ALLAIRE CORP.
1997 STOCK INCENTIVE PLAN
1. Purpose. The purpose of this 1997 Stock Incentive Plan (the "Plan") is
to promote the interests of Allaire Corp. (the "Company") and its Affiliates, if
any, by providing key employees, directors, advisors and representatives of the
Company and any Affiliates an opportunity to acquire a proprietary interest in
the Company and thereby develop a stronger incentive to put forth maximum effort
for the continued success and growth of the Company and its Affiliates. This
Plan is also intended to facilitate recruiting and retaining key personnel of
outstanding ability.
2. Definitions. The capitalized terms used in this Plan have the meanings
set forth in the list of defined terms attached to this Plan as Exhibit A.
3. Administration.
(a) Authority of Committee. The Committee shall administer this Plan.
The Committee shall have exclusive power to make Awards and to determine when
and to whom Awards will be granted, and the form, amount and other terms and
conditions of each Award, subject to the provisions of this Plan. The Committee
may determine whether, to what extent and under what circumstances Awards may be
settled, paid or exercised in cash, Shares or other Awards or other property, or
canceled, forfeited or suspended. The Committee shall have the authority to
interpret this Plan and any Award or Agreement made under this Plan, to
establish, amend, waive and rescind any rules and regulations relating to the
administration of this Plan, to determine the terms and provisions of any
Agreements entered into hereunder (not inconsistent with this Plan), and to make
all other determinations necessary or advisable for the administration of this
Plan. The Committee may correct any defect, supply any omission or reconcile any
inconsistency in this Plan or in any Award in the manner and to the extent it
shall deem desirable. The determinations of the Committee in the administration
of this Plan, as described herein, shall be final, binding and conclusive.
(b) Rule 16b-3 Compliance. It is intended that, from and after Section
12 Registration, this Plan and all Awards granted pursuant to it shall be
administered by the Committee so as to permit this Plan and Awards to comply
with Exchange Act Rule 16b-3. If any provision of this Plan or of any Award
would otherwise frustrate or conflict with the intent expressed in this Section
3(b), that provision to the extent possible shall be interpreted and deemed
amended in the manner determined by the Committee so as to avoid such conflict.
To the extent of any remaining irreconcilable conflict with such intent, the
provision shall be deemed void as applicable to Participants who are then
subject to the reporting requirements of Section 16 of the Exchange Act to the
extent permitted by law and in the manner deemed advisable by the Committee.
(c) Delegation of Authority. The Committee may delegate all or any
part of its authority under this Plan to persons who are not Non-employee
Director for purposes of determining and administering Awards. From and after
Section 12 Registration, such delegation shall be for purposes of determining
and administering Awards solely to Employees who are not then subject to the
reporting requirements of Section 16 of the Exchange Act.
(d) Indemnification. To the full extent permitted by law, each member
and former member of the Committee and each person to whom the Committee
delegates or has delegated authority under this Plan shall be entitled to
indemnification by the Company against and from any loss, liability, judgment,
damage, cost and reasonable expense incurred by such member, former member or
other person by reason of any action taken, failure to act or determination made
in good faith under or with respect to this Plan.
4. Shares Available; Maximum Payouts.
(a) Shares Available. The number of Shares available for distribution
under this Plan is 1,726,000 (subject to adjustment under Section 12(f) hereof).
(b) Shares Again Available. Any Shares subject to the terms and
conditions of an Award under this Plan which are not used because the Award
expires without all Shares subject to such Award having been issued or because
the terms and conditions of the Award are not met may again be used for an Award
under this Plan. Any Shares that are the subject of Awards which are
subsequently forfeited to the Company pursuant to the restrictions applicable to
such Award may again be used for an Award under this Plan. If a Participant
exercises a Stock Appreciation Right, any Shares covered by the Stock
Appreciation Right in excess of the number of Shares issued (or, in the case of
a settlement in cash or any other form of property, in excess of the number of
Shares equal in value to the amount of such settlement, based on the Fair Market
Value of such Shares on the date of such exercise) may again be used for an
Award under this Plan. If, in accordance with the Plan, a Participant uses
Shares to (i) pay a purchase or exercise price, including an Option exercise
price, or (ii) satisfy tax withholdings, such Shares may again be used for an
Award under this Plan.
(c) Unexercised Awards. Any unexercised or undistributed portion of
any terminated, expired, exchanged, or forfeited Award or any Award settled in
cash in lieu of Shares (except as provided in Section 4(b) hereof) shall be
available for further Awards.
(d) No Fractional Shares. No fractional Shares may be issued under
this Plan; fractional Shares will be rounded to the nearest whole Share.
(e) Maximum Payouts. No more than 25% of all Shares subject to this
Plan may be granted in the aggregate pursuant to Restricted Stock and Other
Stock-Based Awards.
5. Eligibility. Awards may be granted under this Plan at the discretion of
the Committee to any Employee of the Company or any Affiliate, whether or not
such person is an employee of the Company or any such Affiliate within the
meaning of the Code; provided, however, that key employees of the Company or its
Affiliates within the meaning of the Code (including any such employee who is
also an officer or director the the Company or any such Affiliate) shall be the
only persons eligible to receive Options intended to constitute Incentive Stock
Options.
6. General Terms of Awards.
(a) Awards. Awards under this Plan may consist of Stock, Options
(either Incentive Stock Options or Non-Qualified Stock Options), Stock
Appreciation Rights, Performance Shares, Restricted Stock and Other Stock-Based
Awards. Awards of Restricted Stock may, in the discretion of the Committee,
provide the Participant with dividends or dividend equivalents and voting rights
prior to vesting (whether vesting is based on a period of time, the attainment
of specified performance conditions or otherwise).
(b) Amount of Awards. Each Agreement shall set forth the number of
Shares of Stock, Shares of Restricted Stock or Performance Shares subject to
such Agreement, or the number of Shares to which the Option applies or with
respect to which payment upon the exercise of the Stock Appreciation Right is to
be determined, as the case may be, together with such other terms and conditions
applicable to the Award (not inconsistent with this Plan) as determined by the
Committee in its sole discretion.
(c) Term. Each Agreement, other than those relating solely to Awards
of Stock without restrictions, shall set forth the Term of the Award and any
applicable Performance Period for Performance Shares, as the case may be, but in
no event shall the Term of an Award or the Performance Period be longer than ten
years after the date of grant. An Agreement with a Participant may permit
acceleration of vesting requirements and of the expiration of the applicable
Term upon such terms and conditions as shall be set forth in the Agreement,
which may, but need not, include, without limitation, acceleration resulting
from the occurrence of a Change in Control, a Fundamental Change, or the
Participant's death, Disability or Retirement. Acceleration of the Performance
Period of Performance Shares shall be subject to Section 9(b) hereof.
(d) Agreements. Each Award under this Plan shall be evidenced by an
Agreement setting forth the terms and conditions, as determined by the
Committee, which shall apply to such Award, in addition to the terms and
conditions specified in this Plan.
(e) Transferability. During the lifetime of a Participant to whom an
Award is granted, only such Participant (or such Participant's legal
representative or, if so provided in the applicable Agreement in the case of a
Non-Qualified Stock Option, a permitted transferee as hereafter described) may
exercise an Option or Stock Appreciation Right or receive payment with respect
to Performance Shares or any other Award. No Award of Restricted Stock (prior to
the expiration of the restrictions), Options, Stock Appreciation Rights,
Performance Shares or other Award (other than an award of Stock without
restrictions) may be sold, assigned, transferred, exchanged, or otherwise
encumbered, and any attempt to do so shall be of no effect. Notwithstanding the
immediately preceding sentence, (i) an Agreement may provide that an Award shall
be transferable to a Successor in the event of a Participant's death and (ii) an
Agreement may provide that an Award (other than an Incentive Stock Option) shall
be transferable to any member of a Participant's "immediate family" (as such
term is defined in Rule 16a-1(e) promulgated under the Exchange Act, or any
successor rule or regulation) or to one or more trusts whose beneficiaries are
members of such Participant's "immediate family" or partnerships in which such
family members are the only partners; provided, however, that (1) the
Participant receives no consideration for the transfer and (2) such transferred
Award shall continue to be subject to the same terms and conditions as were
applicable to such Award immediately prior to its transfer.
(f) Termination of Employment. Except as otherwise determined by the
Committee or provided by the Committee in an applicable Agreement, in case of
termination of employment, the following provisions shall apply:
(1) Options and Stock appreciation Rights.
(i) Death. If a Participant who has been granted an Option
or Stock Appreciation Rights shall die before such Option or
Stock Appreciation Rights has expired, the Option or Stock
Appreciation Rights shall become exercisable in full, and may be
exercised by the Participant's Successor at any time, or from
time to time, within five years after the date of the
Participant's death.
(ii) Disability or Retirement. If a Participant's employment
terminates because of Disability or Retirement, the Option or
Stock Appreciation Rights shall become exercisable in full, and
the Participant may exercise his or her Options or Stock
Appreciation Rights at any time, or from time to time, within (x)
five years after the date of such termination if such termination
results from the Participant's disability (one year in the case
of an Incentive Stock Option) or (y) within three months, or such
longer period as the Committee may permit, after the date of such
termination if such termination results from the Participant's
retirement.
(iii) Reasons other than Death, Disability or Retirement. If
a Participant's employment terminates for any reason other than
death, Disability or Retirement, the unvested or unexercised
portion of any Award held by such Participant shall terminate at
the date of termination of employment.
(iv) Expiration of Term. Notwithstanding the foregoing
paragraphs (i)-(iii), in no event shall an Option or a Stock
Appreciation Right be exercisable after expiration of the Term of
such Award.
(2) Performance Shares. If a Participant's employment with the
Company or any of its Affiliates terminates during a Performance
Period because of death, Disability or Retirement, or under other
circumstances provided by the Committee in its discretion in the
applicable Agreement, the Participant shall be entitled to a payment
of Performance Shares at the end of the Performance Period based upon
the extent to which achievement of performance targets was satisfied
at the end of such period (as determined at the end of the Performance
Period) and prorated for the portion of the Performance Period during
which the Participant was employed by the Company or any Affiliate.
Except as provided in this Section 6(f)(2) or in the applicable
Agreement, if a Participant's employment terminates with the Company
or any of its Affiliates during a Performance Period, then such
Participant shall not be entitled to any payment with respect to that
Performance Period.
(3) Restricted Stock. Unless otherwise provided in the applicable
Agreement, in case of a Participant's death, Disability or Retirement,
the Participant shall be entitled to receive that number of shares of
Restricted Stock under outstanding Awards which has been pro rated for
the portion of the Term of the Awards during which the Participant was
employed by the Company or any Affiliate, and with respect to such
Shares all restrictions shall lapse.
(g) Rights as Shareholder. A Participant shall have no rights as a
shareholder with respect to any securities covered by an Award until the date
the Participant becomes the holder of record, and then only to the such rights
are not otherwise restricted by the Agreement covering such Award.
(h) Lock-Up Agreements. Unless the Committee specifies otherwise, each
Award shall provide that upon the request of the Company or the Managing
Underwriter(s), any Participant shall, in connection with an initial public
offering of the Company's Stock, agree in writing that for a period of time (not
to exceed 180 days) from the effective date of the Registration Statement filed
with the Securities and Exchange Commission for such offering, he shall not
sell, make any short sale of, loan, grant any option for the purchase of, or
otherwise dispose of any shares of the Company's Stock owned or controlled by
him. This provision shall apply only to a Participant who, at the time of the
request, is an officer or director of the Company or is the holder (assuming
exercise of all options and warrants, and the conversion of all convertible
securities held by the Participant, to the extent then exercisable or
convertible) of a number of shares of the Company's Stock equal to at least one
percent (1%) of the total number of shares of Stock then issued and outstanding.
7. Stock Options.
(a) Terms of All Options. Each Option shall be granted pursuant to an
Agreement as either an Incentive Stock Option or a Non-Qualified Stock Option.
Only Non-Qualified Stock Options may be granted to Employees who are not
employees of the Company or an Affiliate. The purchase price of each Share
subject to an Option shall be determined by the Committee and set forth in the
Agreement, but shall not be less than 50% of the Fair Market Value of a Share as
of the date the Option is granted. The purchase price of the Shares with respect
to which an Option is exercised shall be payable in full at the time of
exercise, provided that, to the extent permitted by law, Participants may
simultaneously exercise Options and sell the Shares thereby acquired pursuant to
a brokerage or similar relationship and use the proceeds from such sale to pay
the purchase price of such Shares. The purchase price may be paid in cash or, if
the Committee so permits, through a reduction of the number of Shares delivered
to the Participant upon exercise of the Option or delivery to the Company of
Shares held by such Participant (in each case, such Shares having a Fair Market
Value as of the date the Option is exercised equal to the purchase price of the
Shares being purchased pursuant to the Option), or a combination thereof, unless
otherwise provided in the Agreement. If the Committee so determines, the
Agreement relating to any Option may provide for the issuance of "reload"
Options pursuant to which, subject to the terms and conditions established by
the Committee and any applicable requirements of Exchange Act Rule 16b-3 or any
other applicable law, the Participant will, either automatically or subject to
subsequent Committee approval, be granted a new Option when the payment of the
exercise price of the original Option, or the payment of tax withholdings
pursuant to Section 12(d) hereof, is made through the delivery to the Company of
Shares held by such Participant, such new "reload" Option (i) being an Option to
purchase the number of Shares provided as consideration for the exercise price
and in payment of taxes in connection with the exercise of the original Option,
and (ii) having a Per Share exercise price equal to the Fair Market Value as of
the date of exercise of the original Option. Each Option shall be exercisable in
whole or in part on the terms provided in the Agreement. In no event shall any
Option be exercisable at any time after its Term. When an Option is no longer
exercisable, it shall be deemed to have lapsed or terminated.
(b) Incentive Stock Options. In addition to the other terms and
conditions applicable to all Options:
(i) the purchase price of each Share subject to an Incentive Stock
Option shall not be less than 100% of the Fair Market Value of a Share as
of the date the Option is granted (or such other limit as may be required
by the Code) if such limitation is necessary to qualify the Option as an
Incentive Stock Option;
(ii) the aggregate Fair Market Value (determined as of the date the
Option is granted) of the Shares with respect to which Incentive Stock
Options held by an individual first become exercisable in any calendar year
(under this Plan and all other incentive stock option plans of the Company
and its Affiliates) shall not exceed $100,000 (or such other limit as may
be required by the Code), if such limitation is necessary to qualify the
Option as an Incentive Stock Option, and to the extent an Option or Options
granted to a Participant exceed such limit, such Option or Options shall be
treated as a Non-Qualified Stock Option;
(iii) an Incentive Stock Option shall not be exercisable and the Term
of the Award shall not be more than ten years after the date of grant (or
such other limit as may be required by the Code) if such limitation is
necessary to qualify the Option as an Incentive Stock Option;
(iv) the Agreement covering an Incentive Stock Option shall contain
such other terms and provisions which the Committee determines necessary to
qualify such Option as an Incentive Stock Option; and
(v) no Participant may receive an Incentive Stock Option under this
Plan if, at the time the Award is granted, the Participant owns (after
application of the rules contained in Section 424(d) of the Code, or its
successor provision) Shares possessing more than ten percent of the total
combined voting power of all classes of stock of the Company or its
subsidiaries, unless (A) the option price for such Incentive Stock Option
is at least 110% of the Fair Market Value of the Shares subject to such
Incentive Stock Option on the date of grant and (B) such Option is not
exercisable after the date five years from the date such Incentive Stock
Option is granted.
8. Stock Appreciation Rights. An Award of a Stock Appreciation Right shall
entitle the Participant, subject to terms and conditions determined by the
Committee, to receive upon exercise of the Stock Appreciation Right all or a
portion of the excess of (i) the Fair Market Value of a specified number of
Shares as of the date of exercise of the Stock Appreciation Right over (ii) a
specified price which shall not be less than 50% of the Fair Market Value of
such Shares as of the date of grant of the Stock Appreciation Right. A Stock
Appreciation Right may be granted in connection with a previously or
contemporaneously granted Option, or independent of any Option. If issued in
connection with an Option, the Committee may impose a condition that exercise of
a Stock Appreciation Right cancels the Option with which it is connected and
exercise of the connected Option cancels the Stock Appreciation Right. Each
Stock Appreciation Right may be exercisable in whole or in part on the terms
provided in the Agreement. Notwithstanding anything to the contrary stated in
this Plan, no Stock Appreciation Right shall be exercisable prior to six months
from the date of grant except in the event of the death or Disability of the
Participant. No Stock Appreciation Right shall be exercisable at any time after
its Term. When a Stock Appreciation Right is no longer exercisable, it shall be
deemed to have lapsed or terminated. Except as otherwise provided in the
applicable Agreement, upon exercise of a Stock Appreciation Right, payment to
the Participant (or to his or her Successor) shall be made in the form of cash,
Stock or a combination of cash and Stock as promptly as practicable after such
exercise. The Agreement may provide for a limitation upon the amount or
percentage of the total appreciation on which payment (whether in cash and/or
Stock) may be made in the event of the exercise of a Stock Appreciation Right.
9. Performance Shares.
(a) Initial Award. An Award of Performance Shares shall entitle a
Participant (or a Successor) to future payments based upon the achievement of
performance targets established in writing by the Committee. Payment shall be
made in Stock, or a combination of cash and Stock, as determined by the
Committee, provided that at least 25% of the value of the vested Performance
Shares shall be distributed in the form of Stock. With respect to those
Participants who are "covered employees" within the meaning of Section 162(m) of
the Code and the regulations thereunder, such performance targets shall consist
of one or any combination of two or more of earnings or earnings per share
before income tax (profit before taxes), net earnings or net earnings per share
(profits after tax), inventory, total, or net operating asset turnover,
operating income, total shareholder return, return on equity, pre-tax and
pre-interest expense return on average invested capital, which may be expressed
on a current value basis, or sales growth, and any such targets may relate to
one or any combination of two or more of corporate, group, unit, division,
Affiliate or individual performance. The Agreement may establish that a portion
of the maximum amount of a Participant's Award will be paid for performance
which exceeds the minimum target but falls below the maximum target applicable
to such Award. The Agreement shall also provide for the timing of such payment.
Following the conclusion or acceleration of each Performance Period, the
Committee shall determine the extent to which (i) performance targets have been
attained, (ii) any other terms and conditions with respect to an Award relating
to such Performance Period have been satisfied, and (iii) payment is due with
respect to a Performance Share Award.
(b) Acceleration and Adjustment. The Agreement may permit an
acceleration of the Performance Period and an adjustment of performance targets
and payments with respect to some or all of the Performance Shares awarded to a
Participant, upon such terms and conditions as shall be set forth in the
Agreement, upon the occurrence of certain events, which may, but need not,
include without limitation a Change in Control, a Fundamental Change, the
Participant's death, Disability or Retirement, a change in accounting practices
of the Company or its Affiliates, or, with respect to payments in Stock for
Performance Share Awards, a reclassification, stock dividend, stock split or
stock combination as provided in Section 12(f) hereof.
(c) Valuation. Each Performance Share earned after conclusion of a
Performance Period shall have a value equal to the Fair Market Value of a Share
on the last day of such Performance Period.
10. Restricted Stock. Subject to Section 4(e), Restricted Stock may be
granted in the form of Shares registered in the name of the Participant but held
by the Company until the end of the Term of the Award. Any employment
conditions, performance conditions and the Term of the Award shall be
established by the Committee in its discretion and included in the applicable
Agreement. The Committee may provide in the applicable Agreement for the lapse
or waiver of any such restriction or condition based on such factors or criteria
as the Committee, in its sole discretion, may determine. No Award of Restricted
Stock may vest earlier than one year from the date of grant, except as provided
in the applicable Agreement.
11. Other Stock-Based Awards. Subject to Section 4(e) the Committee may
from time to time grant Awards of Stock, and other Awards under this Plan
(collectively herein defined as "Other Stock-Based Awards"), including without
limitation those Awards pursuant to which Shares may be acquired in the future,
such as Awards denominated in Stock units, securities convertible into Stock and
phantom securities. The Committee, in its sole discretion, shall determine the
terms and conditions of such Awards provided that such Awards shall not be
inconsistent with the terms and purposes of this Plan. The Committee may, in its
sole discretion, direct the Company to issue Shares subject to restrictive
legends and/or stop transfer instructions which are consistent with the terms
and conditions of the Award to which such Shares relate.
12. General Provisions.
(a) Effective Date of this Plan. This Plan shall become effective as
of February 4, 1997, provided that this Plan is approved and ratified by the
affirmative vote of the holders of a majority of the outstanding Shares of Stock
present or represented and entitled to vote in person or by proxy at a meeting
of the shareholders of the Company, or by written action, no later than December
31, 1997. If this plan is not so approved by such holders, any Awards granted
under this Plan subject to such approval shall be null and void.
(b) Duration of this Plan. This Plan shall remain in effect until all
Stock subject to it shall be distributed or all Awards have expired or lapsed,
whichever is latest to occur, or this Plan is terminated pursuant to Section
12(e) hereof. No Award of an Incentive Stock Option shall be made more than ten
years after the effective date provided in Section 12(a) hereof (or such other
limit as may be required by the Code) if such limitation is necessary to qualify
the Option as an Incentive Stock Option. The date and time of approval by the
Committee of the granting of an Award shall be considered the date and time at
which such Award is made or granted, notwithstanding the date of any Agreement
with respect to such Award; provided, however, that the Committee may grant
Awards other than Incentive Stock Options to be effective and deemed to be
granted on the occurrence of certain specified contingencies.
(c) Right to Terminate Employment. Nothing in this Plan or in any
Agreement shall confer upon any Participant who is an Employee the right to
continue in the employment of the Company or any Affiliate or affect any right
which the Company or any Affiliate may have to terminate or modify the
employment of the Participant with or without cause.
(d) Tax Withholding. The Company may withhold from any payment of cash
or Stock to a Participant or other person under this Plan an amount sufficient
to cover any required withholding taxes, including the Participant's social
security and Medicare taxes (FICA) and federal, state and local income tax with
respect to income arising from payment of the Award. The Company shall have the
right to require the payment of any such taxes before issuing any Stock pursuant
to the Award. In lieu of all or any part of a cash payment from a person
receiving Stock under this Plan, the individual may elect to cover all or any
part of the required withholdings, and to cover any
additional withholdings up to the amount needed to cover the individual's full
FICA and federal, state and local income tax with respect to income arising from
payment of the Award, through a reduction of the number of Shares delivered to
such individual or a subsequent return to the Company of Shares held by the
Participant or other person, in each case valued in the same manner as used in
computing the withholding taxes under the applicable laws.
(e) Amendment, Modification and Termination of this Plan. Except as
provided in this Section 12(e), the Board may at any time amend, modify,
terminate or suspend this Plan. Except as provided in this Section 12(e), the
Committee may at any time alter or amend any or all Agreements under this Plan
to the extent permitted by law. Amendments are subject to approval of the
shareholders of the Company only if such approval is necessary to maintain this
Plan in compliance with the requirements of Exchange Act Rule 16b-3, Section 422
of the Code, their successor provisions, or any other applicable law or
regulation. No termination, suspension or modification of this Plan may
materially and adversely affect any right acquired by any Participant (or a
Participant's legal representative) or any Successor under an Award granted
before the date of termination, suspension or modification, unless otherwise
agreed by the Participant in the Agreement or otherwise or required as a matter
of law. It is conclusively presumed that any adjustment for changes in
capitalization provided for in Section 9(b) or 12(f) hereof does not adversely
affect any right of a Participant under an Award.
(f) Adjustment for Changes in Capitalization. Appropriate adjustments
in the aggregate number and type of Shares available for Awards under this Plan,
in the limitations on the number and type of Shares that may be issued to an
individual Participant, in the number and type of Shares and amount of cash
subject to Awards then outstanding, in the Option exercise price as to any
outstanding Options and, subject to Section 9(b) hereof, in outstanding
Performance Shares and payments with respect to outstanding Performance Shares
may be made by the Committee in its sole discretion to give effect to
adjustments made in the number or type of Shares through a Fundamental Change
(subject to Section 12(g) hereof), recapitalization, reclassification, stock
dividend, stock split, stock combination, or other relevant change, provided
that fractional Shares shall be rounded to the nearest whole Share.
(g) Fundamental Change. In the event of a proposed Fundamental Change:
(a) involving a merger, consolidation or statutory share exchange, unless
appropriate provision shall be made (which the Committee may, but shall not be
obligated to, make) for the protection of the outstanding Options and Stock
Appreciation Rights by the substitution of options, stock appreciation rights
and appropriate voting common stock of the corporation surviving any such merger
or consolidation or, if appropriate, the Parent of such surviving corporation,
to be issuable upon the exercise of options or used to calculate payments upon
the exercise of stock appreciation rights in lieu of Options, Stock Appreciation
Rights and capital stock of the Company, or (b) involving the dissolution or
liquidation of the Company, the Committee may, but shall not be obligated to,
declare, at least twenty days prior to the occurrence of the Fundamental Change,
and provide written notice to each holder of an Option or Stock Appreciation
Right of the declaration, that each outstanding Option and Stock Appreciation
Right, whether or not then exercisable, shall be canceled at the time of, or
immediately prior to the occurrence of, the Fundamental Change in exchange for
payment to each holder of an Option or Stock Appreciation Right, within 20 days
after the Fundamental Change, of cash equal to (i) for each Share covered by the
canceled Option, the amount, if any, by which the Fair Market Value (as defined
in this Section 12(g)) per Share exceeds the exercise price per Share covered by
such Option or (ii) for each Stock Appreciation Right, the price determined
pursuant to Section 8 hereof, except that Fair Market Value of the Shares as of
the date of exercise of the Stock Appreciation Right, as used in clause (i) of
Section 8, shall be deemed to mean Fair Market Value for each Share with respect
to which the Stock Appreciation Right is calculated determined in the manner
hereinafter referred to in this Section 12(g). At the time of the declaration
provided for in the immediately preceding sentence, each Stock Appreciation
Right that has been outstanding for at least six months and each Option shall
immediately become exercisable in full and each person holding an Option or a
Stock Appreciation Right shall have the right, during the period preceding the
time of cancellation of the Option or Stock Appreciation Right, to exercise the
Option as to all or any part of the Shares covered thereby or the Stock
Appreciation Right in whole or in part, as the case may
be. In the event of a declaration pursuant to this Section 12(g), each
outstanding Option and Stock Appreciation Right that shall not have been
exercised prior to the Fundamental Change shall be canceled at the time of, or
immediately prior to, the Fundamental Change, as provided in the declaration.
Notwithstanding the foregoing, no person holding an Option or Stock Appreciation
Right shall be entitled to the payment provided for in this Section 12(g) if
such Option or Stock Appreciation Right shall have expired pursuant to an
Agreement. For purposes of this Section 12(g) only, "Fair Market Value" per
Share means the cash plus the fair market value, as determined in good faith by
the Committee, of the non-cash consideration to be received per Share by the
shareholders of the Company upon the occurrence of the Fundamental Change,
notwithstanding anything to the contrary provided in this Plan.
(h) Other Benefit and Compensation Programs. Payments and other
benefits received by a Participant under an Award shall not be deemed a part of
a Participant's regular, recurring compensation for purposes of any termination,
indemnity or severance pay laws and shall not be included in, nor have any
effect on, the determination of benefits under any other employee benefit plan,
contract or similar arrangement provided by the Company or an Affiliate, unless
expressly so provided by such other plan, contract or arrangement or the
Committee determines that an Award or portion of an Award should be included to
reflect competitive compensation practices or to recognize that an Award has
been made in lieu of a portion of competitive cash compensation.
(i) Beneficiary Upon Participant's Death. To the extent that the
transfer of a Participant's Award at death is permitted by this Plan or under an
Agreement, (i) a Participant's Award shall be transferable to the beneficiary,
if any, designated on forms prescribed by and filed with the Committee and (ii)
upon the death of the Participant, such beneficiary shall succeed to the rights
of the Participant to the extent permitted by law and this Plan. If no such
designation of a beneficiary has been made, the Participant's legal
representative shall succeed to the Awards, which shall be transferable by will
or pursuant to laws of descent and distribution to the extent permitted by this
Plan or under an Agreement.
(j) Unfunded Plan. This Plan shall be unfunded and the Company shall
not be required to segregate any assets that may at any time be represented by
Awards under this Plan. Neither the Company, its Affiliates, the Committee, nor
the Board shall be deemed to be a trustee of any amounts to be paid under this
Plan nor shall anything contained in this Plan or any action taken pursuant to
its provisions create or be construed to create a fiduciary relationship between
the Company and/or its Affiliates, and a Participant or Successor. To the extent
any person acquires a right to receive an Award under this Plan, such right
shall be no greater than the right of an unsecured general creditor of the
Company.
(k) Limits of Liability.
(i) Any liability of the Company to any Participant with respect to an
Award shall be based solely upon contractual obligations created by this
Plan and the Agreement.
(ii) Except as may be required by law, neither the Company nor any
member or former member of the Board or of the Committee, nor any other
person participating (including participation pursuant to a delegation of
authority under Section 3(b) hereof) in any determination of any question
under this Plan, or in the interpretation, administration or application of
this Plan, shall have any liability to any party for any action taken, or
not taken, in good faith under this Plan.
(l) Compliance with Applicable Legal Requirements. No certificate for
Shares distributable pursuant to this Plan shall be issued and delivered unless
the issuance of such certificate complies with all applicable legal requirements
including, without limitation, compliance with the provisions of applicable
state securities laws, the Securities Act of 1933, as amended and in effect from
time to time or any successor statute, the Exchange Act and the requirements of
the exchanges, if any, on which the Company's Shares may, at the time, be
listed.
(m) Deferrals and Settlements. The Committee may require or permit
Participants to elect to defer the issuance of Shares or the settlement of
Awards in cash under such rules and procedures as it may establish under this
Plan. It may also provide that deferred settlements include the payment or
crediting of interest on the deferral amounts.
13. Governing Law. To the extent that federal laws do not otherwise
control, this Plan and all determinations made and actions taken pursuant to
this Plan shall be governed by the laws of Minnesota and construed accordingly.
14. Severability. In the event any provision of this Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of this Plan, and this Plan shall be construed and enforced
as if the illegal or invalid provision had not been included.
EXHIBIT A
ALLAIRE CORP.
1997 STOCK INCENTIVE PLAN
List Of Defined Terms
(a) "Affiliate" means any corporation that is a "parent corporation" or
"subsidiary corporation" of the Company, as those terms are defined in Sections
424(e) and (f) of the Code, or any successor provision, and, for purposes other
than the grant of Incentive Stock Options, any joint venture in which the
Company or any such "parent corporation" or "subsidiary corporation" owns an
equity interest.
(b) "Agreement" means a written contract entered into between the Company
or an Affiliate and a Participant containing the terms and conditions of an
Award in such form (not inconsistent with this Plan) as the Committee approves
from time to time, together with all amendments thereof, which amendments may be
unilaterally made by the Company (with the approval of the Committee) unless
such amendments are deemed by the Committee to be materially adverse to the
Participant and are not required as a matter of law.
(c) "Award" means a grant made under this Plan in the form of Stock,
Options, Stock Appreciation Rights, Restricted Stock, Performance Shares or any
Other Stock-Based Award.
(d) "Board" means the Board of Directors of the Company.
(e) "Change in Control" means:
(i) a majority of the directors of the Company shall be persons other
than persons
(A) for whose election proxies shall have been solicited by the
Board or
(B) who are then serving as directors appointed by the Board to
fill vacancies on the Board caused by death or resignation
(but not by removal) or to fill newly-created directorships,
(ii) 30% or more of the (1) combined voting power of the then
outstanding voting securities of the Company entitled to vote
generally in the election of directors ("Outstanding Company
Voting Securities") or (2) the then outstanding Shares of Stock
("Outstanding Company Common Stock") is acquired or beneficially
owned (as defined in Rule 13d-3 under the Exchange Act, or any
successor rule thereto) by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act), provided, however, that the following acquisitions
and beneficial ownership shall not constitute Changes in Control
pursuant to this paragraph 2(e)(ii):
(A) any acquisition or beneficial ownership by the Company or a
Subsidiary, or
(B) any acquisition or beneficial ownership by any employee
benefit plan (or related trust) sponsored or maintained by
the Company or one or more of its Subsidiaries,
(C) any acquisition or beneficial ownership by the Participant
or any group that includes the Participant, or
(D) any acquisition or beneficial ownership by a Parent or its
wholly-owned subsidiaries, as long as they shall remain
wholly-owned subsidiaries, of 100% of the Outstanding
Company Voting Securities as a result of a merger or
statutory share exchange which complies with paragraph
2(e)(iii)(A)(2) or the exception in paragraph 2(e)(iii)(B)
hereof in all respects,
(iii) the shareholders of the Company approve a definitive agreement
or plan to
(A) merge or consolidate the Company with or into another
corporation (other than (1) a merger or consolidation with a
Subsidiary or (2) a merger in which
(a) the Company is the surviving corporation,
(b) no Outstanding Company Voting Securities or Outstanding
Company Common Stock (other than fractional shares)
held by shareholders of the Company immediately prior
to the merger is converted into cash, securities, or
other property (except (i) voting stock of a Parent
owning directly or indirectly through wholly-owned
subsidiaries, both beneficially and of record 100% of
the Outstanding Company Voting Securities immediately
after the Merger or (ii) cash upon the exercise by
holders of Outstanding Company Voting Securities of
statutory dissenters' rights),
(c) the persons who were the beneficial owners,
respectively, of the Outstanding Company Voting
Securities and Outstanding Company Common Stock
immediately prior to such merger beneficially own,
directly or indirectly, immediately after the merger,
more than 70% of, respectively, the then outstanding
common stock and the voting power of the then
outstanding voting securities of the surviving
corporation or its Parent entitled to vote generally in
the election of directors, and
(d) if voting securities of the Parent are exchanged for
Outstanding Company Voting Securities in the merger,
all holders of any class or series of Outstanding
Company Voting Securities immediately prior to the
merger have the right to receive substantially the same
per share consideration in exchange for their
Outstanding Company Voting Securities as all other
holders of such class or series),
(B) exchange, pursuant to a statutory share exchange,
Outstanding Company Voting Securities of any one or more
classes or series held by shareholders of the Company
immediately prior to the exchange for cash, securities or
other property, except for (a) voting stock of a Parent
owning directly, or indirectly through wholly-owned
subsidiaries, both beneficially and of record 100% of the
Outstanding Company Voting Securities immediately after the
statutory share exchange if (i) the persons who were the
beneficial owners, respectively, of the Outstanding Company
Voting Securities and Outstanding Company Common Stock
immediately prior to such statutory share exchange own,
directly or indirectly, immediately after the statutory
share exchange more than 70% of, respectively, the then
outstanding common stock and the voting power of the then
outstanding voting securities of such Parent entitled to
vote generally
in the election of directors, and (ii) all holders of any
class or series of Outstanding Company Voting Securities
immediately prior to the statutory share exchange have the
right to receive substantially the same per share
consideration in exchange for their Outstanding Company
Voting Securities as all other holders of such class or
series or (b) cash with respect to fractional shares of
Outstanding Company Voting Securities or payable as a result
of the exercise by holders of Outstanding Company Voting
Securities of statutory dissenters' rights,
(C) sell or otherwise dispose of all or substantially all of the
assets of the Company (in one transaction or a series of
transactions), or
(D) liquidate or dissolve the Company,
unless a majority of the voting stock (or the voting equity interest)
of the surviving corporation or its parent corporation or of any
corporation (or other entity) acquiring all or substantially all of
the assets of the Company (in the case of a merger, consolidation or
disposition of assets) or the Company or its Parent (in the case of a
statutory share exchange) is, immediately following the merger,
consolidation, statutory share exchange or disposition of assets,
beneficially owned by the Participant or a group of persons, including
the Participant, acting in concert.
(f) "Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time, or any successor statute.
(g) "Committee" means two or more persons designated by the Board to
administer this Plan under Section 3 of the Plan. From and after Section 12
Registration, the persons designated by the Board shall be "Non-employee
Directors" and the Committee shall otherwise be constituted so as to permit
awards under this Plan to comply with Exchange Act Rule 16b-3.
(h) "Company" means Allaire Corp., a Minnesota corporation, or any
successor to all or substantially all of its businesses by merger,
consolidation, purchase of assets or otherwise.
(i) "Disability" means the disability of a Participant such that the
Participant is considered disabled under any retirement plan of the Company
which is qualified under Section 401 of the Code, or as otherwise determined by
the Committee.
(j) "Non-employee Director" means a member of the Board who is considered a
non-employee director within the meaning of Exchange Act Rule 16b-3.
(k) "Employee" means any full-time or part-time employee (including an
officer or director who is also an employee) of the Company or an Affiliate.
Except with respect to grants of Incentive Stock Options, "Employee" shall also
include other individuals and entities who are not "employees" of the Company or
an Affiliate but who provide services to the Company or an Affiliate in the
capacity of an independent contractor. References in this Plan to "employment"
and related terms shall include the providing of services in any such capacity.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as amended;
"Exchange Act Rule 16b-3" means Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Exchange Act as in effect with respect to the
Company or any successor regulation.
(m) "Fair Market Value" as of any date means, unless otherwise expressly
provided in this Plan:
(i) the closing sale price of a Share (A) on The Nasdaq Stock Market,
or (B) if the Shares are not traded on the Nasdaq Stock Market, on the
composite tape for New York Stock Exchange ("NYSE") listed shares, or (C)
if the Shares are not quoted on the NYSE composite tape, on the principal
United States securities exchange registered under the Exchange Act on
which the Shares are listed, in any case on the date immediately preceding
that date, or, if no sale of Shares shall have occurred on that date, on
the next preceding
day on which a sale of Shares occurred, or
(ii) if clause (i) is not applicable, what the Committee determines in
good faith to be 100% of the fair market value of a Share on that date.
However, if the applicable securities exchange or system has closed for the
day at the time the event occurs that triggers a determination of Fair Market
Value, all references in this paragraph to the "date immediately preceding that
date" shall be deemed to be references to "that date." In the case of an
Incentive Stock Option, if such determination of Fair Market Value is not
consistent with the then current regulations of the Secretary of the Treasury,
Fair Market Value shall be determined in accordance with said regulations. The
determination of Fair Market Value shall be subject to adjustment as provided in
Section 12(f) of the Plan.
(n) "Fundamental Change" means a dissolution or liquidation of the Company,
a sale of substantially all of the assets of the Company, a merger or
consolidation of the Company with or into any other corporation, regardless of
whether the Company is the surviving corporation, or a statutory share exchange
involving capital stock of the Company.
(o) "Incentive Stock Option" means any Option designated as such and
granted in accordance with the requirements of Section 422 of the Code or any
successor to such section.
(p) "Non-Qualified Stock Option" means an Option other than an Incentive
Stock Option.
(q) "Other Stock-Based Award" means an Award based on Stock other than
Options, Stock Appreciation Rights, Restricted Stock or Performance Shares.
(r) "Option" means a right to purchase Stock, including both Non-Qualified
Stock Options and Incentive Stock Options.
(s) "Parent" means a "parent corporation", as that term is defined in
Section 424(e) of the Code, or any successor provision.
(t) "Participant" means an Employee to whom an Award is made.
(u) "Performance Period" means the period of time as specified in an
Agreement over which Performance Shares are to be earned.
(v) "Performance Shares" means a contingent award of a specified number of
Performance Shares, with each Performance Share equivalent to one Share, a
variable percentage of which may vest depending upon the extent of achievement
of specified performance objectives during the applicable Performance Period.
(w) "Plan" means this 1997 Stock Incentive Plan, as amended and in effect
from time to time.
(x) "Restricted Stock" means Stock granted under Section 10 of the Plan so
long as such Stock remains subject to one or more restrictions.
(y) "Retirement" means termination of employment on or after age 55,
provided the Employee has been employed by the Company and/or one or more
Affiliates for at least ten years, or termination of employment on or after age
62, provided in either case that the Employee has given the Company at least six
months' prior written notice of such termination, or as otherwise determined by
the Committee.
(z) "Section 12 Registration" means the date on which the Company first
registers a class of its equity securities under Section 12 of the Exchange Act.
(aa) "Share" means a share of Stock.
(bb) "Stock" means the common stock, per value $.01 per share, of the
Company.
(cc) "Stock Appreciation Right" means a right, the value of which is
determined relative to appreciation in value of Shares pursuant to an Award
granted under Section 8 of the Plan.
(dd) "Subsidiary" means a "subsidiary corporation," as that term is defined
in Section 424(f) of the Code, or any successor provision.
(ee) "Successor" with respect to a Participant means the legal
representative of an incompetent Participant and, if the Participant is
deceased, the legal representative of the estate of the Participant or the
person or persons who may, by bequest or inheritance, or under the terms of an
Award or of forms submitted by the Participant to the Committee under Section
12(i) of the Plan, acquire the right to exercise an Option or Stock Appreciation
Right or receive cash and/or Shares issuable in satisfaction of an Award in the
event of a Participant's death.
(ff) "Term" means the period during which an Option or Stock Appreciation
Right may be exercised or the period during which the restrictions placed on
Restricted Stock or any other Award are in effect.
Except when otherwise indicated by the context, reference to the masculine
gender shall include, when used, the feminine gender and any term used in the
singular shall also include the plural.