FreeMarkets Inc. Contracts
Sample Business Contracts
Employee Stock Purchase Plan - FreeMarkets Inc.
FREEMARKETS, INC.
EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the FreeMarkets, Inc.
Employee Stock Purchase Plan:
I. Purpose and History
1.1 The purpose of the Plan is to provide employees of the Company and its
Designated Subsidiaries with an opportunity to purchase Common Stock of
the Company. It is the Company's intention to have the Plan qualify as
an "Employee Stock Purchase Plan" under Code Section 423. Accordingly,
the provisions of the Plan shall be construed so as to extend and limit
participation in a manner consistent with the requirements of that Code
section.
II. Definitions
The following words and phrases, when used in this Plan, unless their
context clearly indicates otherwise, shall have the following meanings:
2.1 "Administrator" means the individual(s), committee or entity as may be
appointed by the Board, with such authority and power as the Board may
determine, to administer the terms of the Plan. The Administrator may,
in turn, delegate all or a portion of its authority to one or more
individuals to perform administrative functions under the terms of the
Plan.
2.2 "Board" means the Company's Board of Directors.
2.3 "Change in Control" means the occurrence of any of the following
events:
(a) the acquisition, other than from the Company, by any
individual, entity or group (within the meaning of Section
13(d)(3) or Section 14(d)(2) of the Exchange Act) (other than
the Company or an employee benefit plan of the Company) of
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of more than 50% of the
combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors (the "Voting Securities"); or
(b) the approval by the Company's stockholders of a
reorganization, merger, consolidation or recapitalization of
the Company (a "Business Combination"), other than a Business
Combination in which more than 50% of the combined voting
power of the outstanding voting securities of the surviving or
resulting entity immediately following the Business
Combination is held by the persons
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who, immediately prior to the Business Combination, were the
holders of the Voting Securities; or
(c) the approval by the Company's stockholders of a complete
liquidation or dissolution of the Company, or a sale of all or
substantially all of the Company's assets; or
(d) individuals who, as of the effective date of the Plan,
constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board;
provided, that any individual becoming a director subsequent
to such date whose election or nomination for election by the
Company's stockholders was approved by a vote of at least a
majority of the directors when comprising the Incumbent Board
shall be considered as though such individual were a member of
the Incumbent Board.
2.4 "Code" means the Internal Revenue Code of 1986, as amended.
2.5 "Common Stock" means the Company's Common Stock.
2.6 "Company" means FreeMarkets, Inc., a Delaware corporation.
2.7 "Compensation" means all cash compensation paid to an Employee by the
Company and includes commissions, bonuses, overtime, incentive
compensation, incentive payments and other forms of cash compensation
as determined by the Administrator.
2.8 "Continuous Status as an Employee" means the absence of any
interruption or termination of service as an Employee. Continuous
Status as an Employee shall not be considered interrupted in the case
of: (i) sick leave; (ii) military leave; (iii) any other leave of
absence approved by the Administrator; provided, that such leave is for
a period of not more than ninety (90) days, unless reemployment upon
the expiration of such leave is guaranteed by contract or statute, or
unless provided otherwise pursuant to Company policy adopted from time
to time; or (iv) in the case of transfers between locations of the
Company or between the Company and its Designated Subsidiaries.
2.9 "Contributions" means all amounts credited to the account of a
participant pursuant to the Plan.
2.10 "Designated Subsidiaries" means the Subsidiaries that have been
designated by the Board from time to time in its sole discretion as
eligible to participate in the Plan (as set forth on Appendix A);
provided, however, that the Board shall only have the discretion to
designate a Subsidiary if the issuance of options to such Subsidiary's
Employees under the Plan would not cause the Company to incur adverse
accounting charges or cause the Plan not to qualify under Code Section
423.
2.11 "Employee" means any person, including an Officer, who is customarily
employed for at least twenty (20) hours per week and more than five (5)
months in a calendar year by the Company or one of its Designated
Subsidiaries.
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2.12 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
2.13 "Offering Date" means the first business day of each Offering Period of
the Plan.
2.14 "Offering Period" means a period of twenty-four (24) months commencing
on May 1 and November 1 of each year, except for the first Offering
Period as set forth in Section 4.1.
2.15 "Officer" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
2.16 "Plan" means the FreeMarkets, Inc. Employee Stock Purchase Plan.
2.17 "Purchase Date" means the last day of each Purchase Period of the Plan.
2.18 "Purchase Period" means a period of six (6) months within an Offering
Period, except for the first Purchase Period as set forth in Section
4.2.
2.19 "Purchase Price" means with respect to a Purchase Period an amount
equal to eighty-five percent (85%) of the Fair Market Value (as defined
in Section 7.2 below) of a Share on the Offering Date or on the
Purchase Date, whichever is lower; provided, however, that in the event
(i) there is any increase in the number of Shares available for
issuance under the Plan (including without limitation an automatic
increase pursuant to Section 13.1 below or as a result of a
stockholder-approved amendment to the Plan), (ii) all or a portion of
such additional Shares are to be issued with respect to one or more
Offering Periods that are underway at the time of such increase
("Additional Shares"), and (iii) the Fair Market Value of a Share on
the date of such increase (the "Approval Date Fair Market Value") is
higher than the Fair Market Value on the Offering Date for any such
Offering Period, then in such instance the Purchase Price with respect
to Additional Shares shall be eighty-five percent (85%) of the Approval
Date Fair Market Value or the Fair Market Value of a Share on the
Purchase Date, whichever is lower.
2.20 "Share" means a share of Common Stock, as adjusted in accordance with
Article 19 of the Plan.
2.21 "Subsidiary" means a corporation, domestic or foreign, of which not
less than fifty percent (50%) of the voting shares are held by the
Company or a Subsidiary, whether or not such corporation now exists or
is hereafter organized or acquired by the Company or a Subsidiary.
III. Eligibility
3.1 Eligible Employees. Any person who is an Employee as of the Offering
Date of a given Offering Period shall be eligible to participate in
such Offering Period under the Plan, subject to the requirements of
Section 5.1 and the limitations imposed by Code Section 423(b);
provided, however, that eligible Employees may not participate in more
than one Offering Period at a time.
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3.2 Excluded Employees. Notwithstanding any Plan provisions to the
contrary, no Employee shall be granted an option under the Plan if: (i)
immediately after the grant, such Employee (or any other person whose
stock would be attributed to such Employee pursuant to Code Section
424(d)) would own capital stock of the Company and/or hold outstanding
options to purchase stock possessing five percent (5%) or more of the
total combined voting power or value of all classes of stock of the
Company or of any subsidiary corporation (as defined in Code Section
424(f)); or (ii) such option would permit his or her rights to purchase
stock under all employee stock purchase plans (described in Code
Section 423) of the Company and its Subsidiaries to accrue at a rate
which exceeds twenty-five thousand dollars ($25,000) of the Fair Market
Value (as defined in Section 7.2 below) of such stock (determined at
the time such option is granted) for each calendar year in which such
option is outstanding at any time.
IV. Offering Periods and Purchase Periods
4.1 Offering Periods. The Plan shall be implemented by a series of Offering
Periods of twenty-four (24) months' duration, with new Offering Periods
commencing on or about November 1 and May 1 of each year (or at such
other time or times as may be determined by the Board). The first
Offering Period shall commence on the beginning of the effective date
of the Registration Statement on Form S-1 for the initial public
offering of the Company's Common Stock (the "IPO Date") and continue
until October 31, 2001. The Board shall have the power to change the
duration and/or the frequency of Offering Periods with respect to
future offerings without stockholder approval if such change is
announced at least five (5) days prior to the scheduled beginning of
the first Offering Period to be affected.
4.2 Purchase Periods. Each Offering Period (other than the first) shall
consist of four (4) consecutive Purchase Periods of six (6) months'
duration. The first Offering Period shall consist of four (4)
consecutive Purchase Periods; the first Purchase Period shall commence
on the IPO Date and shall end on April 30, 2000, and the next three (3)
Purchase Periods shall be of six (6) months' duration, with the fourth
Purchase Period ending on October 31, 2001. The last day of each
Purchase Period shall be the Purchase Date for such Purchase Period. A
Purchase Period commencing on November 1 shall end on the next April
30. A Purchase Period commencing on May 1 shall end on the next October
31. The Board shall have the power to change the duration and/or
frequency of Purchase Periods with respect to future purchases without
stockholder approval if such change is announced at least five (5) days
prior to the scheduled beginning of the first Purchase Period to be
affected.
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V. Participation
5.1 Employee Participation. An eligible Employee may become a participant
in the Plan by completing a subscription agreement on the form provided
by the Company and filing it with the Administrator prior to the
applicable Offering Date, unless a later time for filing the
subscription agreement is set by the Administrator for all eligible
Employees with respect to a given Offering Period. The subscription
agreement shall set forth the percentage of a participant's
Compensation (subject to Section 6.1 below) to be paid as Contributions
under the Plan.
5.2 Payroll Deductions. Payroll deductions shall commence as of the first
payroll following the Offering Date and shall end on the last payroll
paid on or prior to the last Purchase Date of the Offering Period to
which the subscription agreement is applicable, unless sooner
terminated by the participant as provided in Section 10.
VI. Method of Payment of Contributions
6.1 Amount of Payroll Deductions. A participant shall elect to have payroll
deductions made on each payday during the Offering Period in an amount
not less than one percent (1%) and not more than twenty percent (20%)
(or such lesser or greater percentage as the Board may establish from
time to time before an Offering Date) of such participant's
Compensation on each payday during the Offering Period. All payroll
deductions made by a participant shall be credited to his or her
account under the Plan. A participant may not make any additional
payments into such account.
6.2 Change and Discontinuation of Payroll Deduction Election. A participant
may discontinue his or her participation in the Plan as provided in
Article 10, or, on one occasion only during an Offering Period may
increase and on one occasion only during such Offering Period may
decrease the rate of his or her Contributions with respect to the
Offering Period by completing and filing a new subscription agreement
with the Administrator. Any such change in the payroll deduction rate
shall be effective as soon as administratively practicable after the
Administrator receives the new subscription agreement from the
participant.
6.3 Limit on Payroll Deductions. Notwithstanding the foregoing, to the
extent necessary to comply with Code Section 423(b)(8) and Section 3.2
herein, a participant's payroll deductions may be decreased during any
Offering Period scheduled to end during the current calendar year to
zero percent (0%) at such time that the aggregate of all payroll
deductions accumulated with respect to such Offering Period and any
other Offering Period ending within the same calendar year equal
$21,250. Payroll deductions shall resume at the elected rate set forth
in such participant's subscription agreement at the beginning of the
first Offering Period that is scheduled to end in the following
calendar year, unless terminated by the participant as provided in
Article 10. Notwithstanding the foregoing, to the extent necessary to
comply with Section 423(b)(8) of the Code and Section 3.2 hereof, a
participant's payroll deductions may be decreased to zero percent (0%)
at any time during a Purchase Period. Payroll deductions shall
recommence at the rate provided in such participant's subscription
agreement at the beginning of the first Purchase Period which is
scheduled to end in the following calendar year, unless terminated by
the participant as provided in Article 10.
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VII. Grant of Option
7.1 Grant of Option. On each Offering Date, each eligible Employee
participating in such Offering Period shall be granted an option to
purchase a number of Shares as determined by dividing such Employee's
Contributions accumulated prior to each Purchase Date during the
Offering Period and retained in the participant's account as of the
Purchase Date by the applicable Purchase Price. There is no limit on
the number of Shares that a participant may purchase under the Plan;
provided, however, that the Board may impose a limit on the number of
Shares a participant may purchase under the Plan at any time; provided,
further, that such purchase shall be subject to the limitations set
forth in Section 3.2 and Article 13.
7.2 Fair Market Value of Options. For all purposes under the Plan, the term
"Fair Market Value" shall mean, as of any applicable date: (i) if the
principal securities market on which the Common Stock is traded is a
national securities exchange or The Nasdaq National Market ("NNM"), the
closing price of the Common Stock on such exchange or NNM, as the case
may be, or if no sale of the Common Stock shall have occurred on such
date, on the next preceding date on which there was a reported sale;
(ii) if the Common Stock is not traded on a national securities
exchange or NNM, the closing price on such date as reported by The
Nasdaq SmallCap Market, or if no sale of the Common Stock shall have
occurred on such date, on the next preceding date on which there was a
reported sale; (iii) if the principal securities market on which the
Common Stock is traded is not a national securities exchange, NNM or
The Nasdaq SmallCap Market, the average of the bid and asked prices
reported by the National Quotation Bureau, Inc.; or (iv) if the price
of the Common Stock is not so reported, the Fair Market Value of the
Common Stock as determined in good faith by the Board.
VIII. Exercise of Option
8.1 Exercise of Option. Unless a participant withdraws from the Plan as
provided in Article 10, his or her option for the purchase of Shares
will be exercised automatically on each Purchase Date of an Offering
Period, and the maximum number of full Shares subject to the option
will be purchased at the applicable Purchase Price with the accumulated
Contributions in his or her account. No fractional Shares shall be
issued under the Plan. The Shares purchased upon exercise of an option
hereunder shall be deemed to be transferred to the participant on the
Purchase Date. During his or her lifetime, a participant's option to
purchase Shares hereunder is exercisable only by him or her.
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IX. Delivery
9.1 Delivery of Shares. As soon as administratively practicable after each
Purchase Date of each Offering Period, the Administrator shall arrange
the delivery to each participant, as appropriate, of a certificate
representing the Shares purchased upon exercise of his or her option.
As an alternative, the Administrator may make arrangements with a
brokerage firm to establish a brokerage account for each participant,
to which Shares purchased for the participant upon exercise of his or
her option shall be credited and held for the participant. Any payroll
deductions accumulated in a participant's account which are not
sufficient to purchase a full Share shall be retained in the
participant's account for the subsequent Purchase Period or Offering
Period, subject to earlier withdrawal by the participant as provided in
Article 10 below. Any other amounts left over in a participant's
account after a Purchase Date shall be returned to the participant.
X. Withdrawal and Termination of Employment
10.1 Voluntary Withdrawal of Participation. A participant may withdraw all
(partial withdrawals are not permitted) Contributions credited to his
or her account under the Plan at any time prior to each Purchase Date
by giving written notice to the Administrator. All of the participant's
Contributions credited to his or her account will be paid to him or her
as soon as administratively practicable after receipt of his or her
withdrawal notice and his or her option for the current period will be
automatically terminated. In addition, no further Contributions for the
purchase of Shares will be made during the Offering Period on the
participant's behalf.
10.2 Withdrawal Upon Termination of Employment. Upon termination of the
participant's Continuous Status as an Employee prior to the Purchase
Date of an Offering Period for any reason, including retirement or
death, the Contributions credited to his or her account will be
returned to him or her or, in the case of his or her death, to the
person or persons entitled thereto under Article 14, and his or her
option will terminate automatically.
10.3 Involuntary Withdrawal of Participation. In the event an Employee fails
to remain in Continuous Status as an Employee of the Company for at
least twenty (20) hours per week during the Offering Period in which
the Employee is a participant, he or she will be deemed to have elected
to withdraw from the Plan and the Contributions credited to his or her
account will be returned to him or her and his or her option will be
terminated.
10.4 Effect of Withdrawal. A participant's withdrawal from an offering will
not have any effect upon his or her eligibility to participate in a
succeeding offering or in any similar plan which may hereafter be
adopted by the Company.
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XI. Automatic Withdrawal
11.1 Automatic Withdrawal. If the Fair Market Value of the Shares on any
Purchase Date of an Offering Period is less than the Fair Market Value
of the Shares on the Offering Date for such Offering Period, then every
participant shall automatically: (i) be withdrawn from such Offering
Period at the close of such Purchase Date and after the acquisition of
Shares for such Purchase Period; and (ii) be enrolled in the Offering
Period commencing on the first business day subsequent to such Purchase
Period. Participants shall automatically be withdrawn as of April 30,
2000 from the Offering Period beginning on the IPO Date and re-enrolled
in the Offering Period beginning on May 1, 2000 if the Fair Market
Value of the Shares on the Offering Date of the first Offering Period
is greater than the Fair Market Value of the Shares on April 30, 2000,
unless a participant notifies the Administrator prior to April 30, 2000
that he or she does not wish to be withdrawn and re-enrolled.
XII. Interest
12.1 Interest Accrual. No interest shall accrue on the Contributions of a
Plan participant.
XIII. Shares
13.1 Shares Available Under the Plan. Subject to adjustment as provided in
Section 19, the maximum number of Shares that initially shall be made
available for sale under the Plan shall be 500,000 Shares. In addition,
on the first day of each of the Company's fiscal years, the aggregate
number of Shares reserved for issuance under the Plan shall be
increased automatically by the number of Shares purchased under the
Plan in the preceding fiscal year; provided, that the aggregate number
of Shares reserved under the Plan shall not exceed 2,000,000 Shares. If
the Board determines that, on a given Purchase Date, the number of
Shares with respect to which options are to be exercised may exceed:
(i) the number of Shares that were available for sale under the Plan on
the Offering Date of the applicable Offering Period; or (ii) the number
of Shares available for sale under the Plan on such Purchase Date, the
Board may in its sole discretion provide: (x) that the Company shall
make a pro rata allocation of the Shares available for purchase on such
Offering Date or Purchase Date, as applicable, in as uniform a manner
as shall be practicable and as it shall determine in its sole
discretion to be equitable among all participants exercising options to
purchase Common Stock on such Purchase Date, and continue all Offering
Periods then in effect; or (y) that the Company shall make a pro rata
allocation of the Shares available for purchase on such Offering Date
or Purchase Date, as applicable, in as uniform a manner as shall be
practicable and as it shall determine in its sole discretion to be
equitable among all participants exercising options to purchase Common
Stock on such Purchase Date, and terminate any or all Offering Periods
then in effect pursuant to Section 20 below. Notwithstanding any
authorization of additional Shares for issuance under the Plan by the
Company's stockholders subsequent to such Offering Date, the Company
may make a pro rata allocation of the Shares available on the Offering
Date of any applicable Offering Period pursuant to the preceding
sentence.
13.2 Voting of Shares. The participant shall have no interest or voting
right in Shares covered by his or her option until such option has been
exercised.
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13.3 Registration of Shares. Shares to be delivered to a participant under
the Plan will be registered in the name of the participant or in the
name of the participant and his or her spouse (or, where applicable, in
the name of a broker or other nominee or custodian for the benefit of
the participant or the participant and his or her spouse).
XIV. Administration
14.1 Plan Administration. The Board shall supervise and administer the Plan
and shall have full power to adopt, amend and rescind any rules deemed
desirable and appropriate for the administration of the Plan and not
inconsistent with the Plan, to construe and interpret the Plan, and to
make all other determinations necessary or advisable for the
administration of the Plan. In its sole discretion, the Board may
appoint an Administrator and delegate all or a portion of its authority
to such Administrator to administer the terms of the Plan.
XV. Designation of Beneficiary
15.1 Beneficiary Designation. A participant may file a written beneficiary
designation with the Administrator designating the beneficiary who is
to receive any Shares and cash, if any, from the participant's account
under the Plan in the event of such participant's death subsequent to
the end of a Purchase Period but prior to delivery to him or her of
such Shares and cash. In addition, a participant may file a beneficiary
designation with the Administrator who is to receive any cash from the
participant's account under the Plan in the event of such participant's
death prior to the Purchase Date of an Offering Period. If a
participant is married and the designated beneficiary is not the
participant's spouse, spousal consent shall be required for such
designation to be effective.
15.2 Change of Beneficiary Designation. Such beneficiary designation may be
changed by the participant (and his or her spouse, if any) at any time
by written notice. In the event of the death of a participant and in
the absence of a valid beneficiary designation who is living at the
time of such participant's death, the Administrator shall deliver such
Shares and/or cash to the executor or administrator of the estate of
the participant, or if no such executor or administrator has been
appointed (to the knowledge of the Administrator), the Administrator,
in its discretion, may deliver such Shares and/or cash to the spouse or
to any one or more dependents or relatives of the participant, or if no
spouse, dependent or relative is known to the Administrator, then to
such other person as the Administrator may designate.
XVI. Transferability
16.1 Transfer of Plan Benefits. Neither Contributions credited to a
participant's account nor any rights with regard to the exercise of an
option or to receive Shares under the Plan may be assigned,
transferred, pledged or otherwise disposed of in any way (other than by
will, the laws of descent and distribution, or as provided in Article
15) by the participant. Any such attempt at assignment, transfer,
pledge or other disposition shall be without effect, except that the
Company may treat such act as a voluntary election to withdraw funds in
accordance with Article 10.
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XVII. Use of Contributions
17.1 Use of Contributions. All Contributions received or held by the Company
under the Plan may be used by the Company for any corporate purpose,
and the Company shall not be obligated to segregate such Contributions
from other Company assets.
XVIII. Reporting of Accounts
18.1 Reporting of Accounts. Individual accounts will be maintained for each
participant in the Plan. Statements of account will be given to
participating Employees at least annually, which statements will set
forth the amounts of Contributions, the per Share Purchase Price, the
number of Shares purchased and the remaining cash balance, if any.
XIX. Adjustments Upon Changes in Capitalization;
Change in Control
19.1 Adjustment. Subject to any required action by the Company's
stockholders, the number of Shares covered by each option under the
Plan that has not yet been exercised and the number of Shares which
have been authorized for issuance under the Plan but have not yet been
placed under option (collectively, the "Reserves"), as well as the
maximum number of Shares which may be purchased by a participant in a
Purchase Period, the number of Shares set forth in Section 13.1 above,
and the price per Share covered by each option under the Plan that has
not yet been exercised, shall be appropriately adjusted to reflect any
stock dividend, stock split, combination or exchange of shares or other
change in capitalization with a similar substantive effect upon the
Plan or the awards granted under the Plan. The Board shall have the
power and sole discretion to determine the nature and amount of the
adjustment to be made in each case. The adjustment so made shall be
final and binding on all participants.
19.2 Change in Control. Upon a Change of Control, each outstanding option
shall be assumed by the "Acquiring Corporation" (as defined below) or
parent thereof or replaced with a comparable option or right to
purchase shares of the capital stock, or equity equivalent instrument,
of the Acquiring Corporation or parent thereof, or other comparable
rights (such assumed and comparable options and rights, together, the
"Replacement Options"); provided, however, that if the Acquiring
Corporation or parent thereof does not agree to grant Replacement
Options, then all outstanding Options which have been granted under the
Plan and which are not exercisable as of the effective date of the
Change of Control shall automatically accelerate and become exercisable
immediately prior to the effective date of the Change of Control as
described below. The term "Acquiring Corporation" means the surviving,
continuing, successor or purchasing corporation, as the case may
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be. In the event that the successor corporation refuses to grant
Replacement Options, each Purchase Period and Offering Period then in
progress shall be shortened and a new Purchase Date shall be set (the
"New Purchase Date"), as of which date any Purchase Period and Offering
Period then in progress will terminate. The New Purchase Date shall be
on or before the date of consummation of the Change in Control and the
Board shall notify each participant in writing, at least ten (10) days
prior to the New Purchase Date, that the Purchase Date for his or her
option has been changed to the New Purchase Date and that his or her
option will be exercised automatically on the New Purchase Date, unless
prior to such date he or she has withdrawn from the Offering Period as
provided in Article 10. For purposes of this Article 19, an option
granted under the Plan shall be deemed to be assumed, without
limitation, if, at the time of issuance of the stock or other
consideration upon a Change in Control, each holder of an option under
the Plan would be entitled to receive upon exercise of the option the
same number and kind of shares of stock or the same amount of property,
cash or securities as such holder would have been entitled to receive
upon the occurrence of the Change in Control if the holder had been,
immediately prior to the transaction, the holder of the number of
Shares of Common Stock covered by the option at such time (after giving
effect to any adjustments in the number of Shares covered by the option
as provided for in this Article 19); provided, however, that if the
consideration received in the transaction is not solely common stock of
the Acquiring Corporation, the Board may, with the consent of the
Acquiring Corporation, provide for the consideration to be received
upon exercise of the option to be solely common stock of the Acquiring
Corporation or its parent equal in Fair Market Value to the per Share
consideration received by holders of Common Stock in the transaction.
Notwithstanding any other provision of this Section, the Board may
determine, in its discretion, to terminate any Purchase Period and
Offering Period in progress immediately prior to the effective date of
a Change of Control and to return all unused Contributions to
Participants.
19.3 Liquidation and Dissolution. In the event of a dissolution or
liquidation of the Company, any Purchase Period and Offering Period
then in progress will terminate immediately prior to the consummation
of such action, unless otherwise provided by the Board.
XX. Amendment or Termination
20.1 Authority to Amend or Terminate Plan. The Board may at any time and for
any reason terminate or amend the Plan. Except as provided in Article
19, no such termination of the Plan may affect options previously
granted; provided, that the Plan or an Offering Period may be
terminated by the Board on a Purchase Date or by the Board's setting a
new Purchase Date with respect to an Offering Period and Purchase
Period then in progress if the Board determines that termination of the
Plan and/or the Offering Period is in the Company's best interests and
the stockholders' or if continuation of the Plan and/or the Offering
Period would cause the Company to incur adverse accounting charges as a
result of a change after the effective date of the Plan in the
generally accepted accounting rules applicable to the Plan. Except as
provided in Section 19 and in this Section 20, no amendment to the Plan
shall make any change in any option previously granted which adversely
affects the rights of any participant. In addition, to
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the extent necessary to comply with Rule 16b-3 under the Exchange Act,
or under Code Section 423 (or any successor rule or provision or any
applicable law or regulation), the Company shall obtain stockholder
approval in such a manner and to such a degree as so required.
20.2 Amendment of Plan Provisions. Without stockholder consent and without
regard to whether any participant rights may be considered to have been
adversely affected, the Board shall be entitled to change the Offering
Periods and Purchase Periods, limit the frequency and/or number of
changes in the amount withheld during an Offering Period, establish the
exchange ratio applicable to amounts withheld in a currency other than
U.S. dollars, permit payroll withholding in excess of the amount
designated by a participant in order to adjust for delays or mistakes
in the Company's processing of properly completed withholding
elections, establish reasonable waiting and adjustment periods and/or
accounting and crediting procedures to ensure that amounts applied
toward the purchase of Common Stock for each participant properly
correspond with amounts withheld from the participant's Compensation,
and establish such other limitations or procedures as the Board, in its
sole discretion, determines to be advisable.
XXI. Notices
21.1 Notices. All notices or other communications by a participant to the
Company under or in connection with the Plan shall be deemed to have
been duly given when received in the form specified by the Company at
the location, or by the person, designated by the Company for the
receipt thereof.
XXII. Conditions Upon Share Issuance
22.1 Conditions Upon Share Issuance. Shares shall not be issued with respect
to an option unless the exercise of such option and the issuance and
delivery of such Shares pursuant thereto shall comply with all
applicable provisions of law, domestic or foreign, including, without
limitation, the Securities Act of 1933, as amended, the Exchange Act,
the rules and regulations promulgated thereunder, applicable state
securities laws and the requirements of any stock exchange upon which
the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance. As
a condition to the exercise of an option, the Company may require the
person exercising such option to represent and warrant at the time of
any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a
representation is required by any of the aforementioned applicable
provisions of law.
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<PAGE> 13
XXIII. Miscellaneous
23.1 Term of Plan and Effective Date. The Plan shall become effective upon
the IPO Date. It shall continue in effect for a term of twenty (20)
years unless sooner terminated under Article 20.
23.2 Additional Restrictions. The terms and conditions of options granted
hereunder to, and the purchase of Shares by, persons subject to Section
16 of the Exchange Act shall comply with the applicable provisions of
Rule 16b-3. This Plan shall be deemed to contain, and such options
shall contain, and the Shares issued upon exercise thereof shall be
subject to, such additional conditions and restrictions as may be
required by Rule 16b-3 to qualify for the maximum exemption from
Section 16 of the Exchange Act with respect to Plan transactions.
23.3 Withholding. The Company shall have the right to deduct from all
amounts paid to a participant in cash as salary, bonus or other
compensation any taxes required by law to be withheld in respect of
awards granted under the Plan. In the Administrator's discretion, a
participant may be permitted to elect to have withheld from the Shares
otherwise issuable to the participant, or to tender to the Company, the
number of Shares whose Fair Market Value equals the amount required to
be withheld.
23.4 Construction of the Plan. The validity, construction, interpretation,
administration and effect of the Plan and of its rules and regulations,
and rights relating to the Plan, shall be determined solely by the
Board. Any determination by the Board shall be final and binding on all
participants. The Plan shall be governed in accordance with the laws of
the State of Delaware, without regard to the conflict of law provisions
of such laws.
23.5 No Right to Option; No Right to Employment. No person shall have any
claim of right to be granted an option under the Plan. Neither the Plan
nor any action taken hereunder shall be construed as giving any
employee any right to be retained in the Company's employ or any of its
subsidiaries or as giving any consultant, advisor or director any right
to continue to serve in such capacity.
23.6 Awards Not Includable for Benefit Purposes. Income recognized by a
participant pursuant to the provisions of the Plan shall not be
included in the determination of benefits under any "employee benefit
plan" (as such term is defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974) or such other benefit plan,
policy or arrangement applicable to the participant that are maintained
by the Company or any of its subsidiaries, except as may be provided
under the terms of such plans or determined by resolution of the Board.
23.7 No Strict Construction. No rule of strict construction shall be implied
against the Company, the Board, or any other person in the
interpretation of any of the terms of the Plan, any award granted under
the Plan or any rule or procedure established by the Board.
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<PAGE> 14
23.8 Captions. All Section headings used in the Plan are for convenience
only, do not constitute a part of the Plan, and shall not be deemed to
limit, characterize or affect in any way any provisions of the Plan,
and all provisions of the Plan shall be construed as if no captions
have been used in the Plan.
23.9 Severability. Whenever possible, each provision in the Plan and every
option at any time granted under the Plan shall be interpreted in such
manner as to be effective and valid under applicable law, but if any
provision of the Plan or any option at any time granted under the Plan
shall be held to be prohibited by or invalid under applicable law, then
such provision shall be deemed amended to accomplish the objectives of
the provision as originally written to the fullest extent permitted by
law, and all other provisions of the Plan and every other option at any
time granted under the Plan shall remain in full force and effect.
23.10 Legends. All certificates for Common Stock delivered under the Plan
shall be subject to such transfer and other restrictions as the Board
may deem advisable under the rules, regulations and other requirements
of the Securities and Exchange Commission, any stock exchange or
quotation system upon which the Common Stock is then listed or quoted
and any applicable federal or state securities law, and the Board may
cause a legend or legends to be put on any such certificates to make
appropriate references to such restrictions.
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<PAGE> 15
APPENDIX A
DESIGNATED SUBSIDIARIES PARTICIPATING UNDER THE PLAN
<PAGE> 16
FREEMARKETS, INC.
EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
New Election ______
Change of Election ______
1. I, ________________________, hereby elect to participate in the
FreeMarkets, Inc. Employee Stock Purchase Plan (the "Plan") for the Offering
Period from __________________, ____ to _______________, ____, and subscribe to
purchase shares of the Company's Common Stock in accordance with this
Subscription Agreement and the Plan.
2. I elect to have Contributions in the amount of ____% of my
Compensation, as those terms are defined in the Plan, applied to this purchase.
I understand that this amount must not be less than 1% and not more than 20% of
my Compensation during the Offering Period. (Please note that no fractional
percentages are permitted).
3. I hereby authorize payroll deductions from each paycheck during the
Offering Period at the rate stated in Item 2 of this Subscription Agreement. I
understand that all payroll deductions made by me shall be credited to my
account under the Plan and that I may not make any additional payments into such
account. I understand that all payments made by me shall be accumulated for the
purchase of Shares at the applicable purchase price determined in accordance
with the Plan. I further understand that, except as otherwise set forth in the
Plan, Shares will be purchased for me automatically on the Purchase Date of each
Offering Period unless I otherwise withdraw from the Plan by giving written
notice to the Company for such purpose.
4. I understand that I may discontinue my participation in accordance
with the Plan's terms at any time prior to a Purchase Date. I also understand
that I can increase or decrease the rate of my Contributions on one occasion
only with respect to any increase and one occasion only with respect to any
decrease during any Offering Period by completing and filing a new Subscription
Agreement, such Subscription Agreement to take effect as soon as
administratively practicable after the date it is filed with the Administrator.
Further, I may change the rate of deductions for future Offering Periods by
filing a new Subscription Agreement, and any such change will be effective as of
the beginning of the next Offering Period. In addition, I acknowledge that,
unless I discontinue my participation in the Plan, my election will continue to
be effective for each successive Offering Period.
5. I have received a copy of the complete "FreeMarkets, Inc. Employee
Stock Purchase Plan" and a prospectus describing the Plan's terms. I understand
that my participation in the Plan is in all respects subject to the terms of the
Plan.
6. Shares purchased for me under the Plan should be issued in the
name(s) of (name of employee or employee and spouse only):
_____________________________________________
<PAGE> 17
7. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due to me under the Plan:
NAME: (Please print)______________________________________________________
(First) (Middle) (Last)
(Relationship)______________________________________________________
(Address)______________________________________________________
______________________________________________________
______________________________________________________
8. I understand that if I dispose of any shares received by me pursuant
to the Plan within 2 years after the Offering Date (the first day of the
Offering Period during which I purchased such shares) or within 1 year after the
Purchase Date, I will be treated for federal income tax purposes as having
received ordinary compensation income at the time of such disposition in an
amount equal to the excess of the fair market value of the shares on the
Purchase Date over the price which I paid for the shares, regardless of whether
I disposed of the shares at a price less than their fair market value at the
Purchase Date. The remainder of the gain or loss, if any, recognized on such
disposition will be treated as capital gain or loss.
I HEREBY AGREE TO NOTIFY THE COMPANY IN WRITING WITHIN 30 DAYS AFTER
THE DATE OF ANY SUCH DISPOSITION, AND I WILL MAKE ADEQUATE PROVISION FOR
FEDERAL, STATE OR OTHER TAX WITHHOLDING OBLIGATIONS, IF ANY, WHICH ARISE UPON
THE DISPOSITION OF THE COMMON STOCK. The Company may, but will not be obligated
to, withhold from my compensation the amount
necessary to meet any applicable withholding obligation including any
withholding necessary to make available to the Company any tax deductions or
benefits attributable to the sale or early disposition of Common Stock by me.
9. If I dispose of such shares at any time after expiration of the
2-year and 1-year holding periods, I understand that I will be treated for
federal income tax purposes as having received compensation income only to the
extent of an amount equal to the lesser of (1) the excess of the fair market
value of the shares at the time of such disposition over the purchase price
which I paid for the shares under the option, or (2) 15% of the fair market
value of the shares on the Offering Date. The remainder of the gain or loss, if
any, recognized on such disposition will be treated as capital gain or loss.
I UNDERSTAND THAT THIS TAX SUMMARY IS ONLY A SUMMARY AND IS SUBJECT TO
CHANGE. I further understand that I should consult a tax advisor concerning the
tax implications of the purchase and sale of stock under the Plan.
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<PAGE> 18
10. I hereby agree to be bound by the terms of the Plan. The
effectiveness of this Subscription Agreement is dependent upon my eligibility to
participate in the Plan.
SIGNATURE:
------------------------------
SOCIAL SECURITY #
------------------------------
DATE:
------------------------------
SPOUSE'S SIGNATURE
(necessary only if beneficiary
is not spouse):
------------------------------
(Signature)
------------------------------
(Print name)
3
<PAGE> 19
FREEMARKETS, INC.
EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
I, __________________________, hereby elect to withdraw my
participation in the FreeMarkets, Inc. Employee Stock Purchase Plan (the "Plan")
for the Offering Period that began on ____________, _____. This withdrawal
covers all Contributions currently credited to my account and is effective on
the date designated below.
I understand that all Contributions credited to my account will be paid
to me as soon as administratively practicable following receipt by the
Administrator of this Notice of Withdrawal and that my option for the current
period will automatically terminate, and that no further Contributions for the
purchase of shares can be made by me during the Offering Period.
The undersigned further understands and agrees that he or she shall be
eligible to participate in succeeding offering periods only by delivering to the
Company a new Subscription Agreement.
Dated:
----------------- ---------------------------------------
Signature of Employee
---------------------------------------
Social Security Number
4