Initial Public Offering (IPO): Pre-Effective Amendment to Registration Statement (General Form) — Form S-1 Filing Table of Contents
Document/ExhibitDescriptionPagesSize
1: S-1/A Form S-1/A - Athenahealth, Inc. HTML 1.59M
9: CORRESP ¶ Comment-Response or Other Letter to the SEC HTML 66K
2: EX-3.1 EX-3.1 - Fifth Amended & Restated Certificate of HTML 97K
Incorporation
3: EX-3.2 EX-3.2 - Sixth Amended & Restated Certificate of HTML 24K
Incorporation
4: EX-3.3 EX-3.3 - Amended & Restated Bylaws HTML 71K
7: EX-10.21 EX-10.21 - Loan & Security Agreement 42 177K
5: EX-10.4 EX-10.4 - 2007 Stock and Incentive Plan HTML 172K
6: EX-10.5 EX-10.5 2007 Employee Stock Purchase Plan HTML 30K
8: EX-23.1 EX-23.1 - Consent of Deloitte & Touche LLP HTML 7K
‘EX-10.4’ — EX-10.4 – 2007 Stock and Incentive Plan
athenahealth, Inc. 2007 STOCK OPTION AND INCENTIVE PLAN
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 Company’s
welfare will assure a closer identification of their interests with those of the Company and its
stockholders, thereby stimulating their efforts on the Company’s 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; provided
further, however, that if the date for which Fair Market Value is determined is the first day when
trading prices for the Stock are reported on a national securities exchange, the Fair Market Value
shall be the “Price to the Public” (or equivalent) set forth on the cover page for the final
prospectus relating to the Company’s Initial Public Offering.
“Incentive Stock Option”means any Stock Option designated and qualified as an “incentive
stock option” as defined in Section 422 of the Code.
“Initial Public Offering”means the consummation of the first fully underwritten, firm
commitment public offering pursuant to an effective registration statement under the Act covering
the offer and sale by the Company of its equity securities, or such other event as a result of or
following which the Stock shall be publicly held.
“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 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
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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 capital, assets, equity, or investment, stockholder returns, return on sales, gross or
net profit levels, productivity, expense, margins, operating efficiency, customer satisfaction,
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 grantee’s right to and the payment of a
Restricted Stock Award, Deferred Stock Award or Cash-based Award.
“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 Shares”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 Company’s outstanding voting power immediately prior to such transaction do not own a majority
of the outstanding voting power of the successor entity 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;
(vi) subject to the provisions of Section 5(a)(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.
All decisions and interpretations of the Administrator shall be binding on all persons,
including the Company and Plan grantees.
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(c) Delegation of Authority to Grant Options. Subject to applicable law, the
Administrator, in its discretion, may delegate to an officer of the Company all or part of the
Administrator’s authority and duties with respect to the granting of 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 that may be granted during the period of the delegation and shall contain
guidelines as to the determination of the exercise price 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 Administrator’s 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 Company’s 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 Company’s 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 violate the Exchange Act or any
other applicable United States securities law, the Code, or any other applicable United States
governing statute or law.
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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(b)) shall be the sum of (i)
1,000,000 shares, (ii) the number of Shares under the Company’s 1997 Stock Plan and 2000 Stock
Option and Incentive Plan (together, the “Prior Plans”) which are not needed to fulfill the
Company’s obligations for awards issued under the Prior Plans as a result of forfeiture,
expiration, cancellation, termination or net issuances of awards thereunder, and (iii) on each
January 1, beginning in 2008, an additional number of shares equal to the lower of (A) that number
of shares as is necessary such that the total number of shares reserved and available for issuance
under the Plan on the immediately preceding December 31 (excluding shares reserved for issuance
pursuant to Awards outstanding on such date) shall equal five percent (5)% of the outstanding
number of shares of Stock on the immediately the preceding December 31 and (B) such lower number of
shares as may be determined by the Board of Directors (the “Additional Shares”); provided that not
more than 20,000,000 shares shall be issued under the Plan. 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, held back upon exercise of an Option or settlement of an
Award to cover the exercise price or tax withholding, reacquired by the Company prior to vesting,
satisfied without the issuance of Stock or otherwise terminated (other than by exercise) shall be
added back 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) Changes in Stock. Subject to Section 3(c) hereof, if, as a result of any
reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other similar change in the Company’s 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
Administrator shall make an appropriate or proportionate adjustment in (i) the maximum number of
shares reserved for issuance under the Plan, (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
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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.
(c) 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
Administrator’s 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 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.
(d) 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
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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 optionee’s 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 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
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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.
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 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 shares attested to. 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.
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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.
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 grant of a Restricted Stock Award is
contingent on the grantee executing the Restricted Stock Award Agreement. 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 execution of the Restricted Stock Award Agreement
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
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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 grantee’s 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 grantee’s 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 Company’s right of
repurchase or forfeiture shall lapse. 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 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 grantee’s rights in any shares
of Restricted Stock that have not vested shall automatically terminate upon the grantee’s
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 grant of a Deferred Stock Award is
contingent on the grantee executing the Deferred Stock Award Agreement. 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. 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
11
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 grantee’s right in all Deferred Stock Awards that have not vested shall automatically
terminate upon the grantee’s termination of employment (or cessation of service relationship) with
the Company and its Subsidiaries for any reason.
SECTION 9. UNRESTRICTED STOCK AWARDS
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
Notwithstanding anything to the contrary contained herein, if any Restricted Stock Award or
Deferred Stock Award granted to a Covered Employee is intended to qualify as “Performance-based
Compensation” under Section 162(m) of the Code and the regulations promulgated thereunder (a
“Performance-based Award”), such Award shall comply with the provisions set forth below:
12
(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 grantee’s rights in all Performance Share Awards shall automatically terminate upon the
grantee’s 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, Performance Shares 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
13
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 Employee’s
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.
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 grantee’s 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 grantee’s
termination of employment (or cessation of service relationship) with the Company and its
Subsidiaries for any reason.
14
SECTION 14. TRANSFERABILITY OF AWARDS
(a) Transferability. Except as provided in Section 14(b) below, during a grantee’s
lifetime, his or her Awards shall be exercisable only by the grantee, or by the grantee’s legal
representative or guardian in the event of the grantee’s 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.
(c) Family Member. For purposes of Section 14(b), “family member” shall mean a
grantee’s 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 grantee’s 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 grantee’s 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 grantee’s 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 Company’s 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.
15
(b) Payment in Stock. Subject to approval by the Administrator, a grantee may elect
to have the Company’s 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.
(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 Company’s 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 grantee’s
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 Company’s 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.
16
(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 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 grantee’s spouse, or a dependent (as defined in
Section 152(a) of the Code) of the grantee, loss of the grantee’s 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
17
(b) an approved leave of absence for military service or sickness, or for any other purpose
approved by the Company, if the employee’s 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 holder’s consent. Except as provided in Section 3(b) or 3(c), 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 without
shareholder approval. 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 Administrator’s authority to take any
action permitted pursuant to Section 3(c).
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 Company’s 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 grantee’s 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
18
shall have given to the grantee by electronic mail (with proof of receipt) or by United States
mail, addressed to the grantee, at the grantee’s 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
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 Company’s 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.
19
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 [or pursuant to written consent]. 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.
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.
UNDER THE 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)]
Grant Date:
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:
C:
Incremental Number of
Option Shares Exercisable*
Exercisability Date
C:C:
___
(___%)
___
___
(___%)
___
___
(___%)
___
___
(___%)
___
___
(___%)
___
C:
*
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 Company’s 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 Optionee’s 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. If the Optionee’s 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 Optionee’s employment terminates by reason of
the Optionee’s death, any portion of this Stock Option outstanding on such date may thereafter be
exercised, to the extent exercisable on such date, by the Optionee’s 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 Optionee’s employment terminates by reason
of the Optionee’s 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 Optionee’s 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 Optionee’s employment terminates for any reason
other than the Optionee’s death, the Optionee’s 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.
The Administrator’s determination of the reason for termination of the Optionee’s 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
3
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 Optionee’s lifetime,
only by the Optionee, and thereafter, only by the Optionee’s 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.
ATHENAHEALTH, INC.
By:
Name:
Title:
The foregoing Agreement is hereby accepted and the terms and conditions thereof hereby agreed to by
the undersigned.
Dated:
Optionee’s Signature
Optionee’s name and address:
5
ATHENAHEALTH, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
FOR COMPANY EMPLOYEES
UNDER THE ATHENAHEALTH, INC.
2007 STOCK OPTION AND INCENTIVE PLAN
Name of Optionee:
No. of Option Shares:
Option Exercise Price per Share: $
[FMV on Grant Date]
Grant 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 Company’s 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 Optionee’s 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 of Employment. If the Optionee’s 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 Optionee’s employment terminates by reason of
the Optionee’s death, any portion of this Stock Option outstanding on such date may thereafter be
exercised, to the extent exercisable on such date, by the Optionee’s 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 Optionee’s employment terminates by reason
of the Optionee’s 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 Optionee’s 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 Optionee’s employment terminates for any reason
other than the Optionee’s death, the Optionee’s 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.
3
The Administrator’s determination of the reason for termination of the Optionee’s 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 Optionee’s lifetime,
only by the Optionee, and thereafter, only by the Optionee’s 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.
4
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.
ATHENAHEALTH, INC.
By:
Name:
Title:
The foregoing Agreement is hereby accepted and the terms and conditions thereof hereby agreed to by
the undersigned.
Dated:
Optionee’s Signature
Optionee’s name and address:
5
ATHENAHEALTH, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
FOR NON-EMPLOYEE DIRECTORS
UNDER THE ATHENAHEALTH, INC.
2007 STOCK OPTION AND INCENTIVE PLAN
Name of Optionee:
No. of Option Shares:
Option Exercise Price per Share: $
[FMV on Grant Date]
Grant 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 Company’s 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 Optionee’s 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 Optionee’s 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 Optionee’s 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 Optionee’s lifetime,
only by the Optionee, and thereafter, only by the Optionee’s 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 Optionee’s rights under this Agreement without the Optionee’s
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:
Optionee’s Signature
Optionee’s name and address:
4
ATHENAHEALTH, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
FOR NON-EMPLOYEE CONSULTANTS
UNDER THE ATHENAHEALTH, INC.
2007 STOCK OPTION AND INCENTIVE PLAN
Name of Optionee:
No. of Option Shares:
Option Exercise Price per Share: $
[FMV on Grant Date]
Grant 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 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 Company’s 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 Optionee’s 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 Optionee’s 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 Optionee’s lifetime,
only by the Optionee, and thereafter, only by the Optionee’s 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 Optionee’s rights under this Agreement without the Optionee’s 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:
Optionee’s Signature
Optionee’s name and address:
4
ATHENAHEALTH, INC,
RESTRICTED STOCK AWARD AGREEMENT
UNDER THE ATHENAHEALTH, INC.
2007 STOCK OPTION AND INCENTIVE PLAN
Name of Grantee:
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 Company’s
transfer agent in book entry form, and the Grantee’s 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 Grantee’s 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.