Exhibit 10.40
INTERLIANT, INC.
EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
PURPOSE AND COMMENCEMENT
1.01 Purpose. The purpose of the Plan is to provide the employees of Interliant, Inc., a
Delaware corporation (the "Company") and its Subsidiaries with added incentive to continue in their employment and to encourage increased efforts to promote the best interests of the Company by permitting eligible employees to purchase shares of Common Stock of the Company at prices less than the current market price thereof. The Plan is intended to qualify as an employee stock purchase plan under Section 423 of the Code and shall be interpreted and construed in accordance with such purpose.
1.02 Commencement . The Plan shall become effective on such date as may be specified by the Board of Directors, which, absent a resolution of the Board of Directors to the contrary, shall be as set forth in Section 2.01(q) hereof; provided, however, that, in no event, shall the Plan become effective unless -------- ------- within twelve months of the date of its adoption by the Board of Directors it has been approved by the affirmative vote of a majority of the issued and outstanding shares of the Company's securities entitled to vote on such matters at a duly called meeting of the shareholders of the Company.
ARTICLE II
DEFINITIONS
2.01 Definitions. As used in the Plan, the following terms and phrases shall have the following meanings:
(a) "Board of Directors" shall mean the Board of Directors of the Company.
(b) "Closing Market Price" with respect to any day shall mean (i) the sales price of the Common Stock as reported on the Nasdaq National Market as of 4:00 P.M. New York Time, on such day, or (ii) if the foregoing provision is inapplicable, the Closing Market Price shall be determined by the Committee in good faith on such basis as it deems appropriate.
(c) "Code" shall mean the Internal Revenue Code as of 1986, as amended.
(d) "Commencement Date" shall mean the first day of a Purchase Period.
(e) "Committee" shall mean the Compensation Committee of the Board of Directors, or such other committee of the Board of Directors designated by it for purposes of administering the Plan.
(f) "Common Stock" means the common stock of the Company, par value $.01 per share.
(g) "Company" shall mean Interliant, Inc., a Delaware corporation.
(h) "Contribution Account" shall mean the account established on behalf of a Participant pursuant to Article III hereof to which shall be credited his or her Participant Contributions.
(i) "Contribution Rate" shall be a percentage of a Participant's Covered Compensation during each payroll period designated by each Participant to be contributed by regular payroll deductions to his or her Contribution Account as set forth in Section 3.03 hereof.
(j) "Covered Compensation" shall mean the total cash compensation received by an Employee from a Sponsoring Employer, before tax withholdings and other deductions, including base compensation, overtime, shift or other compensatory premiums, payments in substitution of base compensation such as vacation, holiday and sick pay, and including all cash bonus compensation, but not including short or long-term disability payments.
(k) "Employee" shall mean each employee of a Sponsoring Employer whose customary employment is at least twenty (20) hours a week and more than five months in a calendar year; provided, however, that an employee of a Sponsoring
-------- ------- Employer who is employed in a foreign jurisdiction shall not be deemed an Employee if participation by such employee in the Plan is prohibited pursuant to the laws of such jurisdiction. For purposes of the Plan, "employment" shall be determined in accordance with the provisions of Section 1.421-7(h) of the Treasury Regulations (or any successor regulations).
(l) "Participant" shall mean any Employee of a Sponsoring Employer who has met the conditions and provisions for becoming a Participant set forth in Article III hereof.
(m) "Participant Contributions" shall be the aggregate dollars actually contributed by each Participant to his or her Contribution Account.
(n) "Permanent Disability" shall mean an illness, injury or other physical or mental condition continuing for at least 180 consecutive days which results in
2
an Employee's inability to provide in all material respects the duties theretofore performed in his or her capacity as an Employee of a Sponsoring Employer.
(o) "Plan" shall mean the Interliant, Inc. Employee Stock Purchase Plan as set forth herein, as it may be amended from time to time.
(p) "Purchase Date" shall mean the last business day of a Purchase Period on which the Common Stock publicly trades.
(q) "Purchase Period" shall mean each of the six-month periods commencing January 1 and July 1 of each calendar year during which the Plan is in effect. The first Purchase Period shall commence on July 1, 2000.
(r) "Purchase Price" shall mean the purchase price for a share of Common Stock to be paid by a Participant on a Purchase Date, as determined under Section 4.02 hereof.
(s) "Request for Participation" shall mean such form as shall be approved by the Committee for distribution to Employees in connection with participation in the Plan.
(t) "Sponsoring Employers" shall mean the Company and each Subsidiary that has been designated by the Committee as a Sponsoring Employer under the Plan.
(u) "Subsidiary" shall mean a subsidiary of the Company which is treated as a subsidiary corporation under Section 424(f) of the Code.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.01 Eligibility. Each Employee who shall be employed by a Sponsoring Employer on a given Commencement Date of a Purchase Period shall be eligible to participate in the Plan for such Purchase Period, subject to the satisfaction of any election requirements described in Section 3.03(a) herein.
3.02 Limitations. Notwithstanding anything to the contrary contained in the Plan, no right to purchase Common Stock shall accrue under the Plan in favor of any person who is not an Employee eligible to participate in the Plan under Section 3.01 hereof, and no Employee shall acquire the right to purchase shares of Common Stock if (i) immediately after receiving such right to purchase Common Stock, such Employee would own 5% or more of the total combined voting power or value of all classes of stock of the Company or any Subsidiary, taking into account in determining stock ownership any stock attributable to such Employee under Section 424(d) of the Code, or (ii) which would permit such Employee's right to purchase stock under all employee
3
stock purchase plans (to which Section 423 of the Code applies) of the Company and its Subsidiaries, as those plans are in effect from time to time, to accrue at a rate which exceeds $25,000 of fair market value of such stock (as determined as each Commencement Date) for each calendar year, all as specified in the manner provided by Section 423(b)(8) of the Code, or (iii) which would permit such Employee the right to purchase more than 1,250 shares (or such other number as may be determined in advance for any Purchase Period by the Committee) of Common Stock in any Purchase Period.
3.03 Participation
(a) Each Employee eligible to be a Participant and participate in the Plan shall be furnished a summary of the Plan and a Request for Participation by such Employee's Sponsoring Employer. If an Employee elects to participate hereunder, such Employee shall complete such form and file it with his or her Sponsoring Employer not later than 15 days prior to a Commencement Date of a Purchase Period. The completed ...