Attached files
Exhibit 10.1
SciQuest Holdings, Inc.
2004 Stock Incentive Plan
2004 Stock Incentive Plan
SciQuest Holdings, Inc.
2004 Stock Incentive Plan
2004 Stock Incentive Plan
Section 1.
Purpose
Purpose
The purpose of this Plan is to promote the interests of the Company by providing the
opportunity to purchase or receive Shares or to receive compensation that is based upon
appreciation in the value of Shares to Eligible Recipients in order to attract and retain Eligible
Recipients by providing an incentive to work to increase the value of Shares and a stake in the
future of the Company that corresponds to the stake of each of the Companys stockholders. The
Plan provides for the grant of Incentive Stock Options, Non-Qualified Stock Options, Restricted
Stock Awards, Restricted Stock Units and Stock Appreciation Rights to aid the Company in obtaining
these goals.
Section 2.
Definitions
Definitions
Each term set forth in this Section shall have the meaning set forth opposite such term for
purposes of this Plan and any Stock Incentive Agreements under this Plan (unless noted otherwise),
and for purposes of such definitions, the singular shall include the plural and the plural shall
include the singular, and reference to one gender shall include the other gender. Note that some
definitions may not be used in this Plan, and may be inserted here solely for possible use in Stock
Incentive Agreements issued under this Plan.
2.1 Board means the Board of Directors of the Company.
2.2 Cause shall mean an act or acts by an Eligible Recipient involving (a) the use for profit
or disclosure to unauthorized persons of confidential information or trade secrets of the Company,
a Parent or a Subsidiary, (b) the continuing, material breach of any contract with the Company, a
Parent or a Subsidiary after a reasonable opportunity to cure, (c) the violation of any fiduciary
obligation to the Company, a Parent or a Subsidiary, (d) the unlawful trading in the securities of
the Company, a Parent or a Subsidiary, or of another corporation based on information gained as a
result of the performance of services for the Company, a Parent or a Subsidiary, (e) a felony
conviction or the failure to contest prosecution of a felony, or (f) willful misconduct,
dishonesty, embezzlement, fraud, deceit or civil rights violations.
2.3 Change of Control means either of the following:
(a) any transaction or series of transactions pursuant to which the Company sells, transfers,
leases, exchanges or disposes of substantially all (i.e., at least eighty-five percent (85%)) of
its assets for cash or property, or for a combination of cash and property, or for other
consideration;
(b) any transaction pursuant to which persons who are not current stockholders of the Company
acquire by merger, consolidation, reorganization, division or other business combination or
transaction, or by a purchase of an interest in the Company, an interest in the Company so that
after such transaction, the stockholders of the Company immediately prior to such transaction no
longer have a controlling (i.e., 50% or more) voting interest in the Company; or
(c) the acquisition of beneficial ownership (as defined in Rule 13d-3 under the Exchange
Act) of securities of the Company representing fifty percent (50%) or more of the combined voting
power of the Companys then outstanding securities (other than through a merger or consolidation or
an acquisition of securities directly from the Company) by any person, as such term is used in
Section 13(d) and 14(d) of the Exchange Act, other than the Company, any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any corporation owned directly
or indirectly by the stockholders of the Company.
However, notwithstanding the foregoing, in no event shall an initial public offering of the
Companys common stock constitute a Change of Control.
2.4 Code means the Internal Revenue Code of 1986, as amended.
2.5 Committee means any committee appointed by the Board to administer the Plan, as specified
in Section 5 hereof. Any such committee shall be comprised entirely of Directors.
2.6 Common Stock means the common stock of the Company.
2.7 Company means SciQuest Holdings, Inc., a Delaware corporation, and any successor to such
organization.
2.8 Constructive Discharge means a termination of employment with the Company by an Employee
due to any of the following events if the termination occurs within thirty (30) days of such event:
(a) Forced Relocation or Transfer. The Employee may continue employment with the Company, a
Parent or a Subsidiary (or a successor employer), but such employment is contingent on the
Employees being transferred to a site of employment which is located further than 50 miles from
the Employees current site of employment. For this purpose, an Employees site of employment
shall be the site of employment to which they are assigned as their home base, from which their
work is assigned, or to which they report, and shall be determined by the Committee in its sole
discretion on the basis of the facts and circumstances.
(b) Decrease in Salary or Wages. The Employee may continue employment with the Company, a
Parent or a Subsidiary (or a successor employer), but such employment is contingent upon the
Employees acceptance of a salary or wage rate which is less than the Employees prior salary or
wage rate.
(c) Significant and Substantial Reduction in Benefits. The Employee may continue employment
with the Company, a Parent or a Subsidiary (or a successor employer), but such employment is
contingent upon the Employees acceptance of a reduction in the pension, welfare or fringe benefits
provided which is both significant and substantial when expressed as a dollar amount or when
expressed as a percentage of the Employees cash compensation. The determination of whether a
reduction in pension, welfare or fringe benefits is significant and substantial shall be made on
the basis of all pertinent facts and circumstances, including the entire benefit (pension, welfare
and fringe) package provided to the Employee, and any salary or wages paid to the Employee.
However, notwithstanding the preceding, any modification or elimination of benefits which results
solely from the provision of new benefits to an Employee by a successor employer as a result of a
change of the Employees employment from employment with the Company to employment with such
successor shall not be deemed a Significant and Substantial Reduction in Benefits where such new
benefits are identical to the benefits provided to similarly situated Employees of the successor.
2.9 Director means a member of the Board.
2.10 Eligible Recipient means an Employee and/or a Key Person.
2.11 Employee means a common law employee of the Company, a Subsidiary or a Parent.
2.12 Exchange Act means the Securities Exchange Act of 1934, as amended.
2.13 Exercise Price means the price that shall be paid to purchase one (1) Share upon the
exercise of an Option granted under this Plan.
2.14 Fair Market Value of each Share on any date means the price determined below as of the
close of business on such date (provided, however, if for any reason, the Fair Market Value per
share cannot be ascertained or is unavailable for such date, the Fair Market Value per share shall
be determined as of the nearest preceding date on which such Fair Market Value can be ascertained):
(a) If the Share is listed or traded on any established stock exchange or a national market
system, including without limitation the National Market of the National Association of Securities
Dealers, Inc.
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Automated Quotation (NASDAQ) System, its Fair Market Value shall be the closing
sale price for the Share (or
the mean of the closing bid and ask prices, if no sales were reported), on such exchange or
system on the date of such determination, as reported in The Wall Street Journal or such other
source as the Board deems reliable; or
(b) If the Share is not listed or traded on any established stock exchange or a national
market system, its Fair Market Value shall be the average of the closing dealer bid and ask
prices of a Share as reflected on the NASDAQ interdealer quotation system of the National
Association of Securities Dealers, Inc. on the date of such determination; or
(c) In the absence of an established public trading market for the Share, the Fair Market
Value of a Share shall be determined in good faith by the Board.
2.15 FLSA Exclusion means the provisions of Section 7(e) of the Fair Labor Standards Act of
1938 (the FLSA) that exempt certain stock-based compensation from inclusion in overtime
determinations under the FLSA.
2.16 Insider means an individual who is, on the relevant date, an officer, director or ten
percent (10%) beneficial owner of any class of the Companys equity securities that is registered
pursuant to Section 12 of the Exchange Act, all as defined under Section 16 of the Exchange Act.
2.17 ISO means an option granted under this Plan to purchase Shares that is intended by the
Company to satisfy the requirements of Code §422 as an incentive stock option.
2.18 Key Person means (1) a member of the Board who is not an Employee, or (2) a consultant or
advisor; provided, however, that such consultant or advisor must be an individual who is providing
or will be providing bona fide services to the Company, a Subsidiary or a Parent, with such
services (1) not being in connection with the offer or sale of securities in a capital-raising
transaction, and (2) not directly or indirectly promoting or maintaining a market for securities of
the Company, a Subsidiary or a Parent, within the meaning of 17 CFR §230.701(c)(1).
2.19 NQSO means an option granted under this Plan to purchase Shares which is not intended by
the Company to satisfy the requirements of Code §422.
2.20 Option means an ISO or a NQSO.
2.21 Outside Director means a Director who is not an Employee and who qualifies as (1) a
non-employee director under Rule 16b-3(b)(3) under the 1934 Act, as amended from time to time,
and (2) an outside director under Code §162(m) and the regulations promulgated thereunder.
2.22 Parent means any corporation (other than the corporation employing a Participant) in an
unbroken chain of corporations ending with the corporation employing a Participant if, at the time
of the granting of the Stock Incentive, each of the corporations other than the corporation
employing the Participant owns stock possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other corporation in such chain. However, for
purposes of interpreting any Stock Incentive Agreement issued under this Plan as of a date of
determination, Parent shall mean any corporation (other than the corporation employing a
Participant) in an unbroken chain of corporations ending with the corporation employing a
Participant if, at the time of the granting of the Stock Incentive and thereafter through such date
of determination, each of the corporations other than the corporation employing the Participant
owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes
of stock in one of the other corporation in such chain.
2.23 Participant means an individual who receives a Stock Incentive hereunder.
2.24 Performance-Based Exception means the performance-based exception from the tax
deductibility limitations of Code §162(m).
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2.25 Plan means the SciQuest Holdings, Inc. 2004 Stock Incentive Plan, as may be amended from
time to time.
2.26 Qualified Termination shall mean a termination of the employment of an employee where
such termination is done by the Company without Cause or where such termination is a Constructive
Discharge.
2.27 Restricted Stock Award means an award of Shares granted to a Participant under this Plan
whereby the Participant has immediate rights of ownership in the Shares underlying the award, but
such Shares are subject to restrictions in accordance with the terms and provisions of this Plan
and the Stock Incentive Agreement pertaining to the award and may be subject to forfeiture by the
individual until the earlier of (a) the time such restrictions lapse or are satisfied, or (b) the
time such shares are forfeited, pursuant to the terms and provisions of the Stock Incentive
Agreement pertaining to the award.
2.28 Restricted Stock Unit means a contractual right granted to a Participant under this Plan
to receive a Share which is subject to restrictions of this Plan and the applicable Stock Incentive
Agreement.
2.29 SAR Exercise Price means the amount per Share specified in a Stock Incentive Agreement
with respect to a Stock Appreciation Right, the excess of the Fair Market Value of a Share over and
above such amount, the holder of such Stock Appreciation Right may be able to receive upon the
exercise or payment of such Stock Appreciation Right.
2.30 Share means a share of the Common Stock of the Company.
2.31 Stock Appreciation Right means a right granted to a Participant pursuant to the terms and
provisions of this Plan whereby the individual, without payment to the Company (except for any
applicable withholding or other taxes), receives cash, Shares, a combination thereof, or such other
consideration as the Board may determine, in an amount equal to the excess of the Fair Market Value
per Share on the date on which the Stock Appreciation Right is exercised over the exercise price
per Share noted in the Stock Appreciation Right for each Share subject to the Stock Appreciation
Right.
2.32 Stock Incentive means an ISO, a NQSO, a Restricted Stock Award, a Restricted Stock Unit,
or a Stock Appreciation Right.
2.33 Stock Incentive Agreement means an agreement between the Company, a Parent or a
Subsidiary, and a Participant evidencing an award of a Stock Incentive.
2.34 Subsidiary means any corporation (other than the corporation employing such Participant)
in an unbroken chain of corporations beginning with the corporation employing such Participant if,
at the time of the granting of the Stock Incentive, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations in such chain.
However, for purposes of interpreting any Stock Incentive Agreement issued under this Plan as of a
date of determination, Subsidiary shall mean any corporation (other than the corporation employing
such Participant) in an unbroken chain of corporations beginning with the corporation employing
such Participant if, at the time of the granting of the Stock Incentive and thereafter through such
date of determination, each of the corporations other than the last corporation in the unbroken
chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
2.35 Ten Percent Stockholder means a person who owns (after taking into account the
attribution rules of Code §424(d)) more than ten percent (10%) of the total combined voting power
of all classes of shares of stock of either the Company, a Subsidiary or a Parent.
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Section 3.
Shares Subject to Stock Incentives
Shares Subject to Stock Incentives
The total number of Shares that may be issued pursuant to Stock Incentives under this Plan
(and the total number of Shares that may be issued pursuant to the exercise of ISOs under this
Plan) shall not exceed 4,307,815, as adjusted pursuant to Section 10. Such Shares shall be
reserved, to the extent that the Company deems appropriate, from authorized but unissued Shares,
and from Shares which have been reacquired by the Company. Furthermore, any Shares subject to a
Stock Incentive which remain after the cancellation, expiration or exchange of such Stock Incentive
thereafter shall again become available for use under this Plan. Notwithstanding anything herein
to the contrary, no Participant may be granted Stock Incentives covering an aggregate number of
Shares in excess of 1,200,000 in any calendar year, and any Shares subject to a Stock Incentive
which again become available for use under this Plan after the cancellation, expiration or exchange
of such Stock Incentive thereafter shall continue to be counted in applying this calendar year
Participant limitation.
Section 4.
Effective Date
Effective Date
The effective date of this Plan shall be the date it is adopted by the Board, as noted in
resolutions effectuating such adoption, provided the stockholders of the Company approve this Plan
within twelve (12) months after such effective date. If such effective date comes before such
stockholder approval, any Stock Incentives granted under this Plan before the date of such approval
automatically shall be granted subject to such approval.
Section 5.
Administration
Administration
5.1 General Administration. This Plan shall be administered by the Board. The Board, acting
in its absolute discretion, shall exercise such powers and take such action as expressly called for
under this Plan. The Board shall have the power to interpret this Plan and, subject to the terms
and provisions of this Plan, to take such other action in the administration and operation of the
Plan as it deems equitable under the circumstances. The Boards actions shall be binding on the
Company, on each affected Eligible Recipient, and on each other person directly or indirectly
affected by such actions.
5.2 Authority of the Board. Except as limited by law or by the Articles of Incorporation or
Bylaws of the Company, and subject to the provisions herein, the Board shall have full power to
select Eligible Recipients who shall participate in the Plan, to determine the sizes and types of
Stock Incentives in a manner consistent with the Plan, to determine the terms and conditions of
Stock Incentives in a manner consistent with the Plan, to construe and interpret the Plan and any
agreement or instrument entered into under the Plan, to establish, amend or waive rules and
regulations for the Plans administration, and to amend the terms and conditions of any outstanding
Stock Incentives as allowed under the Plan and such Stock Incentives. Further, the Board may make
all other determinations which may be necessary or advisable for the administration of the Plan.
5.3 Delegation of Authority. The Board may delegate its authority under the Plan, in whole or
in part, to a Committee appointed by the Board consisting of not less than one (1) Director or to
one or more other persons to whom the powers of the Board hereunder may be delegated in accordance
with applicable law. The members of the Committee and any other persons to whom authority has been
delegated shall be appointed from time to time by, and shall serve at the discretion of, the Board.
The Committee or other delegate (if appointed) shall act according to the policies and procedures
set forth in the Plan and to those policies and procedures established by the Board, and the
Committee or other delegate shall have such powers and responsibilities as are set forth by the
Board. Reference to the Board in this Plan shall specifically include reference to the Committee
or other delegate where the Board has delegated its authority to the Committee or other delegate,
and any action by the Committee or other delegate pursuant to a delegation of authority by the
Board shall be deemed an action by the Board under the Plan. Notwithstanding the above, the Board
may assume the powers and responsibilities granted to the Committee or other delegate at any time,
in whole or in part. With respect to Committee appointments and composition, only a Committee (or
a sub-committee thereof) comprised solely of two (2) or more Outside Directors may grant Stock
Incentives that will meet the
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Performance-Based Exception, and only a Committee comprised solely of Outside Directors may
grant Stock Incentives to Insiders that will be exempt from Section 16(b) of the Exchange Act.
5.4 Decisions Binding. All determinations and decisions made by the Board (or its delegate)
pursuant to the provisions of this Plan and all related orders and resolutions of the Board shall
be final, conclusive and binding on all persons, including the Company, its stockholders,
Directors, Eligible Recipients, Participants, and their estates and beneficiaries.
5.5 Indemnification for Decisions. No member of the Board or the Committee (or a
sub-committee thereof) shall be liable for any action taken or determination made hereunder in good
faith. Service on the Committee (or a sub-committee thereof) shall constitute service as a
director of the Company so that the members of the Committee (or a sub-committee thereof) shall be
entitled to indemnification and reimbursement as directors of the Company pursuant to its bylaws
and applicable law. In addition, the members of the Board, Committee (or a sub-committee thereof)
shall be indemnified by the Company against (a) the reasonable expenses, including attorneys fees
actually and necessarily incurred in connection with the defense of any action, suit or proceeding,
to which they or any of them may be a party by reason of any action taken or failure to act under
or in connection with the Plan, any Stock Incentive granted hereunder, and (b) against all amounts
paid by them in settlement thereof (provided such settlement is approved by independent legal
counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding, except in relation to matters as to which it shall be adjudged in such action,
suit or proceeding that such individual is liable for gross negligence or misconduct in the
performance of his duties, provided that within 60 days after institution of any such action, suit
or proceeding a Committee member or delegatee shall in writing offer the Company the opportunity,
at its own expense, to handle and defend the same.
Section 6.
Eligibility
Eligibility
Eligible Recipients selected by the Board shall be eligible for the grant of Stock Incentives
under this Plan, but no Eligible Recipient shall have the right to be granted a Stock Incentive
under this Plan merely as a result of his or her status as an Eligible Recipient. Only Employees
shall be eligible to receive a grant of ISOs.
Section 7
Terms of Stock Incentives
Terms of Stock Incentives
7.1 Terms and Conditions of All Stock Incentives.
(a) Grants of Stock Incentives. The Board, in its absolute discretion, shall grant Stock
Incentives under this Plan from time to time and shall have the right to grant new Stock Incentives
in exchange for outstanding Stock Incentives, including, but not limited to, exchanges of Stock
Options for the purpose of achieving a lower Exercise Price. Stock Incentives shall be granted to
Eligible Recipients selected by the Board, and the Board shall be under no obligation whatsoever to
grant any Stock Incentives, or to grant Stock Incentives to all Eligible Recipients, or to grant
all Stock Incentives subject to the same terms and conditions.
(b) Shares Subject to Stock Incentives. The number of Shares as to which a Stock Incentive
shall be granted shall be determined by the Board in its sole discretion, subject to the provisions
of Section 3 as to the total number of Shares available for grants under the Plan.
(c) Stock Incentive Agreements. Each Stock Incentive shall be evidenced by a Stock Incentive
Agreement executed by the Company, a Parent or a Subsidiary, and the Participant, which shall be in
such form and contain such terms and conditions as the Board in its discretion may, subject to the
provisions of the Plan, from time to time determine.
(d) Date of Grant. The date a Stock Incentive is granted shall be the date on which the Board
(1) has approved the terms and conditions of the Stock Incentive Agreement, (2) has determined the
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Page 6
recipient of the Stock Incentive and the number of Shares covered by the Stock Incentive and
(3) has taken all such other action necessary to direct the grant of the Stock Incentive.
7.2 Terms and Conditions of Options.
(a) Necessity of Stock Incentive Agreements. Each grant of an Option shall be evidenced by a
Stock Incentive Agreement that shall specify whether the Option is an ISO or NQSO, and incorporate
such other terms and conditions as the Board, acting in its absolute discretion, deems consistent
with the terms of this Plan, including (without limitation) a restriction on the number of Shares
subject to the Option that first become exercisable during any calendar year. The Board and/or the
Company shall have complete discretion to modify the terms and provisions of an Option in
accordance with Section 12 of this Plan even though such modification may change the Option from an
ISO to a NQSO.
(b) Determining Optionees. In determining Eligible Recipient(s) to whom an Option shall be
granted and the number of Shares to be covered by such Option, the Board may take into account the
recommendations of the Chief Executive Officer of the Company and its other officers, the duties of
the Eligible Recipient, the present and potential contributions of the Eligible Recipient to the
success of the Company, and other factors deemed relevant by the Board, in its sole discretion, in
connection with accomplishing the purpose of this Plan. An Eligible Recipient who has been granted
an Option to purchase Shares, whether under this Plan or otherwise, may be granted one or more
additional Options. If the Board grants an ISO and a NQSO to an Eligible Recipient on the same
date, the right of the Eligible Recipient to exercise one such Option shall not be conditioned on
his or her failure to exercise the other such Option.
(c) Exercise Price. Subject to adjustment in accordance with Section 10 and the other
provisions of this Section, the Exercise Price shall be as set forth in the applicable Stock
Incentive Agreement. With respect to each grant of an ISO to a Participant who is not a Ten
Percent Stockholder, the Exercise Price shall not be less than the Fair Market Value on the date
the ISO is granted. With respect to each grant of an ISO to a Participant who is a Ten Percent
Stockholder, the Exercise Price shall not be less than one hundred ten percent (110%) of the Fair
Market Value on the date the ISO is granted. If a Stock Incentive is a NQSO, the Exercise Price
for each Share shall be no less than (1) the minimum price required by applicable state law, or (2)
the minimum price required by the Companys governing instrument, or (3) $0.01, whichever price is
greater. Any Stock Incentive intended to meet the Performance-Based Exception must be granted with
an Exercise Price equivalent to or greater than the Fair Market Value of the Shares subject thereto
determined as of the date of such grant. Any Stock Incentive intended to meet the FLSA Exclusion
must be granted with an Exercise Price equivalent to or greater than eighty-five percent (85%) of
the Fair Market Value of the Shares subject thereto on the date granted determined as of the date
of such grant.
(d) Option Term. Each Option granted under this Plan shall be exercisable in whole or in part
at such time or times as set forth in the related Stock Incentive Agreement, but no Stock Incentive
Agreement shall:
(i) make an Option exercisable before the date such Option is granted; or
(ii) make an Option exercisable after the earlier of:
(A) the date such Option is exercised
in full, or
(B) the date that is the tenth (10th) anniversary of the date such Option is granted, if such
Option is a NQSO or an ISO granted to a non-Ten Percent Stockholder, or the date that is the fifth
(5th) anniversary of the date such Option is granted, if such Option is an ISO granted to a Ten
Percent Stockholder. A Stock Incentive Agreement may provide for the exercise of an Option after
the employment of an Employee has terminated for any reason whatsoever, including death or
disability. The Employees rights, if any, upon termination of employment will be set forth in the
applicable Stock Incentive Agreement.
(e) Payment. Options shall be exercised by the delivery of a written notice of exercise to
the Company, setting forth the number of Shares with respect to which the Option is to be exercised
accompanied by full payment for the Shares. Payment for shares of Stock purchased pursuant to
exercise of
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Page 7
an Option shall be made in cash or, unless the Stock Incentive Agreement provides otherwise, by
delivery to the Company of a number of Shares that have been owned and completely paid for by the
holder for at least six (6) months prior to the date of exercise (i.e., mature shares for
accounting purposes) having an aggregate Fair Market Value equal to the amount to be tendered, or a
combination thereof. In addition, unless the Stock Incentive Agreement provides otherwise, the
Option may be exercised through a brokerage transaction following registration of the Companys
equity securities under Section 12 of the Exchange Act as permitted under the provisions of
Regulation T applicable to cashless exercises promulgated by the Federal Reserve Board, unless
prohibited by Section 402 of the Sarbanes-Oxley Act of 2002. However, notwithstanding the
foregoing, with respect to any Option recipient who is an Insider, a tender of shares or a cashless
exercise must (1) have met the requirements of an exemption under Rule 16b-3 promulgated under the
Exchange Act, or (2) be a subsequent transaction the terms of which were provided for in a
transaction initially meeting the requirements of an exemption under Rule 16b-3 promulgated under
the Exchange Act. Unless the Stock Incentive Agreement provides otherwise, the foregoing exercise
payment methods shall be subsequent transactions approved by the original grant of an Option.
Except as provided in subparagraph (f) below, payment shall be made at the time that the Option or
any part thereof is exercised, and no Shares shall be issued or delivered upon exercise of an
Option until full payment has been made by the Participant. The holder of an Option, as such,
shall have none of the rights of a stockholder. Notwithstanding the above and unless prohibited by
the Sarbanes-Oxley Act of 2002, in the sole discretion of the Board, an Option may be exercised as
to a portion or all (as determined by the Board) of the number of Shares specified in the Stock
Incentive Agreement by delivery to the Company of a promissory note, such promissory note to be
executed by the Participant and that shall include, with such other terms and conditions as the
Board shall determine, provisions in a form approved by the Board under which: (i) the balance of
the aggregate purchase price shall be payable in equal installments over such period and shall bear
interest at such rate (that shall not be less than the prime bank loan rate as determined by the
Board, that shall be established at the time of exercise, and that must be a market rate based on
the rate environment at the date of exercise) as the Board shall approve, and (ii) the Participant
shall be personally liable for payment of the unpaid principal balance and all accrued but unpaid
interest. Other methods of payment may also be used if approved by the Board in its sole and
absolute discretion and provided for under the Stock Incentive Agreement.
(f) Conditions to Exercise of an Option. Each Option granted under the Plan shall vest and
shall be exercisable at such time or times, or upon the occurrence of such event or events, and in
such amounts, as the Board shall specify in the Stock Incentive Agreement; provided, however, that
subsequent to the grant of an Option, the Board, at any time before complete termination of such
Option, may accelerate the time or times at which such Option may vest or be exercised in whole or
in part. Notwithstanding the foregoing, an Option intended to meet the FLSA Exclusion shall not be
exercisable for at least six (6) months following the date it is granted, except by reason of
death, disability, retirement, a change in corporate ownership or other circumstances permitted
under regulations promulgated under the FLSA Exclusion. The Board may impose such restrictions on
any Shares acquired pursuant to the exercise of an Option as it may deem advisable, including,
without limitation, vesting or performance-based restrictions, rights of the Company to re-purchase
Shares acquired pursuant to the exercise of an Option, voting restrictions, investment intent
restrictions, restrictions on transfer, first refusal rights of the Company to purchase Shares
acquired pursuant to the exercise of an Option prior to their sale to any other person, drag
along rights requiring the sale of shares to a third party purchaser in certain circumstances,
lock up type restrictions in the case of an initial public offering of the Companys stock,
restrictions or limitations or other provisions that would be applied to stockholders under any
applicable agreement among the stockholders, and restrictions under applicable federal securities
laws, under the requirements of any stock exchange or market upon which such Shares are then listed
and/or traded, and/or under any blue sky or state securities laws applicable to such Shares.
(g) Transferability of Options. An Option shall not be transferable or assignable except by
will or by the laws of descent and distribution and shall be exercisable, during the Participants
lifetime, only by the Participant; provided, however, that in the event the Participant is
incapacitated and unable to exercise his or her Option, if such Option is a NQSO, such Option may
be exercised by such Participants legal guardian, legal representative, or other representative
whom the Board deems appropriate based on applicable facts and circumstances. The determination of
incapacity of a Participant and the determination of the appropriate representative of the
Participant who shall be able to exercise the Option if the Participant is incapacitated shall be
determined by the Board in its sole and absolute discretion. Notwithstanding the foregoing, except
as otherwise provided in the Stock Incentive Agreement, a NQSO may also be transferred by a
Participant as a
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Page 8
bona fide gift (i) to his spouse, lineal descendant or lineal ascendant, siblings
and children by adoption, (ii) to a trust for the benefit of one or more individuals described in
clause (i) and no other persons, or (iii) to a
partnership of which the only partners are one or more individuals described in clause (i), in
which case the transferee shall be subject to all provisions of the Plan, the Stock Incentive
Agreement and other agreements with the Participant in connection with the exercise of the Option
and purchase of Shares. In the event of such a gift, the Participant shall promptly notify the
Board of such transfer and deliver to the Board such written documentation as the Board may in its
discretion request, including, without limitation, the written acknowledgment of the donee that the
donee is subject to the provisions of the Plan, the Stock Incentive Agreement and other agreements
with the Participant.
(h) Special Provisions for Certain Substitute Options. Notwithstanding anything to the
contrary in this Section, any Option in substitution for a stock option previously issued by
another entity, which substitution occurs in connection with a transaction to which Code §424(a) is
applicable, may provide for an exercise price computed in accordance with Code §424(a) and the
regulations thereunder and may contain such other terms and conditions as the Board may prescribe
to cause such substitute Option to contain as nearly as possible the same terms and conditions
(including the applicable vesting and termination provisions) as those contained in the previously
issued stock option being replaced thereby.
(i) ISO Tax Treatment Requirements. With respect to any Option that purports to be an ISO, to
the extent that the aggregate Fair Market Value (determined as of the date of grant of such Option)
of stock with respect to which such Option is exercisable for the first time by any individual
during any calendar year exceeds one hundred thousand dollars ($100,000.00), such Option shall not
be treated as an ISO in accordance with Code §422(d). The rule of the preceding sentence is
applied in the order in which Options are granted. Also, with respect to any Option that purports
to be an ISO, such Option shall not be treated as an ISO if the Participant disposes of shares
acquired thereunder within two (2) years from the date of the granting of the Option or within one
(1) year of the exercise of the Option, or if the Participant has not met the requirements of Code
§422(a)(2).
(j) Potential Repricing of Stock Options. With respect to any Option granted pursuant to, and
under, this Plan, the Board (or a committee thereof) may determine that the repricing of all or any
portion of existing outstanding Options is appropriate without the need for any additional approval
of the Stockholders of the Company. For this purpose, repricing of Options shall include, but
not be limited to, any of the following actions (or any similar action): (1) lowering the Exercise
Price of an existing Option; (2) any action which would be treated as a repricing under generally
accepted accounting principles; or (3) canceling of an existing Option at a time when its Exercise
Price exceeds the Fair Market Value of the underlying stock subject to such Option, in exchange for
another Option, a Restricted Stock Award, or other equity in the Company.
7.3 Terms and Conditions of Stock Appreciation Rights. A Stock Appreciation Right may be
granted in connection with all or any portion of a previously or contemporaneously granted Option
or not in connection with an Option. A Stock Appreciation Right shall entitle the Participant to
receive upon exercise or payment the excess of the Fair Market Value of a specified number of
Shares at the time of exercise, over a SAR Exercise Price that shall be not less than the Exercise
Price for that number of Shares in the case of a Stock Appreciation Right granted in connection
with a previously or contemporaneously granted Option, or in the case of any other Stock
Appreciation Right, not less than one hundred percent (100%) of the Fair Market Value of that
number of Shares at the time the Stock Appreciation Right was granted. The exercise of a Stock
Appreciation Right shall result in a pro rata surrender of the related Option to the extent the
Stock Appreciation Right has been exercised.
(a) Payment. Upon exercise or payment of a Stock Appreciation Right, the Company shall pay to
the Participant the appreciation in cash or Shares (at the aggregate Fair Market Value on the date
of payment or exercise) as provided in the Stock Incentive Agreement or, in the absence of such
provision, as the Board may determine. To the extent that a Stock Appreciation Right is paid in
cash, it shall nonetheless be deemed paid in Shares for purposes of Section 3 hereof.
(b) Conditions to Exercise. Each Stock Appreciation Right granted under the Plan shall be
exercisable at such time or times, or upon the occurrence of such event or events, and in such
amounts, as the Board shall specify in the Stock Incentive Agreement; provided, however, that
subsequent to the grant of a
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Stock Appreciation Right, the Board, at any time before complete
termination of such Stock Appreciation Right, may accelerate the time or times at which such Stock
Appreciation Right may be exercised in whole or in part.
(c) Transferability of Stock Appreciation Rights. Except as otherwise provided in a
Participants Stock Incentive Agreement, no Stock Appreciation Right granted under the Plan may be
sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or
by the laws of descent and distribution. Further, except as otherwise provided in a Participants
Stock Incentive Agreement, all Stock Appreciation Rights granted to a Participant under the Plan
shall be exercisable, during the Participants lifetime, only by the Participant; provided,
however, that in the event the Participant is incapacitated and unable to exercise his or her Stock
Appreciation Right, such Stock Appreciation Right may be exercised by such Participants legal
guardian, legal representative, or other representative whom the Board deems appropriate based on
applicable facts and circumstances. The determination of incapacity of a Participant and the
determination of the appropriate representative of the Participant shall be determined by the Board
in its sole and absolute discretion. Notwithstanding the foregoing, except as otherwise provided
in the Stock Incentive Agreement, (A) a Stock Appreciation Right which is granted in connection
with the grant of a NQSO may be transferred, but only with the NQSO, and (B) a Stock Appreciation
Right which is not granted in connection with the grant of a NQSO, may be transferred by the
Participant as a bona fide gift (i) to his spouse, lineal descendant or lineal ascendant, siblings
and children by adoption, (ii) to a trust for the benefit of one or more individuals described in
clause (i), or (iii) to a partnership of which the only partners are one or more individuals
described in clause (i), in which case the transferee shall be subject to all provisions of the
Plan, the Stock Incentive Agreement and other agreements with the Participant in connection with
the exercise of the Stock Appreciation Right. In the event of such a gift, the Participant shall
promptly notify the Board of such transfer and deliver to the Board such written documentation as
the Board may in its discretion request, including, without limitation, the written acknowledgment
of the donee that the donee is subject to the provisions of the Plan, the Stock Incentive Agreement
and other agreements with the Participant in connection with the exercise of the Stock Appreciation
Right.
(d) Special Provisions for Tandem SARs. A Stock Appreciation Right granted in connection
with an Option may only be exercised to the extent that the related Option has not been exercised.
A Stock Appreciation Right granted in connection with an ISO (1) will expire no later than the
expiration of the underlying ISO, (2) may be for no more than the difference between the exercise
price of the underlying ISO and the Fair Market Value of the Shares subject to the underlying ISO
at the time the Stock Appreciation Right is exercised, (3) may be transferable only when, and under
the same conditions as, the underlying ISO is transferable, and (4) may be exercised only (i) when
the underlying ISO could be exercised and (ii) when the Fair Market Value of the Shares subject to
the ISO exceeds the exercise price of the ISO.
7.4 Terms and Conditions of Restricted Stock Awards.
(a) Grants of Restricted Stock Awards. Shares awarded pursuant to Restricted Stock Awards
shall be subject to such restrictions as determined by the Board for periods determined by the
Board. Restricted Stock Awards issued under the Plan may have restrictions which lapse based upon
the service of a Participant, or based upon the attainment (as determined by the Board) of
performance goals established pursuant to the business criteria listed in Section 14, or based upon
any other criteria that the Board may determine appropriate. Any Restricted Stock Award which
becomes exercisable based on the attainment of performance goals must be granted by a Committee,
must have its performance goals determined by such a Committee based upon one or more of the
business criteria listed in Section 14, and must have the attainment of such performance goals
certified in writing by such a Committee in order to meet the Performance-Based Exception. The
Board may require a cash payment from the Participant in exchange for the grant of a Restricted
Stock Award or may grant a Restricted Stock Award without the requirement of a cash payment.
(b) Acceleration of Award. The Board shall have the power to permit, in its discretion, an
acceleration of the expiration of the applicable restrictions or the applicable period of such
restrictions with respect to any part or all of the Shares awarded to a Participant.
(c) Necessity of Stock Incentive Agreement. Each grant of a Restricted Stock Award shall be
evidenced by a Stock Incentive Agreement that shall specify the terms, conditions and restrictions
regarding the Shares awarded to a Participant, and shall incorporate such other terms and
conditions as the Board, acting
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in its absolute discretion, deems consistent with the terms of this
Plan. The Board shall have complete discretion to modify the terms and provisions of Restricted
Stock Awards in accordance with Section 12 of this Plan.
(d) Restrictions on Shares Awarded. Shares awarded pursuant to Restricted Stock Awards shall
be subject to such restrictions as determined by the Board for periods determined by the Board.
The Board may impose such restrictions on any Shares acquired pursuant to a Restricted Stock Award
as it may deem advisable, including, without limitation, vesting or performance-based restrictions,
rights of the Company to re-purchase Shares acquired pursuant to the Restricted Stock Award, voting
restrictions, investment intent restrictions, restrictions on transfer, first refusal rights of
the Company to purchase Shares acquired pursuant to the Restricted Stock Award prior to their sale
to any other person, drag along rights requiring the sale of shares to a third party purchaser in
certain circumstances, lock up type restrictions in connection with public offerings of the
Companys stock, restrictions or limitations or other provisions that would be applied to
stockholders under any applicable agreement among the stockholders, and restrictions under
applicable federal securities laws, under the requirements of any stock exchange or market upon
which such Shares are then listed and/or traded, and/or under any blue sky or state securities laws
applicable to such Shares.
(e) Transferability of Restricted Stock Awards. A Restricted Stock Award may not be
transferred by the holder Participant, except upon the death of the holder Participant by will or
by the laws of descent and distribution.
(f) Voting, Dividend & Other Rights. Unless the applicable Stock Incentive Agreement provides
otherwise, holders of Restricted Stock Awards shall be entitled to vote and shall receive dividends
during the periods of restriction.
7.5 Terms and Conditions of Restricted Stock Units.
(a) Grants of Restricted Stock Units. A Restricted Stock Unit shall entitle the Participant
to receive one Share at such future time and upon such terms as specified by the Board in the Stock
Incentive Agreement evidencing such award. Restricted Stock Units issued under the Plan may have
restrictions which lapse based upon the service of a Participant, or based upon other criteria that
the Board may determine appropriate. The Board may require a cash payment from the Participant in
exchange for the grant of Restricted Stock Units or may grant Restricted Stock Units without the
requirement of a cash payment.
(b) Vesting of Restricted Stock Units. The Board shall establish the vesting schedule
applicable to Restricted Stock Units and shall specify the times, vesting and performance goal
requirements. Until the end of the period(s) of time specified in the vesting schedule and/or the
satisfaction of any performance criteria, the Restricted Stock Units subject to such Stock
Incentive Agreement shall remain subject to forfeiture.
(c) Acceleration of Award. The Board shall have the power to permit, in its sole discretion,
an acceleration of the applicable restrictions or the applicable period of such restrictions with
respect to any part or all of the Restricted Stock Units awarded to a Participant.
(d) Necessity of Stock Incentive Agreement. Each grant of Restricted Stock Unit(s) shall be
evidenced by a Stock Incentive Agreement that shall specify the terms, conditions and restrictions
regarding the Participants right to receive Share(s) in the future, and shall incorporate such
other terms and conditions as the Board, acting in its sole discretion, deems consistent with the
terms of this Plan. The Board shall have sole discretion to modify the terms and provisions of
Restricted Stock Unit(s) in accordance with Section 12 of this Plan.
(e) Transferability of Restricted Stock Units. Except as otherwise provided in a
Participants Restricted Stock Unit Award, no Restricted Stock Unit granted under the Plan may be
sold, transferred, pledged, assigned or otherwise alienated or hypothecated by the holder
Participant, except upon the death of the holder Participant by will or by the laws of descent and
distribution.
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(f) Voting, Dividend & Other Rights. Unless the applicable Stock Incentive Agreement provides
otherwise, holders of Restricted Stock Units shall not be entitled to vote or to receive dividends
until they become owners of the Shares pursuant to their Restricted Stock Units.
Section 8.
Securities Regulation
Securities Regulation
Each Stock Incentive Agreement may provide that, upon the receipt of Shares as a result of the
exercise of a Stock Incentive or otherwise, the Participant shall, if so requested by the Company,
hold such Shares for investment and not with a view of resale or distribution to the public and, if
so requested by the Company, shall deliver to the Company a written statement satisfactory to the
Company to that effect. Each Stock Incentive Agreement may also provide that, if so requested by
the Company, the Participant shall make a written representation to the Company that he or she will
not sell or offer to sell any of such Shares unless a registration statement shall be in effect
with respect to such Shares under the Securities Act of 1933, as amended (1933 Act), and any
applicable state securities law or, unless he or she shall have furnished to the Company an
opinion, in form and substance satisfactory to the Company, of legal counsel acceptable to the
Company, that such registration is not required. Certificates representing the Shares transferred
upon the exercise of a Stock Incentive granted under this Plan may at the discretion of the Company
bear a legend to the effect that such Shares have not been registered under the 1933 Act or any
applicable state securities law and that such Shares may not be sold or offered for sale in the
absence of an effective registration statement as to such Shares under the 1933 Act and any
applicable state securities law or an opinion, in form and substance satisfactory to the Company,
of legal counsel acceptable to the Company, that such registration is not required.
Section 9.
Life of Plan
Life of Plan
No Stock Incentive shall be granted under this Plan on or after the earlier of:
(a) the tenth (10th) anniversary of the effective date of this Plan (as determined under
Section 4 of this Plan), in which event this Plan otherwise thereafter shall continue in effect
until all outstanding Stock Incentives have been exercised in full or no longer are exercisable, or
(b) the date on which all of the Shares reserved under Section 3 of this Plan have (as a
result of the exercise of Stock Incentives granted under this Plan or lapse of all restrictions
under a Restricted Stock Award or Restricted Stock Unit) been issued or no longer are available for
use under this Plan, in which event this Plan also shall terminate on such date.
This Plan shall continue in effect until all outstanding Stock Incentives have been exercised in
full or are no longer exercisable and all Restricted Stock Awards or Restricted Stock Units have
vested or been forfeited.
Section 10.
Adjustment
Adjustment
Notwithstanding anything in Section 12 to the contrary, the number of Shares reserved under
Section 3 of this Plan, the limit on the number of Shares that may be granted during a calendar
year to any individual under Section 3 of this Plan, the number of Shares subject to Stock
Incentives granted under this Plan, and the Exercise Price of any Options and the SAR Exercise
Price of any Stock Appreciation Rights, shall be adjusted by the Board in an equitable manner to
reflect any change in the capitalization of the Company, including, but not limited to, such
changes as stock dividends or stock splits. Furthermore, the Board shall have the right to adjust
(in a manner that satisfies the requirements of Code §424(a)) the number of Shares reserved under
Section 3, and the number of Shares subject to Stock Incentives granted under this Plan, and the
Exercise Price of any Options and the SAR Exercise Price of any Stock Appreciation Rights in the
event of any corporate transaction described in Code §424(a) that provides for the substitution or
assumption of such Stock Incentives. If any adjustment under this Section creates a fractional
Share or a right to acquire a fractional Share, such
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fractional Share shall be disregarded, and the
number of Shares reserved under this Plan and the number subject to any Stock Incentives granted
under this Plan shall be the next lower number of Shares, rounding all fractions downward. An
adjustment made under this Section by the Board shall be conclusive and binding on all affected
persons and, further, shall not constitute an increase in the number of Shares reserved under
Section 3.
Section 11.
Change of Control of the Company
Change of Control of the Company
11.1 General Rule for Options. Except as otherwise provided in a Stock Incentive Agreement,
if a Change of Control occurs, and if the agreements effectuating the Change of Control do not
provide for the assumption or substitution of all Options granted under this Plan, with respect to
any Option granted under this Plan that is not so assumed or substituted (a Non-Assumed Option),
the Committee, in its sole and absolute discretion, may, with respect to any or all of such
Non-Assumed Options, take any or all of the following actions to be effective as of the date of the
Change of Control (or as of any other date fixed by the Committee occurring within the thirty (30)
day period ending on the date of the Change of Control, but only if such action remains contingent
upon the effectuation of the Change of Control) (such date referred to as the Action Effective
Date):
(a) Accelerate the vesting and/or exercisability of such Non-Assumed Option; and/or
(b) Unilaterally cancel any such Non-Assumed Option which has not vested and/or which has not
become exercisable as of the Action Effective Date; and/or
(c) Unilaterally cancel such Non-Assumed Option in exchange for:
(i) whole and/or fractional Shares (or for whole Shares and cash in lieu of any
fractional Share) that, in the aggregate, are equal in value to the excess of the Fair
Market Value of the Shares that could be purchased subject to such Non-Assumed Option
determined as of the Action Effective Date (taking into account vesting and/or
exercisability) over the aggregate Exercise Price for such Shares; or
(ii) cash or other property equal in value to the excess of the Fair Market Value of
the Shares that could be purchased subject to such Non-Assumed Option determined as of the
Action Effective Date (taking into account vesting and/or exercisability) over the aggregate
Exercise Price for such Shares; and/or
(d) Unilaterally cancel such Non-Assumed Option after providing the holder of such Option with
(1) an opportunity to exercise such Non-Assumed Option to the extent vested and/or exercisable
within a specified period prior to the date of the Change of Control, and (2) notice of such
opportunity to exercise prior to the commencement of such specified period; and/or
(e) Unilaterally cancel such Non-Assumed Option and notify the holder of such Option of such
action, but only if the Fair Market Value of the Shares that could be purchased subject to such
Non-Assumed Option determined as of the Action Effective Date (taking into account vesting and/or
exercisability) does not exceed the aggregate Exercise Price for such Shares.
However, notwithstanding the foregoing, to the extent that the recipient of a Non-Assumed Option is
an Insider, payment of cash in lieu of whole or fractional Shares or shares of a successor may only
be made to the extent that such payment (1) has met the requirements of an exemption under Rule
16b-3 promulgated under the Exchange Act, or (2) is a subsequent transaction the terms of which
were provided for in a transaction initially meeting the requirements of an exemption under Rule
16b-3 promulgated under the Exchange Act. Unless a Stock Incentive Agreement provides otherwise,
the payment of cash in lieu of whole or fractional Shares or in lieu of whole or fractional shares
of a successor shall be considered a subsequent transaction approved by the original grant of an
Option.
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11.2 General Rule for SARs. Except as otherwise provided in a Stock Incentive Agreement, if a
Change of Control occurs, and if the agreements effectuating the Change of Control do not provide
for the assumption or substitution of all Stock Appreciation Rights granted under this Plan, with
respect to any Stock Appreciation Right granted under this Plan that is not so assumed or
substituted (a Non-Assumed SAR), the Committee, in its sole and absolute discretion, may, with
respect to any or all of such Non-Assumed SARs, take either or both of the following actions to be
effective as of the date of the Change of Control (or as of any other date fixed by the Committee
occurring within the thirty (30) day period ending on the date of the Change of Control, but only
if such action remains contingent upon the effectuation of the Change of Control) (such date
referred to as the Action Effective Date):
(a) Accelerate the vesting and/or exercisability of such Non-Assumed SAR; and/or
(f) Unilaterally cancel any such Non-Assumed SAR which has not vested or which has not become
exercisable as of the Action Effective Date; and/or
(b) Unilaterally cancel such Non-Assumed SAR in exchange for:
(iii) whole and/or fractional Shares (or for whole Shares and cash in lieu of any
fractional Share) that, in the aggregate, are equal in value to the excess of the Fair
Market Value of the Shares subject to such Non-Assumed SAR determined as of the Action
Effective Date (taking into account vesting and/or exercisability) over the SAR Exercise
Price for such Non-Assumed SAR; or
(iv) cash or other property equal in value to the excess of the Fair Market Value of
the Shares subject to such Non-Assumed SAR determined as of the Action Effective Date
(taking into account vesting and/or exercisability) over the SAR Exercise Price for such
Non-Assumed SAR; and/or
(c) Unilaterally cancel such Non-Assumed SAR and notify the holder of such SAR of such action,
but only if the Fair Market Value of the Shares that could be purchased subject to such Non-Assumed
SAR determined as of the Action Effective Date (taking into account vesting and/or exercisability)
does not exceed the SAR Exercise Price for such Non-Assumed SAR.
However, notwithstanding the foregoing, to the extent that the recipient of a Non-Assumed SAR is an
Insider, payment of cash in lieu of whole or fractional Shares or shares of a successor may only be
made to the extent that such payment (1) has met the requirements of an exemption under Rule 16b-3
promulgated under the Exchange Act, or (2) is a subsequent transaction the terms of which were
provided for in a transaction initially meeting the requirements of an exemption under Rule 16b-3
promulgated under the Exchange Act. Unless a Stock Incentive Agreement provides otherwise, the
payment of cash in lieu of whole or fractional Shares or in lieu of whole or fractional shares of a
successor shall be considered a subsequent transaction approved by the original grant of a SAR.
11.3 General Rule for Restricted Stock Units. Except as otherwise provided in a Stock
Incentive Agreement, if a Change of Control occurs, and if the agreements effectuating the Change
of Control do not provide for the assumption or substitution of all Restricted Stock Units granted
under this Plan, with respect to any Restricted Stock Unit granted under this Plan that is not so
assumed or substituted (a Non-Assumed RSU), the Committee, in its sole and absolute discretion,
may, with respect to any or all of such Non-Assumed RSUs, take either or both of the following
actions to be effective as of the date of the Change of Control (or as of any other date fixed by
the Committee occurring within the thirty (30) day period ending on the date of the Change of
Control, but only if such action remains contingent upon the effectuation of the Change of Control)
(such date referred to as the Action Effective Date):
(d) Accelerate the vesting of such Non-Assumed RSU; and/or
(g) Unilaterally cancel any such Non-Assumed RSU which has not vested as of the Action
Effective Date; and/or
(e) Unilaterally cancel such Non-Assumed RSU in exchange for:
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Page 14
(v) whole and/or fractional Shares (or for whole Shares and cash in lieu of any
fractional Share) that are equal to the number of Shares subject to such Non-Assumed RSU
determined as of the Action Effective Date (taking into account vesting); or
(vi) cash or other property equal in value to the Fair Market Value of the Shares
subject to such Non-Assumed RSU determined as of the Action Effective Date (taking into
account vesting); and/or
(f) Unilaterally cancel such Non-Assumed RSU and notify the holder of such RSU of such action,
but only if the Fair Market Value of the Shares that were subject to such Non-Assumed RSU
determined as of the Action Effective Date (taking into account vesting) is zero.
However, notwithstanding the foregoing, to the extent that the recipient of a Non-Assumed RSU is an
Insider, payment of cash in lieu of whole or fractional Shares or shares of a successor may only be
made to the extent that such payment (1) has met the requirements of an exemption under Rule 16b-3
promulgated under the Exchange Act, or (2) is a subsequent transaction the terms of which were
provided for in a transaction initially meeting the requirements of an exemption under Rule 16b-3
promulgated under the Exchange Act. Unless a Stock Incentive Agreement provides otherwise, the
payment of cash in lieu of whole or fractional Shares or in lieu of whole or fractional shares of a
successor shall be considered a subsequent transaction approved by the original grant of an RSU.
11.4 General Rule for Other Stock Incentive Agreements. If a Change of Control occurs, then,
except to the extent otherwise provided in the Stock Incentive Agreement pertaining to a particular
Stock Incentive or as otherwise provided in this Plan, each Stock Incentive shall be governed by
applicable law and the documents effectuating the Change of Control.
11.5 Special Vesting Upon Change of Control. If a Change of Control occurs, then, except to
the extent that the Stock Incentive Agreement of such Stock Incentive expressly provides otherwise,
such Stock Incentive shall have its vesting and exercisability accelerated by one year as of the
date of the Change of Control so that, after such acceleration, the recipient of the Stock
Incentive shall be vested in such Stock Incentive as of any date of determination after such Change
of Control in accordance with the terms and provisions of the Stock Incentive except that it shall
be presumed that the date of determination is actually one year later than the otherwise determined
actual date of determination.
Section 12.
Amendment or Termination
Amendment or Termination
This Plan may be amended by the Board from time to time to the extent that the Board deems
necessary or appropriate; provided, however, no such amendment shall be made absent the approval of
the stockholders of the Company (a) to increase the number of Shares reserved under Section 3,
except as set forth in Section 10, (b) to extend the maximum life of the Plan under Section 9 or
the maximum exercise period under Section 7, (c) to decrease the minimum Exercise Price under
Section 7, or (d) to change the designation of Eligible Recipients eligible for Stock Incentives
under Section 6. Stockholder approval of other material amendments (such as an expansion of the
types of awards available under the Plan, an extension of the term of the Plan, a change to the
method of determining the Exercise Price of Options issued under the Plan, or a change to the
provisions of Section 7.2(j)) may also be required pursuant to rules promulgated by an established
stock exchange or a national market system if the Company is, or become, listed or traded on any
such established stock exchange or national market system, or for the Plan to continue to be able
to issue Stock Incentives which meet the Performance-Based Exception. The Board also may suspend
the granting of Stock Incentives under this Plan at any time and may terminate this Plan at any
time. The Company shall have the right to modify, amend or cancel any Stock Incentive after it has
been granted if (I) the modification, amendment or cancellation does not diminish the rights or
benefits of the Stock Incentive recipient under the Stock Incentive (provided, however, that a
modification, amendment or cancellation that results solely in a change in the tax consequences
with respect to a Stock Incentive shall not be deemed as a diminishment of rights or benefits of
such Stock Incentive), (II) the Participant consents in writing to such modification, amendment or
cancellation, (III) there is a dissolution or liquidation of the Company, (IV) this Plan and/or the
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Page 15
Stock Incentive Agreement expressly provides for such modification, amendment or cancellation, or
(V) the Company would otherwise have the right to make such modification, amendment or cancellation
by applicable law.
Section 13.
Miscellaneous
Miscellaneous
13.1 Stockholder Rights. No Participant shall have any rights as a stockholder of the Company
as a result of the grant of a Stock Incentive to him or to her under this Plan or his or her
exercise of such Stock Incentive pending the actual delivery of Shares subject to such Stock
Incentive to such Participant.
13.2 No Guarantee of Continued Relationship. The grant of a Stock Incentive to a Participant
under this Plan shall not constitute a contract of employment and shall not confer on a Participant
any rights upon his or her termination of employment or relationship with the Company in addition
to those rights, if any, expressly set forth in the Stock Incentive Agreement that evidences his or
her Stock Incentive.
13.3 Withholding. The Company shall have the power and the right to deduct or withhold, or
require a Participant to remit to the Company as a condition precedent for the fulfillment of any
Stock Incentive, an amount sufficient to satisfy Federal, state and local taxes, domestic or
foreign, required by law or regulation to be withheld with respect to any taxable event arising as
a result of this Plan and/or any action taken by a Participant with respect to a Stock Incentive.
Whenever Shares are to be issued to a Participant upon exercise of an Option or a Stock
Appreciation Right, or satisfaction of conditions under a Restricted Stock Unit, or grant of or
substantial vesting of a Restricted Stock Award, the Company shall have the right to require the
Participant to remit to the Company, as a condition of exercise of the Option or Stock Appreciation
Right, or as a condition to the fulfillment of the Restricted Stock Unit, or as a condition to the
grant or substantial vesting of the Restricted Stock Award, an amount in cash (or, unless the Stock
Incentive Agreement provides otherwise, in Shares) sufficient to satisfy federal, state and local
withholding tax requirements at the time of such exercise, satisfaction of conditions, or grant or
substantial vesting. However, notwithstanding the foregoing, to the extent that a Participant is
an Insider, satisfaction of withholding requirements by having the Company withhold Shares may only
be made to the extent that such withholding of Shares (1) has met the requirements of an exemption
under Rule 16b-3 promulgated under the Exchange Act, or (2) is a subsequent transaction the terms
of which were provided for in a transaction initially meeting the requirements of an exemption
under Rule 16b-3 promulgated under the Exchange Act. Unless the Stock Incentive Agreement provides
otherwise, the withholding of shares to satisfy federal, state and local withholding tax
requirements shall be a subsequent transaction approved by the original grant of a Stock Incentive.
Notwithstanding the foregoing, in no event shall payment of withholding taxes be made by a
retention of Shares by the Company unless the Company retains only Shares with a Fair Market Value
equal to the minimum amount of taxes required to be withheld.
13.4 Notification of Disqualifying Dispositions of ISO Options. If a Participant sells or
otherwise disposes of any of the Shares acquired pursuant to an Option that is an ISO on or before
the later of (1) the date two (2) years after the date of grant of such Option, or (2) the date one
(1) year after the exercise of such Option, then the Participant shall immediately notify the
Company in writing of such sale or disposition and shall cooperate with the Company in providing
sufficient information to the Company for the Company to properly report such sale or disposition
to the Internal Revenue Service. The Participant acknowledges and agrees that he may be subject to
federal, state and/or local tax withholding by the Company on the compensation income recognized by
Participant from any such early disposition, and agrees that he shall include the compensation from
such early disposition in his gross income for federal tax purposes. Participant also acknowledges
that the Company may condition the exercise of any Option that is an ISO on the Participants
express written agreement with these provisions of this Plan.
13.5 Transfer. The transfer of an Employee between or among the Company, a Subsidiary or a
Parent shall not be treated as a termination of his or her employment under this Plan.
13.6 Construction. This Plan shall be construed under the laws of the State of Delaware.
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Section 14.
Performance Criteria
Performance Criteria
14.1 Performance Goal Business Criteria. Unless and until the Board proposes for stockholder
vote and stockholders approve a change in the general performance measures set forth in this
Section, the
attainment of which may determine the degree of payout and/or vesting with respect to Stock
Incentives to Employees and Key Persons pursuant to this Plan which are designed to qualify for the
Performance-Based Exception, the performance measure(s) to be used by a Committee composed of two
(2) or more Outside Directors for purposes of such grants shall be chosen from among the following:
(a) Earnings per share;
(b) Net income (before or after taxes);
(c) Return measures (including, but not limited to, return on assets, equity or sales);
(d) Cash flow return on investments which equals net cash flows divided by owners equity;
(e) Earnings before or after taxes, depreciation and/or amortization;
(f) Gross revenues;
(g) Operating income (before or after taxes);
(h) Total stockholder returns;
(i) Corporate performance indicators (indices based on the level of certain services provided
to customers);
(j) Cash generation, profit and/or revenue targets;
(k) Growth measures, including revenue growth, as compared with a peer group or other
benchmark;
(l) Share price (including, but not limited to, growth measures and total stockholder return);
and/or
(m) Pre-tax profits.
14.2 Discretion in Formulation of Performance Goals. The Board shall have the discretion to
adjust the determinations of the degree of attainment of the pre-established performance goals;
provided, however, that Stock Incentives which are to qualify for the Performance-Based Exception
may not be adjusted upward (although the Committee shall retain the discretion to adjust such Stock
Incentives downward).
14.3 Performance Periods. The Board shall have the discretion to determine the period during
which any performance goal must be attained with respect to a Stock Incentive. Such period may be
of any length, and must be established prior to the start of such period or within the first ninety
(90) days of such period (provided that the performance criteria is not in any event set after 25%
or more of such period has elapsed).
14.4 Modifications to Performance Goal Business Criteria. In the event that the applicable
tax and/or securities laws change to permit Board discretion to alter the governing performance
measures noted above without obtaining stockholder approval of such changes, the Board shall have
sole discretion to make such changes without obtaining stockholder approval. In addition, in the
event that the Board determines that it is advisable to grant Stock Incentives which shall not
qualify for the Performance-Based Exception, the Board
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may make such grants without satisfying the requirements of Code §162(m); otherwise, a
Committee composed exclusively of two (2) of more Outside Directors must make such grants.
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SCHEDULE A
The UK Sub-Plan
This schedule constitutes a sub-plan, providing for the grant of options to UK employees.
If the Board determines to grant an Option pursuant to this sub-plan, such Option will be subject
to the terms of the rules of the Plan but subject to the following additional provisions:
1 | Only Options and Stock Appreciation Rights may be granted under this sub-plan. | |
2 | In this sub-plan Eligible Recipient means an Employee. | |
3 | When the Board determines to grant a Stock Incentive pursuant to this sub-Plan it shall do so by executing (on the date it so determines) a deed to that effect. | |
4 | Clause (i) of Section 7.2(g) and clause (i) of Section 7.3(c) shall be substituted with the following: | |
to his spouse, widow, widower, or children or children by adoption under the age of 18 | ||
5 | In Section 13.3 all references to Federal, state and local taxes shall be deemed to include all forms of tax, duties, imposts and levies in the nature of tax whenever created or imposed and whether of the United Sates of America or elsewhere including (without limitation) United Kingdom national insurance. | |
6 | The Company may in its absolute discretion require a Participant, on demand, to enter into an election pursuant to Section 431(1) of the UK Income Tax (Earnings and Pensions) Act 2003 in respect of all Shares issued or transferred upon the exercise of any Option held by that Participant (and no Shares shall be issued or delivered on exercise of an Option whilst the holder of that Option is in breach of this paragraph 6). Such election shall be in such form as the Board shall require. | |
7 | The Company may require, as a condition of exercise of an Option, that the Option holder shall enter into an election or agreement with the Company or any Subsidiary or Parent to assume the liability for any secondary Class 1 national insurance contributions payable in the United Kingdom in respect of that Option, under Section 4 of, and paragraph 3B of Schedule 1 to, the UK Social Security Contributions and Benefits Act 1992 (and no Shares shall be issued or delivered on exercise of an Option whilst the holder of that Option is in breach of this paragraph 7). Such election or agreement shall be in such form as the Board shall require. |
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SCHEDULE B
The German Sub-Plan
This schedule constitutes a sub-plan, providing for the grant of Stock Incentives to Employees in
Germany under the SciQuest, Inc. 2004 Stock Incentive Plan, as amended from time to time (the
Plan).
If the Board determines to grant a Stock Incentive to an Employee in Germany, such Stock Incentive
shall be subject to the terms of the rules of the Plan in connection with the following additional
provisions:
1. | Section 2.8 of the Plan shall apply with the following provisos: |
(a) | A Forced Relocation or Transfer exists where the Employees transfer to a site of employment which is located further than 50 miles from the Employees current site of employment is based on an instruction by the Company, a Parent or a Subsidiary (or a successor employer). A Forced Relocation or Transfer shall also exist if the Company, a Parent or a Subsidiary (or a successor employer) gives notice to terminate pending a change of contract to that effect (as further defined in Section 2.8(a) of the Plan) and if the Employee does not challenge the validity of this notice in court within the statutory period of three (3) weeks. | ||
(b) | A Decrease in Salary or Wages exists if the Company, a Parent or a Subsidiary (or a successor employer) gives notice to terminate pending a change of contract to that effect (as further defined in section 2.8(b) of the Plan) and if the Employee does not challenge the validity of this notice in court within the statutory period of three (3) weeks. | ||
(c) | A Significant and Substantial Reduction in Benefits exists if the Company, a Parent or a Subsidiary (or a successor employer) gives notice to terminate pending a change of contract to that effect (as further defined in Section 2.8(c) of the Plan) and if the Employee does not challenge the validity of this notice in court within the statutory period of three (3) weeks. |
The thirty (30) days period within which a termination of employment with the Company by an Employee must occur shall commence on the day immediately following the day of receipt by the Employee of the instruction or the notice to terminate pending a change of contract, as the case may be. It shall suffice that the Employee gives notice to terminate within this thirty (30) days period. The day on which the notice period expires shall not be relevant for the purpose of compliance with this thirty (30) days period. | ||
2. | Deviating from Section 2.10 of the Plan, Eligible Recipient means an Employee. | |
3. | Deviating from Section 2.11 of the Plan, Employee means an employee of the Company, a Subsidiary or a Parent. | |
4. | Where the Plan grants the Board or a Committee discretion, e.g. in Sections 5.1, 7.1(a), 7.2(a), 7.2(e), 7.2(g), 7.3(c), 7.4(c), such provisions shall be interpreted as meaning reasonable discretion. | |
5. | In Section 13.3 of the Plan all references to federal, state and local taxes shall be deemed to include all forms of tax, duties, imposts and levies in nature of tax whenever created or imposed, whether U.S. domestic or foreign, including (without limitation) German social security contributions. |
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6. | Stock Incentives under the Plan are granted on a voluntary basis. The grant of a Stock Incentive under the Plan, even if repeated, shall not entitle the Employee to any future grant of Stock Incentives under the Plan. |
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