EXHIBIT 10.10
ZIPLINK, INC.
1999 STOCK OPTION PLAN
1. PURPOSE
The purpose of this 1999 Stock Option Plan (the "Plan") of ZipLink, Inc.
(the "Company") is to advance the interests of the Company by providing
additional incentives to attract, motivate and retain individuals of outstanding
competence, on a basis that will encourage them to perform at increasing levels
of effectiveness and to use their best efforts to promote the growth and
profitability of the Company. Consistent with these objectives, the Plan
authorizes the granting of Incentive Stock Options (as hereinafter defined) and
Non Qualified Stock Options (as hereinafter defined) to designated key
employees, officers, directors, consultants and advisors to the Company.
2. ADMINISTRATION
(a) GENERAL. The Plan shall be administered by the board of directors of the
Company (the "Board") which, to the extent it shall determine, may delegate its
powers with respect to the administration of, and all other rights with respect
to, the Plan to a committee (the Board, if it is administering the Plan without
having delegated its powers to such a committee, or such committee, if it has
been established, may be referred to hereinafter as the "Committee") appointed
by the Board.
(b) COMMITTEE COMPOSITION. If a Committee has been appointed pursuant to this
Section, 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 any 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 a Committee and thereafter
directly administer the Plan. If a Committee has been appointed pursuant to this
Section, the Committee shall consist of not less than two persons and, on and
after the effective date specified in Section 12(b), the Committee shall consist
of not less than two persons appointed by the Board, all of whom shall be
"independent or disinterested persons" as defined under Rule 16b-3 under the
Securities Exchange Act of 1934 (the "Exchange Act") and "outside directors" as
defined under section 162(m) of the of the Internal Revenue Code (the "Code")
and related Treasury regulations.
(c) POWERS OF THE COMMITTEE. Subject to the provisions of the Plan, the
Committee shall have the authority, in its sole discretion and from time to time
to:
(1) Determine to whom options shall be granted under the Plan (the
"Optionee" or "Optionees").
(2) Determine the type, quantity and terms of the options to be
granted to each Optionee.
(3) Determine when the options will be granted and the duration of the
exercise period, including the criteria for vesting and the
acceleration of vesting (if any).
(4) Determine the terms and conditions of agreements to be entered
into by and between the Company and an Optionee (the "Option
Agreement" or "Option Agreements").
(5) Determine the Fair Market Value (as hereinafter defined) of the
shares of Company Stock.
(6) Make determinations with respect to any other matters arising
under the Plan.
(d) LIMITATION ON GRANTS TO NON-EMPLOYEE DIRECTORS. Notwithstanding the
foregoing, on and after the effective date specified in Section 12(b), the
Committee shall not have the authority to make grants to Non-Employee Directors,
except pursuant to provisions of the Plan as then in effect that satisfy the
requirements for making exempt grants in accordance with Rule 16b-3 of the
Exchange Act.
(e) INTERPRETATIONS AND DETERMINATIONS. The Committee shall have full power and
authority to administer and interpret the Plan, to make factual determinations,
and to adopt or amend such rules, regulations, agreements, and instruments for
implementing the Plan and for the conduct of its business as it deems necessary
or advisable, in its sole discretion. The Committee's interpretations of the
Plan and all determinations made by the Committee pursuant to the powers vested
in it hereunder shall be conclusive and binding on all persons having any
interests in the Plan or in any awards granted hereunder. All powers of the
Committee shall be executed in its sole discretion, in the best interest of the
Company and in keeping with the objectives of the Plan and need not be uniform
as to similarly situated individuals.
(f) COUNSEL. The Committee may employ such legal counsel, consultants and agents
as it may deem desirable for the administration of the Plan and may rely upon
any opinion received from any such counsel or consultant and any computation
received from any such consultant or agent.
3. SHARES SUBJECT TO THE PLAN
(a) SHARES SUBJECT TO THE PLAN. Subject to the adjustment specified below, the
aggregate number of shares of the Common Stock of the Company (the "Company
Stock") that have been or may be issued or transferred under the Plan is
1,500,000 shares. Notwithstanding anything in the Plan to the contrary, during
the term of the Plan, the maximum aggregate number of shares of Company Stock
that shall be subject to options granted under the Plan annually to any one
Optionee shall be 500,000. The shares may be authorized but unissued shares of
Company Stock or reacquired shares of Company Stock, including shares purchased
by the Company on the open market or otherwise, for purposes of the Plan. If and
to the extent options granted under the Plan terminate, expire, or are canceled,
forfeited, exchanged or surrendered without having been exercised, the shares
subject to such options shall again be available for purposes of the Plan.
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(b) ADJUSTMENT. If there is any change in the number or kind of shares of
Company Stock outstanding by reason of a stock dividend, recapitalization, stock
split, combination or exchange of such shares, merger, reorganization or
consolidation in which the Company is the surviving corporation,
reclassification or change in par value or by reason of any other extraordinary
or unusual events affecting the outstanding Company Stock as a class without the
Company's receipt of consideration, or if the value of outstanding shares of
Company Stock is substantially reduced due to the Company's payment of an
extraordinary dividend or distribution, the maximum number of shares of Company
Stock available for Stock Options, the maximum number of shares of Company Stock
for which any one Optionee participating in the Plan may be granted over the
term of the Plan, the number of shares covered by outstanding Stock Options, and
the price per share or the applicable market value of such Stock Options, shall
be proportionately adjusted by the Committee to reflect any increase or decrease
in the number or kind of issued shares of Company Stock to preclude the
enlargement or dilution of rights and benefits under such Stock Options;
provided, however, that any fractional shares resulting from such adjustment
shall be eliminated. The adjustments determined by the Committee shall be final,
binding and conclusive. Notwithstanding the foregoing, no adjustment shall be
authorized or made pursuant to this Section to the extent that such authority or
adjustment would cause any Incentive Stock Option to fail to comply with section
422 of the Code.
4. ELIGIBILITY FOR PARTICIPATION
All employees who hold positions of responsibility and whose performance, in
the judgment of the Committee, can have a significant effect on the long-term
success of the Company ("Employees"), all directors of the Company who are not
also employees of the Company ("Non-Employee Directors"), and all advisors and
consultants ("Consultants") whose services, in the judgment of the Committee,
can have a significant effect on the long-term success of the Company shall be
eligible to participate in the Plan. In making this selection and in determining
the form and amount of awards, the Committee shall consider any factors deemed
relevant, including the individual's functions, responsibilities, value of
services to the Company, and past and potential contributions to the Company's
profitability and sound growth. The term Employees as used herein shall include
employees of the Company's "parent corporation" or "subsidiary corporations" as
those terms are defined in section 424(e) or 424(f) of the Code, as well as
directors of the Company who are also employees of the Company.
5. GRANTING OF OPTIONS
(a) GRANT OF OPTIONS. The Committee shall select the Employees, Non-Employee
Directors, and Consultants to receive Stock Options and determine the number of
shares of Company Stock subject to a particular Stock Option in such manner as
the Committee determines.
(b) TYPES OF AWARDS. Awards under the Plan shall consist of options intended to
qualify as incentive stock options ("Incentive Stock Options") within the
meaning of section 422 of the Code or options which are not intended to so
qualify ("Non Qualified Stock Options")
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(hereinafter collectively referred to as "Stock Options" or "Options"). The
Committee may grant Incentive Stock Options, Non Qualified Stock Options or any
combination of Incentive Stock Options and Non Qualified Stock Options, all in
accordance with the terms and conditions set forth herein; provided, however,
that neither Non-Employee Directors nor Consultants shall be eligible to receive
grants of Incentive Stock Options. All Stock Options shall be subject to the
terms and conditions set forth herein and to those other terms and conditions
consistent with this Plan as the Committee deems appropriate and as are
specified in writing by the Committee to the Optionees. Grants under a
particular section of the Plan need not be uniform as among the Optionees.
(d) TERMS AND CONDITIONS OF OPTIONS. Each Option granted pursuant to the Plan
shall be evidenced by an Option Agreement between the Company and the Optionee
in such form or forms as the Committee, from time to time, shall prescribe,
which agreements need not be identical to each other but shall comply with and
be subject to the terms and conditions of the Plan. In addition, the Committee
may, in its absolute discretion, include in any Option Agreement other terms,
conditions, and provisions that are not inconsistent with the express provisions
of the Plan.
(e) NUMBER OF SHARES. The Committee, in its sole discretion, shall determine the
number of shares of Company Stock that will be subject to each Stock Option
grant.
(f) EXERCISE PRICE. The purchase price of Company Stock subject to a Stock
Option shall be determined by the Committee and may be equal to, greater than,
or less than the Fair Market Value (as hereinafter defined) of a share of such
Stock on the date such Stock Option is granted; provided, however, that the
purchase price of Company Stock subject to an Incentive Stock Option shall be
equal to, or greater than, the fair market value of a share of such Stock on the
date such Stock Option is granted. Prior to the effective date specified in
Section 12(b) of the Plan, the Committee shall inform the Optionees as to the
Fair Market Value of the Company Stock on a periodic basis, but not less
frequently than once per calendar year.
(g) VESTING AND EXERCISABILITY OF OPTIONS. Stock Options shall become vested and
exercisable in accordance with the terms and conditions determined by the
Committee, in its sole discretion, and specified in the Option Agreement.
(h) EXERCISE PERIOD. Stock Options shall be exercisable for such exercise period
as is determined by the Committee, in its sole discretion, and specified in the
Option Agreement; provided, however, that the exercise period shall not exceed
ten years from the date of grant.
(i) FAIR MARKET VALUE. "Fair Market Value" of any share of Company Stock on any
date of reference shall mean:
(1) If the Company Stock is listed on an established stock exchange or
traded in the over-the-counter market, the closing price of a share of
Company Stock (on a consolidated basis) on the principal exchange or
such other over-the counter market on the last previous day on which a
sale is reported.
(2) If the Company Stock is not listed on an established stock
exchange or traded in
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the over-the-counter-market, such value as the Committee, in good
faith, shall determine.
(j) TREATMENT OF OPTIONS UPON OPTIONEE'S TERMINATION OF SERVICE. Unless
otherwise determined by the Committee, and except as provided otherwise in
Section 6 below, the following rules shall apply in the event of an Optionee's
termination of service with the Company:
(1) DEATH OR DISABILITY OF OPTIONEE. In the event of: (i) the death of
an Optionee while he or she is an Employee or a Consultant or a
Non-Employee Director of the Company or (ii) the Optionee's
termination of service with the Company by reason of disability
(within the meaning of Section 22(e)(3) of the Code) ("Disability"),
any Stock Option which is otherwise exercisable by the Optionee on the
date on which the Optionee ceases to be an Employee or Consultant or
Non-Employee Director as aforesaid (the "Termination Date") shall
terminate unless exercised by the Optionee or the Optionee's personal
representative within one year of the Termination Date (or within such
other period of time as may be specified in the Option Agreement), but
in any event no later than the date of expiration of the exercise
period of such Option as set forth in the Option Agreement. Any Stock
Option which has not yet become exercisable by the Optionee on the
Termination Date shall immediately terminate (except to the extent
otherwise provided in the Option Agreement); provided, however, that
the Committee may, by written notice given to such Optionee, provide
that any such Option held by the Optionee shall become fully
exercisable as of the Termination Date.
(2) TERMINATION FOR CAUSE BY THE COMPANY. In the event of the
Optionee's termination of service with the Company by reason of a
"Termination for Cause" by the Company (or the applicable parent or
subsidiary corporation), as determined in accordance with the
personnel policies of the Company (or such corporation), or as
determined by a written contract between the Optionee and the Company
(or such corporation), any Stock Option held by the Optionee shall
immediately terminate (except to the extent otherwise provided in the
Option Agreement).
(3) OTHER TERMINATIONS OF SERVICE. In the event of the Optionee's
termination of service with the Company, other than by reason of
death, Disability, or Termination for Cause, any Stock Option which is
otherwise exercisable by the Optionee on the Termination Date shall
terminate unless exercised by the Optionee or the Optionee's personal
representative within three months of the Termination Date (or within
such other period of time as may be specified in the Option
Agreement), but in any event no later than the date of expiration of
the exercise period of such Option as set forth in the Option
Agreement. Any Stock Option which has not yet become exercisable by
the Optionee on the Termination Date shall immediately terminate
(except to the extent otherwise provided in the Option Agreement);
provided, however, that the Committee may, by written notice given to
such Optionee, provide that any such Option held by the Optionee
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shall become fully exercisable as of the Termination Date.
(k) LEAVES OF ABSENCE. The Committee shall be entitled to make such rules,
regulations and determinations as it deems appropriate under the Plan in respect
of any leave of absence taken by any Optionee. Without limiting the generality
of the foregoing, the Committee shall be entitled to determine: (i) whether or
not any such leave of absence shall constitute a termination of employment
within the meaning of the Plan and (ii) the impact, if any, of any such leave of
absence on awards under the Plan theretofore made to any recipient who takes
such leave of absence.
(l) RULE 16b-3 RESTRICTIONS. Unless an Optionee could otherwise transfer Company
Stock issued pursuant to a Stock Option granted hereunder without incurring
liability under Section 16(b) of the Exchange Act, at least six months must
elapse from the date of acquisition of a Stock Option to the date of disposition
of the Company Stock issued upon exercise of such option.
(m) LIMITS ON INCENTIVE STOCK OPTIONS. Each Incentive Stock Option shall provide
that to the extent that the aggregate fair market value of the Company Stock on
the date of the grant with respect to which Incentive Stock Options are
exercisable for the first time by an Optionee during any calendar year under the
Plan or any other stock option plan of the Company or any parent or subsidiary
corporation thereof exceeds $100,000, then, if and to the extent required by
Section 422(d) of the Code or any successor or related provision, such option as
to the excess shall be treated as a Non Qualified Stock Option. An Incentive
Stock Option shall not be granted to any Employee who, at the time of grant,
owns stock possessing more than 10 percent of the total combined voting power of
all classes of stock of the Company or parent of the Company, unless the
exercise price per share is not less than 110% of the Fair Market Value of
Company Stock on the date of grant and the option exercise period is not more
than five years from the date of grant.
(n) OPTIONAL PURCHASE BY THE COMPANY. In the sole discretion of the Committee,
in lieu of the exercise of a Stock Option, the Optionee may be permitted to
transfer the Stock Option to the Company in exchange for a cash payment equal to
the excess of: (i) the then Fair Market Value of the shares of Company Stock
subject to the Optionee's outstanding Stock Options over (ii) the exercise price
as specified therein.
6. NON-DISCRETIONARY GRANTS FOR NON-EMPLOYEE DIRECTORS
(a) NON-DISCRETIONARY GRANTS. Notwithstanding the general grant of discretion to
the Committee, Non-Employee Directors shall be granted Options automatically and
without any discretion on the part of the Committee as follows:
(1) DIRECTOR'S INITIAL OPTIONS. Each Non-Employee Director shall
automatically be granted an Option ("Director's Initial Option") to
acquire 10,000 shares of Company Stock upon the date on which such
individual first becomes a Director, whether through election by the
shareholders of the Company or by appointment of the Board in order to
fill a vacancy.
(2) DIRECTOR'S ANNUAL OPTIONS: Each Non-Employee Director shall
automatically be
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granted an Option ("Director's Annual Option") to acquire 2,000 shares
of Company Stock upon the date of the Company's annual meeting of
stockholders, if he or she has served continuously as a member of the
Board for at least 6 months
(4) EXERCISE PRICE. The purchase price of Company Stock subject to a
Director's Initial Option or Director's Annual Option shall be equal
to the Fair Market Value of a share of Company Stock on the date of
the grant thereof.
(5) VESTING. Director's Initial Options shall become vested and
exercisable as to 33-1/3% of the shares on each of the first three
anniversaries of the date of the grant thereof. Director's Annual
Options shall become vested and exercisable as to all the shares
subject to such option on the first anniversary of the date of the
grant provided such person has continuously served as a director for
such period. In the event of any Corporate Transaction (as defined in
Section 9), all Director's Initial Options and Director's Annual
Options then held by a current director of the Company shall
immediately vest and become exercisable.
(6) EXERCISE PERIOD. Subject to the vesting requirements provided in
the Plan, and subject to the provisions of the Plan which may result
in termination, Director's Initial Options and Director's Annual
Options shall be exercisable at any time during the ten year period
commencing on the date of the grant thereof.
(7) TREATMENT OF DIRECTOR'S INITIAL OPTIONS AND DIRECTOR'S ANNUAL
OPTIONS UPON TERMINATION OF SERVICE OF NON-EMPLOYEE DIRECTOR. Unless
otherwise determined by the Committee, the following rules shall apply
in the event that a Non-Employee Director ceases to be a member of the
Board:
(A) DEATH OR DISABILITY OF NON-EMPLOYEE DIRECTOR. In the
event that a Non-Employee Director ceases to be a member of
the Board by reason of death or disability, any Director's
Initial Option or Director's Annual Option which is
otherwise exercisable by the Non-Employee Director on the
date on which the Non-Employee Director ceases to be a
member of the Board as aforesaid (the "Termination Date")
shall terminate unless exercised by the Non-Employee
Director or the Non-Employee Director's personal
representative within one year of the Termination Date (or
within such other period of time as may be specified in the
Option Agreement), but in any event no later than the date
of expiration of the exercise period of such Option as set
forth in the Option Agreement. Any Director's Initial Option
or Director's Annual Option which has not yet become
exercisable by the Non-Employee Director on the Termination
Date shall immediately terminate (except to the extent
otherwise provided in the Option Agreement); provided,
however, that the Committee may, by written notice given to
such Optionee, provide that any such Option held by the
Optionee shall become fully exercisable as of the
Termination Date.
(B) OTHER TERMINATIONS OF SERVICE. In the event that a
Non-Employee Director ceases to be a member of the Board
other than by reason of death or
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disability, any Director's Initial Option or Director's
Annual Option which is otherwise exercisable by the
Non-Employee Director on the date on which the Non-Employee
Director ceases to be a member of the Board as aforesaid
(the "Termination Date") shall terminate unless exercised by
the Non-Employee Director or the Non-Employee Director's
personal representative within seven (7) months of the
Termination Date (or within such other period of time as may
be specified in the Option Agreement), but in any event no
later than the date of expiration of the exercise period of
such Option as set forth in the Option Agreement. Any
Director's Initial Option or Director's Annual Option which
has not yet become exercisable by the Non-Employee Director
on the Termination Date shall immediately terminate (except
to the extent otherwise provided in the Option Agreement);
provided, however, that the Committee may, by written notice
given to such Optionee, provide that any such Option held by
the Optionee shall become fully exercisable as of the
Termination Date.
(b) AMENDMENT. The provisions of this Section may not be amended more than once
every six months, other than to comport with changes in the Code or the Employee
Retirement Income Security Act of 1974 or the rules promulgated thereunder.
7. EXERCISE OF OPTIONS
(a) MANNER OF EXERCISE. An Option shall be deemed to be exercised when written
notice of such exercise has been given to the Committee in accordance with the
terms of the Option Agreement by the person entitled to exercise the Option and
full payment for the shares with respect to which the Option is exercised has
been received by the Company. Full payment may, as authorized by the Committee,
consist of any consideration and method of payment allowable under Subsection
(b) below. Until the issuance (as evidenced by the appropriate entry on the
books of the Company or of a duly authorized transfer agent of the Company) of
the stock certificate evidencing such shares, no right to vote or receive
dividends or any other rights as a shareholder shall exist with respect to such
shares, notwithstanding the exercise of the Option. The Company shall issue (or
cause to be issued) such stock certificate promptly upon exercise of the Option
and the satisfaction of all conditions and/or requirements under the Plan and/or
established by the Committee pursuant to the Plan. No adjustment will be made
for a dividend or other right for which the record date is prior to the date the
stock certificate is issued, except as provided in Section 3(b) of the Plan.
Exercise of an Option in any manner shall result in a decrease in the number of
shares which thereafter may be available, both for purposes of the Plan and for
sale under the Option, by the number of shares as to which the Option is
exercised.
(b) PERMISSIBLE CONSIDERATION. The Optionee shall pay the exercise price
specified in the Option Agreement in: (i) U.S. Dollars by cash, wire transfer of
immediately available funds, or certified check payable to the order of the
Company, (ii) with the approval of the Committee, by delivering shares of
Company Stock owned by the Optionee (including Company Stock acquired in
connection with the exercise of a particular Stock
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Option) and having a fair market value on the date of exercise equal to the
option price, or (iii) with the approval of the Committee, a combination of the
methods described in Clauses (i) and (ii). The Company may require the Optionee,
in connection with the exercise of a Stock Option, to provide such information
(including, without limitation, the Optionee's address and taxpayer
identification number) as may be necessary to complete any tax information
returns and other tax returns and reports that may be required to reflect such
exercise.
(d) WITHHOLDING OF TAXES. The Optionee or other person receiving shares of
Company Stock upon the exercise of a Stock Option shall be required to pay to
the Company the amount of any federal, state, local, or foreign taxes which the
Company is required to withhold with respect to the exercise of such Stock
Options and the issuance of shares. The Company shall have the right to deduct
from other wages paid to the Optionee by the Company (including through the
withholding of Company Stock purchased upon the exercise of a Stock Option, if
then authorized by the Committee and applicable law) the amount of any tax
required to be deducted, withheld or paid over with respect to such Stock
Options which is not otherwise paid. The Company's obligation to make any
delivery or transfer of any shares shall be conditioned on the Optionee's
compliance, to the Company's satisfaction, with any withholding requirements.
(e) ADDITIONAL REQUIREMENTS FOR ISSUANCE OF SHARES. No Company Stock shall be
issued or transferred upon the exercise of any Stock Option hereunder unless and
until all requirements applicable to the issuance or transfer of such Company
Stock have been complied with to the satisfaction of the Committee. The
Committee shall have the right to condition any Stock Option made to any
Optionee hereunder on such Optionee's undertaking in writing to comply with such
restrictions on his subsequent disposition of such shares of Company Stock as
the Committee shall deem necessary or advisable as a result of any provisions of
such grant or any applicable law, regulation or official interpretation thereof,
and certificates representing such shares may be legended to reflect any such
restrictions. Certificates representing shares of Company Stock issued under the
Plan will be subject to such stop-transfer orders and other restrictions as may
be applicable under such laws, regulations and other obligations of the Company,
including any requirement that a legend or legends be placed thereon.
8. TRANSFERABILITY OF OPTIONS
Only the Optionee or his or her authorized legal representative may exercise
rights under a Stock Option. Such persons may not transfer those rights except
by will or by the laws of descent and distribution or, if permitted under Rule
16b-3 of the Exchange Act and if permitted in any specific case by the Committee
in its sole discretion, pursuant to a qualified domestic relations order as
defined under the Code or Title I of the Employee Retirement Income Security Act
of 1974 or the regulations thereunder. When an Optionee dies, the personal
representative or other person entitled to succeed to the rights of the Optionee
("Successor Optionee") may exercise such rights. A Successor Optionee must
furnish proof satisfactory to the Company of his or her right to receive the
Stock Option under the Optionee's will or under the applicable laws of descent
and distribution.
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Notwithstanding the foregoing, the Committee may permit an Optionee to transfer
rights under a Non Qualified Stock Option to the Optionee's spouse or a lineal
descendant or to one or more trusts for the benefit of such family members or to
partnerships or other entities in which such family members and/or such trusts
are the only partners or owners (a "Family Transfer") provided that the Optionee
receives no consideration for a Family Transfer and that the Optionee and the
transferee in the Family Transfer agree to such conditions as the Committee may
impose, including, without limitation: (i) provisions to assure the payment of
any taxes required to be deducted, withheld and/or paid over in connection with
the exercise of a Stock Option, and (ii) acknowledgment that the Stock Options
and the exercise thereof will continue to be subject to the same terms and
conditions of the Option Agreement and this Plan, and any attempt to transfer a
Stock Option other than in accordance with the foregoing shall be void and of no
force or effect.
9. CORPORATE TRANSACTION
(a) DEFINITION. As used herein, a "Corporate Transaction" shall mean any of the
following events:
(1) CHANGE OF CONTROL. Approval by the holders of Common Stock of, or
the occurrence of, any transaction (which shall include a series of
transactions occurring within a 60 day period or occurring pursuant to
a coordinated plan) pursuant to which the holders of the voting stock,
or securities convertible into the voting stock, of the Company
immediately before such transaction are the holders following such
transaction of less than 50% of the voting stock, or securities
convertible into the voting stock of the Company, in a reorganization,
tender offer, consolidation, merger, liquidation, dissolution or any
other form of corporate transaction except (x) a merger or other
consolidation of the Company in which the holders of Common Stock
immediately prior to such merger or consolidation have substantially
the same proportionate ownership of common stock of the surviving
corporation after the merger or consolidation or (y) the issuance of
shares of Common Stock pursuant to a Public Offering; or
(2) SALE OF ASSETS. Approval by the holders of Common Stock of, or the
occurrence of, any sale, lease, exchange or other disposition other
than in the ordinary course of the Company's business (for cash,
shares of stock, securities, or other consideration) of all or
substantially all of the assets of the Company by reason of which the
Company ceases its normal course of business activities other than a
transfer to a majority-owned Subsidiary of the Company.
(b) ASSUMPTION OF OPTIONS. In connection with any Corporate Transaction, the
Committee may provide that any Options shall be assumed or an equivalent option
shall be substituted by the successor corporation or a Parent or Subsidiary of
such successor corporation (such entity, the "Successor Corporation"), with
appropriate adjustments as to the number of shares and exercise prices, in which
event the Options theretofore granted under the Plan shall continue in the
manner and under the terms so provided.
(c) ACCELERATION AND TERMINATION OF OPTIONS. In the event of a Corporate
Transaction in
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which the Options will not be assumed by the Successor Corporation, the
Committee shall notify each Optionee of the occurrence of the Corporate
Transaction and that the Options will not be assumed by the Successor
Corporation. In connection with the Corporate Transaction and effective only
upon the consummation of such Corporate Transaction, unless the Committee
determines otherwise, each Optionee shall thereupon have the right, within 20
days after such written notice is sent by the Committee, (the "Election
Period"), to exercise in full any or all of such Optionee's outstanding Stock
Options (whether the right to exercise such Stock Option has then vested). If an
Optionee does not exercise the Optionee's outstanding Stock Options in a timely
manner during the Exercise Period, the Optionee's Stock Options shall terminate
as of the consummation of such Corporate Transaction.
(e) ABANDONMENT OF CORPORATE TRANSACTION. Notwithstanding the foregoing, if the
Corporate Transaction is not consummated: (i) Any purchase of Shares pursuant to
Subsection (c) shall be annulled, and the Company shall return the consideration
provided by the Optionee and the Optionee shall return any shares and (ii) to
the extent that any Option vested solely by operation of this Section, such
vesting shall be deemed annulled, and the vesting schedule set forth in the
Option Agreement shall be reinstituted.
(f) OPTIONAL PURCHASE BY THE COMPANY. Notwithstanding the above, in the event of
any Corporate Transaction, the Committee shall have the discretion to cancel
outstanding Options in whole or in part, subject to such conditions as the
Committee may determine, upon payment to Optionees with respect to each Option
then exercisable an amount in cash equal to the difference between: (i) the fair
market value of the shares subject to each Option (at the effective date of such
Corporate Transaction) and (ii) the aggregate exercise price of such Option.
10. AMENDMENT AND TERMINATION OF THE PLAN
(a) AMENDMENT. The Board, by written resolution, may amend or terminate the Plan
at any time; provided, however, that: (i) any amendment that increases the
aggregate number (or individual limit for any single Optionee) of shares of
Company Stock that may be issued or transferred under the Plan (other than by
operation of Section 3(b)), or modifies the requirements as to eligibility for
participation in the Plan, or is required for purposes of satisfying Section 422
of the Code shall be subject to approval by the stockholders of the Company
and(ii) after the effective date specified in Section 12(b), the Board shall not
amend the Plan without stockholder approval if such approval is required by Rule
16b-3 of the Exchange Act or section 162(m) of the Code.
(b) TERMINATION OF PLAN. The Plan shall terminate on February 28, 2009, unless
terminated earlier by the Board or unless extended by the Board with the
approval of the stockholders.
(c) TERMINATION AND AMENDMENT OF OUTSTANDING STOCK OPTIONS. A termination or
amendment of the Plan that occurs after a Stock Option is granted shall not
materially impair the rights of an Optionee unless the Optionee consents or
unless the Committee acts under Section 13(h) hereof. The termination of the
Plan shall not impair the power
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and authority of the Committee with respect to an outstanding Stock Option.
Whether or not the Plan has terminated, an outstanding Stock Option may be
terminated or amended under Section 13(h) hereof or may be amended by agreement
of the Company and the Optionee consistent with the Plan.
(e) GOVERNING DOCUMENT. The Plan shall be the controlling document. No other
statements, representations, explanatory materials, or examples, oral or
written, may amend the Plan in any manner. The Plan shall be binding upon and
enforceable against the Company, its successors and assigns and the Optionees
and their assigns.
11. FUNDING OF THE PLAN
This Plan shall be unfunded. The Company shall not be required to establish
any special or separate fund or to make any other segregation of assets to
assure the payment of any Stock Options under this Plan. In no event shall
interest be paid or accrued on any Stock Option, including unpaid installments
of Stock Options.
12. EFFECTIVE DATE
(a) EFFECTIVE DATE OF THE PLAN. Subject to the approval of the Company's
stockholders, this Plan shall be effective as of March 9, 1999.
(b) EFFECTIVENESS OF SECTION 16 AND SECTION 162(M) PROVISIONS. The provisions of
the Plan that refer to, or are applicable to persons subject to, Section 16 of
the Exchange Act or section 162(m) of the Code shall be effective, if at all,
upon registration of the Company Stock under section 12(g) of the Exchange Act,
and shall remain effective thereafter for so long as such stock is so
registered.
13. MISCELLANEOUS
(a) RIGHTS OF INDIVIDUALS. Nothing in this Plan shall entitle any Employee,
Non-Employee Director, Consultant or other person to any claim or right to be
granted a Stock Option under this Plan. Nothing in the Plan or in any agreement
entered into pursuant to the Plan or any action taken hereunder shall confer
upon any Employee, Non-Employee Director, or Consultant the right to continue in
the employ of the Company or affect any right which the Company may have to
terminate the employment of such participant. Neither this Plan nor any action
taken hereunder shall be construed as giving any Employee, Non-Employee
Director, or Consultant any rights to be retained by or in the employ of the
Company or any other employment rights.
(b) NO OBLIGATION TO EXERCISE OPTIONS. The granting of an Option shall impose no
obligation upon an Optionee to exercise such Option.
(c) NO FRACTIONAL SHARES. No fractional shares of Company Stock shall be issued
or delivered pursuant to the Plan or any Stock Option. The Committee shall
determine whether cash, other awards, or other property shall be issued or paid
in lieu of such fractional shares or whether such fractional shares or any
rights thereto shall be forfeited
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or otherwise eliminated.
(e) NOTICES. Any notice, request, acknowledgment, consent, or other
communication to the Company or the Committee authorized or required by the Plan
shall be in writing and shall be delivered personally, sent by registered or
certified mail (postage prepaid, return receipt requested), or sent by a
recognized overnight delivery service, in any such case: (i) if to the Company,
to the President of the Company at the Company's principal executive offices or
(ii) if to an Optionee, addressed to him or her at the last address shown for
him or her on the records of the Company. Any such notice shall be deemed to
have been delivered, given, and received for all purposes as of the date so
delivered.
(f) OTHER COMPENSATION PLANS. The adoption of this Plan shall not effect any
other option or incentive or other compensation plans in effect for the Company,
nor shall the Plan preclude the Company from establishing any other forms of
incentive or other compensation for employees of the Company. Nothing contained
in this Plan shall be construed to limit the right of the Company to grant
options otherwise in connection with the acquisition, by purchase, lease,
merger, consolidation or otherwise, of the business or assets of any
corporation, firm or association, including options granted to employees thereof
who become Employees of the Company, or for any other proper corporate purpose.
(g) SUBSTITUTE GRANTS. The Committee may make a grant to an employee of another
corporation who becomes an Employee by reason of a corporate merger,
consolidation, acquisition of stock or property, reorganization or liquidation
involving the Company or any of its subsidiaries in substitution for a stock
option or restricted stock grant granted by such corporation ("Substituted Stock
Incentives"). The terms and conditions of the substitute grant may vary from the
terms and conditions required by the Plan and from those of the Substituted
Stock Incentives. The Committee shall prescribe the provisions of the substitute
grants.
(h) OWNERSHIP OF STOCK. An Optionee or Successor Optionee shall have no rights
as a stockholder with respect to any shares of Company Stock covered by a Stock
Option until the shares are issued or transferred to the Optionee or Successor
Optionee on the stock transfer records of the Company.
(i) COMPLIANCE WITH LAW. The Plan, the exercise of Stock Options and the
obligations of the Company to issue or transfer shares of Company Stock under
Stock Options shall be subject to all applicable laws and to approvals by any
governmental or regulatory agency as may be required. With respect to persons
subject to Section 16 of the Exchange Act, it is the intent of the Company that
the Plan and all transactions under the Plan comply with all applicable
provisions of Rule 16b-3 or its successors under the Exchange Act. The Committee
may revoke any Stock Option if it is contrary to law or modify a Stock Option to
bring it into compliance with any valid and mandatory government regulation.
(j) GOVERNING LAW. This Plan shall be governed by and construed in accordance
with the domestic laws of the State of Connecticut without giving any effect to
any choice or conflict of law provision or rule (whether of the State of
Delaware or of any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the
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State of Delaware.
(l) HEADINGS. The headings contained in this Plan are for reference purposes
only and shall not affect the meaning or interpretation of this Plan.
(m) USAGE. In construing this Plan, feminine or neuter pronouns shall be
substituted for those of the masculine form, and the plural for the singular,
and vice versa, in any case in which the context may require. The capitalized
terms used in this Agreement shall have the meaning first applied to their first
usage in this Agreement unless otherwise indicated.
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