EXHIBIT 10.2

 

MARIMBA, INC.

 

1999 OMNIBUS EQUITY INCENTIVE PLAN

 

(AS AMENDED THROUGH NOVEMBER 13, 2003)

 

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TABLE OF CONTENTS

 

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ARTICLE 1. INTRODUCTION

   1

ARTICLE 2. ADMINISTRATION

   1

2.1

  

Committee Composition

   1

2.2

  

Committee Responsibilities

   1

2.3

  

Committee for Non-Officer Grants

   2

ARTICLE 3. SHARES AVAILABLE FOR GRANTS

   2

3.1

  

Basic Limitation

   2

3.2

  

Annual Increase in Shares

   2

3.2

  

Additional Shares

   2

3.3

  

Dividend Equivalents

   2

ARTICLE 4. ELIGIBILITY

   2

4.1

  

Incentive Stock Options

   2

4.2

  

Other Grants

   3

ARTICLE 5. OPTIONS

   3

5.1

  

Stock Option Agreement

   3

5.2

  

Number of Shares

   3

5.3

  

Exercise Price

   3

5.4

  

Exercisability and Term

   3

5.5

  

Modification or Assumption of Options

   3

5.6

  

Buyout Provisions

   4

ARTICLE 6. PAYMENT FOR OPTION SHARES

   4

6.1

  

General Rule

   4

6.2

  

Surrender of Stock

   4

6.3

  

Exercise/Sale

   4

6.4

  

Exercise/Pledge

   4

6.5

  

Promissory Note

   4

6.6

  

Other Forms of Payment

   5

ARTICLE 7. STOCK APPRECIATION RIGHTS

   5

7.1

  

SAR Agreement

   5

7.2

  

Number of Shares

   5

7.3

  

Exercise Price

   5

7.4

  

Exercisability and Term

   5

7.5

  

Exercise of SARs

   5

7.6

  

Modification or Assumption of SARs

   6

 

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ARTICLE 8. RESTRICTED SHARES

   6

8.1

  

Restricted Stock Agreement

   6

8.2

  

Payment for Awards

   6

8.3

  

Vesting Conditions

   6

8.4

  

Voting and Dividend Rights

   6

ARTICLE 9. STOCK UNITS

   6

9.1

  

Stock Unit Agreement

   6

9.2

  

Payment for Awards

   6

9.3

  

Vesting Conditions

   7

9.4

  

Voting and Dividend Rights

   7

9.5

  

Form and Time of Settlement of Stock Units

   7

9.6

  

Death of Recipient

   7

9.7

  

Creditors’ Rights

   7

ARTICLE 10. CHANGE IN CONTROL

   7

ARTICLE 11. PROTECTION AGAINST DILUTION

   8

11.1

  

Adjustments

   8

11.2

  

Dissolution or Liquidation

   8

11.3

  

Reorganizations

   8

ARTICLE 12. DEFERRAL OF AWARDS

   9

ARTICLE 13. AWARDS UNDER OTHER PLANS

   9

ARTICLE 14. PAYMENT OF DIRECTOR’S FEES IN SECURITIES

   9

14.1

  

Effective Date

   9

14.2

  

Elections to Receive NSOs, Restricted Shares or Stock Units

   10

14.3

  

Number and Terms of NSOs, Restricted Shares or Stock Units

   10

ARTICLE 15. LIMITATION ON RIGHTS

   10

15.1

  

Retention Rights

   10

15.2

  

Stockholders’ Rights

   10

15.3

  

Regulatory Requirements

   10

ARTICLE 16. WITHHOLDING TAXES

   10

16.1

  

General

   10

16.2

  

Share Withholding

   10

ARTICLE 17. FUTURE OF THE PLAN

   11

17.1

  

Term of the Plan

   11

17.2

  

Amendment or Termination

   11

ARTICLE 18. LIMITATION ON PAYMENTS

   11

18.1

  

Scope of Limitation

   11

18.2

  

Basic Rule

   12

18.3

  

Reduction of Payments

   12

 

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18.4

  

Overpayments and Underpayments

   13

18.5

  

Related Corporations

   13

ARTICLE 19. DEFINITIONS

   13

 

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MARIMBA, INC.

 

1999 OMNIBUS EQUITY INCENTIVE PLAN

 

ARTICLE 1. INTRODUCTION.

 

The Plan was adopted by the Board on February 2, 1999 to be effective as of the
date of the IPO. The purpose of the Plan is to promote the long-term success of
the Company and the creation of stockholder value by (a) encouraging Employees,
Outside Directors and Consultants to focus on critical long-range objectives,
(b) encouraging the attraction and retention of Employees, Outside Directors and
Consultants with exceptional qualifications and (c) linking Employees, Outside
Directors and Consultants directly to stockholder interests through increased
stock ownership. The Plan seeks to achieve this purpose by providing for Awards
in the form of Restricted Shares, Stock Units, Options (which may constitute
incentive stock options or nonstatutory stock options) or stock appreciation
rights.

 

The Plan shall be governed by, and construed in accordance with, the laws of the
State of Delaware (except their choice-of-law provisions).

 

ARTICLE 2. ADMINISTRATION.

 

2.1 Committee Composition. The Plan shall be administered by the Committee. The
Committee shall consist exclusively of two or more directors of the Company, who
shall be appointed by the Board. In addition, the composition of the Committee
shall satisfy:

 

(a) Such requirements as the Securities and Exchange Commission may establish
for administrators acting under plans intended to qualify for exemption under
Rule 16b-3 (or its successor) under the Exchange Act; and

 

(b) Such requirements as the Internal Revenue Service may establish for outside
directors acting under plans intended to qualify for exemption under section
162(m)(4)(C) of the Code.

 

2.2 Committee Responsibilities. The Committee shall (a) select the Employees,
Outside Directors and Consultants who are to receive Awards under the Plan, (b)
determine the type, number, vesting requirements and other features and
conditions of such Awards, (c) interpret the Plan and (d) make all other
decisions relating to the operation of the Plan. The Committee may adopt such
rules or guidelines as it deems appropriate to implement the Plan. The
Committee’s determinations under the Plan shall be final and binding on all
persons.

 

2.3 Committee for Non-Officer Grants. The Board may also appoint a secondary
committee of the Board, which shall be composed of one or more directors of the
Company who need not satisfy the requirements of Section 2.1. Such secondary
committee may administer the Plan with respect to Employees and Consultants who
are not considered officers or directors of

 

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the Company under section 16 of the Exchange Act, may grant Awards under the
Plan to such Employees and Consultants and may determine all features and
conditions of such Awards. Within the limitations of this Section 2.3, any
reference in the Plan to the Committee shall include such secondary committee.

 

ARTICLE 3. SHARES AVAILABLE FOR GRANTS.

 

3.1 Basic Limitation. Common Shares issued pursuant to the Plan may be
authorized but unissued shares or treasury shares. The aggregate number of
Options, SARs, Stock Units and Restricted Shares awarded under the Plan shall
not exceed: (a) 1,250,000, plus the number of shares under the Predecessor Plan
(up to a maximum of 2,399,653 shares) that (i) are available for issuance as of
the 2001 Annual Meeting, (ii) are subject to outstanding options or other awards
that are canceled or expire after the 2001 Annual Meeting and/or (iii) are
issued but are subject to forfeiture or a right of repurchase by the Company and
that are forfeited or repurchased by the Company after the date of the 2001
Annual Meeting (collectively “shares remaining available for issuance”); plus
(b) the additional Common Shares described in Section 3.2 and 3.3. The
limitations of this Section 3.1 and 3.2 shall be subject to adjustment pursuant
to Article 11.

 

3.2 Annual Increase in Shares. As of January 1 of each year, commencing with the
year 2000, the aggregate number of Options, SARs, Stock Units and Restricted
Shares that may be awarded under the Plan shall automatically increase by a
number equal to the lesser of (a) 4% of the total number of Common Shares then
outstanding or (b) 1,250,000.

 

3.3 Additional Shares. If Restricted Shares or Common Shares issued upon the
exercise of Options are forfeited (including any shares exercised under options
granted under the Predecessor Plan), then such Common Shares shall again become
available for Awards under the Plan. If Stock Units, Options or SARs (including
any options incorporated from the Predecessor Plan) are forfeited or terminate
for any other reason before being exercised, then the corresponding Common
Shares shall again become available for Awards under the Plan. If Stock Units
are settled, then only the number of Common Shares (if any) actually issued in
settlement of such Stock Units shall reduce the number available under Section
3.1 and the balance shall again become available for Awards under the Plan. If
SARs are exercised, then only the number of Common Shares (if any) actually
issued in settlement of such SARs shall reduce the number available under
Section 3.1 and the balance shall again become available for Awards under the
Plan. The foregoing notwithstanding, the aggregate number of Common Shares that
may be issued under the Plan upon the exercise of ISOs shall not be increased
when Restricted Shares or other Common Shares are forfeited.

 

3.4 Dividend Equivalents. Any dividend equivalents paid or credited under the
Plan shall not be applied against the number of Restricted Shares, Stock Units,
Options or SARs available for Awards, whether or not such dividend equivalents
are converted into Stock Units.

 

ARTICLE 4. ELIGIBILITY.

 

4.1 Incentive Stock Options. Only Employees who are common-law employees of the
Company, a Parent or a Subsidiary shall be eligible for the grant of ISOs. In
addition, an

 

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Employee who owns more than 10% of the total combined voting power of all
classes of outstanding stock of the Company or any of its Parents or
Subsidiaries shall not be eligible for the grant of an ISO unless the
requirements set forth in section 422(c)(6) of the Code are satisfied.

 

4.2 Other Grants. Only Employees, Outside Directors and Consultants shall be
eligible for the grant of Restricted Shares, Stock Units, NSOs or SARs.

 

ARTICLE 5. OPTIONS.

 

5.1 Stock Option Agreement. Each grant of an Option under the Plan shall be
evidenced by a Stock Option Agreement between the Optionee and the Company. Such
Option shall be subject to all applicable terms of the Plan and may be subject
to any other terms that are not inconsistent with the Plan. The Stock Option
Agreement shall specify whether the Option is an ISO or an NSO. The provisions
of the various Stock Option Agreements entered into under the Plan need not be
identical. Options may be granted in consideration of a reduction in the
Optionee’s other compensation. A Stock Option Agreement may provide that a new
Option will be granted automatically to the Optionee when he or she exercises a
prior Option and pays the Exercise Price in the form described in Section 6.2.

 

5.2 Number of Shares. Each Stock Option Agreement shall specify the number of
Common Shares subject to the Option and shall provide for the adjustment of such
number in accordance with Article 11. Options granted to any Optionee in a
single fiscal year of the Company shall not cover more than 1,000,000 Common
Shares, except that Options granted to a new Employee in the fiscal year of the
Company in which his or her service as an Employee first commences shall not
cover more than 1,500,000 Common Shares. The limitations set forth in the
preceding sentence shall be subject to adjustment in accordance with Article 11.

 

5.3 Exercise Price. Each Stock Option Agreement shall specify the Exercise
Price; provided that the Exercise Price under an ISO shall in no event be less
than 100% of the Fair Market Value of a Common Share on the date of grant and
the Exercise Price under an NSO shall in no event be less than 85% of the Fair
Market Value of a Common Share on the date of grant. In the case of an NSO, a
Stock Option Agreement may specify an Exercise Price that varies in accordance
with a predetermined formula while the NSO is outstanding.

 

5.4 Exercisability and Term. Each Stock Option Agreement shall specify the date
or event when all or any installment of the Option is to become exercisable. The
Stock Option Agreement shall also specify the term of the Option; provided that
the term of an ISO shall in no event exceed 10 years from the date of grant. A
Stock Option Agreement may provide for accelerated exercisability in the event
of the Optionee’s death, disability or retirement or other events and may
provide for expiration prior to the end of its term in the event of the
termination of the Optionee’s service. Options may be awarded in combination
with SARs, and such an Award may provide that the Options will not be
exercisable unless the related SARs are forfeited.

 

5.5 Modification or Assumption of Options. Within the limitations of the Plan,
the Committee may modify, extend or assume outstanding options or may accept the
cancellation of

 

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outstanding options (whether granted by the Company or by another issuer) in
return for the grant of new options for the same or a different number of shares
and at the same or a different exercise price. The foregoing notwithstanding, no
modification of an Option shall, without the consent of the Optionee, alter or
impair his or her rights or obligations under such Option.

 

5.6 Buyout Provisions. The Committee may at any time (a) offer to buy out for a
payment in cash or cash equivalents an Option previously granted or (b)
authorize an Optionee to elect to cash out an Option previously granted, in
either case at such time and based upon such terms and conditions as the
Committee shall establish.

 

ARTICLE 6. PAYMENT FOR OPTION SHARES.

 

6.1 General Rule. The entire Exercise Price of Common Shares issued upon
exercise of Options shall be payable in cash or cash equivalents at the time
when such Common Shares are purchased, except as follows:

 

(a) In the case of an ISO granted under the Plan, payment shall be made only
pursuant to the express provisions of the applicable Stock Option Agreement. The
Stock Option Agreement may specify that payment may be made in any form(s)
described in this Article 6.

 

(b) In the case of an NSO, the Committee may at any time accept payment in any
form(s) described in this Article 6.

 

6.2 Surrender of Stock. To the extent that this Section 6.2 is applicable, all
or any part of the Exercise Price may be paid by surrendering, or attesting to
the ownership of, Common Shares that are already owned by the Optionee. Such
Common Shares shall be valued at their Fair Market Value on the date when the
new Common Shares are purchased under the Plan. The Optionee shall not
surrender, or attest to the ownership of, Common Shares in payment of the
Exercise Price if such action would cause the Company to recognize compensation
expense (or additional compensation expense) with respect to the Option for
financial reporting purposes.

 

6.3 Exercise/Sale. To the extent that this Section 6.3 is applicable, all or any
part of the Exercise Price and any withholding taxes may be paid by delivering
(on a form prescribed by the Company) an irrevocable direction to a securities
broker approved by the Company to sell all or part of the Common Shares being
purchased under the Plan and to deliver all or part of the sales proceeds to the
Company.

 

6.4 Exercise/Pledge. To the extent that this Section 6.4 is applicable, all or
any part of the Exercise Price and any withholding taxes may be paid by
delivering (on a form prescribed by the Company) an irrevocable direction to
pledge all or part of the Common Shares being purchased under the Plan to a
securities broker or lender approved by the Company, as security for a loan, and
to deliver all or part of the loan proceeds to the Company.

 

6.5 Promissory Note. To the extent that this Section 6.5 is applicable, all or
any part of the Exercise Price and any withholding taxes may be paid by
delivering (on a form prescribed by the Company) a full-recourse promissory
note. However, the par value of the Common Shares being purchased under the
Plan, if newly issued, shall be paid in cash or cash equivalents.

 

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6.6 Other Forms of Payment. To the extent that this Section 6.6 is applicable,
all or any part of the Exercise Price and any withholding taxes may be paid in
any other form that is consistent with applicable laws, regulations and rules.

 

ARTICLE 7. STOCK APPRECIATION RIGHTS.

 

7.1 SAR Agreement. Each grant of an SAR under the Plan shall be evidenced by an
SAR Agreement between the Optionee and the Company. Such SAR shall be subject to
all applicable terms of the Plan and may be subject to any other terms that are
not inconsistent with the Plan. The provisions of the various SAR Agreements
entered into under the Plan need not be identical. SARs may be granted in
consideration of a reduction in the Optionee’s other compensation.

 

7.2 Number of Shares. Each SAR Agreement shall specify the number of Common
Shares to which the SAR pertains and shall provide for the adjustment of such
number in accordance with Article 11. SARs granted to any Optionee in a single
fiscal year of the Company shall in no event pertain to more than 1,000,000
Common Shares, except that SARs granted to a new Employee in the fiscal year of
the Company in which his or her service as an Employee first commences shall not
pertain to more than 1,500,000 Common Shares. The limitations set forth in the
preceding sentence shall be subject to adjustment in accordance with Article 11.

 

7.3 Exercise Price. Each SAR Agreement shall specify the Exercise Price. An SAR
Agreement may specify an Exercise Price that varies in accordance with a
predetermined formula while the SAR is outstanding.

 

7.4 Exercisability and Term. Each SAR Agreement shall specify the date when all
or any installment of the SAR is to become exercisable. The SAR Agreement shall
also specify the term of the SAR. An SAR Agreement may provide for accelerated
exercisability in the event of the Optionee’s death, disability or retirement or
other events and may provide for expiration prior to the end of its term in the
event of the termination of the Optionee’s service. SARs may be awarded in
combination with Options, and such an Award may provide that the SARs will not
be exercisable unless the related Options are forfeited. An SAR may be included
in an ISO only at the time of grant but may be included in an NSO at the time of
grant or thereafter. An SAR granted under the Plan may provide that it will be
exercisable only in the event of a Change in Control.

 

7.5 Exercise of SARs. Upon exercise of an SAR, the Optionee (or any person
having the right to exercise the SAR after his or her death) shall receive from
the Company (a) Common Shares, (b) cash or (c) a combination of Common Shares
and cash, as the Committee shall determine. The amount of cash and/or the Fair
Market Value of Common Shares received upon exercise of SARs shall, in the
aggregate, be equal to the amount by which the Fair Market Value (on the date of
surrender) of the Common Shares subject to the SARs exceeds the Exercise Price.
If, on the date when an SAR expires, the Exercise Price under such SAR is less
than the Fair Market Value on such date but any portion of such SAR has not been
exercised or surrendered, then such SAR shall automatically be deemed to be
exercised as of such date with respect to such portion.

 

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7.6 Modification or Assumption of SARs. Within the limitations of the Plan, the
Committee may modify, extend or assume outstanding SARs or may accept the
cancellation of outstanding SARs (whether granted by the Company or by another
issuer) in return for the grant of new SARs for the same or a different number
of shares and at the same or a different exercise price. The foregoing
notwithstanding, no modification of an SAR shall, without the consent of the
Optionee, alter or impair his or her rights or obligations under such SAR.

 

ARTICLE 8. RESTRICTED SHARES.

 

8.1 Restricted Stock Agreement. Each grant of Restricted Shares under the Plan
shall be evidenced by a Restricted Stock Agreement between the recipient and the
Company. Such Restricted Shares shall be subject to all applicable terms of the
Plan and may be subject to any other terms that are not inconsistent with the
Plan. The provisions of the various Restricted Stock Agreements entered into
under the Plan need not be identical.

 

8.2 Payment for Awards. Subject to the following sentence, Restricted Shares may
be sold or awarded under the Plan for such consideration as the Committee may
determine, including (without limitation) cash, cash equivalents, full-recourse
promissory notes and past services. To the extent that an Award consists of
newly issued Restricted Shares, the Award recipient shall furnish consideration
with a value not less than the par value of such Restricted Shares in the form
of cash, cash equivalents or past services rendered to the Company (or a Parent
or Subsidiary), as the Committee may determine.

 

8.3 Vesting Conditions. Each Award of Restricted Shares may or may not be
subject to vesting. Vesting shall occur, in full or in installments, upon
satisfaction of the conditions specified in the Restricted Stock Agreement. A
Restricted Stock Agreement may provide for accelerated vesting in the event of
the Participant’s death, disability or retirement or other events.

 

8.4 Voting and Dividend Rights. The holders of Restricted Shares awarded under
the Plan shall have the same voting, dividend and other rights as the Company’s
other stockholders. A Restricted Stock Agreement, however, may require that the
holders of Restricted Shares invest any cash dividends received in additional
Restricted Shares. Such additional Restricted Shares shall be subject to the
same conditions and restrictions as the Award with respect to which the
dividends were paid.

 

ARTICLE 9. STOCK UNITS.

 

9.1 Stock Unit Agreement. Each grant of Stock Units under the Plan shall be
evidenced by a Stock Unit Agreement between the recipient and the Company. Such
Stock Units shall be subject to all applicable terms of the Plan and may be
subject to any other terms that are not inconsistent with the Plan. The
provisions of the various Stock Unit Agreements entered into under the Plan need
not be identical. Stock Units may be granted in consideration of a reduction in
the recipient’s other compensation.

 

9.2 Payment for Awards. To the extent that an Award is granted in the form of
Stock Units, no cash consideration shall be required of the Award recipients.

 

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9.3 Vesting Conditions. Each Award of Stock Units may or may not be subject to
vesting. Vesting shall occur, in full or in installments, upon satisfaction of
the conditions specified in the Stock Unit Agreement. A Stock Unit Agreement may
provide for accelerated vesting in the event of the Participant’s death,
disability or retirement or other events.

 

9.4 Voting and Dividend Rights. The holders of Stock Units shall have no voting
rights. Prior to settlement or forfeiture, any Stock Unit awarded under the Plan
may, at the Committee’s discretion, carry with it a right to dividend
equivalents. Such right entitles the holder to be credited with an amount equal
to all cash dividends paid on one Common Share while the Stock Unit is
outstanding. Dividend equivalents may be converted into additional Stock Units.
Settlement of dividend equivalents may be made in the form of cash, in the form
of Common Shares, or in a combination of both. Prior to distribution, any
dividend equivalents which are not paid shall be subject to the same conditions
and restrictions as the Stock Units to which they attach.

 

9.5 Form and Time of Settlement of Stock Units. Settlement of vested Stock Units
may be made in the form of (a) cash, (b) Common Shares or (c) any combination of
both, as determined by the Committee. The actual number of Stock Units eligible
for settlement may be larger or smaller than the number included in the original
Award, based on predetermined performance factors. Methods of converting Stock
Units into cash may include (without limitation) a method based on the average
Fair Market Value of Common Shares over a series of trading days. Vested Stock
Units may be settled in a lump sum or in installments. The distribution may
occur or commence when all vesting conditions applicable to the Stock Units have
been satisfied or have lapsed, or it may be deferred to any later date. The
amount of a deferred distribution may be increased by an interest factor or by
dividend equivalents. Until an Award of Stock Units is settled, the number of
such Stock Units shall be subject to adjustment pursuant to Article 11.

 

9.6 Death of Recipient. Any Stock Units Award that becomes payable after the
recipient’s death shall be distributed to the recipient’s beneficiary or
beneficiaries. Each recipient of a Stock Units Award under the Plan shall
designate one or more beneficiaries for this purpose by filing the prescribed
form with the Company. A beneficiary designation may be changed by filing the
prescribed form with the Company at any time before the Award recipient’s death.
If no beneficiary was designated or if no designated beneficiary survives the
Award recipient, then any Stock Units Award that becomes payable after the
recipient’s death shall be distributed to the recipient’s estate.

 

9.7 Creditors’ Rights. A holder of Stock Units shall have no rights other than
those of a general creditor of the Company. Stock Units represent an unfunded
and unsecured obligation of the Company, subject to the terms and conditions of
the applicable Stock Unit Agreement.

 

ARTICLE 10. CHANGE IN CONTROL.

 

Unless the applicable agreement evidencing the Award provides otherwise, in the
event of any Change in Control, the vesting of each outstanding Award shall
automatically accelerate so that each such Award shall, immediately prior to the
effective date of the Change in

 

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Control, become fully exercisable for all of the Common Shares at the time
subject to such Award and may be exercised for any or all of those shares as
fully-vested Common Shares. However, an outstanding Award shall not so
accelerate if and to the extent such Award, in connection with the Change in
Control, remains outstanding, or is assumed by the surviving corporation (or
parent thereof) or substituted with an award with substantially the same terms
by the surviving corporation (or parent thereof). The determination of whether a
substituted award has substantially the same terms as an Award shall be made by
the Committee, and its determination shall be final, binding and conclusive.

 

ARTICLE 11. PROTECTION AGAINST DILUTION.

 

11.1 Adjustments. In the event of a subdivision of the outstanding Common
Shares, a declaration of a dividend payable in Common Shares, a declaration of a
dividend payable in a form other than Common Shares in an amount that has a
material effect on the price of Common Shares, a combination or consolidation of
the outstanding Common Shares (by reclassification or otherwise) into a lesser
number of Common Shares, a recapitalization, a spin-off or a similar occurrence,
the Committee shall make such adjustments as it, in its sole discretion, deems
appropriate in one or more of:

 

(a) The number of Options, SARs, Restricted Shares and Stock Units available for
future Awards under Article 3;

 

(b) The limitations set forth in Sections 5.2 and 7.2;

 

(c) The number of Common Shares covered by each outstanding Option and SAR;

 

(d) The Exercise Price under each outstanding Option and SAR; or

 

(e) The number of Stock Units included in any prior Award which has not yet been
settled.

 

Except as provided in this Article 11, a Participant shall have no rights by
reason of any issue by the Company of stock of any class or securities
convertible into stock of any class, any subdivision or consolidation of shares
of stock of any class, the payment of any stock dividend or any other increase
or decrease in the number of shares of stock of any class.

 

11.2 Dissolution or Liquidation. To the extent not previously exercised or
settled, Options, SARs and Stock Units shall terminate immediately prior to the
dissolution or liquidation of the Company.

 

11.3 Reorganizations. In the event that the Company is a party to a merger or
other reorganization, outstanding Awards shall be subject to the agreement of
merger or reorganization. Such agreement shall provide for (a) the continuation
of the outstanding Awards by the Company, if the Company is a surviving
corporation, (b) the assumption of the outstanding Awards by the surviving
corporation or its parent or subsidiary, (c) the substitution by the surviving
corporation or its parent or subsidiary of its own awards for the outstanding

 

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Awards, (d) full exercisability or vesting and accelerated expiration of the
outstanding Awards or (e) settlement of the full value of the outstanding Awards
in cash or cash equivalents followed by cancellation of such Awards.

 

ARTICLE 12. DEFERRAL OF AWARDS.

 

The Committee (in its sole discretion) may permit or require a Participant to:

 

(a) Have cash that otherwise would be paid to such Participant as a result of
the exercise of an SAR or the settlement of Stock Units credited to a deferred
compensation account established for such Participant by the Committee as an
entry on the Company’s books;

 

(b) Have Common Shares that otherwise would be delivered to such Participant as
a result of the exercise of an Option or SAR converted into an equal number of
Stock Units; or

 

(c) Have Common Shares that otherwise would be delivered to such Participant as
a result of the exercise of an Option or SAR or the settlement of Stock Units
converted into amounts credited to a deferred compensation account established
for such Participant by the Committee as an entry on the Company’s books. Such
amounts shall be determined by reference to the Fair Market Value of such Common
Shares as of the date when they otherwise would have been delivered to such
Participant.

 

A deferred compensation account established under this Article 12 may be
credited with interest or other forms of investment return, as determined by the
Committee. A Participant for whom such an account is established shall have no
rights other than those of a general creditor of the Company. Such an account
shall represent an unfunded and unsecured obligation of the Company and shall be
subject to the terms and conditions of the applicable agreement between such
Participant and the Company. If the deferral or conversion of Awards is
permitted or required, the Committee (in its sole discretion) may establish
rules, procedures and forms pertaining to such Awards, including (without
limitation) the settlement of deferred compensation accounts established under
this Article 12.

 

ARTICLE 13. AWARDS UNDER OTHER PLANS.

 

The Company may grant awards under other plans or programs. Such awards may be
settled in the form of Common Shares issued under this Plan. Such Common Shares
shall be treated for all purposes under the Plan like Common Shares issued in
settlement of Stock Units and shall, when issued, reduce the number of Common
Shares available under Article 3.

 

ARTICLE 14. PAYMENT OF DIRECTOR’S FEES IN SECURITIES.

 

14.1 Effective Date. No provision of this Article 14 shall be effective unless
and until the Board has determined to implement such provision.

 

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14.2 Elections to Receive NSOs, Restricted Shares or Stock Units. An Outside
Director may elect to receive his or her annual retainer payments and/or meeting
fees from the Company in the form of cash, NSOs, Restricted Shares or Stock
Units, or a combination thereof, as determined by the Board. Such NSOs,
Restricted Shares and Stock Units shall be issued under the Plan. An election
under this Article 14 shall be filed with the Company on the prescribed form.

 

14.3 Number and Terms of NSOs, Restricted Shares or Stock Units. The number of
NSOs, Restricted Shares or Stock Units to be granted to Outside Directors in
lieu of annual retainers and meeting fees that would otherwise be paid in cash
shall be calculated in a manner determined by the Board. The terms of such NSOs,
Restricted Shares or Stock Units shall also be determined by the Board.

 

ARTICLE 15. LIMITATION ON RIGHTS.

 

15.1 Retention Rights. Neither the Plan nor any Award granted under the Plan
shall be deemed to give any individual a right to remain an Employee, Outside
Director or Consultant. The Company and its Parents, Subsidiaries and Affiliates
reserve the right to terminate the service of any Employee, Outside Director or
Consultant at any time, with or without cause, subject to applicable laws, the
Company’s certificate of incorporation and by-laws and a written employment
agreement (if any).

 

15.2 Stockholders’ Rights. A Participant shall have no dividend rights, voting
rights or other rights as a stockholder with respect to any Common Shares
covered by his or her Award prior to the time when a stock certificate for such
Common Shares is issued or, if applicable, the time when he or she becomes
entitled to receive such Common Shares by filing any required notice of exercise
and paying any required Exercise Price. No adjustment shall be made for cash
dividends or other rights for which the record date is prior to such time,
except as expressly provided in the Plan.

 

15.3 Regulatory Requirements. Any other provision of the Plan notwithstanding,
the obligation of the Company to issue Common Shares under the Plan shall be
subject to all applicable laws, rules and regulations and such approval by any
regulatory body as may be required. The Company reserves the right to restrict,
in whole or in part, the delivery of Common Shares pursuant to any Award prior
to the satisfaction of all legal requirements relating to the issuance of such
Common Shares, to their registration, qualification or listing or to an
exemption from registration, qualification or listing.

 

ARTICLE 16. WITHHOLDING TAXES.

 

16.1 General. To the extent required by applicable federal, state, local or
foreign law, a Participant or his or her successor shall make arrangements
satisfactory to the Company for the satisfaction of any withholding tax
obligations that arise in connection with the Plan. The Company shall not be
required to issue any Common Shares or make any cash payment under the Plan
until such obligations are satisfied.

 

16.2 Share Withholding. The Committee may permit a Participant to satisfy all or
part of his or her withholding or income tax obligations by having the Company
withhold all or a

 

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portion of any Common Shares that otherwise would be issued to him or her or by
surrendering all or a portion of any Common Shares that he or she previously
acquired. Such Common Shares shall be valued at their Fair Market Value on the
date when taxes otherwise would be withheld in cash.

 

ARTICLE 17. FUTURE OF THE PLAN.

 

17.1 Term of the Plan. The Plan, as set forth herein, shall become effective as
of the date of the IPO. The Plan shall remain in effect until the earlier to
occur of: (a) September 5, 2011 or (b) the date it is terminated under Section
17.2.

 

17.2 Amendment or Termination. The Board may, at any time and for any reason,
amend or terminate the Plan. An amendment of the Plan shall be subject to the
approval of the Company’s stockholders only to the extent required by applicable
laws, regulations or rules. No Awards shall be granted under the Plan after the
termination thereof. The termination of the Plan, or any amendment thereof,
shall not affect any Award previously granted under the Plan. The Board amended
the Plan on November 13, 2003 to limit the term to the earlier to occur of
September 5, 2011 or the date the Plan is terminated under this Section 17.2.
The Board earlier amended the Plan on July 20, 2001, and approved by the
Company’s stockholders on September 6, 2001, to (i) increase the number of
shares available under the Plan by the number of shares remaining available for
issuance under the Predecessor Plan on or after the 2001 Annual Meeting (up to a
maximum of 2,399,653 shares), and (ii) increase the limit on the number of
shares subject to individual option or SAR grants under Articles 5.2 and 7.2
from 300,000 to 1,500,000 for grants given in the Company’s fiscal year during
which the person commences his or her service with the Company, and from 100,000
to 1,000,000 for grants in any other fiscal year of the Company.

 

ARTICLE 18. LIMITATION ON PAYMENTS.

 

18.1 Scope of Limitation. This Article 18 shall apply to an Award only if:

 

(a) The independent auditors most recently selected by the Board (the
“Auditors”) determine that the after-tax value of such Award to the Participant,
taking into account the effect of all federal, state and local income taxes,
employment taxes and excise taxes applicable to the Participant (including the
excise tax under section 4999 of the Code), will be greater after the
application of this Article 18 than it was before the application of this
Article 18; or

 

(b) The Committee, at the time of making an Award under the Plan or at any time
thereafter, specifies in writing that such Award shall be subject to this
Article 18 (regardless of the after-tax value of such Award to the Participant).

 

If this Article 18 applies to an Award, it shall supersede any contrary
provision of the Plan or of any Award granted under the Plan.

 

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18.2 Basic Rule. In the event that the Auditors determine that any payment or
transfer by the Company under the Plan to or for the benefit of a Participant (a
“Payment”) would be nondeductible by the Company for federal income tax purposes
because of the provisions concerning “excess parachute payments” in section 280G
of the Code, then the aggregate present value of all Payments shall be reduced
(but not below zero) to the Reduced Amount. For purposes of this Article 18, the
“Reduced Amount” shall be the amount, expressed as a present value, which
maximizes the aggregate present value of the Payments without causing any
Payment to be nondeductible by the Company because of section 280G of the Code.

 

18.3 Reduction of Payments. If the Auditors determine that any Payment would be
nondeductible by the Company because of section 280G of the Code, then the
Company shall promptly give the Participant notice to that effect and a copy of
the detailed calculation thereof and of the Reduced Amount, and the Participant
may then elect, in his or her sole discretion, which and how much of the
Payments shall be eliminated or reduced (as long as after such election the
aggregate present value of the Payments equals the Reduced Amount) and shall
advise the Company in writing of his or her election within 10 days of receipt
of notice. If no such election is made by the Participant within such 10-day
period, then the Company may elect which and how much of the Payments shall be
eliminated or reduced (as long as after such election the aggregate present
value of the Payments equals the Reduced Amount) and shall notify the
Participant promptly of such election. For purposes of this Article 18, present
value shall be determined in accordance with section 280G(d)(4) of the Code. All
determinations made by the Auditors under this Article 18 shall be binding upon
the Company and the Participant and shall be made within 60 days of the date
when a Payment becomes payable or transferable. As promptly as practicable
following such determination and the elections hereunder, the Company shall pay
or transfer to or for the benefit of the Participant such amounts as are then
due to him or her under the Plan and shall promptly pay or transfer to or for
the benefit of the Participant in the future such amounts as become due to him
or her under the Plan.

 

18.4 Overpayments and Underpayments. As a result of uncertainty in the
application of section 280G of the Code at the time of an initial determination
by the Auditors hereunder, it is possible that Payments will have been made by
the Company which should not have been made (an “Overpayment”) or that
additional Payments which will not have been made by the Company could have been
made (an “Underpayment”), consistent in each case with the calculation of the
Reduced Amount hereunder. In the event that the Auditors, based upon the
assertion of a deficiency by the Internal Revenue Service against the Company or
the Participant which the Auditors believe has a high probability of success,
determine that an Overpayment has been made, such Overpayment shall be treated
for all purposes as a loan to the Participant which he or she shall repay to the
Company, together with interest at the applicable federal rate provided in
section 7872(f)(2) of the Code; provided, however, that no amount shall be
payable by the Participant to the Company if and to the extent that such payment
would not reduce the amount which is subject to taxation under section 4999 of
the Code. In the event that the Auditors determine that an Underpayment has
occurred, such Underpayment shall promptly be paid or transferred by the Company
to or for the benefit of the Participant, together with interest at the
applicable federal rate provided in section 7872(f)(2) of the Code.

 

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18.5 Related Corporations. For purposes of this Article 18, the term “Company”
shall include affiliated corporations to the extent determined by the Auditors
in accordance with section 280G(d)(5) of the Code.

 

ARTICLE 19. DEFINITIONS.

 

19.1 “Affiliate” means any entity other than a Subsidiary, if the Company and/or
one or more Subsidiaries own not less than 50% of such entity.

 

19.2 “Award” means any award of an Option, an SAR, a Restricted Share or a Stock
Unit under the Plan.

 

19.3 “Board” means the Company’s Board of Directors, as constituted from time to
time.

 

19.4 “Change in Control” shall mean:

 

(a) The consummation of a merger or consolidation of the Company with or into
another entity or any other corporate reorganization, if more than 50% of the
combined voting power of the continuing or surviving entity’s securities
outstanding immediately after such merger, consolidation or other reorganization
is owned by persons who were not stockholders of the Company immediately prior
to such merger, consolidation or other reorganization;

 

(b) The sale, transfer or other disposition of all or substantially all of the
Company’s assets;

 

(c) A change in the composition of the Board, as a result of which fewer than
50% of the incumbent directors are directors who either (i) had been directors
of the Company on the date 24 months prior to the date of the event that may
constitute a Change in Control (the “original directors”) or (ii) were elected,
or nominated for election, to the Board with the affirmative votes of at least a
majority of the aggregate of the original directors who were still in office at
the time of the election or nomination and the directors whose election or
nomination was previously so approved; or

 

(d) Any transaction as a result of which any person is the “beneficial owner”
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing at least 50% of the total voting power
represented by the Company’s then outstanding voting securities. For purposes of
this Paragraph (d), the term “person” shall have the same meaning as when used
in sections 13(d) and 14(d) of the Exchange Act but shall exclude (i) a trustee
or other fiduciary holding securities under an employee benefit plan of the
Company or of a Parent or Subsidiary and (ii) a corporation owned directly or
indirectly by the stockholders of the Company in substantially the same
proportions as their ownership of the Common Shares of the Company.

 

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A transaction shall not constitute a Change in Control if its sole purpose is to
change the state of the Company’s incorporation or to create a holding company
that will be owned in substantially the same proportions by the persons who held
the Company’s securities immediately before such transaction.

 

19.5 “Code” means the Internal Revenue Code of 1986, as amended.

 

19.6 “Committee” means a committee of the Board, as described in Article 2.

 

19.7 “Common Share” means one share of the common stock of the Company.

 

19.8 “Company” means Marimba, Inc., a Delaware corporation.

 

19.9 “Consultant” means a consultant or adviser who provides bona fide services
to the Company, a Parent, a Subsidiary or an Affiliate as an independent
contractor. Service as a Consultant shall be considered employment for all
purposes of the Plan, except as provided in Section 4.1.

 

19.10 “Employee” means a common-law employee of the Company, a Parent, a
Subsidiary or an Affiliate.

 

19.11 “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

19.12 “Exercise Price,” in the case of an Option, means the amount for which one
Common Share may be purchased upon exercise of such Option, as specified in the
applicable Stock Option Agreement. “Exercise Price,” in the case of an SAR,
means an amount, as specified in the applicable SAR Agreement, which is
subtracted from the Fair Market Value of one Common Share in determining the
amount payable upon exercise of such SAR.

 

19.13 “Fair Market Value” means the market price of Common Shares, determined by
the Committee in good faith on such basis as it deems appropriate. Whenever
possible, the determination of Fair Market Value by the Committee shall be based
on the prices reported in The Wall Street Journal. Such determination shall be
conclusive and binding on all persons.

 

19.14 “IPO” means the initial offering of Common Shares to the public pursuant
to a registration statement filed by the Company with the Securities and
Exchange Commission.

 

19.15 “ISO” means an incentive stock option described in section 422(b) of the
Code.

 

19.16 “NSO” means a stock option not described in sections 422 or 423 of the
Code.

 

19.17 “Option” means an ISO or NSO granted under the Plan and entitling the
holder to purchase Common Shares.

 

19.18 “Optionee” means a person or estate who holds an Option or SAR.

 

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19.19 “Outside Director” shall mean a member of the Board who is not an
Employee. Service as an Outside Director shall be considered employment for all
purposes of the Plan, except as provided in Section 4.1.

 

19.20 “Parent” means any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company, if each of the 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. A
corporation that attains the status of a Parent on a date after the adoption of
the Plan shall be considered a Parent commencing as of such date.

 

19.21 “Participant” means a person or estate who holds an Award.

 

19.22 “Predecessor Plan” means the Company’s 1996 Stock Plan.

 

19.23 “Plan” means this Marimba, Inc. 1999 Omnibus Equity Incentive Plan, as
amended from time to time.

 

19.24 “Restricted Share” means a Common Share awarded under the Plan.

 

19.25 “Restricted Stock Agreement” means the agreement between the Company and
the recipient of a Restricted Share which contains the terms, conditions and
restrictions pertaining to such Restricted Share.

 

19.26 “SAR” means a stock appreciation right granted under the Plan.

 

19.27 “SAR Agreement” means the agreement between the Company and an Optionee
which contains the terms, conditions and restrictions pertaining to his or her
SAR.

 

19.28 “Stock Option Agreement” means the agreement between the Company and an
Optionee that contains the terms, conditions and restrictions pertaining to his
or her Option.

 

19.29 “Stock Unit” means a bookkeeping entry representing the equivalent of one
Common Share, as awarded under the Plan.

 

19.30 “Stock Unit Agreement” means the agreement between the Company and the
recipient of a Stock Unit which contains the terms, conditions and restrictions
pertaining to such Stock Unit.

 

19.31 “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. A corporation that attains the status of a
Subsidiary on a date after the adoption of the Plan shall be considered a
Subsidiary commencing as of such date.

 

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