Attached files
file | filename |
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10-Q - FORM 10-Q - ATHENAHEALTH INC | b87795e10vq.htm |
EX-31.1 - EX-31.1 - ATHENAHEALTH INC | b87795exv31w1.htm |
EX-10.2 - EX-10.2 - ATHENAHEALTH INC | b87795exv10w2.htm |
EX-10.1 - EX-10.1 - ATHENAHEALTH INC | b87795exv10w1.htm |
EX-32.1 - EX-32.1 - ATHENAHEALTH INC | b87795exv32w1.htm |
EX-31.2 - EX-31.2 - ATHENAHEALTH INC | b87795exv31w2.htm |
EXCEL - IDEA: XBRL DOCUMENT - ATHENAHEALTH INC | Financial_Report.xls |
Exhibit 10.3
ATHENAHEALTH, INC.
2007 STOCK OPTION AND INCENTIVE PLAN
2007 STOCK OPTION AND INCENTIVE PLAN
As Amended and Restated as of May 27, 2011
SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS |
The name of the plan is the athenahealth, Inc. 2007 Stock Option and Incentive Plan (the
Plan). The purpose of the Plan is to encourage and enable the officers, employees, directors and
other key persons (including consultants and prospective employees) of athenahealth, Inc. (the
Company) and its Subsidiaries upon whose judgment, initiative and efforts the Company largely
depends for the successful conduct of its business to acquire a proprietary interest in the
Company. It is anticipated that providing such persons with a direct stake in the Companys
welfare will assure a closer identification of their interests with those of the Company and its
stockholders, thereby stimulating their efforts on the Companys behalf and strengthening their
desire to remain with the Company.
The following terms shall be defined as set forth below:
Act means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
Administrator means either the Board or the Compensation Committee of the Board or a similar
committee performing the functions of the compensation committee and which is comprised of not less
than two Non-Employee Directors.
Award or Awards, except where referring to a particular category of grant under the Plan,
shall include Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation Rights,
Deferred Stock Awards, Restricted Stock Awards, Unrestricted Stock Awards, Cash-based Awards,
Performance Shares and Dividend Equivalent Rights.
Award Agreement means a written or electronic agreement setting forth the terms and
provisions applicable to an Award granted under the Plan. Each Award Agreement is subject to the
terms and conditions of the Plan.
Board means the Board of Directors of the Company.
Cash-based Award means an Award entitling the recipient to receive a cash-denominated
payment.
Code means the Internal Revenue Code of 1986, as amended, and any successor Code, and
related rules, regulations and interpretations.
Committee means a committee of the Board.
Covered Employee means an employee who is a Covered Employee within the meaning of Section
162(m) of the Code.
Deferred Stock Award means an Award of phantom stock units to a grantee, subject to
restrictions and conditions as the Administrator may determine at the time of grant.
Dividend Equivalent Right means an Award entitling the grantee to receive credits based on
cash dividends that would have been paid on the shares of Stock specified in the Dividend
Equivalent Right (or other award to which it relates) if such shares had been issued to and held by
the grantee.
Effective Date means the date on which the Plan is approved by stockholders as set forth in
Section 20.
Exchange Act means the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder.
Fair Market Value of the Stock on any given date means the fair market value of the Stock
determined in good faith by the Administrator; provided, however, that if the Stock is admitted to
quotation on a national securities exchange, the determination shall be made by reference to market
quotations. If there are no market quotations for such date, the determination shall be made by
reference to the last date preceding such date for which there are market quotations.
Incentive Stock Option means any Stock Option designated and qualified as an incentive
stock option as defined in Section 422 of the Code.
Non-Employee Director means a member of the Board who is not also an employee of the Company
or any Subsidiary.
Non-Qualified Stock Option means any Stock Option that is not an Incentive Stock Option.
Option or Stock Option means any option to purchase shares of Stock granted pursuant to
Section 5.
Performance-based Award means any Restricted Stock Award, Deferred Stock Award, Performance
Share Award or Cash-based Award granted to a Covered Employee that is intended to qualify as
performance-based compensation under Section 162(m) of the Code and the regulations promulgated
thereunder.
Performance Criteria means the criteria that the Administrator selects for purposes of
establishing the Performance Goal or Performance Goals for an individual for a Performance Cycle.
The Performance Criteria (which shall be applicable to an individual or to the organizational level
specified by the Administrator, including, but not limited to, the Company or a unit, division,
group, or Subsidiary of the Company) that will be used to establish Performance Goals are limited
to the following: earnings before interest, taxes, depreciation and amortization, net income (loss)
(either before or after interest, taxes, depreciation and/or amortization), changes in the market
price of the Stock, economic value-added, funds from operations or similar measure, sales or
revenue, acquisitions or strategic transactions, operating income (loss), cash flow (including, but
not limited to, operating cash flow and free cash flow), return on
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capital, assets, equity, or investment, stockholder returns, return on sales, gross or net
profit levels, productivity, expense, margins, operating efficiency, voluntary turnover, employee
engagement, client days-in-accounts-receivable, lost patient care revenue, client work rate,
provider time per relative value unit, provider documentation time per appointment, client
satisfaction, sales bookings, working capital, earnings (loss) per share of Stock, sales or market
shares and number of customers, any of which may be measured either in absolute terms or as
compared to any incremental increase or as compared to results of a peer group.
Performance Cycle means one or more periods of time, which may be of varying and overlapping
durations, as the Administrator may select, over which the attainment of one or more Performance
Criteria will be measured for the purpose of determining a grantees right to and the payment of a
Restricted Stock Award, Deferred Stock Award or Cash-based Award. Each such period shall not be
less than 12 months.
Performance Goals means, for a Performance Cycle, the specific goals established in writing
by the Administrator for a Performance Cycle based upon the Performance Criteria.
Performance Share Award means an Award entitling the recipient to acquire shares of Stock
upon the attainment of specified Performance Goals.
Restricted Stock Award means an Award entitling the recipient to acquire, at such purchase
price (which may be zero) as determined by the Administrator, shares of Stock subject to such
restrictions and conditions as the Administrator may determine at the time of grant.
Sale Event shall mean (i) the dissolution or liquidation of the Company, (ii) the sale of
all or substantially all of the assets of the Company on a consolidated basis to an unrelated
person or entity, (iii) a merger, reorganization or consolidation in which the outstanding shares
of Stock are converted into or exchanged for securities of the successor entity and the holders of
the Companys outstanding voting power immediately prior to such transaction do not own a majority
of the outstanding voting power of the successor entity (or its ultimate parent, if applicable)
immediately upon completion of such transaction, or (iv) the sale of all of the Stock of the
Company to an unrelated person or entity.
Sale Price means the value as determined by the Administrator of the consideration payable,
or otherwise to be received by stockholders, per share of Stock pursuant to a Sale Event.
Section 409A means Section 409A of the Code and the regulations and other guidance
promulgated thereunder.
Stock means the Common Stock, par value $0.001 per share, of the Company, subject to
adjustments pursuant to Section 3.
Stock Appreciation Right means an Award entitling the recipient to receive shares of Stock
having a value equal to the excess of the Fair Market Value of the Stock on the date of exercise
over the exercise price of the Stock Appreciation Right multiplied by the number of shares of Stock
with respect to which the Stock Appreciation Right shall have been exercised.
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Subsidiary means any corporation or other entity (other than the Company) in which the
Company has at least a 50 percent interest, either directly or indirectly.
Ten Percent Owner means an employee who owns or is deemed to own (by reason of the
attribution rules of Section 424(d) of the Code) more than 10 percent of the combined voting power
of all classes of stock of the Company or any parent or subsidiary corporation.
Unrestricted Stock Award means an Award of shares of Stock free of any restrictions.
SECTION 2. | ADMINISTRATION OF PLAN; ADMINISTRATOR AUTHORITY TO SELECT GRANTEES AND DETERMINE AWARDS |
(a) Administrator. The Plan shall be administered by the Administrator.
(b) Powers of Administrator. The Administrator shall have the power and authority to
grant Awards consistent with the terms of the Plan, including the power and authority:
(i) to select the individuals to whom Awards may from time to time be granted;
(ii) to determine the time or times of grant, and the extent, if any, of Incentive Stock
Options, Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock Awards, Deferred
Stock Awards, Unrestricted Stock Awards, Cash-based Awards, Performance Share Awards and Dividend
Equivalent Rights, or any combination of the foregoing, granted to any one or more grantees;
(iii) to determine the number of shares of Stock to be covered by any Award;
(iv) to determine and modify from time to time the terms and conditions, including
restrictions, not inconsistent with the terms of the Plan, of any Award, which terms and conditions
may differ among individual Awards and grantees, and to approve the form of written instruments
evidencing the Awards;
(v) to accelerate at any time the exercisability or vesting of all or any portion of any
Award, provided that the Administrator generally shall not exercise such discretion to accelerate
Awards subject to Sections 7 and 8 except in the event of the grantees death, disability or
retirement or a Sale Event;
(vi) subject to the provisions of Section 5(c)(ii), to extend at any time the period in which
Stock Options may be exercised; and
(vii) at any time to adopt, alter and repeal such rules, guidelines and practices for
administration of the Plan and for its own acts and proceedings as it shall deem advisable; to
interpret the terms and provisions of the Plan and any Award (including related written
instruments); to make all determinations it deems advisable for the administration of the Plan; to
decide all disputes arising in connection with the Plan; and to otherwise supervise the
administration of the Plan.
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All decisions and interpretations of the Administrator shall be binding on all persons,
including the Company and Plan grantees.
(c) Delegation of Authority to Grant Options and Deferred Stock Awards. Subject to
applicable law, the Administrator, in its discretion, may delegate to an officer of the Company all
or part of the Administrators authority and duties with respect to the granting of Options and
Deferred Stock Awards, to individuals who are (i) not subject to the reporting and other provisions
of Section 16 of the Exchange Act and (ii) not Covered Employees. Any such delegation by the
Administrator shall include a limitation as to the amount of Options and Deferred Stock Awards that
may be granted during the period of the delegation and shall contain guidelines as to the
determination of the exercise price, if applicable, and the vesting criteria. The Administrator
may revoke or amend the terms of a delegation at any time but such action shall not invalidate any
prior actions of the Administrators delegate or delegates that were consistent with the terms of
the Plan.
(d) Award Agreement. Awards under the Plan shall be evidenced by Award Agreements
that set forth the terms, conditions and limitations for each Award which may include, without
limitation, the term of an Award, the provisions applicable in the event employment or service
terminates, and the Companys authority to unilaterally or bilaterally amend, modify, suspend,
cancel or rescind an Award.
(e) Indemnification. Neither the Board nor the Administrator, nor any member of
either or any delegate thereof, shall be liable for any act, omission, interpretation, construction
or determination made in good faith in connection with the Plan, and the members of the Board and
the Administrator (and any delegate thereof) shall be entitled in all cases to indemnification and
reimbursement by the Company in respect of any claim, loss, damage or expense (including, without
limitation, reasonable attorneys fees) arising or resulting therefrom to the fullest extent
permitted by law and/or under the Companys articles or bylaws or any directors and officers
liability insurance coverage which may be in effect from time to time and/or any indemnification
agreement between such individual and the Company.
(f) Foreign Award Recipients. Notwithstanding any provision of the Plan to the
contrary, in order to comply with the laws in other countries in which the Company and its
Subsidiaries operate or have employees or other individuals eligible for Awards, the Administrator,
in its sole discretion, shall have the power and authority to: (i) determine which Subsidiaries
shall be covered by the Plan; (ii) determine which individuals outside the United States are
eligible to participate in the Plan; (iii) modify the terms and conditions of any Award granted to
individuals outside the United States to comply with applicable foreign laws; (iv) establish
subplans and modify exercise procedures and other terms and procedures, to the extent the
Administrator determines such actions to be necessary or advisable (and such subplans and/or
modifications shall be attached to this Plan as appendices); provided, however, that no such
subplans and/or modifications shall increase the share limitations contained in Section 3(a)
hereof; and (v) take any action, before or after an Award is made, that the Administrator
determines to be necessary or advisable to obtain approval or comply with any local governmental
regulatory exemptions or approvals. Notwithstanding the foregoing, the Administrator may not take
any actions hereunder, and no Awards shall be granted, that would
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violate the Exchange Act or any other applicable United States securities law, the Code, or
any other applicable United States governing statute or law.
SECTION 3. STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION |
(a) Stock Issuable. The maximum number of shares of Stock reserved and available for
issuance under the Plan (subject to adjustment as provided in Section 3(c)) shall be the sum of (i)
5,829,781 shares, plus (ii) the number of Shares under the Companys 1997 Stock Plan and 2000 Stock
Option and Incentive Plan (together, the Prior Plans) which are not needed to fulfill the
Companys obligations for awards issued under the Prior Plans as a result of forfeiture,
expiration, cancellation, termination or net issuances of awards thereunder. Without limiting the
generality of the foregoing, not more than 20,000,000 shares shall be issued in the form of
Incentive Stock Options under the Plan. For purposes of this limitation, the shares of Stock
underlying any Awards under the Plan that are forfeited, canceled or otherwise terminated (other
than by exercise) shall be added back to the shares of Stock available for issuance under the Plan.
Notwithstanding the foregoing, the following shares shall not be added to the shares authorized
for grant under the Plan: (i) shares tendered or held back upon exercise of an Option or settlement
of an Award to cover the exercise price or tax withholding, and (ii) shares subject to a Stock
Appreciation Right that are not issued in connection with the stock settlement of the Stock
Appreciation Right upon exercise thereof. In the event the Company repurchases shares of Stock on
the open market, such shares shall not be added to the shares of Stock available for issuance under
the Plan. Subject to such overall limitations, shares of Stock may be issued up to such maximum
number pursuant to any type or types of Award; provided, however, that Stock Options or Stock
Appreciation Rights with respect to no more than 2,000,000 shares of Stock may be granted to any
one individual grantee during any one calendar year period. The shares available for issuance
under the Plan may be authorized but unissued shares of Stock or shares of Stock reacquired by the
Company.
(b) Effect of Awards. Effective for Awards granted on or after May 27, 2011, for
purposes of determining the number of shares of Stock available for issuance under Section 3(a),
the grant of any Option or Stock Appreciation Right shall be deemed an Award for one share of Stock
for each share of Stock actually subject to that Award, and the grant of any full value Award
(i.e., an Award other than an Option or a Stock Appreciation Right) shall be deemed an Award of 1.3
shares of Stock for each share of Stock actually subject to that Award. Any forfeiture,
cancellation, or other termination (other than by exercise) of an Award shall result in the return
of the shares subject to that Award to the reserved pool of shares of Stock under the Plan in the
same ratios.
(c) Changes in Stock. Subject to Section 3(d) hereof, if, as a result of any
reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other similar change in the Companys capital stock, the outstanding shares of Stock are
increased or decreased or are exchanged for a different number or kind of shares or other
securities of the Company, or additional shares or new or different shares or other securities of
the Company or other non-cash assets are distributed with respect to such shares of Stock or other
securities, or, if, as a result of any merger or consolidation, sale of all or substantially all of
the assets of the Company, the outstanding shares of Stock are converted into or exchanged for
securities of the Company or any successor entity (or a parent or subsidiary thereof), the
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Administrator shall make an appropriate or proportionate adjustment in (i) the maximum number
of shares reserved for issuance under the Plan, including the maximum number of shares that may be
issued in the form of Incentive Stock Options, (ii) the number of Stock Options or Stock
Appreciation Rights that can be granted to any one individual grantee and the maximum number of
shares that may be granted under a Performance-based Award, (iii) the number and kind of shares or
other securities subject to any then outstanding Awards under the Plan, (iv) the repurchase price,
if any, per share subject to each outstanding Restricted Stock Award, and (v) the price for each
share subject to any then outstanding Stock Options and Stock Appreciation Rights under the Plan,
without changing the aggregate exercise price (i.e., the exercise price multiplied by the number of
Stock Options and Stock Appreciation Rights) as to which such Stock Options and Stock Appreciation
Rights remain exercisable. The Administrator shall also make equitable or proportionate
adjustments in the number of shares subject to outstanding Awards and the exercise price and the
terms of outstanding Awards to take into consideration cash dividends paid other than in the
ordinary course or any other extraordinary corporate event. Notwithstanding the foregoing, no such
adjustment shall be made if the Administrator determines that such action could cause any Award to
fail to satisfy the conditions of any applicable exception from the requirements of Section 409A or
otherwise could subject the grantee to the additional tax imposed under Section 409A in respect of
an outstanding Award or constitute a modification, extension or renewal of an Incentive Stock
Option within the meaning of Section 424(h) of the Code. The adjustment by the Administrator shall
be final, binding and conclusive. No fractional shares of Stock shall be issued under the Plan
resulting from any such adjustment, but the Administrator in its discretion may make a cash payment
in lieu of fractional shares.
(d) Mergers and Other Transactions. Except as the Administrator may otherwise specify
with respect to a particular Award in the relevant Award Agreement, in the case of and subject to
the consummation of a Sale Event, all Options and Stock Appreciation Rights that are not
exercisable immediately prior to the effective time of the Sale Event shall become fully
exercisable as of the effective time of the Sale Event, all other Awards with time-based vesting,
conditions or restrictions shall become fully vested and nonforfeitable as of the effective time of
the Sale Event, and all other Awards with conditions and restrictions relating to the attainment of
performance goals may become vested and nonforfeitable in connection with a Sale Event in the
Administrators discretion unless in any case, the parties to the Sale Event agree that Awards will
be assumed or continued by the successor entity. Upon the effective time of the Sale Event, the
Plan and all outstanding Awards granted hereunder shall terminate, unless provision is made in
connection with the Sale Event in the sole discretion of the parties thereto for the assumption or
continuation of Awards theretofore granted by the successor entity, or the substitution of such
Awards with new Awards of the successor entity or parent thereof, with appropriate adjustment as to
the number and kind of shares and, if appropriate, the per share exercise prices, as such parties
shall agree (after taking into account any acceleration hereunder). In the event of such
termination, (i) the Company shall have the right, but not the obligation, to make or provide for a
cash payment to the grantees holding Options and Stock Appreciation Rights, in exchange for the
cancellation thereof, in an amount equal to the difference between (A) the Sale Price times the
number of shares of Stock subject to outstanding Options and Stock Appreciation Rights (to the
extent then exercisable at prices not in excess of the Sale Price) and (B) the aggregate exercise
price of all such outstanding Options and Stock Appreciation Rights, or (ii) each grantee shall be
permitted, within a specified period of time prior to the consummation of the Sale Event
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as determined by the Administrator, to exercise all outstanding Options and Stock Appreciation
Rights held by such grantee, including those that will become exercisable upon the consummation of
the Sale Event; provided, however, that the exercise of Options and Stock Appreciation Rights not
exercisable prior to the Sale Event shall be subject to the consummation of the Sale Event.
(e) Substitute Awards. The Administrator may grant Awards under the Plan in
substitution for stock and stock based awards held by employees, directors or other key persons of
another corporation in connection with the merger or consolidation of the employing corporation
with the Company or a Subsidiary or the acquisition by the Company or a Subsidiary of property or
stock of the employing corporation. The Administrator may direct that the substitute awards be
granted on such terms and conditions as the Administrator considers appropriate in the
circumstances. Any substitute Awards granted under the Plan shall not count against the share
limitation set forth in Section 3(a).
SECTION 4. ELIGIBILITY
Grantees under the Plan will be such full or part-time officers and other employees, directors
and key persons (including consultants and prospective employees) of the Company and its
Subsidiaries as are selected from time to time by the Administrator in its sole discretion.
SECTION 5. STOCK OPTIONS |
(a) Any Stock Option granted under the Plan shall be in such form as the Administrator may
from time to time approve.
(b) Stock Options granted under the Plan may be either Incentive Stock Options or
Non-Qualified Stock Options. Incentive Stock Options may be granted only to employees of the
Company or any Subsidiary that is a subsidiary corporation within the meaning of Section 424(f)
of the Code. To the extent that any Option does not qualify as an Incentive Stock Option, it shall
be deemed a Non-Qualified Stock Option.
(c) Stock Options granted pursuant to this Section 5(a) shall be subject to the following
terms and conditions and shall contain such additional terms and conditions, not inconsistent with
the terms of the Plan, as the Administrator shall deem desirable. If the Administrator so
determines, Stock Options may be granted in lieu of cash compensation at the optionees election,
subject to such terms and conditions as the Administrator may establish.
(i) Exercise Price. The exercise price per share for the Stock covered by a Stock
Option granted pursuant to this Section 5(a) shall be determined by the Administrator at the time
of grant but shall not be less than one hundred percent (100%) of the Fair Market Value on the date
of grant. In the case of an Incentive Stock Option that is granted to a Ten Percent Owner, the
option price of such Incentive Stock Option shall be not less than one hundred ten percent (110%)
of the Fair Market Value on the grant date.
(ii) Option Term. The term of each Stock Option shall be fixed by the Administrator,
but no Stock Option shall be exercisable more than ten years after the date the
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Stock Option is granted. In the case of an Incentive Stock Option that is granted to a Ten
Percent Owner, the term of such Stock Option shall be no more than five years from the date of
grant.
(iii) Exercisability; Rights of a Stockholder. Stock Options shall become exercisable
at such time or times, whether or not in installments, as shall be determined by the Administrator
at or after the grant date. The Administrator may at any time accelerate the exercisability of all
or any portion of any Stock Option. An optionee shall have the rights of a stockholder only as to
shares acquired upon the exercise of a Stock Option and not as to unexercised Stock Options.
(iv) Method of Exercise. Stock Options may be exercised in whole or in part, by
giving written notice of exercise to the Company, specifying the number of shares to be purchased.
Payment of the purchase price may be made by one or more of the following methods to the extent
provided in the Option Award Agreement:
(A) In cash, by certified or bank check or other instrument acceptable to the
Administrator;
(B) Through the delivery (or attestation to the ownership) of shares of Stock that have
been purchased by the optionee on the open market or that are beneficially owned by the
optionee and are not then subject to restrictions under any Company plan. Such surrendered
shares shall be valued at Fair Market Value on the exercise date. To the extent required to
avoid variable accounting treatment under FAS 123R or other applicable accounting rules,
such surrendered shares shall have been owned by the optionee for at least six months; or
(C) By the optionee delivering to the Company a properly executed exercise notice
together with irrevocable instructions to a broker to promptly deliver to the Company cash
or a check payable and acceptable to the Company for the purchase price; provided that in
the event the optionee chooses to pay the purchase price as so provided, the optionee and
the broker shall comply with such procedures and enter into such agreements of indemnity and
other agreements as the Administrator shall prescribe as a condition of such payment
procedure.
(D) With respect to Stock Options that are not Incentive Stock Options, by a net
exercise arrangement pursuant to which the Company will reduce the number of shares of
Stock issuable upon exercise by the largest whole number of shares with a Fair Market Value
that does not exceed the aggregate exercise price.
Payment instruments will be received subject to collection. The transfer to the optionee on the
records of the Company or of the transfer agent of the shares of Stock to be purchased pursuant to
the exercise of a Stock Option will be contingent upon receipt from the optionee (or a purchaser
acting in his stead in accordance with the provisions of the Stock Option) by the Company of the
full purchase price for such shares and the fulfillment of any other requirements contained in the
Option Award Agreement or applicable provisions of laws (including the satisfaction of any
withholding taxes that the Company is obligated to withhold with respect to the optionee). In the
event an optionee chooses to pay the purchase price by previously-owned
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shares of Stock through the attestation method, the number of shares of Stock transferred to the
optionee upon the exercise of the Stock Option shall be net of the number of attested shares. In
the event that the Company establishes, for itself or using the services of a third party, an
automated system for the exercise of Stock Options, such as a system using an internet website or
interactive voice response, then the paperless exercise of Stock Options may be permitted through
the use of such an automated system.
(v) Annual Limit on Incentive Stock Options. To the extent required for incentive
stock option treatment under Section 422 of the Code, the aggregate Fair Market Value (determined
as of the time of grant) of the shares of Stock with respect to which Incentive Stock Options
granted under this Plan and any other plan of the Company or its parent and subsidiary corporations
become exercisable for the first time by an optionee during any calendar year shall not exceed
$100,000. To the extent that any Stock Option exceeds this limit, it shall constitute a
Non-Qualified Stock Option.
SECTION 6. STOCK APPRECIATION RIGHTS
(a) Exercise Price of Stock Appreciation Rights. The exercise price of a Stock
Appreciation Right shall not be less than 100 percent of the Fair Market Value of the Stock on the
date of grant (or more than the Stock Option exercise price per share, if the Stock Appreciation
Right was granted in tandem with a Stock Option).
(b) Grant and Exercise of Stock Appreciation Rights. Stock Appreciation Rights may be
granted by the Administrator in tandem with, or independently of, any Stock Option granted pursuant
to Section 5 of the Plan. In the case of a Stock Appreciation Right granted in tandem with a
Non-Qualified Stock Option, such Stock Appreciation Right may be granted either at or after the
time of the grant of such Option. In the case of a Stock Appreciation Right granted in tandem with
an Incentive Stock Option, such Stock Appreciation Right may be granted only at the time of the
grant of the Option.
A Stock Appreciation Right or applicable portion thereof granted in tandem with a Stock Option
shall terminate and no longer be exercisable upon the termination or exercise of the related
Option.
(c) Terms and Conditions of Stock Appreciation Rights. Stock Appreciation Rights
shall be subject to such terms and conditions as shall be determined from time to time by the
Administrator, subject to the following:
(i) Stock Appreciation Rights granted in tandem with Options shall be exercisable at such time
or times and to the extent that the related Stock Options shall be exercisable.
(ii) Upon exercise of a Stock Appreciation Right, the applicable portion of any related Option
shall be surrendered.
(iii) The term of a Stock Appreciation Right may not exceed ten years.
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SECTION 7. RESTRICTED STOCK AWARDS
(a) Nature of Restricted Stock Awards. The Administrator shall determine the
restrictions and conditions applicable to each Restricted Stock Award at the time of grant.
Conditions may be based on continuing employment (or other service relationship) and/or achievement
of pre-established performance goals and objectives. The terms and conditions of each such Award
Agreement shall be determined by the Administrator, and such terms and conditions may differ among
individual Awards and grantees.
(b) Rights as a Stockholder. Upon the grant of the Restricted Stock Award and payment
of any applicable purchase price, a grantee shall have the rights of a stockholder with respect to
the voting of the Restricted Stock, subject to such conditions contained in the Restricted Stock
Award Agreement. Unless the Administrator shall otherwise determine, (i) uncertificated Restricted
Stock shall be accompanied by a notation on the records of the Company or the transfer agent to the
effect that they are subject to forfeiture until such Restricted Stock are vested as provided in
Section 7(d) below, and (ii) certificated Restricted Stock shall remain in the possession of the
Company until such Restricted Stock is vested as provided in Section 7(d) below, and the grantee
shall be required, as a condition of the grant, to deliver to the Company such instruments of
transfer as the Administrator may prescribe.
(c) Restrictions. Restricted Stock may not be sold, assigned, transferred, pledged or
otherwise encumbered or disposed of except as specifically provided herein or in the Restricted
Stock Award Agreement. Except as may otherwise be provided by the Administrator either in the
Award Agreement or, subject to Section 18 below, in writing after the Award Agreement is issued, if
any, if a grantees employment (or other service relationship) with the Company and its
Subsidiaries terminates for any reason, any Restricted Stock that has not vested at the time of
termination shall automatically and without any requirement of notice to such grantee from or other
action by or on behalf of, the Company be deemed to have been reacquired by the Company at its
original purchase price from such grantee or such grantees legal representative simultaneously
with such termination of employment (or other service relationship), and thereafter shall cease to
represent any ownership of the Company by the grantee or rights of the grantee as a stockholder.
Following such deemed reacquisition of unvested Restricted Stock that are represented by physical
certificates, a grantee shall surrender such certificates to the Company upon request without
consideration.
(d) Vesting of Restricted Stock. The Administrator at the time of grant shall specify
the date or dates and/or the attainment of pre-established performance goals, objectives and other
conditions on which the non-transferability of the Restricted Stock and the Companys right of
repurchase or forfeiture shall lapse. Notwithstanding the foregoing, in the event that any such
Restricted Stock granted to employees shall have a performance-based goal, the restriction period
with respect to such shares shall not be less than one year, and in the event any such Restricted
Stock granted to employees shall have a time-based restriction, the total restriction period with
respect to such shares shall not be less than three years; provided, however, that Restricted Stock
with a time-based restriction may become vested incrementally over such three-year period.
Subsequent to such date or dates and/or the attainment of such pre-established performance goals,
objectives and other conditions, the shares on which all restrictions have lapsed shall no longer
be Restricted Stock and shall be deemed vested. Except as may
11
otherwise be provided by the Administrator either in the Award Agreement or, subject to
Section 18 below, in writing after the Award Agreement is issued, a grantees rights in any shares
of Restricted Stock that have not vested shall automatically terminate upon the grantees
termination of employment (or other service relationship) with the Company and its Subsidiaries and
such shares shall be subject to the provisions of Section 7(c) above.
SECTION 8. DEFERRED STOCK AWARDS
(a) Nature of Deferred Stock Awards. The Administrator shall determine the
restrictions and conditions applicable to each Deferred Stock Award at the time of grant.
Conditions may be based on continuing employment (or other service relationship) and/or achievement
of pre-established performance goals and objectives. The terms and conditions of each such Award
Agreement shall be determined by the Administrator, and such terms and conditions may differ among
individual Awards and grantees. Notwithstanding the foregoing, in the event that any such Deferred
Stock Award granted to employees shall have a performance-based goal, the restriction period with
respect to such Award shall not be less than one year, and in the event any such Deferred Stock
Award granted to employees shall have a time-based restriction, the total restriction period with
respect to such Award shall not be less than three years; provided, however, that any Deferred
Stock Award with a time-based restriction may become vested incrementally over such three-year
period. At the end of the deferral period, the Deferred Stock Award, to the extent vested, shall
be settled in the form of shares of Stock.
(b) Election to Receive Deferred Stock Awards in Lieu of Compensation. The
Administrator may, in its sole discretion, permit a grantee to elect to receive a portion of future
cash compensation otherwise due to such grantee in the form of a Deferred Stock Award. Any such
election shall be made in writing and shall be delivered to the Company no later than the date
specified by the Administrator and in accordance with Section 409A and such other rules and
procedures established by the Administrator. The Administrator shall have the sole right to
determine whether and under what circumstances to permit such elections and to impose such
limitations and other terms and conditions thereon as the Administrator deems appropriate. Any
such future cash compensation that the grantee elects to deter shall be converted to a fixed number
of phantom stock units based on the Fair Market Value of Stock on the date the compensation would
otherwise have been paid to the grantee but for the deferral.
(c) Rights as a Stockholder. A grantee shall have the rights as a stockholder only as
to shares of Stock acquired by the grantee upon settlement of a Deferred Stock Award; provided,
however, that the grantee may be credited with Dividend Equivalent Rights with respect to the
phantom stock units underlying his Deferred Stock Award, subject to such terms and conditions as
the Administrator may determine.
(d) Termination. Except as may otherwise be provided by the Administrator either in
the Award Agreement or, subject to Section 18 below, in writing after the Award Agreement is
issued, a grantees right in all Deferred Stock Awards that have not vested shall automatically
terminate upon the grantees termination of employment (or cessation of service relationship) with
the Company and its Subsidiaries for any reason.
12
SECTION 9. UNRESTRICTED STOCK AWARDS
(a) Grant or Sale of Unrestricted Stock. The Administrator may, in its sole
discretion, grant (or sell at par value or such higher purchase price as determined by the
Administrator), an Unrestricted Stock Award under the Plan. Unrestricted Stock Awards may be
granted in respect of past services or other valid consideration, or in lieu of cash compensation
due to such grantee.
SECTION 10. CASH-BASED AWARDS
(a) Grant of Cash-based Awards. The Administrator may, in its sole discretion, grant
Cash-based Awards to any grantee in such number or amount and upon such terms, and subject to such
conditions, as the Administrator shall determine at the time of grant. The Administrator shall
determine the maximum duration of the Cash-based Award, the amount of cash to which the Cash-based
Award pertains, the conditions upon which the Cash-based Award shall become vested or payable, and
such other provisions as the Administrator shall determine. Each Cash-based Award shall specify a
cash-denominated payment amount, formula or payment ranges as determined by the Administrator.
Payment, if any, with respect to a Cash-based Award shall be made in accordance with the terms of
the Award and may be made in cash or in shares of Stock, as the Administrator determines.
SECTION 11. PERFORMANCE SHARE AWARDS
(a) Nature of Performance Share Awards. The Administrator may, in its sole
discretion, grant Performance Share Awards independent of, or in connection with, the granting of
any other Award under the Plan. The Administrator shall determine whether and to whom Performance
Share Awards shall be granted, the Performance Goals, the periods during which performance is to be
measured, which may not be less than one year, and such other limitations and conditions as the
Administrator shall determine.
(b) Rights as a Stockholder. A grantee receiving a Performance Share Award shall have
the rights of a stockholder only as to shares actually received by the grantee under the Plan and
not with respect to shares subject to the Award but not actually received by the grantee. A
grantee shall be entitled to receive shares of Stock under a Performance Share Award only upon
satisfaction of all conditions specified in the Performance Share Award agreement (or in a
performance plan adopted by the Administrator).
(c) Termination. Except as may otherwise be provided by the Administrator either in
the Award agreement or, subject to Section 18 below, in writing after the Award agreement is
issued, a grantees rights in all Performance Share Awards shall automatically terminate upon the
grantees termination of employment (or cessation of service relationship) with the Company and its
Subsidiaries for any reason.
SECTION 12. PERFORMANCE-BASED AWARDS TO COVERED EMPLOYEES
(a) Performance-based Awards. Any employee or other key person providing services to
the Company and who is selected by the Administrator may be granted one or more Performance-based
Awards in the form of a Restricted Stock Award, Deferred Stock Award,
13
Performance Share Award or Cash-based Award payable upon the attainment of Performance Goals
that are established by the Administrator and relate to one or more of the Performance Criteria, in
each case on a specified date or dates or over any period or periods determined by the
Administrator. The Administrator shall define in an objective fashion the manner of calculating
the Performance Criteria it selects to use for any Performance Period. Depending on the
Performance Criteria used to establish such Performance Goals, the Performance Goals may be
expressed in terms of overall Company performance or the performance of a division, business unit,
or an individual. The Administrator, in its discretion, may adjust or modify the calculation of
Performance Goals for such Performance Period in order to prevent the dilution or enlargement of
the rights of an individual (i) in the event of, or in anticipation of, any unusual or
extraordinary corporate item, transaction, event or development, or (ii) in recognition of, or in
anticipation of, any other unusual or nonrecurring events affecting the Company, or the financial
statements of the Company, or (iii) in response to, or in anticipation of, changes in applicable
laws, regulations, accounting principles, or business conditions provided however, that the
Administrator may not exercise such discretion in a manner that would increase the
Performance-based Award granted to a Covered Employee. Each Performance-based Award shall comply
with the provisions set forth below.
(b) Grant of Performance-based Awards. With respect to each Performance-based Award
granted to a Covered Employee, the Administrator shall select, within the first 90 days of a
Performance Cycle (or, if shorter, within the maximum period allowed under Section 162(m) of the
Code) the Performance Criteria for such grant, and the Performance Goals with respect to each
Performance Criterion (including a threshold level of performance below which no amount will become
payable with respect to such Award). Each Performance-based Award will specify the amount payable,
or the formula for determining the amount payable, upon achievement of the various applicable
performance targets. The Performance Criteria established by the Administrator may be (but need
not be) different for each Performance Cycle and different Performance Goals may be applicable to
Performance-based Awards to different Covered Employees.
(c) Payment of Performance-based Awards. Following the completion of a Performance
Cycle, the Administrator shall meet to review and certify in writing whether, and to what extent,
the Performance Goals for the Performance Cycle have been achieved and, if so, to also calculate
and certify in writing the amount of the Performance-based Awards earned for the Performance Cycle.
The Administrator shall then determine the actual size of each Covered Employees
Performance-based Award, and, in doing so, may reduce or eliminate the amount of the
Performance-based Award for a Covered Employee if, in its sole judgment, such reduction or
elimination is appropriate.
(d) Maximum Award Payable. The maximum Performance-based Award payable to any one
Covered Employee under the Plan for a Performance Cycle is 300,000 shares of Stock (subject to
adjustment as provided in Section 3(c) hereof) or $1,000,000 in the case of a Performance-Based
Award that is a Cash-Based Award.
14
SECTION 13. DIVIDEND EQUIVALENT RIGHTS
(a) Dividend Equivalent Rights. A Dividend Equivalent Right may be granted hereunder
to any grantee as a component of another Award or as a freestanding award. The terms and
conditions of Dividend Equivalent Rights shall be specified in the Award Agreement. Dividend
equivalents credited to the holder of a Dividend Equivalent Right may be paid currently or may be
deemed to be reinvested in additional shares of Stock, which may thereafter accrue additional
equivalents. Any such reinvestment shall be at Fair Market Value on the date of reinvestment or
such other price as may then apply under a dividend reinvestment plan sponsored by the Company, if
any. Dividend Equivalent Rights may be settled in cash or shares of Stock or a combination
thereof, in a single installment or installments. A Dividend Equivalent Right granted as a
component of another Award may provide that such Dividend Equivalent Right shall be settled upon
exercise, settlement, or payment of, or lapse of restrictions on, such other Award, and that such
Dividend Equivalent Right shall expire or be forfeited or annulled under the same conditions as
such other Award. A Dividend Equivalent Right granted as a component of another Award may also
contain terms and conditions different from such other Award.
(b) Interest Equivalents. Any Award under this Plan that is settled in whole or in
part in cash on a deferred basis may provide in the grant for interest equivalents to be credited
with respect to such cash payment. Interest equivalents may be compounded and shall be paid upon
such terms and conditions as may be specified by the grant.
(c) Termination. Except as may otherwise be provided by the Administrator either in
the Award Agreement or, subject to Section 18 below, in writing after the Award Agreement is
issued, a grantees rights in all Dividend Equivalent Rights or interest equivalents granted as a
component of another Award that has not vested shall automatically terminate upon the grantees
termination of employment (or cessation of service relationship) with the Company and its
Subsidiaries for any reason.
SECTION 14. TRANSFERABILITY OF AWARDS
(a) Transferability. Except as provided in Section 14(b) below, during a grantees
lifetime, his or her Awards shall be exercisable only by the grantee, or by the grantees legal
representative or guardian in the event of the grantees incapacity. No Awards shall be sold,
assigned, transferred or otherwise encumbered or disposed of by a grantee other than by will or by
the laws of descent and distribution. No Awards shall be subject, in whole or in part, to
attachment, execution, or levy of any kind, and any purported transfer in violation hereof shall be
null and void.
(b) Administrator Action. Notwithstanding Section 14(a), the Administrator, in its
discretion, may provide either in the Award Agreement regarding a given Award or by subsequent
written approval that the grantee (who is an employee or director) may transfer his or her Awards
(other than any Incentive Stock Options) to his or her immediate family members, to trusts for the
benefit of such family members, or to partnerships in which such family members are the only
partners, provided that the transferee agrees in writing with the Company to be bound by all of the
terms and conditions of this Plan and the applicable Award.
15
(c) Family Member. For purposes of Section 14(b), family member shall mean a
grantees child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse,
sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law,
or sister-in-law, including adoptive relationships, any person sharing the grantees household
(other than a tenant of the grantee), a trust in which these persons (or the grantee) have more
than 50 percent of the beneficial interest, a foundation in which these persons (or the grantee)
control the management of assets, and any other entity in which these persons (or the grantee) own
more than 50 percent of the voting interests.
(d) Designation of Beneficiary. Each grantee to whom an Award has been made under the
Plan may designate a beneficiary or beneficiaries to exercise any Award or receive any payment
under any Award payable on or after the grantees death. Any such designation shall be on a form
provided for that purpose by the Administrator and shall not be effective until received by the
Administrator. If no beneficiary has been designated by a deceased grantee, or if the designated
beneficiaries have predeceased the grantee, the beneficiary shall be the grantees estate.
SECTION 15. TAX WITHHOLDING
(a) Payment by Grantee. Each grantee shall, no later than the date as of which the
value of an Award or of any Stock or other amounts received thereunder first becomes includable in
the gross income of the grantee for Federal income tax purposes, pay to the Company, or make
arrangements satisfactory to the Administrator regarding payment of, any Federal, state, or local
taxes of any kind required by law to be withheld by the Company with respect to such income. The
Company and its Subsidiaries shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment of any kind otherwise due to the grantee. The Companys obligation to
deliver evidence of book entry (or stock certificates) to any grantee is subject to and conditioned
on tax withholding obligations being satisfied by the grantee.
(b) Payment in Stock. Subject to approval by the Administrator, a grantee may elect
to have the Companys minimum required tax withholding obligation satisfied, in whole or in part,
by authorizing the Company to withhold from shares of Stock to be issued pursuant to any Award a
number of shares with an aggregate Fair Market Value (as of the date the withholding is effected)
that would satisfy the withholding amount due.
SECTION 16. | ADDITIONAL CONDITIONS APPLICABLE TO NONQUALIFIED DEFERRED COMPENSATION UNDER SECTION 409A. |
In the event any Stock Option or Stock Appreciation Right under the Plan is materially
modified and deemed a new grant at a time when the Fair Market Value exceeds the exercise price, or
any other Award is otherwise determined to constitute nonqualified deferred compensation within
the meaning of Section 409A (a 409A Award), the following additional conditions shall apply and
shall supersede any contrary provisions of this Plan or the terms of any agreement relating to such
409A Award.
16
(a) Exercise and Distribution. Except as provided in Section 16(b) hereof, no 409A
Award shall be exercisable or distributable earlier than upon one of the following:
(i) Specified Time. A specified time or a fixed schedule set forth in the written
instrument evidencing the 409A Award.
(ii) Separation from Service. Separation from service (within the meaning of Section
409A) by the 409A Award grantee; provided, however, that if the 409A Award grantee is a key
employee (as defined in Section 416(i) of the Code without regard to paragraph (5) thereof) and
any of the Companys Stock is publicly traded on an established securities market or otherwise,
exercise or distribution under this Section 16(a)(ii) may not be made before the date that is six
months after the date of separation from service.
(iii) Death. The date of death of the 409A Award grantee.
(iv) Disability. The date the 409A Award grantee becomes disabled (within the meaning
of Section 16(c)(ii) hereof).
(v) Unforeseeable Emergency. The occurrence of an unforeseeable emergency (within the
meaning of Section 16(c)(iii) hereof), but only if the net value (after payment of the exercise
price) of the number of shares of Stock that become issuable does not exceed the amounts necessary
to satisfy such emergency plus amounts necessary to pay taxes reasonably anticipated as a result of
the exercise, after taking into account the extent to which the emergency is or may be relieved
through reimbursement or compensation by insurance or otherwise or by liquidation of the grantees
other assets (to the extent such liquidation would not itself cause severe financial hardship).
(vi) Change in Control Event. The occurrence of a Change in Control Event (within the
meaning of Section 16(c)(i) hereof), including the Companys discretionary exercise of the right to
accelerate vesting of such grant upon a Change in Control Event or to terminate the Plan or any
409A Award granted hereunder within 12 months of the Change in Control Event.
(b) No Acceleration. A 409A Award may not be accelerated or exercised prior to the
time specified in Section 16(a) hereof, except in the case of one of the following events:
(i) Domestic Relations Order. The 409A Award may permit the acceleration of the
exercise or distribution time or schedule to an individual other than the grantee as may be
necessary to comply with the terms of a domestic relations order (as defined in Section
414(p)(1)(B) of the Code).
(ii) Conflicts of Interest. The 409A Award may permit the acceleration of the
exercise or distribution time or schedule as may be necessary to comply with the terms of a
certificate of divestiture (as defined in Section 1043(b)(2) of the Code).
(iii) Change in Control Event. The Administrator may exercise the discretionary right
to accelerate the vesting of such 409A Award upon a Change in Control
17
Event or to terminate the Plan or any 409A Award granted thereunder within 12 months of the
Change in Control Event and cancel the 409A Award for compensation.
(c) Definitions. Solely for purposes of this Section 16 and not for other purposes of
the Plan, the following terms shall be defined as set forth below:
(i) Change in Control Event means the occurrence of a change in the ownership of the
Company, a change in effective control of the Company, or a change in the ownership of a
substantial portion of the assets of the Company (as defined in Section 1.409A-3(g) of the proposed
regulations promulgated under Section 409A by the Department of the Treasury on September 29, 2005
or any subsequent guidance).
(ii) Disabled means a grantee who (i) is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment that can be expected
to result in death or can be expected to last for a continuous period of not less than 12 months,
or (ii) is, by reason of any medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a continuous period of not less than 12
months, receiving income replacement benefits for a period of not less than three months under an
accident and health plan covering employees of the Company or its Subsidiaries.
(iii) Unforeseeable Emergency means a severe financial hardship to the grantee resulting
from an illness or accident of the grantee, the grantees spouse, or a dependent (as defined in
Section 152(a) of the Code) of the grantee, loss of the grantees property due to casualty, or
similar extraordinary and unforeseeable circumstances arising as a result of events beyond the
control of the grantee.
SECTION 17. TRANSFER, LEAVE OF ABSENCE, ETC.
For purposes of the Plan, the following events shall not be deemed a termination of
employment:
(a) a transfer to the employment of the Company from a Subsidiary or from the Company to a
Subsidiary, or from one Subsidiary to another; or
(b) an approved leave of absence for military service or sickness, or for any other purpose
approved by the Company, if the employees right to re-employment is guaranteed either by a statute
or by contract or under the policy pursuant to which the leave of absence was granted or if the
Administrator otherwise so provides in writing.
SECTION 18. AMENDMENTS AND TERMINATION
The Board may, at any time, amend or discontinue the Plan and the Administrator may, at any
time, amend or cancel any outstanding Award for the purpose of satisfying changes in law or for any
other lawful purpose, but no such action shall adversely affect rights under any outstanding Award
without the holders consent. Except as provided in Section 3(c) or 3(d), without prior
stockholder approval in no event may the Administrator exercise its discretion to reduce the
exercise price of outstanding Stock Options or Stock Appreciation Rights or effect repricing
through cancellation and re-grants or cancellation of Stock Options or Stock
18
Appreciation Rights in exchange for cash. Any material Plan amendments (other than amendments
that curtail the scope of the Plan), including any Plan amendments that (i) increase the number of
shares reserved for issuance under the Plan, (ii) expand the type of Awards available under,
materially expand the eligibility to participate in, or materially extend the term of, the Plan, or
(iii) materially change the method of determining Fair Market Value, shall be subject to approval
by the Company stockholders entitled to vote at a meeting of stockholders. In addition, to the
extent determined by the Administrator to be required by the Code to ensure that Incentive Stock
Options granted under the Plan are qualified under Section 422 of the Code or to ensure that
compensation earned under Awards qualifies as performance-based compensation under Section 162(m)
of the Code, Plan amendments shall be subject to approval by the Company stockholders entitled to
vote at a meeting of stockholders. Nothing in this Section 18 shall limit the Administrators
authority to take any action permitted pursuant to Section 3(d).
SECTION 19. STATUS OF PLAN
With respect to the portion of any Award that has not been exercised and any payments in cash,
Stock or other consideration not received by a grantee, a grantee shall have no rights greater than
those of a general creditor of the Company unless the Administrator shall otherwise expressly
determine in connection with any Award or Awards. In its sole discretion, the Administrator may
authorize the creation of trusts or other arrangements to meet the Companys obligations to deliver
Stock or make payments with respect to Awards hereunder, provided that the existence of such trusts
or other arrangements is consistent with the foregoing sentence.
SECTION 20. GENERAL PROVISIONS
(a) No Distribution. The Administrator may require each person acquiring Stock
pursuant to an Award to represent to and agree with the Company in writing that such person is
acquiring the shares without a view to distribution thereof.
(b) Delivery of Stock Certificates. Stock certificates to grantees under this Plan
shall be deemed delivered for all purposes when the Company or a stock transfer agent of the
Company shall have mailed such certificates in the United States mail, addressed to the grantee, at
the grantees last known address on file with the Company. Uncertificated Stock shall be deemed
delivered for all purposes when the Company or a Stock transfer agent of the Company shall have
given to the grantee by electronic mail (with proof of receipt) or by United States mail, addressed
to the grantee, at the grantees last known address on file with the Company, notice of issuance
and recorded the issuance in its records (which may include electronic book entry records).
Notwithstanding anything herein to the contrary, the Company shall not be required to issue or
deliver any certificates evidencing shares of Stock pursuant to the exercise of any Award, unless
and until the Board has determined, with advice of counsel (to the extent the Board deems such
advice necessary or advisable), that the issuance and delivery of such certificates is in
compliance with all applicable laws, regulations of governmental authorities and, if applicable,
the requirements of any exchange on which the shares of Stock are listed, quoted or traded. All
Stock certificates delivered pursuant to the Plan shall be subject to any stop-transfer orders and
other restrictions as the Administrator deems necessary or advisable to comply with federal, state
or foreign jurisdiction, securities or other laws, rules and quotation
19
system on which the Stock is listed, quoted or traded. The Administrator may place legends on
any Stock certificate to reference restrictions applicable to the Stock. In addition to the terms
and conditions provided herein, the Board may require that an individual make such reasonable
covenants, agreements, and representations as the Board, in its discretion, deems necessary or
advisable in order to comply with any such laws, regulations, or requirements. The Administrator
shall have the right to require any individual to comply with any timing or other restrictions with
respect to the settlement or exercise of any Award, including a window-period limitation, as may be
imposed in the discretion of the Administrator.
(c) Stockholder Rights. Until Stock is deemed delivered in accordance with Section
20(b), no right to vote or receive dividends or any other rights of a stockholder will exist with
respect to shares of Stock to be issued in connection with an Award, notwithstanding the exercise
of a Stock Option or any other action by the grantee with respect to an Award.
(d) Other Compensation Arrangements; No Employment Rights. Nothing contained in this
Plan shall prevent the Board from adopting other or additional compensation arrangements, including
trusts, and such arrangements may be either generally applicable or applicable only in specific
cases. The adoption of this Plan and the grant of Awards do not confer upon any employee any right
to continued employment with the Company or any Subsidiary.
(e) Trading Policy Restrictions. Option exercises and other Awards under the Plan
shall be subject to the Companys insider trading policy and procedures, as in effect from time to
time.
(f) Forfeiture of Awards under Sarbanes-Oxley Act. If the Company is required to
prepare an accounting restatement due to the material noncompliance of the Company, as a result of
misconduct, with any financial reporting requirement under the securities laws, then any grantee
who is one of the individuals subject to automatic forfeiture under Section 304 of the
Sarbanes-Oxley Act of 2002 shall reimburse the Company for the amount of any Award received by such
individual under the Plan during the 12-month period following the first public issuance or filing
with the United States Securities and Exchange Commission, as the case may be, of the financial
document embodying such financial reporting requirement.
SECTION 21. EFFECTIVE DATE OF PLAN
This Plan shall become effective upon approval by the holders of a majority of the votes cast
at a meeting of stockholders at which a quorum is present. No grants of Stock Options and other
Awards may be made hereunder after the tenth (10th) anniversary of the Effective Date
and no grants of Incentive Stock Options may be made hereunder after the tenth (10th)
anniversary of the date the Plan is approved by the Board.
20
SECTION 22. GOVERNING LAW
This Plan and all Awards and actions taken thereunder shall be governed by, and construed in
accordance with, the laws of the State of Delaware, applied without regard to conflict of law
principles.
DATE OF BOARD APPROVAL: July 26, 2007
DATE OF STOCKHOLDER APPROVAL: September 4, 2007
DATE OF BOARD APPROVAL OF AMENDED PLAN: May 27, 2011
DATE OF STOCKHOLDER APPROVAL OF AMENDED PLAN: June 9, 2011
21
ATHENAHEALTH, INC.
INCENTIVE STOCK OPTION AGREEMENT
UNDER THE AMENDED AND RESTATED
ATHENAHEALTH, INC.
2007 STOCK OPTION AND INCENTIVE PLAN
ATHENAHEALTH, INC.
2007 STOCK OPTION AND INCENTIVE PLAN
Name of Optionee:
No. of Option Shares:
Option Exercise Price per Share: $
[FMV on Grant Date (110% of FMV if a 10% owner)]
No. of Option Shares:
Option Exercise Price per Share: $
[FMV on Grant Date (110% of FMV if a 10% owner)]
Grant Date:
Expiration Date:
[up to 10 years (5 if a 10% owner)]
Expiration Date:
[up to 10 years (5 if a 10% owner)]
Pursuant to the athenahealth, Inc. 2007 Stock Option and Incentive Plan, as amended through
the date hereof (the Plan), athenahealth, Inc. (the Company) hereby grants to the Optionee
named above an option (the Stock Option) to purchase on or prior to the Expiration Date specified
above all or part of the number of shares of Common Stock, par value $0.01 per share (the Stock),
of the Company specified above at the Option Exercise Price per Share specified above subject to
the terms and conditions set forth herein and in the Plan.
1. Exercisability Schedule. No portion of this Stock Option may be exercised until
such portion shall have become exercisable. Except as set forth below, and subject to the
discretion of the Administrator (as defined in Section 1 of the Plan) to accelerate the
exercisability schedule hereunder, this Stock Option shall be exercisable with respect to the
following number of Option Shares on the dates indicated:
Incremental Number of | |||||
Option Shares Exercisable* | Exercisability Date | ||||
( %) | |||||
( %) | |||||
( %) | |||||
( %) |
* | Max. of $100,000 per yr. |
Once exercisable, this Stock Option shall continue to be exercisable at any time or times
prior to the close of business on the Expiration Date, subject to the provisions hereof and of the
Plan.
2. Manner of Exercise.
(a) The Optionee may exercise this Stock Option only in the following manner: from time to
time on or prior to the Expiration Date of this Stock Option, the Optionee may give written notice
to the Administrator of his or her election to purchase some or all of the Option Shares
purchasable at the time of such notice. This notice shall specify the number of Option Shares to
be purchased.
Payment of the purchase price for the Option Shares may be made by one or more of the
following methods: (i) in cash, by certified or bank check or other instrument acceptable to the
Administrator; (ii) through the delivery (or attestation to the ownership) of shares of Stock that
have been purchased by the Optionee on the open market or that are beneficially owned by the
Optionee and are not then subject to any restrictions under any Company plan and that otherwise
satisfy any holding periods as may be required by the Administrator; (iii) by the Optionee
delivering to the Company a properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable
to the Company to pay the option purchase price, provided that in the event the Optionee chooses to
pay the option purchase price as so provided, the Optionee and the broker shall comply with such
procedures and enter into such agreements of indemnity and other agreements as the Administrator
shall prescribe as a condition of such payment procedure; or (iv) a combination of (i), (ii) and
(iii) above. Payment instruments will be received subject to collection.
The transfer to the Optionee on the records of the Company or of the transfer agent of the
Option Shares will be contingent upon the Companys receipt from the Optionee of full payment for
the Option Shares, as set forth above and any agreement, statement or other evidence that the
Company may require to satisfy itself that the issuance of Stock to be purchased pursuant to the
exercise of Stock Options under the Plan and any subsequent resale of the shares of Stock will be
in compliance with applicable laws and regulations. In the event the Optionee chooses to pay the
purchase price by previously-owned shares of Stock through the attestation method, the number of
shares of Stock transferred to the Optionee upon the exercise of the Stock Option shall be net of
the shares attested to.
(b) The shares of Stock purchased upon exercise of this Stock Option shall be transferred to
the Optionee on the records of the Company or of the transfer agent upon compliance to the
satisfaction of the Administrator with all requirements under applicable laws or regulations in
connection with such issuance and with the requirements hereof and of the Plan. The determination
of the Administrator as to such compliance shall be final and binding on the Optionee. The
Optionee shall not be deemed to be the holder of, or to have any of the rights of a holder with
respect to, any shares of Stock subject to this Stock Option unless and until this Stock Option
shall have been exercised pursuant to the terms hereof, the Company or the transfer agent shall
have transferred the shares to the Optionee, and the Optionees name shall have been entered as the
stockholder of record on the books of the Company. Thereupon, the Optionee shall have full voting,
dividend and other ownership rights with respect to such shares of Stock.
(c) The minimum number of shares with respect to which this Stock Option may be exercised at
any one time shall be 100 shares, unless the number of shares with respect to
2
which this Stock Option is being exercised is the total number of shares subject to exercise
under this Stock Option at the time.
(d) Notwithstanding any other provision hereof or of the Plan, no portion of this Stock Option
shall be exercisable after the Expiration Date hereof.
3. Termination of Employment; Employment Status Change. If the Optionees employment
by the Company or a Subsidiary (as defined in the Plan) is terminated, the period within which to
exercise the Stock Option may be subject to earlier termination as set forth below.
(a) Termination Due to Death. If the Optionees employment terminates by reason of
the Optionees death, any portion of this Stock Option outstanding on such date may thereafter be
exercised, to the extent exercisable on such date, by the Optionees legal representative or
legatee for a period of 180 days from the date of death or until the Expiration Date, if earlier.
(b) Termination Due to Disability. If the Optionees employment terminates by reason
of the Optionees disability (as determined by the Administrator), any portion of this Stock Option
outstanding on such date may thereafter be exercised, to the extent exercisable on the date of
termination, by the Optionee for a period of 180 days from the date of termination or until the
Expiration Date, if earlier. The death of the Optionee during the 180-day period provided in this
Section 3(b) shall extend such period for another 180-days from the date of death or until the
Expiration Date, if earlier.
(c) Termination for Cause. If the Optionees employment terminates for Cause, any
portion of this Stock Option outstanding on such date shall terminate immediately and be of no
further force and effect. For purposes hereof, Cause means any of the following: (i) dishonesty,
embezzlement, misappropriation of assets or property of the Company; (ii) gross negligence,
misconduct, neglect of duties, theft, fraud, or breach of fiduciary duty to the Company; (iii)
violation of federal or state securities laws; (iv) breach of an employment, consulting or other
agreement with the Company; or (v) the conviction of a felony, or any crime involving moral
turpitude, including a plea of guilty or nolo contendre.
(d) Other Termination. If the Optionees employment terminates for any reason other
than the Optionees death, the Optionees disability, or Cause, and unless otherwise determined by
the Administrator, any portion of this Stock Option outstanding on such date may be exercised, to
the extent exercisable on the date of termination, for a period of three months from the date of
termination or until the Expiration Date, if earlier. Any portion of this Stock Option that is not
exercisable on the date of termination shall terminate immediately and be of no further force or
effect.
(e) Employment Status Change. The exercisability of this Stock Option reflects the
Companys policy that stock option awards accrue over time, and that such accruals are in
consideration for providing continued service to the Company during substantially all of each work
week. Therefore, this Stock Option will continue to vest under the above Exercisability Schedule
only if the Optionee devotes at least eighty percent (80%) of the
3
Optionees work schedule to service to the Company. If at any time the Optionees employment
status is changed to less than 80% time, then any portion of this Stock Option outstanding on such
date may be exercised, to the extent exercisable on the date of change in employment status, for a
period of three months from the date of change in employment status or until the Expiration Date,
if earlier. Any portion of this Stock Option that is not exercisable on the date of change in
employment status shall terminate immediately and be of no further force or effect.
The Administrators determination of the reason for termination of the Optionees employment
shall be conclusive and binding on the Optionee and his or her representatives or legatees.
4. Incorporation of Plan. Notwithstanding anything herein to the contrary, this Stock
Option shall be subject to and governed by all the terms and conditions of the Plan, including the
powers of the Administrator set forth in Section 2(b) of the Plan. Capitalized terms in this
Agreement shall have the meaning specified in the Plan, unless a different meaning is specified
herein.
5. Transferability. This Agreement is personal to the Optionee, is non-assignable and
is not transferable in any manner, by operation of law or otherwise, other than by will or the laws
of descent and distribution. This Stock Option is exercisable, during the Optionees lifetime,
only by the Optionee, and thereafter, only by the Optionees legal representative or legatee.
6. Status of the Stock Option. This Stock Option is intended to qualify as an
incentive stock option under Section 422 of the Internal Revenue Code of 1986, as amended (the
Code), but the Company does not represent or warrant that this Stock Option qualifies as such.
The Optionee should consult with his or her own tax advisors regarding the tax effects of this
Stock Option and the requirements necessary to obtain favorable income tax treatment under Section
422 of the Code, including, but not limited to, holding period requirements. To the extent any
portion of this Stock Option does not so qualify as an incentive stock option, such portion shall
be deemed to be a non-qualified stock option. If the Optionee intends to dispose or does dispose
(whether by sale, gift, transfer or otherwise) of any Option Shares within the one-year period
beginning on the date after the transfer of such shares to him or her, or within the two-year
period beginning on the day after the grant of this Stock Option, he or she will so notify the
Company within 30 days after such disposition.
7. Tax Withholding. The Optionee shall, not later than the date as of which the
exercise of this Stock Option becomes a taxable event for Federal income tax purposes, pay to the
Company or make arrangements satisfactory to the Administrator for payment of any Federal, state,
and local taxes required by law to be withheld on account of such taxable event. The Optionee may
elect to have the minimum required tax withholding obligation satisfied, in whole or in part, by
authorizing the Company to withhold from shares of Stock to be issued.
8. No Obligation to Continue Employment. Neither the Company nor any Subsidiary is
obligated by or as a result of the Plan or this Agreement to continue the Optionee in employment
and neither the Plan nor this Agreement shall interfere in any way with the right of the Company or
any Subsidiary to terminate the employment of the Optionee at any time.
4
9. Notices. Notices hereunder shall be mailed or delivered to the Company at its
principal place of business and shall be mailed or delivered to the Optionee at the address on file
with the Company or, in either case, at such other address as one party may subsequently furnish to
the other party in writing.
10. Acceptance. The foregoing Agreement shall be deemed accepted and the terms and
conditions thereof hereby agreed to by the Optionee upon notice to the Optionee.
5
ATHENAHEALTH, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
FOR COMPANY EMPLOYEES
NON-QUALIFIED STOCK OPTION AGREEMENT
FOR COMPANY EMPLOYEES
UNDER THE AMENDED AND RESTATED
ATHENAHEALTH, INC.
2007 STOCK OPTION AND INCENTIVE PLAN
ATHENAHEALTH, INC.
2007 STOCK OPTION AND INCENTIVE PLAN
Name of Optionee:
No. of Option Shares:
Option Exercise Price per Share: $
[FMV on Grant Date]
No. of Option Shares:
Option Exercise Price per Share: $
[FMV on Grant Date]
Grant Date:
Expiration Date:
Expiration Date:
Pursuant to the athenahealth, Inc. 2007 Stock Option and Incentive Plan, as amended through
the date hereof (the Plan), athenahealth, Inc. (the Company) hereby grants to the Optionee
named above an option (the Stock Option) to purchase on or prior to the Expiration Date specified
above all or part of the number of shares of Common Stock, par value $0.01 per share (the Stock)
of the Company specified above at the Option Exercise Price per Share specified above subject to
the terms and conditions set forth herein and in the Plan. This Stock Option is not intended to be
an incentive stock option under Section 422 of the Internal Revenue Code of 1986, as amended.
1. Exercisability Schedule. No portion of this Stock Option may be exercised until
such portion shall have become exercisable. Except as set forth below, and subject to the
discretion of the Administrator (as defined in Section 1 of the Plan) to accelerate the
exercisability schedule hereunder, this Stock Option shall be exercisable with respect to the
following number of Option Shares on the dates indicated:
Incremental Number of | |||||
Option Shares Exercisable | Exercisability Date | ||||
( %) | |||||
( %) | |||||
( %) | |||||
( %) |
Once exercisable, this Stock Option shall continue to be exercisable at any time or times
prior to the close of business on the Expiration Date, subject to the provisions hereof and of the
Plan.
2. Manner of Exercise.
(a) The Optionee may exercise this Stock Option only in the following manner: from time to
time on or prior to the Expiration Date of this Stock Option, the Optionee may give written notice
to the Administrator of his or her election to purchase some or all of the Option Shares
purchasable at the time of such notice. This notice shall specify the number of Option Shares to
be purchased.
Payment of the purchase price for the Option Shares may be made by one or more of the
following methods: (i) in cash, by certified or bank check or other instrument acceptable to the
Administrator; (ii) through the delivery (or attestation to the ownership) of shares of Stock that
have been purchased by the Optionee on the open market or that are beneficially owned by the
Optionee and are not then subject to any restrictions under any Company plan and that otherwise
satisfy any holding periods as may be required by the Administrator; (iii) by the Optionee
delivering to the Company a properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable
to the Company to pay the option purchase price, provided that in the event the Optionee chooses to
pay the option purchase price as so provided, the Optionee and the broker shall comply with such
procedures and enter into such agreements of indemnity and other agreements as the Administrator
shall prescribe as a condition of such payment procedure; or (iv) a combination of (i), (ii) and
(iii) above. Payment instruments will be received subject to collection.
The transfer to the Optionee on the records of the Company or of the transfer agent of the
Option Shares will be contingent upon the Companys receipt from the Optionee of full payment for
the Option Shares, as set forth above and any agreement, statement or other evidence that the
Company may require to satisfy itself that the issuance of Stock to be purchased pursuant to the
exercise of Stock Options under the Plan and any subsequent resale of the shares of Stock will be
in compliance with applicable laws and regulations. In the event the Optionee chooses to pay the
purchase price by previously-owned shares of Stock through the attestation method, the number of
shares of Stock transferred to the Optionee upon the exercise of the Stock Option shall be net of
the Shares attested to.
(b) The shares of Stock purchased upon exercise of this Stock Option shall be transferred to
the Optionee on the records of the Company or of the transfer agent upon compliance to the
satisfaction of the Administrator with all requirements under applicable laws or regulations in
connection with such issuance and with the requirements hereof and of the Plan. The determination
of the Administrator as to such compliance shall be final and binding on the Optionee. The
Optionee shall not be deemed to be the holder of, or to have any of the rights of a holder with
respect to, any shares of Stock subject to this Stock Option unless and until this Stock Option
shall have been exercised pursuant to the terms hereof, the Company or the transfer agent shall
have transferred the shares to the Optionee, and the Optionees name shall have been entered as the
stockholder of record on the books of the Company. Thereupon, the Optionee shall have full voting,
dividend and other ownership rights with respect to such shares of Stock.
(c) The minimum number of shares with respect to which this Stock Option may be exercised at
any one time shall be 100 shares, unless the number of shares with respect to
2
which this Stock Option is being exercised is the total number of shares subject to exercise
under this Stock Option at the time.
(d) Notwithstanding any other provision hereof or of the Plan, no portion of this Stock Option
shall be exercisable after the Expiration Date hereof.
3. Termination of Employment; Employment Status Change. If the Optionees employment
by the Company or a Subsidiary (as defined in the Plan) is terminated, the period within which to
exercise the Stock Option may be subject to earlier termination as set forth below.
(a) Termination Due to Death. If the Optionees employment terminates by reason of
the Optionees death, any portion of this Stock Option outstanding on such date may thereafter be
exercised, to the extent exercisable on such date, by the Optionees legal representative or
legatee for a period of 180 days from the date of death or until the Expiration Date, if earlier.
(b) Termination Due to Disability. If the Optionees employment terminates by reason
of the Optionees disability (as determined by the Administrator), any portion of this Stock Option
outstanding on such date may thereafter be exercised, to the extent exercisable on the date of
termination, by the Optionee for a period of 180 days from the date of termination or until the
Expiration Date, if earlier. The death of the Optionee during the 180-day period provided in this
Section 3(b) shall extend such period for another 180 days from the date of death or until the
Expiration Date, if earlier.
(c) Termination for Cause. If the Optionees employment terminates for Cause, any
portion of this Stock Option outstanding on such date shall terminate immediately and be of no
further force and effect. For purposes hereof, Cause means any of the following: (i) dishonesty,
embezzlement, misappropriation of assets or property of the Company; (ii) gross negligence,
misconduct, neglect of duties, theft, fraud, or breach of fiduciary duty to the Company; (iii)
violation of federal or state securities laws; (iv) breach of an employment, consulting or other
agreement with the Company; or (v) the conviction of a felony, or any crime involving moral
turpitude, including a plea of guilty or nolo contendre.
(d) Other Termination. If the Optionees employment terminates for any reason other
than the Optionees death, the Optionees disability or Cause, and unless otherwise determined by
the Administrator, any portion of this Stock Option outstanding on such date may be exercised, to
the extent exercisable on the date of termination, for a period of three months from the date of
termination or until the Expiration Date, if earlier. Any portion of this Stock Option that is not
exercisable on the date of termination shall terminate immediately and be of no further force or
effect.
(e) Employment Status Change. The exercisability of this Stock Option reflects the
Companys policy that stock option awards accrue over time, and that such accruals are in
consideration for providing continued service to the Company during substantially all of each work
week. Therefore, this Stock Option will continue to vest under the above Exercisability Schedule
only if the Optionee devotes at least eighty percent (80%) of the
3
Optionees work schedule to service to the Company. If at any time the Optionees employment
status is changed to less than 80% time, then any portion of this Stock Option outstanding on such
date may be exercised, to the extent exercisable on the date of change in employment status, for a
period of three months from the date of change in employment status or until the Expiration Date,
if earlier. Any portion of this Stock Option that is not exercisable on the date of change in
employment status shall terminate immediately and be of no further force or effect.
The Administrators determination of the reason for termination of the Optionees employment
shall be conclusive and binding on the Optionee and his or her representatives or legatees.
4. Incorporation of Plan. Notwithstanding anything herein to the contrary, this Stock
Option shall be subject to and governed by all the terms and conditions of the Plan, including the
powers of the Administrator set forth in Section 2(b) of the Plan. Capitalized terms in this
Agreement shall have the meaning specified in the Plan, unless a different meaning is specified
herein.
5. Transferability. This Agreement is personal to the Optionee, is non-assignable and
is not transferable in any manner, by operation of law or otherwise, other than by will or the laws
of descent and distribution. This Stock Option is exercisable, during the Optionees lifetime,
only by the Optionee, and thereafter, only by the Optionees legal representative or legatee.
6. Tax Withholding. The Optionee shall, not later than the date as of which the
exercise of this Stock Option becomes a taxable event for Federal income tax purposes, pay to the
Company or make arrangements satisfactory to the Administrator for payment of any Federal, state,
and local taxes required by law to be withheld on account of such taxable event. The Optionee may
elect to have the minimum required tax withholding obligation satisfied, in whole or in part, by
authorizing the Company to withhold from shares of Stock to be issued.
7. No Obligation to Continue Employment. Neither the Company nor any Subsidiary is
obligated by or as a result of the Plan or this Agreement to continue the Optionee in employment
and neither the Plan nor this Agreement shall interfere in any way with the right of the Company or
any Subsidiary to terminate the employment of the Optionee at any time.
8. Notices. Notices hereunder shall be mailed or delivered to the Company at its
principal place of business and shall be mailed or delivered to the Optionee at the address on file
with the Company or, in either case, at such other address as one party may subsequently furnish to
the other party in writing.
9. Acceptance. The foregoing Agreement shall be deemed accepted and the terms and
conditions thereof hereby agreed to by the Optionee upon notice to the Optionee.
4
ATHENAHEALTH, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
FOR NON-EMPLOYEE DIRECTORS
FOR NON-EMPLOYEE DIRECTORS
UNDER THE AMENDED AND RESTATED
ATHENAHEALTH, INC.
2007 STOCK OPTION AND INCENTIVE PLAN
ATHENAHEALTH, INC.
2007 STOCK OPTION AND INCENTIVE PLAN
Name of Optionee:
No. of Option Shares:
Option Exercise Price per Share: $
[FMV on Grant Date]
No. of Option Shares:
Option Exercise Price per Share: $
[FMV on Grant Date]
Grant Date:
Expiration Date:
Expiration Date:
[No more than 10 years]
Pursuant to the athenahealth, Inc. 2007 Stock Option and Incentive Plan, as amended through
the date hereof (the Plan), athenahealth, Inc. (the Company) hereby grants to the Optionee
named above, who is a Director of the Company but is not an employee of the Company, an option (the
Stock Option) to purchase on or prior to the Expiration Date specified above all or part of the
number of shares of Common Stock, par value $0.01 per share (the Stock), of the Company specified
above at the Option Exercise Price per Share specified above subject to the terms and conditions
set forth herein and in the Plan. This Stock Option is not intended to be an incentive stock
option under Section 422 of the Internal Revenue Code of 1986, as amended.
1. Exercisability Schedule. No portion of this Stock Option may be exercised until
such portion shall have become exercisable. Except as set forth below, and subject to the
discretion of the Administrator (as defined in Section 1 of the Plan) to accelerate the
exercisability schedule hereunder, this Stock Option shall be exercisable with respect to the
following number of Option Shares on the dates indicated:
Incremental Number of | |||||
Option Shares Exercisable | Exercisability Date | ||||
( %) | |||||
( %) | |||||
( %) | |||||
( %) |
Once exercisable, this Stock Option shall continue to be exercisable at any time or times
prior to the close of business on the Expiration Date, subject to the provisions hereof and of the
Plan.
2. Manner of Exercise.
(a) The Optionee may exercise this Stock Option only in the following manner: from time to
time on or prior to the Expiration Date of this Stock Option, the Optionee may give written notice
to the Administrator of his or her election to purchase some or all of the Option Shares
purchasable at the time of such notice. This notice shall specify the number of Option Shares to
be purchased.
Payment of the purchase price for the Option Shares may be made by one or more of the
following methods: (i) in cash, by certified or bank check or other instrument acceptable to the
Administrator; (ii) through the delivery (or attestation to the ownership) of shares of Stock that
have been purchased by the Optionee on the open market or that are beneficially owned by the
Optionee and are not then subject to any restrictions under any Company plan and that otherwise
satisfy any holding periods as may be required by the Administrator; (iii) by the Optionee
delivering to the Company a properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable
to the Company to pay the option purchase price, provided that in the event the Optionee chooses to
pay the option purchase price as so provided, the Optionee and the broker shall comply with such
procedures and enter into such agreements of indemnity and other agreements as the Administrator
shall prescribe as a condition of such payment procedure; or (iv) a combination of (i), (ii) and
(iii) above. Payment instruments will be received subject to collection.
The transfer to the Optionee on the records of the Company or of the transfer agent of the
Option Shares will be contingent upon the Companys receipt from the Optionee of full payment for
the Option Shares, as set forth above and any agreement, statement or other evidence that the
Company may require to satisfy itself that the issuance of Stock to be purchased pursuant to the
exercise of Stock Options under the Plan and any subsequent resale of the shares of Stock will be
in compliance with applicable laws and regulations. In the event the Optionee chooses to pay the
purchase price by previously-owned shares of Stock through the attestation method, the number of
shares of Stock transferred to the Optionee upon the exercise of the Stock Option shall be net of
the Shares attested to.
(b) The shares of Stock purchased upon exercise of this Stock Option shall be transferred to
the Optionee on the records of the Company or of the transfer agent upon compliance to the
satisfaction of the Administrator with all requirements under applicable laws or regulations in
connection with such transfer and with the requirements hereof and of the Plan. The determination
of the Administrator as to such compliance shall be final and binding on the Optionee. The
Optionee shall not be deemed to be the holder of, or to have any of the rights of a holder with
respect to, any shares of Stock subject to this Stock Option unless and until this Stock Option
shall have been exercised pursuant to the terms hereof, the Company or the transfer agent shall
have transferred the shares to the Optionee, and the Optionees name shall have been
2
entered as the stockholder of record on the books of the Company. Thereupon, the Optionee
shall have full voting, dividend and other ownership rights with respect to such shares of Stock.
(c) The minimum number of shares with respect to which this Stock Option may be exercised at
any one time shall be 100 shares, unless the number of shares with respect to which this Stock
Option is being exercised is the total number of shares subject to exercise under this Stock Option
at the time.
(d) Notwithstanding any other provision hereof or of the Plan, no portion of this Stock Option
shall be exercisable after the Expiration Date hereof.
3. Termination as Director. If the Optionee ceases to be a Director of the Company,
the period within which to exercise the Stock Option may be subject to earlier termination as set
forth below.
(a) Termination by Reason of Death. If the Optionee ceases to be a Director by reason
of the Optionees death, any portion of this Stock Option outstanding on such date may be
exercised, to the extent exercisable on such date, by his or her legal representative or legatee
for a period of 180 days from the date of death or until the Expiration Date, if earlier.
(b) Other Termination. If the Optionee ceases to be a Director for any reason other
than the Optionees death, any portion of this Stock Option outstanding on such date may be
exercised, to the extent exercisable on such date, for a period of 180 days from the date of
termination or until the Expiration Date, if earlier.
4. Incorporation of Plan. Notwithstanding anything herein to the contrary, this Stock
Option shall be subject to and governed by all the terms and conditions of the Plan, including the
powers of the Administrator set forth in Section 2(b) of the Plan. Capitalized terms in this
Agreement shall have the meaning specified in the Plan, unless a different meaning is specified
herein.
5. Transferability. This Agreement is personal to the Optionee, is non-assignable and
is not transferable in any manner, by operation of law or otherwise, other than by will or the laws
of descent and distribution. This Stock Option is exercisable, during the Optionees lifetime,
only by the Optionee, and thereafter, only by the Optionees legal representative or legatee.
6. No Obligation to Continue as a Director. Neither the Plan nor this Stock Option
confers upon the Optionee any rights with respect to continuance as a Director.
7. Notices. Notices hereunder shall be mailed or delivered to the Company at its
principal place of business and shall be mailed or delivered to the Optionee at the address on file
with the Company or, in either case, at such other address as one party may subsequently furnish to
the other party in writing.
8. Amendment. Pursuant to Section 18 of the Plan, the Administrator may at any time
amend or cancel any outstanding portion of this Stock Option, but no such action may be
3
taken that adversely affects the Optionees rights under this Agreement without the Optionees
consent.
9. Acceptance. The foregoing Agreement shall be deemed accepted and the terms and
conditions thereof hereby agreed to by the Optionee upon notice to the Optionee.
4
ATHENAHEALTH, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
FOR NON-EMPLOYEE CONSULTANTS
FOR NON-EMPLOYEE CONSULTANTS
UNDER THE ATHENAHEALTH, INC.
2007 STOCK OPTION AND INCENTIVE PLAN
2007 STOCK OPTION AND INCENTIVE PLAN
Name of Optionee:
No. of Option Shares:
Option Exercise Price per Share: $
[FMV on Grant Date]
No. of Option Shares:
Option Exercise Price per Share: $
[FMV on Grant Date]
Grant Date:
Expiration Date:
[No more than 10 years]
Expiration Date:
[No more than 10 years]
Pursuant to the athenahealth, Inc. 2007 Stock Option and Incentive Plan, as amended through
the date hereof (the Plan), athenahealth, Inc. (the Company) hereby grants to the Optionee
named above, who is a consultant or other service provider to the Company but is not an employee of
the Company, an option (the Stock Option) to purchase on or prior to the Expiration Date
specified above all or part of the number of shares of Common Stock, par value $0.01 per share (the
Stock), of the Company specified above at the Option Exercise Price per Share specified above
subject to the terms and conditions set forth herein and in the Plan. This Stock Option is not
intended to be an incentive stock option under Section 422 of the Internal Revenue Code of 1986,
as amended.
1. Exercisability Schedule. No portion of this Stock Option may be exercised until
such portion shall have become exercisable. Except as set forth below, and subject to the
discretion of the Administrator (as defined in Section 1 of the Plan) to accelerate the
exercisability schedule hereunder, this Stock Option shall be exercisable with respect to the
following number of Option Shares on the dates indicated:
Incremental Number of | |||||
Option Shares Exercisable | Exercisability Date | ||||
( %) | |||||
( %) | |||||
( %) | |||||
( %) | |||||
( %) |
Once exercisable, this Stock Option shall continue to be exercisable at any time or times
prior to the close of business on the Expiration Date, subject to the provisions hereof and of the
Plan.
2. Manner of Exercise.
(a) The Optionee may exercise this Stock Option only in the following manner: from time to
time on or prior to the Expiration Date of this Stock Option, the Optionee may give written notice
to the Administrator of his or her election to purchase some or all of the Option Shares
purchasable at the time of such notice. This notice shall specify the number of Option Shares to
be purchased.
Payment of the purchase price for the Option Shares may be made by one or more of the
following methods: (i) in cash, by certified or bank check or other instrument acceptable to the
Administrator; (ii) through the delivery (or attestation to the ownership) of shares of Stock that
have been purchased by the Optionee on the open market or that are beneficially owned by the
Optionee and are not then subject to any restrictions under any Company plan and that otherwise
satisfy any holding periods as may be required by the Administrator; (iii) by the Optionee
delivering to the Company a properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable
to the Company to pay the option purchase price, provided that in the event the Optionee chooses to
pay the option purchase price as so provided, the Optionee and the broker shall comply with such
procedures and enter into such agreements of indemnity and other agreements as the Administrator
shall prescribe as a condition of such payment procedure; or (iv) a combination of (i), (ii) and
(iii) above. Payment instruments will be received subject to collection.
The transfer to the Optionee on the records of the Company or of the transfer agent of the
Option Shares will be contingent upon the Companys receipt from the Optionee of full payment for
the Option Shares, as set forth above and any agreement, statement or other evidence that the
Company may require to satisfy itself that the issuance of Stock to be purchased pursuant to the
exercise of Stock Options under the Plan and any subsequent resale of the shares of Stock will be
in compliance with applicable laws and regulations. In the event the Optionee chooses to pay the
purchase price by previously-owned shares of Stock through the attestation method, the number of
shares of Stock transferred to the Optionee upon the exercise of the Stock Option shall be net of
the Shares attested to.
(b) The shares of Stock purchased upon exercise of this Stock Option shall be transferred to
the Optionee on the records of the Company or of the transfer agent upon compliance to the
satisfaction of the Administrator with all requirements under applicable laws or regulations in
connection with such transfer and with the requirements hereof and of the Plan. The determination
of the Administrator as to such compliance shall be final and binding on the Optionee. The
Optionee shall not be deemed to be the holder of, or to have any of the rights of a holder with
respect to, any shares of Stock subject to this Stock Option unless and until this Stock Option
shall have been exercised pursuant to the terms hereof, the Company or the transfer agent shall
have transferred the shares to the Optionee, and the Optionees name shall have been
2
entered as the stockholder of record on the books of the Company. Thereupon, the Optionee
shall have full voting, dividend and other ownership rights with respect to such shares of Stock.
(c) The minimum number of shares with respect to which this Stock Option may be exercised at
any one time shall be 100 shares, unless the number of shares with respect to which this Stock
Option is being exercised is the total number of shares subject to exercise under this Stock Option
at the time.
(d) Notwithstanding any other provision hereof or of the Plan, no portion of this Stock Option
shall be exercisable after the Expiration Date hereof.
3. Termination as Consultant. If the Optionee ceases to be a consultant or other
service provider to the Company for any reason including death or disability, any portion of this
Stock Option outstanding on such date may be exercised (to the extent exercisable on such date) for
a period of three (3) months from the date of the cessation of the Optionees consulting or service
relationship with Company or until the Expiration Date, if earlier. No further portion of this
Option shall become exercisable after the Optionee ceases to be a consultant or other service
provider to the Company.
4. Incorporation of Plan. Notwithstanding anything herein to the contrary, this Stock
Option shall be subject to and governed by all the terms and conditions of the Plan, including the
powers of the Administrator set forth in Section 2(b) of the Plan. Capitalized terms in this
Agreement shall have the meaning specified in the Plan, unless a different meaning is specified
herein.
5. Transferability. This Agreement is personal to the Optionee, is non-assignable and
is not transferable in any manner, by operation of law or otherwise, other than by will or the laws
of descent and distribution. This Stock Option is exercisable, during the Optionees lifetime,
only by the Optionee, and thereafter, only by the Optionees legal representative or legatee.
6. No Obligation to Continue as a Consultant or Service Provider. Neither the Plan
nor this Stock Option confers upon the Optionee any rights with respect to continuance as a
consultant or other service provider to the Company.
7. Notices. Notices hereunder shall be mailed or delivered to the Company at its
principal place of business and shall be mailed or delivered to the Optionee at the address on file
with the Company or, in either case, at such other address as one party may subsequently furnish to
the other party in writing.
3
8. Amendment. Pursuant to Section 18 of the Plan, the Administrator may at any time
amend or cancel any outstanding portion of this Stock Option, but no such action may be taken that
adversely affects the Optionees rights under this Agreement without the Optionees consent.
ATHENAHEALTH, INC. |
||||
By: | ||||
Name: | ||||
Title: | ||||
The foregoing Agreement is hereby accepted and the terms and conditions thereof hereby agreed to by
the undersigned.
Dated: |
||||
Optionees Signature | ||||
Optionees name and address: | ||||
4
ATHENAHEALTH, INC,
RESTRICTED STOCK AWARD AGREEMENT
UNDER THE ATHENAHEALTH, INC.
2007 STOCK OPTION AND INCENTIVE PLAN
2007 STOCK OPTION AND INCENTIVE PLAN
Name of Grantee:
No. of Shares:
Grant Date:
Final Acceptance Date:
Purchase Price per Share: (if any)
No. of Shares:
Grant Date:
Final Acceptance Date:
Purchase Price per Share: (if any)
Pursuant to the athenahealth, Inc. 2007 Stock Option and Incentive Plan (the Plan) as
amended through the date hereof, athenahealth, Inc. (the Company) hereby grants a Restricted
Stock Award (an Award) to the Grantee named above. Upon acceptance of this Award, the Grantee
shall receive the number of shares of Common Stock, par value $0.01 per share (the Stock) of the
Company specified above, subject to the restrictions and conditions set forth herein and in the
Plan.
1. Acceptance of Award. The Grantee shall have no rights with respect to this Award
unless he or she shall have accepted this Award prior to the close of business on the Final
Acceptance Date specified above by signing and delivering to the Company a copy of this Award
Agreement and paying the applicable purchase price (if any). Upon acceptance of this Award by the
Grantee, the shares of Restricted Stock so accepted shall be issued and held by the Companys
transfer agent in book entry form, and the Grantees name shall be entered as the stockholder of
record on the books of the Company. Thereupon, the Grantee shall have all the rights of a
shareholder with respect to such shares, including voting and dividend rights, subject, however, to
the restrictions and conditions specified in Paragraph 2 below.
2. Restrictions and Conditions.
(a) Any book entries for the shares of Restricted Stock granted herein shall bear an
appropriate legend, as determined by the Administrator in its sole discretion, to the effect that
such shares are subject to restrictions as set forth herein and in the Plan.
(b) Shares of Restricted Stock granted herein may not be sold, assigned, transferred, pledged
or otherwise encumbered or disposed of by the Grantee prior to vesting.
(c) If the Grantees employment with the Company and its Subsidiaries is voluntarily or
involuntarily terminated for any reason (including death) prior to vesting of shares of Restricted
Stock granted herein, all shares of Restricted Stock shall immediately and automatically be
forfeited and returned to the Company.
3. Vesting of Restricted Stock. The restrictions and conditions in Paragraph 2 of
this Agreement shall lapse on the Vesting Date or Dates specified in the following schedule so long
as the Grantee remains an employee of the Company or a Subsidiary on such Dates. If a series
of Vesting Dates is specified, then the restrictions and conditions in Paragraph 2 shall lapse only
with respect to the number of shares of Restricted Stock specified as vested on such date.
Number of | |||||
Shares Vested | Vesting Date | ||||
( %) | |||||
( %) | |||||
( %) | |||||
( %) | |||||
( %) |
Subsequent to such Vesting Date or Dates, the shares of Stock on which all restrictions and
conditions have lapsed shall no longer be deemed Restricted Stock. The Administrator may at any
time accelerate the vesting schedule specified in this Paragraph 3.
4. Dividends. Dividends on Shares of Restricted Stock shall be paid currently to the
Grantee.
5. Incorporation of Plan. Notwithstanding anything herein to the contrary, this
Agreement shall be subject to and governed by all the terms and conditions of the Plan, including
the powers of the Administrator set forth in Section 2(b) of the Plan. Capitalized terms in this
Agreement shall have the meaning specified in the Plan, unless a different meaning is specified
herein.
6. Transferability. This Agreement is personal to the Grantee, is non-assignable and
is not transferable in any manner, by operation of law or otherwise, other than by will or the laws
of descent and distribution.
7. Tax Withholding. The Grantee shall, not later than the date as of which the
receipt of this Award becomes a taxable event for Federal income tax purposes, pay to the Company
or make arrangements satisfactory to the Administrator for payment of any Federal, state, and local
taxes required by law to be withheld on account of such taxable event. The Grantee may elect to
have the required minimum tax withholding obligation satisfied, in whole or in part, by authorizing
the Company to withhold from shares of Stock to be issued.
8. Election Under Section 83(b). The Grantee and the Company hereby agree that the
Grantee may, within 30 days following the acceptance of this Award as provided in Paragraph 1
hereof, file with the Internal Revenue Service and the Company an election under Section 83(b) of
the Internal Revenue Code. In the event the Grantee makes such an election, he or she agrees to
provide a copy of the election to the Company.
2
9. No Obligation to Continue Employment. Neither the Company nor any Subsidiary is
obligated by or as a result of the Plan or this Agreement to continue the Grantee in employment and
neither the Plan nor this Agreement shall interfere in any way with the right of the Company or any
Subsidiary to terminate the employment of the Grantee at any time.
10. Notices. Notices hereunder shall be mailed or delivered to the Company at its
principal place of business and shall be mailed or delivered to the Grantee at the address on file
with the Company or, in either case, at such other address as one party may subsequently furnish to
the other party in writing.
ATHENAHEALTH, INC. |
||||
By: | ||||
Name: | ||||
Title: | ||||
The foregoing Agreement is hereby accepted and the terms and conditions thereof hereby agreed to by
the undersigned.
Dated: |
||||
Grantees Signature | ||||
Grantees name and address: | ||||
3
RESTRICTED STOCK UNIT AWARD AGREEMENT
UNDER THE AMENDED AND RESTATED
ATHENAHEALTH, INC.
2007 STOCK OPTION AND INCENTIVE PLAN
ATHENAHEALTH, INC.
2007 STOCK OPTION AND INCENTIVE PLAN
Name of Grantee:
No. of Restricted Stock Units:
Grant Date:
No. of Restricted Stock Units:
Grant Date:
athenahealth, Inc. (the Company) has selected you to receive an award of Restricted Stock
Units identified above, subject to the terms set forth on Appendix A and the provisions of
the Amended and Restated athenahealth, Inc. 2007 Stock Option and Incentive Plan (the Plan) and
the attached Statement of Terms and Conditions.
Appendix A
Vesting Schedule
Percentage of Units Vested | Vesting Date | |
____%
|
First Anniversary of Grant Date | |
____%
|
Second Anniversary of Grant Date | |
____%
|
Third Anniversary of Grant Date | |
____%
|
Fourth Anniversary of Grant Date |
The Administrator may at any time accelerate the vesting schedule set forth above.
1
STATEMENT OF TERMS AND CONDITIONS
1. Preamble. This Statement contains the terms and conditions of an award (Award)
of Restricted Stock Units (Restricted Stock Units) made to the Grantee identified in the
Restricted Stock Unit Award Agreement attached hereto pursuant to the Plan. Each Restricted Stock
Unit represents the right to receive one share of common stock of the Company (Stock) on the
vesting date of that unit.
2. Restrictions and Conditions.
(a) This Award may not be sold, assigned, transferred, pledged or otherwise encumbered or
disposed of by the Grantee prior to vesting.
(b) If the Grantees employment with or service as a director of the Company and its
Subsidiaries is voluntarily or involuntarily terminated for any reason (including death) prior to
vesting of Restricted Stock Units granted herein, all unvested Restricted Stock Units shall
immediately and automatically be forfeited and returned to the Company.
(c) The Grantee shall not have any stockholder rights, including voting or dividend rights,
with respect to the shares of Stock subject to the Award until the Grantee becomes a record holder
of those shares of Stock following their actual issuance pursuant to Section 5 of this Agreement
3. Vesting of Restricted Stock Units.
The term vest as used in this Statement means the lapsing of the restrictions that are
described in this Statement with respect to the Restricted Stock Units. The Restricted Stock Units
shall vest in accordance with the schedule set forth in Appendix A to this Agreement so long as the
Grantee remains at least eighty percent of a full-time equivalent employee or director of the
Company or a Subsidiary on each vesting date. If at any time the Grantees employment status is
changed to less than an eighty percent full-time equivalent, then any unvested Restricted Stock
Units shall be forfeited and returned to the Company on such date.
4. Dividend Equivalents.
(a) If on any date the Company shall pay any dividend on shares of Stock of the Company, the
number of Restricted Stock Units credited to the Grantee shall, as of such date, be increased by an
amount determined by the following formula:
W = (X multiplied by Y) divided by Z, where:
W = the number of additional Restricted Stock Units to be credited to the Grantee on
such dividend payment date;
X = the aggregate number of Restricted Stock Units credited to the Grantee as of the
record date of the dividend;
Y = the cash dividend per share amount; and
2
Z = the Fair Market Value per share of Stock (as determined under the Plan) on the
dividend payment date.
(b) In the case of a dividend paid on Stock in the form of Stock, including without limitation
a distribution of Stock by reason of a stock dividend, stock split or otherwise, the number of
Restricted Stock Units credited to the Grantee shall be increased by a number equal to the product
of (i) the aggregate number of Restricted Stock Units that have been awarded to the Grantee through
the related dividend record date, and (ii) the number of shares of Stock (including any fraction
thereof) payable as dividend on one share of Stock. Any additional Restricted Stock Units shall be
subject to the vesting and restrictions of this Agreement in the same manner and for so long as the
Restricted Stock Units granted pursuant to this Agreement to which they relate remain subject to
such vesting and restrictions, and shall be promptly forfeited to the Company if and when such
Restricted Stock Units are so forfeited.
5. Receipt of Shares of Stock.
(a) The Restricted Stock Units in which the Grantee vests in accordance with the vesting
schedule set forth in Appendix A will be issuable in the form of shares of Stock immediately upon
vesting, subject to the collection of the minimum withholding taxes in accordance with the share
withholding provision of Section 7 of this Agreement.
(b) Once a stock certificate (or electronic transfer) has been delivered to the Grantee in
respect of the Restricted Stock Units, the Grantee will be free to sell the shares of Stock
evidenced by such certificate (or electronic transfer), subject to applicable requirements of
federal and state securities law and the Companys insider trading policy.
6. Incorporation of Plan. Notwithstanding anything herein to the contrary, this
Award shall be subject to and governed by all the terms and conditions of the Plan. Capitalized
terms in this Award shall have the meaning specified in the Plan, unless a different meaning is
specified herein.
7. Tax Withholding. The Grantee shall, not later than the date as of which the
receipt of this Award becomes a taxable event for Federal income tax purposes, pay to the Company
or make arrangements satisfactory to the Administrator for payment of any Federal, state, and local
taxes required by law to be withheld on account of such taxable event. The Grantee may elect to
have the required minimum tax withholding obligation satisfied, in whole or in part, by authorizing
the Company to withhold shares of Stock to be issued to the Grantee pursuant to this Agreement with
an aggregate Fair Market Value that would satisfy the withholding amount due.
8. No Obligation to Continue Employment. Neither the Company nor any Subsidiary is
obligated by or as a result of the Plan or this Award to continue the Grantee in employment and
neither the Plan nor this Award shall interfere in any way with the right of the Company or any
Subsidiary to terminate the employment of the Grantee at any time.
9. Notices. Notices hereunder shall be mailed or delivered to the Company at its
principal place of business and shall be mailed or delivered to the Grantee at the address on file
3
with the Company or, in either case, at such other address as one party may subsequently
furnish to the other party in writing.
10. Acceptance. This Agreement shall be deemed accepted and the terms and conditions
thereof hereby agreed to by the Grantee upon notice to the Grantee.
4