2003 Employment Inducement Award Plan

EXHIBIT 10.11


VERSATA, INC.

2003 EMPLOYMENT INDUCEMENT AWARD PLAN

TABLE OF CONTENTS

Page


1.

Purposes of the Plan

1

2.

Definitions

1

(a)

"Administrator"

1

(b)

"Applicable Laws"

1

(c)

"Award"

1

(d)

"Award Agreement"

1

(e)

"Change in Control"

1

(f)

"Code"

1

(g)

"Committee"

1

(h)

"Common Stock"

2

(i)

"Company"

2

(j)

"Consultant"

2

(k)

"Director"

2

(l)

"Disability"

2

(m)

"Employee"

2

(n)

"Exchange Act"

2

(o)

"Fair Market Value"

2

(p)

"Independent Director"

2

(q)

"Misconduct"

2

(r)

"Nonstatutory Stock Option"

2

(s)

"Notice of Grant"

2

(t)

"Officer"

2

(u)

"Option"

2

(v)

"Optioned Stock"

2

(w)

"Parent"

3

(x)

"Participant"

3

(y)

"Plan"

3

(z)

"Restricted Stock"

3

(aa)

"Rule 16b-3"

3

(bb)

"Section 16(b)"

3

(cc)

"Service Provider"

3

(dd)

"Share"

3

(ee)

"Stock Appreciation Right" or "SAR"

3

(ff)

"Subsidiary"

3

3.

Stock Subject to the Plan

3

4.

Administration of the Plan

4


-i-

TABLE OF CONTENTS

(Continued)

Page


(b)

Powers of the Administrator 4

(c)

Effect of Administrator's Decision 4

5.

Eligibility 4

6.

Limitations 4

7.

Term of Plan 4

8.

Stock Options 5

(a)

Term of Option 5

(b)

Option Exercise Price, Waiting Period and Consideration 5

(c)

Termination of Relationship as a Service Provider 5

(d)

Disability of Optionee 6

(e)

Death of Optionee 6

(f)

Misconduct of Optionee 6

(g)

Buyout Provisions 6

9.

Restricted Stock 6

(a)

Grant of Restricted Stock 6

(b)

Exercise Price and other Terms 7

(c)

Restricted Stock Award Agreement 7

10.

Stock Appreciation Rights 7

(a)

Grant of SARs 7

(b)

Exercise Price and other Terms 7

(c)

Payment of SAR Amount 7

(d)

Payment upon Exercise of SAR 7

(e)

Cash Settlements and Plan Share Allocation 7

(f)

SAR Agreement 7

(g)

Expiration of SARs 7

(h)

Termination of Relationship as a Service Provider 8

(i)

Disability of Participant 8

(j)

Death of Participant 8

(k)

Misconduct of Participant 8

(l)

Buyout Provisions 8

11.

Leaves of Absence 9

12.

Non-Transferability of Awards 9

13.

Adjustments Upon Changes in Capitalization, Dissolution, Liquidation or Change of Control 9


-ii-

TABLE OF CONTENTS

(Continued)

Page
(a) Changes in Capitalization 9 (b) Dissolution or Liquidation 9 (c) Change of Control 9

14. Award Date of Grant 10

15. Amendment and Termination of the Plan 10 (a) Amendment and Termination 10 (b) Stockholder Approval 10 (c) Effect of Amendment or Termination 10

16. Conditions Upon Issuance of Shares 10 (a) Legal Compliance 10 (b) Investment Representations 10

17. Inability to Obtain Authority 10

18. Reservation of Shares 10


-iii-

VERSATA, INC.


2003 EMPLOYMENT INDUCEMENT AWARD PLAN


Purposes of the Plan . The purposes of this 2003 Stock Plan are: ? to provide a material inducement for the best available employees to join the Company; and

? to promote the success of the Company's business.

The Plan permits the grant of Nonstatutory Stock Options, Restricted Stock and Stock Appreciation Rights.

Definitions . As used herein, the following definitions shall apply:


" Administrator" means the Committee as shall be administering the Plan in accordance with Section 4 of the Plan.


" Applicable Laws" means the requirements relating to the administration of stock option plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Awards are granted under the Plan.


" Award" means, individually or collectively, a grant under the Plan of Options, SARs or Restricted Stock.


" Award Agreement" means the written agreement setting forth the terms and provisions applicable to each Award granted under the Plan. The Award Agreement is subject to the terms and conditions of the Plan.


" Change in Control" means the occurrence of any of the following events:

Any Person becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company's then outstanding voting securities; or


The consummation of the sale or disposition by the Company of all or substantially all the Company's assets; or


The consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or


A change in the composition of the Board occurring within a two-year period, as a result of which fewer than a majority of the directors are Incumbent Directors. "Incumbent Directors" shall mean directors who either (A) are directors of the Company as of the date upon which this Agreement was entered into, or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of those directors whose election or nomination was not in connection with any transaction described in subsections (i), (ii), or (iii) above, or in connection with an actual or threatened proxy contest relating to the election of directors to the Company.

" Code" means the U.S. Internal Revenue Code of 1986, as amended.


" Committee" means a committee of independent Directors appointed by the Board in accordance with Section 4 of the Plan.


1

" Common Stock" means the common stock of the Company.

" Company" means Versata, Inc.

" Consultant" means any person, including an advisor, engaged by the Company or a Parent or Subsidiary to render services to such entity.


" Director" means a member Versata's Board of Directors.

" Disability" means total and permanent disability as defined in Section 22(e)(3) of the Code.

" Employee" means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director's fee by the Company shall be sufficient to constitute "employment" by the Company.

" Exchange Act" means the Securities Exchange Act of 1934, as amended.


" Fair Market Value" means, as of any date, the value of Common Stock determined as follows:


If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the date of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;


If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on the date of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or

in the absence of an established market for the Common Stock, the Fair Market Value shall be determined in good faith by the Administrator.


" Independent Director" means a Director who is not an Employee and who qualifies as an Independent Director under the applicable rules of Nasdaq (and/or the similar rules of any other stock exchange(s) on which the Company's securities become publicly traded).


" Misconduct" means the commission of any act of fraud, embezzlement or dishonesty by the Participant, any unauthorized use of disclosure by such person of confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional misconduct by such person adversely affecting the business or affairs of the Corporation (or any Parent or Subsidiary) in a material manner. The foregoing definition shall not be deemed to be inclusive of all the acts or omissions which the Corporation (or any Parent or Subsidiary) may consider as grounds for the dismissal or discharge of any Participant or other person in the Service of the Corporation (or any Parent or Subsidiary).


" Nonstatutory Stock Option" means an Option not intended to qualify as an Incentive Stock Option.


" Notice of Grant" means a written or electronic notice evidencing certain terms and conditions of an individual Award. The Notice of Grant is part of the Award Agreement.

" 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.

" Option" means a stock option granted pursuant to the Plan.


" Optioned Stock" means the Common Stock subject to an Option or SAR.

2

" Parent" means a "parent corporation," whether now or hereafter existing, as defined in Section 424(e) of the Code.


" Participant" means the holder of an outstanding Award granted under the Plan.

" Plan" means this 2003 Employment Inducement Award Plan.


" Restricted Stock" means shares of Common Stock or units/rights to acquire shares of Common Stock granted pursuant to Section 9 of the Plan that are subject to vesting.


" Rule 16b-3" means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan.

" Section 16(b)" means Section 16(b) of the Exchange Act.


" Service Provider" means an Employee, Director or Consultant.


" Share" means a share of the Common Stock, as adjusted in accordance with Section 13 of the Plan.

" Stock Appreciation Right" or " SAR" means an Award, granted alone or in connection with a related Option, that pursuant to Section 10 is designated as an SAR.


" Subsidiary" means a "subsidiary corporation", whether now or hereafter existing, as defined in Section 424(f) of the Code and also include partnerships, limited liability companies and other entities that are at least 30% owned by the Company.


Stock Subject to the Plan . Subject to the provisions of Section 13 of the Plan, the maximum aggregate number of Shares which may be issued under the Plan is 800,000 Shares; provided, however, that commencing October 1, 2004, on the first day of each fiscal year of the Company during the term of the Plan, an additional 400,000 shares shall automatically be added to the Plan; provided, further, that in no event shall more than 50% of the Shares issuable under the Plan be granted pursuant to Awards with an exercise price or purchase price that is less than 100% of Fair Market Value on the date of grant. The Shares may be authorized, but unissued, or reacquired Common Stock.


If an Award expires or becomes unexercisable without having been exercised in full, or, with respect to Restricted Stock, is forfeited back to or repurchased by the Company, the unpurchased Shares (or for Restricted Stock, the forfeited or repurchased shares) which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated). With respect to SARs, only shares actually issued pursuant to an SAR (or in the event of a cash payout, the share equivalent) shall cease to be available under the Plan; all remaining shares under SARs, shall remain available for future grant or sale under the Plan (unless the Plan has ter ...