Right). Such payment
shall be made in shares of Common Stock valued at fair market value on the date
of such surrender, or in cash, or partly in such shares of Common Stock and
partly in cash as the Board or Committee shall determine. The surrender shall be
permitted only if the Board or Committee determines that such surrender is
consistent with the purpose set forth in Section 1, and only to the extent that
the Stock Right is exercisable under Section 8 on the date of surrender. In no
event shall an optionee or grantee surrender his Stock Right under this Section
if the fair market value of the shares on the date of such surrender is less
than the purchase price payable for the shares of Common Stock subject to the
Stock Right. Any ISO surrendered pursuant to the provisions of this Section 15
shall be deemed to have been converted into a NSO immediately prior to such
surrender.
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16. Term and Amendment of Plan. This Plan was adopted by the Board
on March 23, 2004 (the "Effective Date"), subject (with respect to the
validation of ISOs granted under the Plan) to approval of the Plan by the
stockholders of the Company. The Plan will be approved by the stockholders of
the Company within one year of the Effective Date. The Plan shall expire 10
years after the Effective Date (except as to Stock Rights outstanding on that
date). Subject to the provisions of Section 5 above, Stock Rights may be granted
under the Plan prior to the date of stockholder approval of the Plan. The Board
may terminate or amend the Plan in any respect at any time, except that without
the approval of the stockholders obtained within 12 months before or after the
Board adopts a resolution authorizing any of the following actions:
(a) the total number of shares that may be issued under the
Plan may not be increased (except by adjustment pursuant to Section 13);
(b) the provisions of Section 3 regarding eligibility for
grants of ISOs may not be modified;
(c) the provisions of Section 6(b) regarding the exercise
price at which shares may be offered pursuant to ISOs may not be modified
(except by adjustment pursuant to Section 13); and
(d) the expiration date of the Plan may not be extended.
Except as provided in Section 13(a) and the fifth sentence of this
Section 16, in no event may action of the Board or stockholders adversely alter
or impair the rights of a grantee, without his or her consent, under any Stock
Right previously granted.
17. Conversion of ISOs into NSOs; Termination of ISOs. The Board
or Committee, with the consent of any optionee, may in its discretion take such
actions as may be necessary to convert an optionee's ISOs (or any installments
or portions of installments thereof) that have not been exercised on the date of
conversion into NSOs at any time prior to the expiration of such ISOs. These
actions may include, but not be limited to, accelerating the exercisability,
extending the exercise period or reducing the exercise price of the appropriate
installments of optionee's Options. At the time of such conversion, the Board or
Committee (with the consent of the optionee) may impose these conditions on the
exercise of the resulting NSOs as the Board or Committee in its discretion may
determine, provided that the conditions shall not be inconsistent with the Plan.
Nothing in the Plan shall be deemed to give any optionee the right to have such
optionee's ISOs converted into NSOs, and no conversion shall occur until and
unless the Board or Committee takes appropriate action. The Board or Committee,
with the consent of the optionee, may also terminate any portion of any ISO that
has not been exercised at the time of termination.
18. Governmental Regulation. The Company's obligation to sell and
deliver shares of the Common Stock under the Plan is subject to the approval of
any governmental authority required in connection with the authorization,
issuance or sale of such shares.
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19. Withholding of Additional Income Taxes.
(a) Upon the exercise of an NSO, or the grant of a Stock
Bonus or Purchase Right for less than the fair market value of the Common Stock,
the making of a Disqualifying Disposition (as defined in Section 20), the
vesting of restricted Common Stock acquired on the exercise of a Stock Right
hereunder or the surrender of an Option pursuant to Section 15, the Company, in
accordance with Section 3402(a) of the Code and any applicable state statute or
regulation, may require the optionee, Stock Bonus recipient or purchaser to pay
to the Company additional withholding taxes in respect of the amount that is
considered compensation includable in such person's gross income. With respect
to (a) the exercise of an Option, (b) the grant of a Stock Bonus, (c) the grant
of a Purchase Right of Common Stock for less than its fair market value, (d) the
vesting of restricted Common Stock acquired by exercising a Stock Right, or (e)
the acceptance of a surrender of an Option, the Committee in its discretion may
condition such event on the payment by the optionee, Stock Bonus recipient or
purchaser of any such additional withholding taxes.
(b) At the sole and absolute discretion of the Committee,
the holder of Stock Rights may pay all or any part of the total estimated
federal and state income tax liability arising out of the exercise or receipt of
such Stock Rights, the making of a Disqualifying Disposition, or the vesting of
restricted Common Stock acquired on the exercise of a Stock Right hereunder
(each of the foregoing, a "Tax Event") by tendering already-owned shares of
Common Stock or (except in the case of a Disqualifying Disposition) by directing
the Company to withhold shares of Common Stock otherwise to be transferred to
the holder of such Stock Rights as a result of the exercise or receipt thereof
in an amount equal to the estimated federal and state income tax liability
arising out of such event, provided that no more shares may be withheld than are
necessary to satisfy the holder's actual minimum withholding obligation with
respect to the exercise of Stock Rights. In such event, the holder of Stock
Rights must, however, notify the Committee of his or her desire to pay all or
any part of the total estimated federal and state income tax liability arising
out of a Tax Event by tendering already-owned shares of Common Stock or having
shares of Common Stock withheld prior to the date that the amount of federal or
state income tax to be withheld is to be determined. For purposes of this
Section 19(b), shares of Common Stock shall be valued at their fair market value
on the date that the amount of the tax withholdings is to be determined.
20. Notice to Company of Disqualifying Disposition. Each employee
who receives an ISO must agree to notify the Company in writing immediately
after the employee makes a Disqualifying Disposition (as defined below) of any
Common Stock acquired pursuant to the exercise of an ISO. A "Disqualifying
Disposition" is any disposition (including any sale) of such Common Stock before
either (a) two years after the date the employee was granted the ISO, or (b) one
year after the date the employee acquired Common Stock by exercising the ISO. If
the employee has died before such stock is sold, these holding period
requirements do not apply and no Disqualifying Disposition can occur thereafter.
21. Governing Law; Construction. The validity and construction of
the Plan and the instruments evidencing Stock Rights shall be governed by the
laws of the State of Delaware. In
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construing this Plan, the singular shall include the plural and the masculine
gender shall include the feminine and neuter, unless the context otherwise
requires.
22. Lock-up Agreement. Each recipient of securities hereunder
agrees, if requested by the Board or Committee, in connection with the
registration with the United States Securities and Exchange Commission under the
Securities Act of 1933, as amended, of the public sale of the Company's Common
Stock, not to sell, make any short sale of, loan, grant any option for the
purchase of or otherwise dispose of any securities of the Company (other than
those included in the registration) without the prior written consent of the
Company or such underwriters, as the case may be, for such period of time (not
to exceed 180 days) from the effective date of such registration as the Company
or the underwriters, as the case may be, shall specify. Each such recipient
agrees that the Company may instruct its transfer agent to place stop-transfer
notations in its records to enforce this Section 22. Each such recipient agrees
to execute a form of agreement reflecting the foregoing restrictions as
requested by the underwriters managing such offering.
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