EXHIBIT 10.4
InterTrust Technologies Corporation
1999 Non-Employee Directors Option Plan
(As Adopted July 22, 1999)
INTERTRUST TECHNOLOGIES CORPORATION
1999 NON-EMPLOYEE DIRECTORS OPTION PLAN
ARTICLE 1. PURPOSE OF THE PLAN
The Plan is intended to promote the interests of the Company by
providing the non-employee members of the Board with the opportunity to acquire
a proprietary interest, or otherwise increase their proprietary interest, in the
Company as an incentive for them to remain in the service of the Company.
ARTICLE 2. ADMINISTRATION
The terms and conditions of each automatic option grant (including the
timing and pricing of the option grant) shall be determined by the express terms
and conditions of the Plan, and neither the Board nor any committee of the Board
shall exercise any discretionary functions with respect to option grants made
pursuant to the Plan.
ARTICLE 3. STOCK SUBJECT TO THE PLAN
A. Shares of Common Stock shall be available for issuance under the
Plan and shall be drawn from either the Company's authorized but unissued shares
of Common Stock or from reacquired shares of Common Stock, including shares
repurchased by the Company on the open market. The number of shares of Common
Stock reserved for issuance over the term of the Plan shall be fixed at 350,000
shares. As of January 1 of each year, starting in 2000, the aggregate number of
shares of Common Stock available for purchase during the life of the Plan shall
automatically be increased by the number of shares necessary to cause the number
of shares then available for purchase to be restored to 350,000.
B. Should one or more outstanding options under this Plan expire or
terminate for any reason prior to exercise in full, then the shares subject to
the portion of each option not so exercised shall be available for subsequent
option grant under the Plan. In addition, should the exercise price of an
outstanding option under the Plan be paid with shares of Common Stock, then the
number of shares of Common Stock available for issuance under the Plan shall be
reduced by the net number of shares of Common Stock actually issued to the
holder of such option.
C. Should any change be made to the Common Stock issuable under the
Plan by reason of any stock split, stock dividend, recapitalization, combination
of shares, exchange of shares or other change affecting the outstanding Common
Stock as a class without the Company's receipt of consideration, then
appropriate adjustments shall be made to (i) the maximum number and/or class of
securities issuable under the Plan, (ii) the number and/or class of securities
for which automatic option grants are to be subsequently made to each Eligible
Director under the Plan, and (iii) the number and/or class of securities and
price per share in effect under each option outstanding under the Plan. The
adjustments to the outstanding options shall be made by the Board in a manner
which shall preclude the enlargement or dilution of rights and benefits under
such options and shall be final, binding and conclusive.
ARTICLE 4. ELIGIBILITY
The individuals eligible to receive automatic option grants pursuant
to the provisions of this Plan shall be limited to (i) those individuals serving
as non-employee Board members on the effective date of the IPO and (ii) those
individuals who are first elected or appointed as non-employee Board members
after the effective date of the IPO, whether through appointment by the Board or
election by the Company's stockholders. A non-employee Board member shall not be
eligible to receive the initial automatic option grant described in Section
5.A.2 if such individual has previously been in the employ of the Company (or
any parent or subsidiary). However, a non-employee Board member shall be
eligible to receive one or more annual option grants described in Section 5.A.3,
whether or not he or she has previously been in the employ of the Company (or
any parent or subsidiary). Each non-employee Board member eligible to
participate in the Plan pursuant to the foregoing criteria is hereby designated
an Eligible Director.
ARTICLE 5. TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS
A. Grant Date. Option grants shall be made on the dates
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specified below:
1. Each individual who is an Eligible Director on the
effective date of the IPO shall automatically be granted, on the
effective date of the IPO, a fully vested non-statutory option to
purchase 15,000 shares of Common Stock.
2. Each individual who first becomes an Eligible
Director after the effective date of the IPO, whether through
election by the Company's stockholders or appointment by the
Board, shall automatically be granted, at the time of such
initial election or appointment, a fully vested non-statutory
option to purchase 15,000 shares of Common Stock.
3. On the date of each Annual Meeting, beginning with
the 2000 Annual Meeting, each Eligible Director who serves on the
Board at the time of that Annual Meeting, whether or not standing
for re-election, shall automatically be granted a fully vested
non-statutory option to purchase 5,000 shares of Common Stock. An
Eligible Director who resigns effective at an Annual Meeting
shall not be eligible to be granted a non-statutory option at
that time. There shall be no limit on the number of such annual
5,000-share option grants any one Eligible Director may receive
over his or her period of continued Board service.
4. However, each Eligible Director who in a calendar
year received a non-statutory option to purchase 15,000 shares of
Common Stock under this Plan (as described in Section 5.A.2)
shall first be eligible to be granted a non-statutory option to
purchase 5,000 shares of Common Stock under this Plan (as
described in Section 5.A.3) at the Annual Meeting occurring at
any time in the year that is following the year in which the
Eligible Director received the non-statutory option to purchase
15,000 shares under this Plan (as described in Section 5.A.2).
For example, if an Eligible Director received a non-statutory
option to
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purchase 15,000 shares of Common Stock (as described in Section
5.A.2) in 1999, this Eligible Director will first become eligible
to receive a non-statutory option to purchase 5,000 shares of
Common Stock (as described in Section 5.A.3) at the Annual
Meeting occurring in 2000.
B. Exercise Price. The exercise price per share of Common Stock
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subject to each automatic option grant shall be equal to one hundred percent
(100%) of the Fair Market Value per share of Common Stock on the automatic grant
date, except that the exercise price per share of Common Stock subject to the
automatic grant described in Section 5.A.1 above will be the initial price
offered to the public on the effective date of the IPO.
C. Payment.
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The exercise price shall become immediately due upon
exercise of the option and shall be payable in one of the alternative
forms specified below:
(i) all or part of the exercise price may be paid in
cash or check made payable to the Company's order; or
(ii) all or part of the exercise price may be paid by
surrendering, or attesting to the ownership of, shares of Common Stock
that are already owned by the Optionee. Such shares of Common Stock
shall be valued at their Fair Market Value on the date when the new
shares of Common Stock are purchased under the Plan. The Optionee
shall not surrender, or attest to the ownership of, shares of Common
Stock in payment of the exercise price if such action would cause the
Company to recognize compensation expense (or additional compensation
expense) with respect to the option for financial reporting purposes;
or
(iii) all or part of the exercise price may be paid by
delivering (on a form prescribed by the Company) an irrevocable
direction to a securities broker approved by the Company to sell all
or part of the shares of Common Stock being purchased under the Plan
and to deliver all or part of the sales proceeds to the Company; or
(iv) all or part of the exercise price may be paid by
delivering (on a form prescribed by the Company) an irrevocable
direction to pledge all or part of the shares of Common Stock being
purchased under the Plan to a securities broker or lender approved by
the Company, as security for a loan, and to deliver all or part of the
loan proceeds to the Company.
D. Exercisability/Vesting. Each automatic option grant shall be
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fully vested on the date of option grant.
E. Option Term. Each automatic option grant under the Plan shall
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have a maximum term of ten (10) years measured from the automatic grant date.
F. Non-Transferability. During the lifetime of the Optionee, each
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automatic option grant shall be exercisable only by the Optionee and shall not
be assignable or transferable
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by the Optionee other than a transfer of the option effected by will or by the
laws of descent and distribution following Optionee's death.
G. Effect of Termination of Board Service.
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1. Should the Optionee cease to serve as a Board member for any
reason (including Disability or death) while holding one or more automatic
option grants under the Plan, then such individual shall have a twelve-month
period following the date of such cessation of Board service in which to
exercise each such option for any or all of the option shares for which the
option is exercisable at the time of his or her cessation of Board service.
2. Should the Optionee die while serving as a Board member,
then any automatic option grant held by the Optionee at the time of death may
subsequently be exercised, for the option shares for which the option is
exercisable at the time of his or her cessation of Board service (less any
option shares purchased by the Optionee prior to death), by the personal
representative of the Optionee's estate or by the person or persons to whom the
option is transferred pursuant to the Optionee's will or in accordance with the
laws of descent and distribution. The right to exercise each such option shall
lapse upon the expiration of the twelve-month period measured from the date of
the Optionee's cessation of service.
3. In no event shall any automatic option grant under this Plan
remain exercisable after the expiration date of the maximum ten-year option
term. Upon the expiration of the applicable post-service exercise period under
subparagraphs 1 through 2 above or (if earlier) upon the expiration of the
maximum ten-year option term, the unexercised automatic option grant shall
terminate and cease to be outstanding.
H. Stockholder Rights. The holder of an automatic option grant shall
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have none of the rights of a stockholder with respect to any shares subject to
such option until such individual shall have exercised the option and paid the
exercise price for the purchased shares.
I. Remaining Terms. The remaining terms and conditions of each
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automatic option grant shall be as set forth in the form Stock Option Agreement
approved for use under the Plan.
J. Affiliates of Eligible Directors. The Board may provide that the
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non-statutory options that otherwise would be granted to an Eligible Director
under this Article 5 shall instead be granted to an affiliate of such Eligible
Director. Such affiliate shall then be deemed to be an Eligible Director for
purposes of the Plan, provided that the service-related termination provisions
pertaining to the non-statutory options shall be applied with regard to the
service of the Eligible Director.
ARTICLE 6. AMENDMENT OF THE PLAN AND AWARDS
The Board has complete and exclusive power and authority to amend or
modify the Plan (or any component thereof) in any or all respects whatsoever.
However, no such amendment or modification shall adversely affect rights and
obligations with respect to options at the time outstanding under the Plan,
unless the affected Optionees consent to such amendment. Stockholder approval
shall be obtained to the extent required by applicable law.
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ARTICLE 7. EFFECTIVE DATE AND TERM OF PLAN
A. The Plan shall become effective on the effective date of the IPO.
One or more automatic option grants may be made under the Plan at any time on or
after the effective date of the IPO.
B. The Board may, at any time and for any reason, amend or terminate
the Plan. An amendment of the Plan shall be subject to the approval of the
Company's stockholders only to the extent required by applicable laws,
regulations or rules. No options shall be granted under the Plan after the
termination thereof. The termination of the Plan, or any amendment thereof,
shall not affect any option previously granted under the Plan.
ARTICLE 8. USE OF PROCEEDS
Any cash proceeds received by the Company from the sale of shares
pursuant to option grants under the Plan shall be used for general corporate
purposes.
ARTICLE 9. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any option under
the Plan and the issuance of Common Stock upon the exercise of the option grants
made hereunder shall be subject to the Company's procurement of all approvals
and permits required by regulatory authorities having jurisdiction over the
Plan, the options granted under it, and the Common Stock issued pursuant to it.
B. No shares of Common Stock or other assets shall be issued or
delivered under this Plan unless and until there shall have been compliance with
all applicable requirements of Federal and state securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of the Nasdaq National Market or any stock exchange on which the Common Stock is
then listed for trading.
ARTICLE 10. NO IMPAIRMENT OF RIGHTS
Neither the action of the Company in establishing the Plan nor any
provision of the Plan shall be construed or interpreted so as to affect
adversely or otherwise impair the right of the Company or the stockholders to
remove any individual from the Board at any time in accordance with the
provisions of applicable law.
ARTICLE 11. MISCELLANEOUS PROVISIONS
A. The right to acquire Common Stock or other assets under the Plan
may not be assigned, encumbered or otherwise transferred by any Optionee.
B. The provisions of the Plan relating to the exercise of options
shall be governed by the laws of the State of Delaware, as such laws are applied
to contracts entered into and performed in such State, except for their choice-
of-law provisions.
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C. The provisions of the Plan shall inure to the benefit of, and be
binding upon, the Company and its successors or assigns, whether by a change in
control or otherwise, and the Optionees, the legal representatives of their
respective estates, their respective heirs or legatees and their permitted
assignees.
ARTICLE 12. DEFINITIONS
Annual Meeting: the annual meeting of the Company's stockholders.
Board: the Company's Board of Directors.
Code: the Internal Revenue Code of 1986, as amended.
Common Stock: shares of the Company's common stock.
Company: InterTrust Technologies Corporation, a Delaware corporation.
Disability: the inability to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment.
Eligible Director: a member of the Board who is described in Section 4
of the Plan.
Fair Market Value: the market price of shares of Common Stock,
determined by the Board in good faith on such basis as it deems appropriate.
Whenever possible, the determination of Fair Market Value by the Board shall be
based on the prices reported in The Wall Street Journal. Such determination
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shall be conclusive and binding on all persons.
IPO: the initial offering of Common Stock to the public pursuant to a
registration statement filed by the Company with the Securities and Exchange
Commission.
1934 Act: the Securities Exchange Act of 1934, as amended.
Optionee: any person to whom an option is granted under the Plan.
Plan: this InterTrust Technologies Corporation 1999 Non-Employee
Directors Option Plan.
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