2000 Equity Incentive Plan

Exhibit 10.18


GATEWAY, INC.
2000 EQUITY INCENTIVE PLAN


1. PURPOSE. The 2000 Equity Incentive Plan (the "Plan") is intended to promote the long-term success of Gateway, Inc. (the "Company") and its stockholders by strengthening the Company's ability to attract and retain highly competent officers, directors, managers and other selected employees, consultants and advisors and to provide a means to encourage stock ownership and proprietary interest in the Company.


2. TERM. The Plan shall become effective upon its ratification and approval by the affirmative vote of the holders of a majority of the securities of the Company present or represented, and entitled to vote at, a meeting of stockholders of the Company, and shall terminate at the close of business on January 18, 2010 unless terminated earlier by the Compensation Committee (as defined in Section 3). After termination of the Plan, no future awards may be granted, but previously granted awards shall remain outstanding in accordance with their applicable terms and conditions and the terms and conditions of the Plan.


3. PLAN ADMINISTRATION. A committee (the "Compensation Committee") appointed by the Board of Directors of the Company (the "Board") shall be responsible for administering the Plan. The Compensation Committee shall be comprised of two or more members of the Board who shall qualify as both (1) "Non-Employee Directors" within the meaning of Rule 16b-3 under the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), or any successor rules and (2) "outside directors" within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). The Compensation Committee shall have full and exclusive power to interpret the Plan and to adopt such rules, regulations and guidelines for carrying out the Plan as it may deem necessary or proper, and such power shall be executed in the best interests of the Company and in keeping with the objectives of the Plan. This power includes but is not limited to selecting award recipients, establishing all award terms and conditions and adopting modifications, amendments and procedures, as well as rules and regulations governing awards under the Plan. The interpretation and construction of any provision of the Plan or any option or right granted hereunder and all determinations by the Compensation Committee in each case shall be final, binding and conclusive with respect to all interested parties. Notwithstanding the foregoing, in its absolute discretion, the Board (or any committee selected by the Board) may at any time and from time to time exercise any and all rights and duties of the Committee under this Plan except with respect to matters which under Rule 16b-3 or Section 162(m) of the Code, or any regulations or rules issued thereunder, are required to be determined in the sole discretion of the Committee.


4. ELIGIBILITY. Any officer, employee, director, consultant or advisor of the Company shall be eligible to receive one or more awards under the Plan. "Company" includes for this purpose any entity that is directly or indirectly controlled by the Company or any entity in which the Company has a significant equity interest, as determined by the Compensation Committee.


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5. SHARES OF COMMON STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 6 of the Plan, the aggregate number of shares of Common Stock, $.01 par value, of the Company ("Shares") which shall be reserved for issuance to participants under the Plan shall be 16,000,000; provided; however, that on January 1 of each fiscal year of the Company during which the Plan is effective (commencing January 1, 2001), the aggregate number of shares reserved for issuance to participants under the Plan shall be increased by the lesser of (i) 5% of the total number of shares of Common Stock outstanding on such date and (ii) an amount determined by the Board.


In addition, upon and after stockholder approval of this Plan, (i) all then remaining Shares reserved and available for issuance under the Company's 1996 Long-Term Incentive Equity Plan (the "1996 Plan") and the 1993 Stock Option Plan (the "1993 Plan") and (ii) any Shares underlying outstanding awards under the 1996 Plan and the 1993 Plan that expire without being exercised or would otherwise again be available for issuance under the 1996 Plan or the 1993 Plan, shall in each case be transferred to this Plan and shall be reserved and available for issuance hereunder.


Subject to adjustment as provided in Section 6, no more than 50% of the aggregate number of Shares issued pursuant to awards under the Plan annually may be issued under awards pursuant to Section 8.3 of the Plan. The aggregate number of Shares that may be covered by awards granted to any single individual under the Plan shall not exceed 3,000,000 Shares per fiscal year of the Company.


Shares subject to awards under the Plan which expire, terminate, or are canceled prior to exercise or, in the case of awards granted under Section 8.3, do not vest, shall thereafter be available for the granting of other awards. Shares which have been exchanged by a participant as full or partial payment to the Company in connection with any award under the Plan, also shall thereafter be available for the granting of other awards. In instances where a stock appreciation right ("SAR") or other award is settled in cash, the Shares covered by such award shall remain available for issuance under the Plan. Likewise, the payment of cash dividends and dividend equivalents paid in cash in conjunction with outstanding awards shall not be counted against the Shares available for issuance. Any Shares that are issued by the Company, and any awards that are granted through the assumption of, or in substitution for, outstanding awards previously granted by an acquired entity shall not be counted against the Shares available for issuance under the Plan.


Any Shares issued under the Plan may consist in whole or in part of authorized and unissued Shares or of treasury Shares. No fractional Shares shall be issued under the Plan. Cash may be paid in lieu of any fractional Shares in settlements of awards under the Plan.


6. ADJUSTMENTS. In the event of any stock dividend, stock split, combination or exchange of Shares, merger, consolidation, spin-off, recapitalization or other distribution (other than normal cash dividends) of Company assets to stockholders, or any other change affecting the Shares or the Share price, such proportionate adjustments, if any, as the Compensation Committee in its discretion may deem appropriate to reflect such change shall be made with respect to (1) the aggregate number of Shares that may be issued under the Plan, the aggregate


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number of Shares that may be issued pursuant to Section 8.3 of the Plan, and the aggregate number of Shares that may be granted to any single individual under the Plan during any fiscal year of the Company; (2) the number of shares issuable pursuant to each outstanding award made under the Plan; and (3) the exercise price per Share for any outstanding stock options, SARs or similar awards under the Plan. In connection with any event described in this Section 6, the Compensation Committee may provide for the cancellation of any outstanding awards upon payment in cash, securities or other property therefor based on the then Fair Market Value of the Common Stock.


7. FAIR MARKET VALUE. "Fair Market Value," for all purposes under the Plan, shall mean the closing price of a Share as reported daily in The Wall Street Journal or similar, readily available public source for the date in question. If no sales of Shares were made on such date, the closing price of a Share as reported for the preceding day on which a sale of Shares occurred shall be used. Notwithstanding the foregoing, the Committee may use any other definition of Fair Market Value consistent with applicable tax, accounting and other rules.


8. AWARDS. The Compensation Committee shall determine the type or types of award(s) to be made to each participant. Awards may be granted singly, in combination or in tandem. Awards also may be made in combination or in tandem with, in replacement of, as alternatives to or as the payment form for grants or rights under any other compensation plan or individual contract or agreement of the Company including those of any acquired entity. The types of awards that may be granted under the Plan are:


8.1 STOCK OPTIONS. A stock option is a right to purchase a specified number of Shares during a specified period as determined by the Compensation Committee. The purchase price per Share for each stock option shall be not less than 100% of Fair Market Value on the date of grant, except if a stock option is granted retroactively in tandem with or as a substitution for a SAR, the exercise price may be no lower than the Fair Market Value of a Share as set forth in award agreements for such tandem or replaced SAR. The price at which Shares may be purchased under a stock option shall be paid in full by the optionee at the time of the exercise in cash or such other method permitted by the Compensation Committee, including (1) tendering Shares (with prior approval of the Chief Executive Officer if Shares are owned less than six months); (2) authorizing a third party broker to sell the Shares (or a sufficient portion thereof) acquired upon exercise of a stock option and assigning the delivery to the Company of a sufficient amount of the sale proceeds to pay for all the Shares acquired through such exercise; or (3) any combination of the above.


8.2 SARS. A SAR is a right to receive a payment, in cash and/or Shares, equal to the excess of the Fair Market Value of a specified number of Shares on the date the SAR is exercised over the Fair Market Value on the date the SAR was granted as set forth in the applicable award agreement; except that if a SAR is granted retroactively in tandem with or in substitution for a stock option, the designated Fair Market Value set forth in the award agreement shall be no lower than the Fair Market Value of a Share for such tandem or replaced stock option.


8.3 STOCK AWARDS. A stock award is a grant made or denominated in Shares or units equivalent in value to Shares. All or part of any stock award may be subject to conditions


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and restrictions established by the Compensation Committee, as set forth in the applicable award agreement, which may include, but are not limited to, continuous service with the Company and/or the achievement of performance goals. The performance criteria that may be used by the Compensation Committee in granting a stock award contingent on performance goals shall consist of earnings, earnings per share, revenues, profit growth, profit-related return ratios, cash flow or total stockholder return. The Compensation Committee may select one criterion or multiple criteria for measuring performance, and the measurement may be stated in absolute terms or relative to comparable companies.


Notwithstanding anything to the contrary contained in the Plan, the Compensation Committee may grant a stock award which is not contingent on performance goals or which is contingent on performance goals other than those specified in this Section 8.3, provided the Compensation Committee shall have determined that such award is not required to satisfy the requirements for "qualified performance-based compensation" within the meaning of Section 162(m) of the Code.


9. DIVIDENDS AND DIVIDEND EQUIVALENTS. The Compensation Committee may provide that any awards under the Plan earn dividends or dividend equivalents. Such dividends or dividend equivalents may be paid currently or ma ...