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8-K - FORM 8-K - KEYNOTE SYSTEMS INC | f58574e8vk.htm |
KEYNOTE SYSTEMS, INC.
1999 EQUITY INCENTIVE PLAN
As Adopted June 28, 1999 and
Amended through March 18, 2011.
Amended through March 18, 2011.
1. PURPOSE. The purpose of this Plan is to provide incentives to attract, retain and
motivate eligible persons whose present and potential contributions are important to the success of
the Company, its Parent and Subsidiaries, by offering them an opportunity to participate in the
Companys future performance through awards of Options, Restricted Stock and Stock Bonuses.
Capitalized terms not defined in the text are defined in Section 24.
2. SHARES SUBJECT TO THE PLAN.
2.1 Number of Shares Available. Subject to Sections 2.2 and 19, the total number of
Shares reserved and available for grant and issuance pursuant to this Plan will be 5,000,000 Shares
plus Shares that are subject to: (a) issuance upon exercise of an Option but cease to be subject to
such Option for any reason other than exercise of such Option; (b) an Award granted hereunder but
are forfeited or are repurchased by the Company at the original issue price; and (c) an Award that
otherwise terminates without Shares being issued. In addition, any authorized shares not issued or
subject to outstanding grants under the Keynote Systems, Inc. 1996 Stock Option Plan and the 1999
Stock Option Plan (the Prior Plans) on the Effective Date (as defined below) and any shares
issued under the Prior Plans that are forfeited or repurchased by the Company or that are issuable
upon exercise of options granted pursuant to the Prior Plans that expire or become unexercisable
for any reason without having been exercised in full, will no longer be available for grant and
issuance under the Prior Plans, but will be available for grant and issuance under this Plan. No
more than 20,000,000 shares shall qualify as ISOs (as defined in Section 5 below). At all times
the Company shall reserve and keep available a sufficient number of Shares as shall be required to
satisfy the requirements of all outstanding Options granted under this Plan and all other
outstanding but unvested Awards granted under this Plan.
2.2 Adjustment of Shares. In the event that the number of outstanding shares is
changed by a stock dividend, recapitalization, stock split, reverse stock split, subdivision,
combination, reclassification or similar change in the capital structure of the Company without
consideration, then (a) the number of Shares reserved for issuance under this Plan, (b) the
Exercise Prices of and number of Shares subject to outstanding Options, and (c) the number of
Shares subject to other outstanding Awards will be proportionately adjusted, subject to any
required action by the Board or the stockholders of the Company and compliance with applicable
securities laws; provided, however, that fractions of a Share will not be issued
but will either be replaced by a cash payment equal to the Fair Market Value of such fraction of a
Share or will be rounded up to the nearest whole Share, as determined by the Committee.
3. ELIGIBILITY. ISOs (as defined in Section 5 below) may be granted only to employees
(including officers and directors who are also employees) of the Company or of a Parent or
Subsidiary of the Company. All other Awards may be granted to employees, officers, directors,
consultants, independent contractors and advisors of the Company or any Parent or Subsidiary of the
Company; provided such consultants, contractors and advisors render bona fide services not
in connection with the offer and sale of securities in a capital-raising transaction. No person
will be eligible to receive more than 1,000,000 Shares in any calendar year under this Plan
pursuant to the grant of Awards hereunder, other than new employees of the Company or of a Parent
or Subsidiary of the Company (including new employees who are also officers and directors of the
Company or any Parent or Subsidiary of the Company), who are eligible to receive up to a maximum of
2,000,000 Shares in the calendar year in which they commence their employment. A person may be
granted more than one Award under this Plan.
4. ADMINISTRATION.
4.1 Committee Authority. This Plan will be administered by the Committee or by the
Board acting as the Committee. Except for automatic grants to Outside Directors pursuant to
Section 10 hereof, and subject to the general purposes, terms and conditions of this Plan, and to
the direction of the Board, the Committee will have full power to implement and carry out this
Plan. Except for automatic grants to Outside Directors pursuant to Section 10 hereof, the
Committee will have the authority to:
(a) construe and interpret this Plan, any Award Agreement and any other
agreement or document executed pursuant to this Plan;
(b) prescribe, amend and rescind rules and regulations relating to this Plan
or any Award;
(c) select persons to receive Awards;
(d) determine the form and terms of Awards;
(e) determine the number of Shares or other consideration subject to Awards;
(f) determine whether Awards will be granted singly, in combination with, in
tandem with, in replacement of, or as alternatives to, other Awards under
this Plan or any other incentive or compensation plan of the Company or any
Parent or Subsidiary of the Company;
(g) grant waivers of Plan or Award conditions;
(h) determine the vesting, exercisability and payment of Awards;
(i) correct any defect, supply any omission or reconcile any inconsistency
in this Plan, any Award or any Award Agreement;
(j) determine whether an Award has been earned; and
(k) make all other determinations necessary or advisable for the
administration of this Plan.
4.2 Committee Discretion. Except for automatic grants to Outside Directors pursuant
to Section 10 hereof, any determination made by the Committee with respect to any Award will be
made in its sole discretion at the time of grant of the Award or, unless in contravention of any
express term of this Plan or Award, at any later time, and such determination will be final and
binding on the Company and on all persons having an interest in any Award under this Plan. The
Committee may delegate to one or more officers of the Company the authority to grant an Award under
this Plan to Participants who are not Insiders of the Company.
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5. OPTIONS. The Committee may grant Options to eligible persons and will determine
whether such Options will be Incentive Stock Options within the meaning of the Code (ISO) or
Nonqualified Stock Options (NQSOs), the number of Shares subject to the Option, the Exercise
Price of the Option, the period during which the Option may be exercised, and all other terms and
conditions of the Option, subject to the following:
5.1 Form of Option Grant. Each Option granted under this Plan will be evidenced by an
Award Agreement which will expressly identify the Option as an ISO or an NQSO (Stock Option
Agreement), and, except as otherwise required by the terms of Section 10 hereof, will be in such
form and contain such provisions (which need not be the same for each Participant) as the Committee
may from time to time approve, and which will comply with and be subject to the terms and
conditions of this Plan.
5.2 Date of Grant. The date of grant of an Option will be the date on which the
Committee makes the determination to grant such Option, unless otherwise specified by the
Committee. The Stock Option Agreement and a copy of this Plan will be delivered to the Participant
within a reasonable time after the granting of the Option.
5.3 Exercise Period. Options may be exercisable within the times or upon the events
determined by the Committee as set forth in the Stock Option Agreement governing such Option;
provided, however, that no Option will be exercisable after the expiration of ten
(10) years from the date the Option is granted; and provided further that no ISO granted to a
person who directly or by attribution owns more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or of any Parent or Subsidiary of the Company (Ten
Percent Stockholder) will be exercisable after the expiration of five (5) years from the date the
ISO is granted. The Committee also may provide for Options to become exercisable at one time or
from time to time, periodically or otherwise, in such number of Shares or percentage of Shares as
the Committee determines.
5.4 Exercise Price. The Exercise Price of an Option will be determined by the
Committee when the Option is granted and will not be less than 100% of the Fair Market Value of the
Shares on the date of grant; provided that the Exercise Price of any ISO granted to a Ten Percent
Stockholder will not be less than 110% of the Fair Market Value of the Shares on the date of grant.
Payment for the Shares purchased may be made in accordance with Section 9 of this Plan.
5.5 Method of Exercise. Options may be exercised only by delivery to the Company of a
written stock option exercise agreement (the Exercise Agreement) in a form approved by the
Committee (which need not be the same for each Participant), stating the number of Shares being
purchased, the restrictions imposed on the Shares purchased under such Exercise Agreement, if any,
and such representations and agreements regarding Participants investment intent and access to
information and other matters, if any, as may be required or desirable by the Company to comply
with applicable securities laws, together with payment in full of the Exercise Price for the number
of Shares being purchased.
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5.6 Termination. Notwithstanding the exercise periods set forth in the Stock Option
Agreement, exercise of an Option will always be subject to the following:
(a) If the Participant is Terminated for any reason except death or
Disability, then the Participant may exercise such Participants Options
only to the extent that such Options would have been exercisable upon the
Termination Date no later than three (3) months after the Termination Date
(or such shorter or longer time period not exceeding five (5) years as may
be determined by the Committee, with any exercise beyond three (3) months
after the Termination Date deemed to be an NQSO), but in any event, no later
than the expiration date of the Options.
(b) If the Participant is Terminated because of Participants death or
Disability (or the Participant dies within three (3) months after a
Termination other than for Cause or because of Participants Disability),
then Participants Options may be exercised only to the extent that such
Options would have been exercisable by Participant on the Termination Date
and must be exercised by Participant (or Participants legal representative
or authorized assignee) no later than twelve (12) months after the
Termination Date (or such shorter or longer time period not exceeding five
(5) years as may be determined by the Committee, with any such exercise
beyond (a) three (3) months after the Termination Date when the Termination
is for any reason other than the Participants death or Disability, or (b)
twelve (12) months after the Termination Date when the Termination is for
Participants death or Disability, deemed to be an NQSO), but in any event
no later than the expiration date of the Options.
(c) Notwithstanding the provisions in paragraph 5.6(a) above, if a
Participant is terminated for Cause, neither the Participant, the
Participants estate nor such other person who may then hold the Option
shall be entitled to exercise any Option with respect to any Shares
whatsoever, after termination of service, whether or not after termination
of service the Participant may receive payment from the Company or
Subsidiary for vacation pay, for services rendered prior to termination, for
services rendered for the day on which termination occurs, for salary in
lieu of notice, or for any other benefits. In making such determination,
the Board shall give the Participant an opportunity to present to the Board
evidence on his behalf. For the purpose of this paragraph, termination of
service shall be deemed to occur on the date when the Company dispatches
notice or advice to the Participant that his service is terminated.
5.7 Limitations on Exercise. The Committee may specify a reasonable minimum number of
Shares that may be purchased on any exercise of an Option, provided that such minimum number will
not prevent Participant from exercising the Option for the full number of Shares for which it is
then exercisable.
5.8 Limitations on ISO. The aggregate Fair Market Value (determined as of the date of
grant) of Shares with respect to which ISO are exercisable for the first time by a Participant
during any calendar year (under this Plan or under any other incentive stock option plan of the
Company, Parent or Subsidiary of the
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Company) will not exceed $100,000. If the Fair Market Value
of Shares on the date of grant with respect to which ISO are exercisable for the first time by a
Participant during any calendar year exceeds $100,000, then the Options
for the first $100,000 worth of Shares to become exercisable in such calendar year will be ISO and
the Options for the amount in excess of $100,000 that become exercisable in that calendar year will
be NQSOs. In the event that the Code or the regulations promulgated thereunder are amended after
the Effective Date of this Plan to provide for a different limit on the Fair Market Value of Shares
permitted to be subject to ISO, such different limit will be automatically incorporated herein and
will apply to any Options granted after the effective date of such amendment.
5.9 Modification, Extension or Renewal. The Committee may modify, extend or renew
outstanding Options and authorize the grant of new Options in substitution therefor, provided that
any such action may not, without the written consent of a Participant, impair any of such
Participants rights under any Option previously granted. Notwithstanding the foregoing, without
first obtaining the consent of stockholders, the Committee may not (a) reduce the Exercise Price of
outstanding Options or (b) grant in substitution for cancelled Options (i) new Options having a
lower Exercise Price, or (ii) other Awards authorized under the Plan. Any outstanding ISO that is
modified, extended, renewed or otherwise altered will be treated in accordance with Section 424(h)
of the Code.
5.10 No Disqualification. Notwithstanding any other provision in this Plan, no term
of this Plan relating to ISO will be interpreted, amended or altered, nor will any discretion or
authority granted under this Plan be exercised, so as to disqualify this Plan under Section 422 of
the Code or, without the consent of the Participant affected, to disqualify any ISO under Section
422 of the Code.
6. RESTRICTED STOCK. A Restricted Stock Award is an offer by the Company to sell to
an eligible person Shares that are subject to restrictions. The Committee will determine to whom
an offer will be made, the number of Shares the person may purchase, the price to be paid (the
Purchase Price), the restrictions to which the Shares will be subject, and all other terms and
conditions of the Restricted Stock Award, subject to the following:
6.1 Form of Restricted Stock Award. All purchases under a Restricted Stock Award made
pursuant to this Plan will be evidenced by an Award Agreement (Restricted Stock Purchase
Agreement) that will be in such form (which need not be the same for each Participant) as the
Committee will from time to time approve, and will comply with and be subject to the terms and
conditions of this Plan. The offer of Restricted Stock will be accepted by the Participants
execution and delivery of the Restricted Stock Purchase Agreement and full payment for the Shares
to the Company within thirty (30) days from the date the Restricted Stock Purchase Agreement is
delivered to the person. If such person does not execute and deliver the Restricted Stock Purchase
Agreement along with full payment for the Shares to the Company within thirty (30) days, then the
offer will terminate, unless otherwise determined by the Committee.
6.2 Purchase Price. The Purchase Price of Shares sold pursuant to a Restricted Stock
Award will be determined by the Committee on the date the Restricted Stock Award is granted, except
in the case of a sale to a Ten Percent Stockholder, in which case the Purchase Price will be 100%
of the Fair Market Value. Payment of the Purchase Price may be made in accordance with Section 9
of this Plan.
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6.3 Terms of Restricted Stock Awards. Restricted Stock Awards shall be subject to
such restrictions as the Committee may impose. These restrictions may be based upon completion of
a specified number of years of service with the Company or upon completion of the performance goals
as set out in advance in the
Participants individual Restricted Stock Purchase Agreement. Restricted Stock Awards may vary
from Participant to Participant and between groups of Participants. Prior to the grant of a
Restricted Stock Award, the Committee shall: (a) determine the nature, length and starting date of
any Performance Period for the Restricted Stock Award; (b) select from among the Performance
Factors to be used to measure performance goals, if any; and (c) determine the number of Shares
that may be awarded to the Participant. Prior to the payment of any Restricted Stock Award, the
Committee shall determine the extent to which such Restricted Stock Award has been earned.
Performance Periods may overlap and Participants may participate simultaneously with respect to
Restricted Stock Awards that are subject to different Performance Periods and having different
performance goals and other criteria.
6.4 Termination During Performance Period. If a Participant is Terminated during a
Performance Period for any reason, then such Participant will be entitled to payment (whether in
Shares, cash or otherwise) with respect to the Restricted Stock Award only to the extent earned as
of the date of Termination in accordance with the Restricted Stock Purchase Agreement, unless the
Committee will determine otherwise.
7. STOCK BONUSES.
7.1 Awards of Stock Bonuses. A Stock Bonus is an award of Shares (which may consist
of Restricted Stock) for services rendered to the Company or any Parent or Subsidiary of the
Company. A Stock Bonus may be awarded for past services already rendered to the Company, or any
Parent or Subsidiary of the Company pursuant to an Award Agreement (the Stock Bonus Agreement)
that will be in such form (which need not be the same for each Participant) as the Committee will
from time to time approve, and will comply with and be subject to the terms and conditions of this
Plan. A Stock Bonus may be awarded upon satisfaction of such performance goals as are set out in
advance in the Participants individual Award Agreement (the Performance Stock Bonus Agreement)
that will be in such form (which need not be the same for each Participant) as the Committee will
from time to time approve, and will comply with and be subject to the terms and conditions of this
Plan. Stock Bonuses may vary from Participant to Participant and between groups of Participants,
and may be based upon the achievement of the Company, Parent or Subsidiary and/or individual
performance factors or upon such other criteria as the Committee may determine.
7.2 Terms of Stock Bonuses. The Committee will determine the number of Shares to be
awarded to the Participant. If the Stock Bonus is being earned upon the satisfaction of
performance goals pursuant to a Performance Stock Bonus Agreement, then the Committee will: (a)
determine the nature, length and starting date of any Performance Period for each Stock Bonus; (b)
select from among the Performance Factors to be used to measure the performance, if any; and (c)
determine the number of Shares that may be awarded to the Participant. Prior to the payment of any
Stock Bonus, the Committee shall determine the extent to which such Stock Bonuses have been earned.
Performance Periods may overlap and Participants may participate simultaneously with respect to
Stock Bonuses that are subject to different Performance Periods and different performance goals and
other criteria. The number of Shares may be fixed or may vary in accordance with such performance
goals and criteria as may be determined by the Committee. The Committee may adjust the performance
goals applicable to the Stock Bonuses to take into account changes in law and accounting or tax
rules and to make such adjustments as the
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Committee deems necessary or appropriate to reflect the
impact of extraordinary or unusual items, events or circumstances to avoid windfalls or hardships.
7.3 Form of Payment. The earned portion of a Stock Bonus may be paid currently or on
a deferred basis with such interest or dividend equivalent, if any, as the Committee may determine.
Payment may be made in the form of cash or whole Shares or a combination thereof, either in a lump
sum payment or in installments, all as the Committee will determine.
8. RESTRICTED STOCK UNITS.
8.1 Awards of Restricted Stock Units. A Restricted Stock Unit (RSU) is an award to
a Participant covering a number of Shares that may be settled in cash, or by issuance of those
Shares (which may consist of Restricted Stock). All RSUs shall be made pursuant to an Award
Agreement.
8.2 Terms of RSUs. The Committee will determine the terms of an RSU including,
without limitation: (a) the number of Shares subject to the RSU; (b) the time or times during which
the RSU may be settled; and (c) the consideration to be distributed on settlement, and the effect
of the Participants Termination on each RSU. An RSU may be awarded upon satisfaction of such
Performance Factors (if any) during any Performance Period as are set out in advance in the
Participants Award Agreement. If the RSU is being earned upon satisfaction of Performance
Factors, then the Committee will: (x) determine the nature, length and starting date of any
Performance Period for the RSU; (y) select from among the Performance Factors to be used to measure
the performance, if any; and (z) determine the number of Shares deemed subject to the RSU.
Performance Periods may overlap and participants may participate simultaneously with respect to
RSUs that are subject to different Performance Periods and different performance goals and other
criteria.
8.3 Form and Timing of Settlement. Payment of earned RSUs shall be made as soon as
practicable after the date(s) determined by the Committee and set forth in the Award Agreement.
The Committee, in its sole discretion, may settle earned RSUs in cash, Shares, or a combination of
both.
8.4 Termination of Participant. Except as may be set forth in the Participants Award
Agreement, vesting ceases on such Participants Termination Date (unless determined otherwise by
the Committee).
9. PAYMENT FOR SHARE PURCHASES.
9.1 Payment. Payment for Shares purchased pursuant to this Plan may be made in cash
(by check) or, where expressly approved for the Participant by the Committee and where permitted by
law:
(a) by cancellation of indebtedness of the Company to the Participant;
(b) by surrender of shares that either: (1) have been owned by Participant
for more than six (6) months and have been paid for within the meaning of
SEC Rule 144 (and, if such shares were purchased from the Company by use of
a promissory note, such note
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has
been fully paid with respect to such shares); or (2) were obtained by Participant in the public market;
(c) by waiver of compensation due or accrued to the Participant for services
rendered;
(d) with respect only to purchases upon exercise of an Option, and provided
that a public market for the Companys stock exists:
(1) through a same day sale commitment from the Participant and a
broker-dealer that is a member of the National Association of
Securities Dealers (an NASD Dealer) whereby the Participant
irrevocably elects to exercise the Option and to sell a portion of
the Shares so purchased to pay for the Exercise Price, and whereby
the NASD Dealer irrevocably commits upon receipt of such Shares to
forward the Exercise Price directly to the Company; or
(2) through a margin commitment from the Participant and a NASD
Dealer whereby the Participant irrevocably elects to exercise the
Option and to pledge the Shares so purchased to the NASD Dealer in a
margin account as security for a loan from the NASD Dealer in the
amount of the Exercise Price, and whereby the NASD Dealer irrevocably
commits upon receipt of such Shares to forward the Exercise Price
directly to the Company; or
(e) by any combination of the foregoing.
9.2 Loan Guarantees. The Committee may help the Participant pay for Shares purchased
under this Plan by authorizing a guarantee by the Company of a third-party loan to the Participant.
10. GRANTS TO OUTSIDE DIRECTORS.
10.1 Types of Options and Shares. Options granted under this Plan and subject to this
Section 10 shall be NQSOs.
10.2 Eligibility. Options subject to this Section 10 shall be granted only to Outside
Directors.
10.3 Initial Grants. Each Outside Director who was a member of the Board before the
Effective Date will automatically be granted an Option for 50,000 Shares on the Effective Date,
unless such Outside Director received a grant of Options before the Effective Date. Each Outside
Director who first becomes a member of the Board on or after the Effective Date will automatically
be granted an Option for 60,000 Shares on the date such Outside Director first becomes a member of
the Board (in either case an Initial Grant).
10.4 Additional Grants. Each Outside Director will be eligible for additional Options
(an Additional Grant) at the sole discretion of the Committee. No Outside Director shall receive
Additional
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Grants during any fiscal year covering, in the aggregate, in excess of 40,000 Shares,
provided that any Options received pursuant to Section 10.3 above shall not count against such
limit.
10.5 Vesting.
(a) The date an Outside Director receives an Initial Grant is referred to in
this Plan as the Start Date for such Option. Each Initial Grant will vest
as to 25% of the Shares on the earlier of the first anniversary of the Start
Date for such Initial Grant or the first Annual Meeting of stockholders of
the Company following such Initial Grant, and as to 2.0833% of the Shares
monthly thereafter until all of the Shares are fully vested, so long as the
Outside Director continuously remains a director of the Company.
(b) The Committee, in its sole discretion, may set the vesting schedule of
Additional Grants to Outside Directors.
(c) In the event of a corporate transaction described in Section 19.1, the
vesting of all options granted to Outside Directors pursuant to this Section
10 will accelerate and such options will become exercisable in full prior to
the consummation of such event at such times and on such conditions as the
Committee determines, and must be exercised, if at all, within three months
of the consummation of said event. Any options not exercised within such
three-month period shall expire.
10.6 Exercise Price. The exercise price of an Option pursuant to an Initial Grant or
an Additional Grant shall be the Fair Market Value of the Shares, at the time that the Option is
granted.
11. WITHHOLDING TAXES.
11.1 Withholding Generally. Whenever Shares are to be issued in satisfaction of
Awards granted under this Plan, the Company may require the Participant to remit to the Company an
amount sufficient to satisfy federal, state and local withholding tax requirements prior to the
delivery of any certificate or certificates for such Shares. Whenever, under this Plan, payments
in satisfaction of Awards are to be made in cash, such payment will be net of an amount sufficient
to satisfy federal, state, and local withholding tax requirements.
11.2 Stock Withholding. When, under applicable tax laws, a Participant incurs tax
liability in connection with the exercise or vesting of any Award that is subject to tax
withholding and the Participant is obligated to pay the Company the amount required to be withheld,
the Committee may in its sole discretion allow the Participant to satisfy the minimum withholding
tax obligation by electing to have the Company withhold from the Shares to be issued that number of
Shares having a Fair Market Value equal to the minimum amount required to be withheld, determined
on the date that the amount of tax to be withheld is to be determined. All elections by a
Participant to have Shares withheld for this purpose will be made in accordance with the
requirements established by the Committee and be in writing in a form acceptable to the Committee
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12. TRANSFERABILITY.
12.1 Except as otherwise provided in this Section 12, Awards granted under this Plan, and
any interest therein, will not be transferable or assignable by Participant, and may not be
made subject to execution, attachment or similar process, otherwise than by will or by the laws
of descent and distribution or as determined by the Committee and set forth in the Award
Agreement with respect to Awards that are not ISOs.
12.2 All Awards other than NQSOs. All Awards other than NQSOs shall be
exercisable: (i) during the Participants lifetime, only by (A) the Participant, or (B) the
Participants guardian or legal representative; and (ii) after Participants death, by the
legal representative of the Participants heirs or legatees.
12.3 NQSOs. Unless otherwise restricted by the Committee, an NQSO shall be
exercisable: (i) during the Participants lifetime only by (A) the Participant, (B) the
Participants guardian or legal representative, (C) a Family Member of the Participant who has
acquired the NQSO by permitted transfer; and (ii) after Participants death, by the legal
representative of the Participants heirs or legatees. Permitted transfer means, as
authorized by this Plan and the Committee in an NQSO, any transfer effected by the Participant
during the Participants lifetime of an interest in such NQSO but only such transfers which are
by gift or domestic relations order. A permitted transfer does not include any transfer for
value and neither of the following are transfers for value: (a) a transfer of under a domestic
relations order in settlement of marital property rights or (b) a transfer to an entity in
which more than fifty percent of the voting interests are owned by Family Members or the
Participant in exchange for an interest in that entity.
13. PRIVILEGES OF STOCK OWNERSHIP; RESTRICTIONS ON SHARES.
13.1 Voting and Dividends. No Participant will have any of the rights of a
stockholder with respect to any Shares until the Shares are issued to the Participant. After
Shares are issued to the Participant, the Participant will be a stockholder and have all the rights
of a stockholder with respect to such Shares, including the right to vote and receive all dividends
or other distributions made or paid with respect to such Shares; provided, that if such
Shares are Restricted Stock, then any new, additional or different securities the Participant may
become entitled to receive with respect to such Shares by virtue of a stock dividend, stock split
or any other change in the corporate or capital structure of the Company will be subject to the
same restrictions as the Restricted Stock; provided, further, that the Participant
will have no right to retain such stock dividends or stock distributions with respect to Shares
that are repurchased at the Participants Purchase Price or Exercise Price pursuant to Section 12.
13.2 Restrictions on Shares. At the discretion of the Committee, the Company may
reserve to itself and/or its assignee(s) in the Award Agreement a right to repurchase a portion of
or all Unvested Shares held by a Participant following such Participants Termination at any time
within ninety (90) days after the later of Participants Termination Date and the date Participant
purchases Shares under this Plan, for cash and/or cancellation of purchase money indebtedness, at
the Participants Exercise Price or Purchase Price, as the case may be.
14. CERTIFICATES. All certificates for Shares or other securities delivered under
this Plan will be subject to such stock transfer orders, legends and other restrictions as the
Committee may deem necessary or
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advisable, including restrictions under any applicable federal,
state or foreign securities law, or any rules, regulations
and other requirements of the SEC or any stock exchange or automated quotation system upon which
the Shares may be listed or quoted.
15. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a Participants Shares,
the Committee may require the Participant to deposit all certificates representing Shares, together
with stock powers or other instruments of transfer approved by the Committee, appropriately
endorsed in blank, with the Company or an agent designated by the Company to hold in escrow until
such restrictions have lapsed or terminated, and the Committee may cause a legend or legends
referencing such restrictions to be placed on the certificates.
16. EXCHANGE OF AWARDS. The Committee may, at any time or from time to time,
authorize the Company, with the consent of the respective Participants, to issue new Awards in
exchange for the surrender and cancellation of any or all outstanding Awards.
17. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award will not be effective
unless such Award is in compliance with all applicable federal and state securities laws, rules and
regulations of any governmental body, and the requirements of any stock exchange or automated
quotation system upon which the Shares may then be listed or quoted, as they are in effect on the
date of grant of the Award and also on the date of exercise or other issuance. Notwithstanding any
other provision in this Plan, the Company will have no obligation to issue or deliver certificates
for Shares under this Plan prior to: (a) obtaining any approvals from governmental agencies that
the Company determines are necessary or advisable; and/or (b) completion of any registration or
other qualification of such Shares under any state or federal law or ruling of any governmental
body that the Company determines to be necessary or advisable. The Company will be under no
obligation to register the Shares with the SEC or to effect compliance with the registration,
qualification or listing requirements of any state securities laws, stock exchange or automated
quotation system, and the Company will have no liability for any inability or failure to do so.
18. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award granted under this
Plan will confer or be deemed to confer on any Participant any right to continue in the employ of,
or to continue any other relationship with, the Company or any Parent or Subsidiary of the Company
or limit in any way the right of the Company or any Parent or Subsidiary of the Company to
terminate Participants employment or other relationship at any time, with or without cause.
19. CORPORATE TRANSACTIONS.
19.1 Assumption or Replacement of Awards by Successor. Except for automatic grants to
Outside Directors pursuant to Section 10 hereof, in the event of (a) a dissolution or liquidation
of the Company, (b) a merger or consolidation in which the Company is not the surviving corporation
(other than a merger or consolidation with a wholly-owned subsidiary, a reincorporation of the
Company in a different jurisdiction, or other transaction in which there is no substantial change
in the stockholders of the Company or their relative stock holdings and the Awards granted under
this Plan are assumed, converted or replaced by the successor corporation, which assumption will be
binding on all Participants), (c) a merger in which the Company is the surviving corporation but
after which the stockholders of the Company immediately prior to such merger (other than any
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stockholder that merges, or which owns or controls another corporation that merges, with the
Company in such merger) cease to own their shares or
other equity interest in the Company, (d) the sale of substantially all of the assets of the
Company, or (e) the acquisition, sale, or transfer of more than 50% of the outstanding shares of
the Company by tender offer or similar transaction, any or all outstanding Awards may be assumed,
converted or replaced by the successor corporation (if any), which assumption, conversion or
replacement will be binding on all Participants. In the alternative, the successor corporation may
substitute equivalent Awards or provide substantially similar consideration to Participants as was
provided to stockholders (after taking into account the existing provisions of the Awards). The
successor corporation may also issue, in place of outstanding Shares of the Company held by the
Participants, substantially similar shares or other property subject to repurchase restrictions no
less favorable to the Participant. In the event such successor corporation (if any) refuses to
assume or substitute Awards, as provided above, pursuant to a transaction described in this
Subsection 19.1, such Awards will expire on such transaction at such time and on such conditions as
the Committee will determine. Notwithstanding anything in this Plan to the contrary, the Committee
may, in its sole discretion, provide that the vesting of any or all Awards granted pursuant to this
Plan will accelerate upon a transaction described in this Section 19. If the Committee exercises
such discretion with respect to Options, such Options will become exercisable in full prior to the
consummation of such event at such time and on such conditions as the Committee determines, and if
such Options are not exercised prior to the consummation of the corporate transaction, they shall
terminate at such time as determined by the Committee.
19.2 Other Treatment of Awards. Subject to any greater rights granted to Participants
under the foregoing provisions of this Section 19, in the event of the occurrence of any
transaction described in Section 19.1, any outstanding Awards will be treated as provided in the
applicable agreement or plan of merger, consolidation, dissolution, liquidation, or sale of assets.
19.3 Assumption of Awards by the Company. The Company, from time to time, also may
substitute or assume outstanding awards granted by another company, whether in connection with an
acquisition of such other company or otherwise, by either; (a) granting an Award under this Plan in
substitution of such other companys award; or (b) assuming such award as if it had been granted
under this Plan if the terms of such assumed award could be applied to an Award granted under this
Plan. Such substitution or assumption will be permissible if the holder of the substituted or
assumed award would have been eligible to be granted an Award under this Plan if the other company
had applied the rules of this Plan to such grant. In the event the Company assumes an award
granted by another company, the terms and conditions of such award will remain unchanged
(except that the Exercise Price and the number and nature of Shares issuable upon exercise
of any such option will be adjusted appropriately pursuant to Section 424(a) of the Code). In the
event the Company elects to grant a new Option rather than assuming an existing option, such new
Option may be granted with a similarly adjusted Exercise Price.
20. ADOPTION AND STOCKHOLDER APPROVAL. This Plan will become effective on the date on
which the registration statement filed by the Company with the SEC under the Securities Act
registering the initial public offering of the Companys Common Stock is declared effective by the
SEC (the Effective Date). This Plan shall be approved by the stockholders of the Company
(excluding Shares issued pursuant to this Plan), consistent with applicable laws, within twelve
(12) months before or after the date this Plan is adopted by the Board. Upon the Effective Date,
the Committee may grant Awards pursuant to this Plan; provided, however, that: (a)
no Option may be exercised prior to initial stockholder approval of this Plan; (b) no Option
granted pursuant to an
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increase in the number of Shares subject to this Plan approved by the Board
will be exercised prior to the time such increase has been approved by the stockholders of the
Company; (c) in the event that initial stockholder approval is
not obtained within the time period provided herein, all Awards granted hereunder shall be
cancelled, any Shares issued pursuant to any Awards shall be cancelled and any purchase of Shares
issued hereunder shall be rescinded; and (d) in the event that stockholder approval of such
increase is not obtained within the time period provided herein, all Awards granted pursuant to
such increase will be cancelled, any Shares issued pursuant to any Award granted pursuant to such
increase will be cancelled, and any purchase of Shares pursuant to such increase will be rescinded.
21. TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as provided herein, this
Plan will terminate on December 31, 2014. This Plan and all agreements thereunder shall be
governed by and construed in accordance with the laws of the State of California.
22. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time terminate or amend
this Plan in any respect, including without limitation amendment of any form of Award Agreement or
instrument to be executed pursuant to this Plan; provided, however, that the Board
will not, without the approval of the stockholders of the Company, amend this Plan in any manner
that requires such stockholder approval.
23. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan by the Board, the
submission of this Plan to the stockholders of the Company for approval, nor any provision of this
Plan will be construed as creating any limitations on the power of the Board to adopt such
additional compensation arrangements as it may deem desirable, including, without limitation, the
granting of stock options and bonuses otherwise than under this Plan, and such arrangements may be
either generally applicable or applicable only in specific cases.
24. DEFINITIONS. As used in this Plan, the following terms will have the following
meanings:
Award means any award under this Plan, including any Option, Restricted Stock, Stock Bonus
or Restricted Stock Unit.
Award Agreement means, with respect to each Award, the signed written agreement between the
Company and the Participant setting forth the terms and conditions of the Award.
Board means the Board of Directors of the Company.
Cause means the commission of an act of theft, embezzlement, fraud, dishonesty or a breach
of fiduciary duty to the Company or a Parent or Subsidiary of the Company.
Code means the Internal Revenue Code of 1986, as amended.
Committee means the Compensation Committee of the Board.
Company means Keynote Systems, Inc. or any successor corporation.
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Disability means a disability, whether temporary or permanent, partial or total, as
determined by the Committee.
Exchange Act means the Securities Exchange Act of 1934, as amended.
Exercise Price means the price at which a holder of an Option may purchase the Shares
issuable upon exercise of the Option.
Fair Market Value means, as of any date, the value of a share of the Companys Common Stock
determined as follows:
(a) if such Common Stock is then quoted on the Nasdaq National Market, its closing
price on the Nasdaq National Market on the date of determination as reported in
The Wall Street Journal;
(b) if such Common Stock is publicly traded and is then listed on a national
securities exchange, its closing price on the date of determination on the principal
national securities exchange on which the Common Stock is listed or admitted to
trading as reported in The Wall Street Journal;
(c) if such Common Stock is publicly traded but is not quoted on the Nasdaq National
Market nor listed or admitted to trading on a national securities exchange, the
average of the closing bid and asked prices on the date of determination as reported
in The Wall Street Journal;
(d) in
the case of an Award made on the Effective Date, the price per share at which shares of the Companys Common Stock are initially offered for sale to the public by
the Companys underwriters in the initial public offering of the Companys Common
Stock pursuant to a registration statement filed with the SEC under the Securities
Act; or
(e) if none of the foregoing is applicable, by the Committee in good faith.
Family Member includes any of the following:
(a) 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 of the Participant, including
any such person with such relationship to the Participant by adoption;
(b) any person (other than a tenant or employee) sharing the Participants
household;
(c) a trust in which the persons in (a) and (b) have more than fifty percent of
the beneficial interest;
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(d) a foundation in which the persons in (a) and (b) or the Participant control
the management of assets; or
(e) any other entity in which the persons in (a) and (b) or the Participant own
more than fifty percent of the voting interest.
Insider means an officer or director of the Company or any other person whose transactions
in the Companys Common Stock are subject to Section 16 of the Exchange Act.
Option means an award of an option to purchase Shares pursuant to Section 5.
Outside Director means a member of the Board who is not an employee of the Company or any
Parent, Subsidiary or Affiliate of the Company.
Parent means any corporation (other than the Company) in an unbroken chain of corporations
ending with the Company if each of such corporations other than the Company owns stock possessing
50% or more of the total combined voting power of all classes of stock in one of the other
corporations in such chain.
Participant means a person who receives an Award under this Plan.
Performance Factors means the factors selected by the Committee from among the following
measures to determine whether the performance goals established by the Committee and applicable to
Awards have been satisfied:
(a) Net revenue and/or net revenue growth;
(b) Earnings before income taxes and amortization and/or earnings before income
taxes and amortization growth;
(c) Operating income and/or operating income growth;
(d) Net income and/or net income growth;
(e) Earnings per share and/or earnings per share growth;
(f) Total stockholder return and/or total stockholder return growth;
(g) Return on equity;
(h) Operating cash flow return on income;
(i) Adjusted operating cash flow return on income;
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(j) Economic value added; and
(k) Individual confidential business objectives.
Performance Period means the period of service determined by the Committee, not to exceed
five years, during which years of service or performance is to be measured for Restricted Stock
Awards or Stock Bonuses.
Plan means this Keynote Systems, Inc. 1999 Equity Incentive Plan, as amended from time to
time.
Restricted Stock Award means an award of Shares pursuant to Section 6.
Restricted Stock Unit means an Award granted pursuant to Section 8 of the Plan.
SEC means the Securities and Exchange Commission.
Securities Act means the Securities Act of 1933, as amended.
Shares means shares of the Companys Common Stock reserved for issuance under this Plan, as
adjusted pursuant to Sections 2 and 19, and any successor security.
Stock Bonus means an award of Shares, or cash in lieu of Shares, pursuant to Section 7.
Subsidiary means any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company if each of the corporations other than the last corporation
in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
Termination or Terminated means, for purposes of this Plan with respect to a Participant,
that the Participant has for any reason ceased to provide services as an employee, officer,
director, consultant, independent contractor, or advisor to the Company or a Parent or Subsidiary
of the Company. An employee will not be deemed to have ceased to provide services in the case of
(i) sick leave, (ii) military leave, or (iii) any other leave of absence approved by the Committee,
provided, that such leave is for a period of not more than 90 days, unless reemployment upon the
expiration of such leave is guaranteed by contract or statute or unless provided otherwise pursuant
to formal policy adopted from time to time by the Company and issued and promulgated to employees
in writing. In the case of any employee on an approved leave of absence, the Committee may make
such provisions respecting suspension of vesting of the Award while on leave from the employ of the
Company or a Subsidiary as it may deem appropriate, except that in no event may an Option be
exercised after the expiration of the term set forth in the Option agreement. The Committee will
have sole discretion to determine whether a Participant has ceased to provide services and the
effective date on which the Participant ceased to provide services (the Termination Date).
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Unvested Shares means Unvested Shares as defined in the Award Agreement.
Vested Shares means Vested Shares as defined in the Award Agreement.
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