Exhibit 10.8
DIRECT INSITE CORP., 2003 STOCK OPTION/STOCK ISSUANCE PLAN
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I. GENERAL PROVISIONS
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A. PURPOSE OF THE PLAN
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This 2003 Stock Option/Stock Issuance Plan ("Plan") is intended to promote
the interests of Direct Insite Corp., a Delaware corporation ("Corporation"), by
providing eligible persons in the employ or service of the Corporation or its
affiliates with the opportunity to acquire a proprietary interest, or otherwise
increase their proprietary interest, in the Corporation as an incentive for them
to continue in such employ or service.
Unless otherwise defined herein, all capitalized terms shall have the
meaning assigned to them in the attached Appendix.
B. STRUCTURE OF THE PLAN
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The Plan shall be divided into two (2) separate equity programs:
(i) the Option Grant Program under which eligible persons ("Optionees")
may, at the discretion of the Board, be granted options to purchase
shares of Common Stock; and
(ii) the Stock Issuance Program under which eligible persons
("Participants") may, at the discretion of the Board, be issued shares
of Common Stock directly, either through the immediate purchase of
such shares or as a bonus for services rendered the Corporation (or
any Parent or Subsidiary).
The provisions of Articles One and Four shall apply to both equity programs
under the Plan and shall accordingly govern the interests of all persons under
the Plan.
C. ADMINISTRATION OF THE PLAN
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The Plan shall be administered by the Corporation's Board of Directors
("Board"), or in the discretion of the Board, a committee consisting of no less
than two Non-Employee Directors or persons meeting such other requirements as
may be imposed by Rule 16(b) under the 1934 Act ("Committee").
The Board or Committee shall have full power and authority (subject to the
provisions of the Plan) to establish such rules and regulations as it may deem
appropriate for proper administration of the Plan and to make such
determinations under, and issue such interpretations of, the Plan and any
outstanding options or stock issuances thereunder as it may deem necessary or
advisable. Decisions of the Board shall be final and binding on all parties who
have an interest in the Plan or any option or stock issuance thereunder.
D. ELIGIBILITY
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The persons eligible to participate in the Plan are:
- -- Employees;
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- -- non-employee members of the Board or the non-employee members of the board
of directors of any Parent or Subsidiary; and
- -- consultants and other independent advisors who provide services to the
Corporation, or any parent or subsidiary of the Corporation.
The Board or Committee shall have full authority to determine, (i) with
respect to the grants made under the Option Grant Program, described in Article
Two below, which eligible persons are to receive the option grants, the time or
times when those grants are to be made, the number of shares to be covered by
each such grant, the status of the granted option as either an Incentive Option
or a Non-Statutory Option, the time or times when each option is to become
exercisable, the vesting schedule (if any) applicable to the option shares and
the maximum term for which the option is to remain outstanding, and (ii) with
respect to stock issuances made under the Stock Issuance Program, described in
Article Three, which eligible persons are to receive such stock issuances, the
time or times when those issuances are to be made, the number of shares to be
issued to each Participant, the vesting schedule (if any) applicable to the
issued shares and the consideration to be paid by the Participant for such
shares.
The Board or Committee shall have the absolute discretion either to grant
options in accordance with the Option Grant Program or to issue stock in
accordance with the Stock Issuance Program.
E. STOCK SUBJECT TO THE PLAN
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The stock issuable under the Plan shall be shares of the Corporation's
authorized but unissued or reacquired Common Stock. The maximum number of shares
of Common Stock which may be issued under the Plan is 725,000 shares.
Shares of Common Stock subject to outstanding options shall be available
for subsequent issuance under the Plan to the extent (i) the options expire or
terminate for any reason prior to exercise in full, or (ii) the options are
cancelled in accordance with the cancellation-regrant provisions of Article Two.
Unvested shares issued under the Plan and subsequently repurchased by the
Corporation, at the option exercise or direct issue price paid per share,
pursuant to the Corporation's repurchase rights under the Plan shall be added
back to the number of shares of Common Stock reserved for issuance under the
Plan.
If there is any change to the Common Stock by reason of any stock split,
stock dividend, recapitalization, combination of shares, exchange of shares or
other change affecting the outstanding Common Stock as a class without the
Corporation's receipt of consideration, then appropriate adjustments shall be
made to (i) the maximum number and/or class of securities issuable under the
Plan, and (ii) the number and/or class of securities and the exercise price per
share in effect under each outstanding option in order to prevent the dilution
or enlargement of benefits thereunder.
II. OPTION GRANT PROGRAM
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A. OPTION TERMS
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Each option shall be evidenced by one or more documents in the form
approved by the Board, and which shall be subject to the provisions of the Plan.
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1. Exercise Price.
a. The exercise price per share shall be fixed by the Board in accordance
with the following provisions:
(i) The exercise price per share shall not be less than the Fair
Market Value per share of Common Stock on the option grant date.
(ii) If the Optionee is a 10% Stockholder, then the exercise price per
share shall not be less than one hundred ten percent (110%) of
the Fair Market Value per share of Common Stock on the option
grant date for Incentive Options.
b. The exercise price is payable in cash or check made payable to the
Corporation upon exercise of the option, subject to the provisions of
Section I of Article Four and the documents evidencing the option. If
the Common Stock is registered under Section 12 of the Securities
Exchange Act of 1934, as amended ("34 Act") at the time the option is
exercised, then the exercise price may also be paid as follows:
(i) in shares of Common Stock held for the requisite period necessary
to avoid a charge to the Corporation's earnings for financial
reporting purposes and valued at Fair Market Value on the
Exercise Date, or
(ii) to the extent the option is exercised for vested shares, through
a special sale and remittance procedure pursuant to which the
Optionee shall concurrently provide irrevocable instructions (x)
to a Corporation- designated brokerage firm to effect the
immediate sale of the purchased shares and remit to the
Corporation, out of the sale proceeds available on the settlement
date, sufficient funds to cover the aggregate exercise price
payable for the purchased shares plus all applicable Federal,
state and local income and employment taxes required to be
withheld by the Corporation by reason of such exercise and (y) to
the Corporation to deliver the certificates for the purchased
shares directly to such brokerage firm in order to complete the
sale.
Except to the extent the foregoing sale and remittance procedure is used,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.
2. Exercise and Term of Options. Each option shall be exercisable at such
time or times, during such period and for such number of shares as shall be
determined by the Board or Committee and set forth in the documents evidencing
the option grant. However, no option shall have a term in excess of ten (10)
years measured from the option grant date.
3. Effect of Termination of Service.
a. The following provisions shall govern the exercise of any vested
option held by the Optionee at the time of cessation of
Optionee's employment or rendering of services to the Corporation
(collectively "Service") or death:
(i) Should the Optionee cease to remain in Service for any reason
other than death, Disability or Misconduct, then the Optionee
shall have a period of three (3) months following the date of
such cessation of Service during which to exercise each option
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held by such Optionee to the extent exercisable on the date of
such termination.
(ii) Should Optionee's Service terminate by reason of Disability, then
the Optionee shall have a period of twelve (12) months following
the date of such cessation of Service during which to exercise
each outstanding option held by such Optionee to the extent
exercisable on the date of such termination.
(iii)If the Optionee dies while holding an outstanding option, then
the personal representative of his or her estate or the person or
persons to whom the option is transferred pursuant to the
Optionee's will or the laws of inheritance shall have a twelve
(12) month period following the date of the Optionee's death to
exercise such option to the extent exercisable on the date of
such termination.
(iv) Under no circumstances, however, shall any such option be
exercisable after the specified expiration of the option term.
(v) All vested options shall terminate upon the expiration of the
applicable exercise period or (if earlier) upon the expiration of
the option term.
b. The Board or Committee shall have the discretion, exercisable either
at the time an option is granted or at any time while the option
remains outstanding, to:
(i) extend the period of time for which the option is to remain
exercisable following Optionee's cessation of Service or death
from the limited period otherwise in effect for that option to
such greater period of time as it shall deem appropriate, but in
no event beyond the expiration of the option term, and/or
(ii) permit the option to be exercised, during the applicable
post-Service exercise period, not only with respect to the number
of vested shares of Common Stock for which such option is
exercisable at the time of the Optionee's cessation of Service
but also with respect to one or more additional installments in
which the Optionee would have vested under the option had the
Optionee continued in Service.
Stockholder Rights. The holder of an option shall have no stockholder rights
with respect to the shares subject to the option until such person exercise the
option, pays the exercise price and becomes the recordholder of the purchased
shares.
Limited Transferability of Options. During the lifetime of the Optionee, the
option shall be exercisable only by the Optionee and shall not be assignable or
transferable other than by will or, following the Optionee's death, by the laws
of descent and distribution.
B. CORPORATE TRANSACTION
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1. All unvested options may at the discretion of the Board vest in full if
and when either of the following stockholder approved transactions to which the
Corporation is a party are consummated: (i) a merger or consolidation in which
securities possessing more than fifty percent (50%) of the total combined voting
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power of the Corporation's outstanding securities are transferred to a person or
persons different from the persons holding those securities immediately prior to
such transaction, or (ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation or
dissolution of the Corporation. However, the shares subject to an outstanding
option shall not vest on an accelerated basis if and to the extent: (i) such
option is assumed by the successor corporation (or parent thereof) in the
Corporate Transaction or (ii) such option is to be replaced with a cash
incentive program of the successor corporation which preserves the spread
existing on the unvested option shares at the time of the Corporate Transaction
and provides for subsequent payout in accordance with the same vesting schedule
applicable to those unvested option shares or (iii) the acceleration of such
option is subject to other limitations imposed by the Board or Committee at the
time of the option grant.
2. Each option which is assumed in connection with a Corporate Transaction
shall be appropriately adjusted, immediately after such Corporate Transaction,
to apply to the number and class of securities which would have been issuable to
the Optionee in consummation of such Corporate Transaction, had the option been
exercised immediately prior to such Corporate Transaction. Appropriate
adjustments shall also be made to (i) the number and class of securities
available for issuance under the Plan following the consummation of such
Corporate Transaction and (ii) the exercise price payable per share under each
outstanding option, provided the aggregate exercise price payable for such
securities shall remain the same.
3. The Board or Committee shall have the discretion, exercisable either at
the time the option is granted or at any time while the option remains
outstanding, to structure one or more options so that those options shall
automatically accelerate and vest in full (and any repurchase rights of the
Corporation with respect to the unvested shares subject to those options shall
immediately terminate) upon the occurrence of a Corporate Transaction, whether
or not those options are to be assumed in the Corporate Transaction.
4. The Board or Committee shall also have full power and authority,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to structure such option so that the shares subject
to that option will automatically vest on an accelerated basis should the
Optionee's Service terminate by reason of the Optionee's involuntary dismissal
or discharge by the Corporation for reasons other than misconduct ("Involuntary
Termination") within a designated period (not to exceed one year) following the
effective date of any Corporate Transaction in which the option is assumed and
the repurchase rights applicable to those shares do not otherwise terminate. Any
option so accelerated shall remain exercisable for the fully-vested option
shares until the expiration or sooner termination of the option term.
5. The portion of any Incentive Option accelerated in connection with a
Corporate Transaction shall remain exercisable as an Incentive Option only to
the extent the applicable One Hundred Thousand Dollar ($100,000.00) limitation
is not exceeded. To the extent such dollar limitation is exceeded, the
accelerated portion of such option shall be exercisable as a Non-Statutory
Option under the Federal tax laws.
6. The grant of options under the Plan shall in no way affect the right of
the Corporation to adjust, reclassify, reorganize or otherwise change its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.
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III. STOCK ISSUANCE PROGRAM
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A. STOCK ISSUANCE TERMS
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Shares of Common Stock may, upon request by a Participant, be issued at the
discretion of the Board or Committee under the Stock Issuance Program through
direct and immediate issuances without any intervening option grants. Each such
stock issuance shall comply with the terms specified below.
1. Purchase Price.
a. The purchase price per share shall be fixed by the Board or Committee
but shall not be less than the Fair Market Value per share of Common
Stock on the issue date.
b. Subject to the provisions of Section A of Article IV, shares of Common
Stock may be issued under the Stock Issuance Program for any of the
following items of consideration which the Board may deem appropriate
in each individual instance:
(i) cash or check made payable to the Corporation, or
(ii) past services rendered to the Corporation (or any Parent or
Subsidiary).
2. Vesting Provisions.
a. Shares of Common Stock issued under the Stock Issuance Program
shall be fully and immediately vested upon issuance.
b. The Participant shall have full stockholder rights with respect
to any shares of Common Stock issued to the Participant under the
Stock Issuance Program. Accordingly, the Participant shall have
the right to vote such shares and to receive any regular cash
dividends paid on such shares.
IV. MISCELLANEOUS
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A. FINANCING
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The Board or Committee may permit any Optionee or Participant to pay the
option exercise price under the Option Grant Program or the purchase price for
shares issued under the Stock Issuance Program by delivering a full-recourse,
interest bearing promissory note payable in one or more installments and secured
by the purchased shares. The terms of any such promissory note (including the
interest rate and the terms of repayment) shall be established by the Board in
its sole discretion. In no event may the maximum credit available to the
Optionee or Participant exceed the sum of (i) the aggregate option exercise
price or purchase price payable for the purchased shares (less the par value of
those shares) plus (ii) any Federal, state and local income and employment tax
liability incurred by the Optionee or the Participant in connection with the
option exercise or share purchase.
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B. EFFECTIVE DATE AND TERM OF PLAN
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1. The Plan shall become effective on December 8, 2002 provided that no
Incentive Options may be granted unless the Plan is first approved by the
Corporation's stockholders. The Board may grant options and issue shares under
the Plan at any time after the effective date of the Plan and before the date
fixed herein for termination of the Plan.
2. The Plan shall terminate upon the earliest of (i) the expiration of the
ten (10)-year period measured from the date the Plan is adopted by the Board,
(ii) the date on which all shares available for issuance under the Plan shall
have been issued as vested shares or (iii) the termination of all outstanding
options in connection with a Corporate Transaction. All options and unvested
stock issuances outstanding at the time of a clause (i) termination event shall
continue to have full force and effect in accordance with the provisions of the
documents evidencing those options or issuances.
C. AMENDMENT OF THE PLAN
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The Board or Committee shall have complete and exclusive power and
authority to amend or modify the Plan in any or all respects. However, no such
amendment or modification shall adversely affect the rights and obligations with
respect to options or unvested stock issuances at the time outstanding under the
Plan unless the Optionee or the Participant consents to such amendment or
modification. In addition, certain amendments may require stockholder approval
pursuant to applicable laws and regulations.
D. WITHHOLDING
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The Corporation's obligation to deliver shares of Common Stock upon the
exercise of any options or upon the issuance of shares issued under the Plan
shall be subject to the satisfaction of all applicable Federal, state and local
income and employment tax withholding requirements.
E. REGULATORY APPROVALS
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The implementation of the Plan, the granting of any options under the Plan
and the issuance of any shares of Common Stock (i) upon the exercise of any
option or (ii) under the Stock Issuance Program shall be subject to the
Corporation's obtaining all approvals and permits required by regulatory
authorities having jurisdiction over the Plan, the options granted under it and
the shares of Common Stock issued pursuant to it.
F. NO EMPLOYMENT OR SERVICE RIGHTS
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Nothing in the Plan shall confer upon the Optionee or the Participant any
right to continue in Service for any period of specific duration or interfere
with or otherwise restrict in any way the rights of the Corporation (or any
Parent or Subsidiary employing or retaining such person) or of the Optionee or
the Participant, which rights are hereby expressly reserved by each, to
terminate such person's Service at any time for any reason, with or without
cause.
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APPENDIX
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The following definitions shall be in effect under the Plan:
Board shall mean the Corporation's Board of Directors.
Code shall mean the Internal Revenue Code of 1986, as amended.
Common Stock shall mean the Corporation's common stock, $.0001 par value.
Corporate Transaction shall mean either of the following stockholder-approved
transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing more than
fifty percent (50%) of the total combined voting power of the Corporation's
outstanding securities are transferred to a person or persons different from the
persons holding those securities immediately prior to such transaction, or
(ii) the sale, transfer or other disposition of all or substantially all of
the Corporation's assets in complete liquidation or dissolution of the
Corporation.
Corporation shall mean Direct Insite Corp., a Delaware corporation.
Disability shall mean the inability of Optionee to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment and shall be determined by the Plan Administrator on the basis of
such medical evidence as the Plan Administrator deems warranted under the
circumstances. Disability shall be deemed to constitute Permanent Disability in
the event that such Disability is expected to result in death or has lasted or
can be expected to last for a continuous period of twelve (12) months or more.
Eligibility. Incentive Options may only be granted to Employees.
Employee shall mean an individual who is in the employ of the Corporation (or
any Parent or Subsidiary), subject to the control and direction of the employer
entity as to both the work to be performed and the manner and method of
performance.
Exercise Date shall mean the date on which the option shall have been exercised.
Exercise Price shall mean the exercise price payable per Option Share as
specified in the Grant Notice.
Expiration Date shall mean the date on which the option expires as specified in
the Grant Notice.
Fair Market Value per share of Common Stock on any relevant date shall be
determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the NASDAQ National
Market, then the Fair Market Value shall be the closing selling price per share
of Common Stock on the date in question, as the price is reported by the
National Association of Securities Dealers on the NASDAQ National Market. If
there is no closing selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
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(ii) If the Common Stock is at the time listed on any Stock Exchange, then
the Fair Market Value shall be the closing selling price per share of Common
Stock on the date in question on the Stock Exchange determined by the Plan
Administrator to be the primary market for the Common Stock, as such price is
officially quoted in the composite tape of transactions on such exchange. If
there is no closing selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
(iii) If the Common Stock is at the time neither listed on any Stock
Exchange nor traded on the NASDAQ National Market, then the Fair Market Value
shall be determined by the Plan Administrator after taking into account such
factors as the Plan Administrator shall deem appropriate.
Grant Date shall mean the date of grant of the option as specified in the Grant
Notice.
Grant Notice shall mean the Notice of Grant of Stock Option accompanying the
Agreement, pursuant to which Optionee has been informed of the basic terms of
the option evidenced hereby.
Incentive Option shall mean an option which satisfies the requirements of Code
Section 422.
Misconduct shall mean the commission of any act of fraud, embezzlement or
dishonesty by the Optionee or Participant, any unauthorized use or disclosure by
such person of confidential information or trade secrets of the Corporation (or
any Parent or Subsidiary), or any other intentional misconduct by such person
adversely affecting the business or affairs of the Corporation (or any Parent or
Subsidiary) in a material manner. The foregoing definition shall not be deemed
to be inclusive of all the acts or omissions which the Corporation (or any
Parent or Subsidiary) may consider as grounds for the dismissal or discharge of
any Optionee, Participant or other person in the Service of the Corporation (or
any Parent or Subsidiary).
1934 Act shall mean the Securities Exchange Act of 1934, as amended.
Non-Employee Director shall have the meaning provided under Rule 16(b) or any
successor rule under the 1934 Act.
Non-Statutory Option shall mean an option not intended to satisfy the
requirements of Code Section 422.
Option Agreement shall mean the option agreement issued pursuant to the Grant
Notice.
Option Shares shall mean the number of shares of Common Stock subject to the
option.
Optionee shall mean the person to whom the option is granted as specified in the
Grant Notice.
Parent shall mean any corporation (other than the Corporation) in an unbroken
chain of corporations ending with the Corporation, provided each corporation in
the unbroken chain (other than the Corporation) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
Permitted Transfer shall mean (i) a gratuitous transfer of the Purchased Shares,
provided and only if Optionee obtains the Corporation's prior written consent to
such transfer, (ii) a transfer of title to the Purchased Shares effected
pursuant to Optionee's will or the laws of intestate succession following
Optionee's death or (iii) a transfer to the Corporation in pledge as security
for any purchase-money indebtedness incurred by Optionee in connection with the
acquisition of the Purchased Shares.
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Plan shall mean the Corporation's 2003 Stock Option/Stock Issuance Plan.
Plan Administrator shall mean either the Board or a committee of the Board
acting in its capacity as administrator of the Plan.
Purchase Agreement shall mean the stock purchase agreement pursuant to the Grant
Notice.
Service shall mean the Optionee's performance of services for the Corporation
(or any Parent or Subsidiary) in the capacity of an Employee, a non-employee
member of the board of directors or an independent consultant.
Stock Exchange shall mean the American Stock Exchange or the New York Stock
Exchange.
Subsidiary shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
Vesting Commencement Date shall mean the date on which the Option Shares
commences to vest as specified in the Grant Notice.
Vesting Schedule shall mean the vesting schedule specified in the Grant Notice
pursuant to which the Optionee is to vest in the Option Shares in a series of
installments over his or her period of Service.
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