**Exhibit 10.1**

 

**CALDERA INTERNATIONAL, INC**

 

**2002 OMNIBUS STOCK INCENTIVE PLAN**

 

1.                                       Establishment and Purpose.

 

There is hereby adopted theCaldera International, Inc. 2002 Omnibus Stock Incentive Plan (the“Plan”).  The Plan shall be in additionto (but except as provided in Section 3(a) below shall not supplant or beconstrued to amend or terminate) the Caldera Systems, Inc. 1999 Omnibus StockIncentive Plan.  The Plan is intended topromote the interests of the Company and the stockholders of the Company by providingofficers, other employees of the Company, directors who are not employees ofthe Company, and other persons who are expected to make a long-termcontribution to the success of the Company with appropriate incentives andrewards to encourage them to enter into and continue in the employ of theCompany and/or to acquire a proprietary interest in the long-term success ofthe Company, thereby aligning their interest more closely to the interest ofstockholders.

 

2.                                       Definitions.

 

As used in the Plan, thefollowing definitions apply to the terms indicated below:

 

(a)                                  “Award Agreement” shall mean the writtenagreement between the Company and a Participant evidencing an Incentive Award.

 

(b)                                 “Boardof Directors” shall mean the Board of Directors of the Company.

 

(c)                                  “Cause,”when used in connection with the termination of a Participant’s employment bythe Company, shall mean (i) the willful and continued failure by theParticipant substantially to perform his duties and obligations to the Company(other than any such failure resulting from his incapacity due to physical ormental illness) or (ii) the willful engaging by the Participant in misconductthat is materially injurious to the Company. For purposes of this Section 2(c), no act, or failure to act, on aParticipant’s part shall be considered “willful” unless done, or omitted to bedone, by the Participant in bad faith and without reasonable belief that hisaction or omission was in the best interest of the Company.  The Committee shall determine whether atermination of employment is for Cause.

 

(d)                                 “Changein Control” shall mean any of the following occurrences:

 

(i)                                     any“person,” as such term is used in Sections 13(d) and 14(d) of the Exchange Act(other than the Company, any trustee or other fiduciary holding securitiesunder an employee benefit plan of the Company or any corporation owned,directly or indirectly, by the stockholders of the Company in substantially thesame proportions as their ownership of stock of the Company), is or becomes the“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directlyor indirectly, of securities of the Company representing 50% or more of thecombined voting power of the Company’s then outstanding securities;

 

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(ii)                                  duringany period of not more than two consecutive years (not including any periodprior to the adoption of the Plan), individuals who at the beginning of suchperiod constitute the Board of Directors and any new director (other than adirector designated by a person who has entered into an agreement with theCompany to effect a transaction described in clause (i), (iii) or (iv) of thisSection) whose election by the Board of Directors or nomination for electionwas approved by a vote of at least two-thirds (2/3) of the directors then stillin office who either were directors at the beginning of the period or whoseelection or nomination for election was previously so approved, cease for anyreason to constitute at least a majority thereof;

 

(iii)                               the stockholders of theCompany approve a merger or consolidation of the Company with any othercorporation, other than (A) a merger or consolidation that would result in thevoting securities of the Company outstanding immediately prior theretocontinuing to represent (either by remaining outstanding or by being convertedinto voting securities of the surviving entity) more than 50% of the combinedvoting power of the voting securities of the Company or such surviving entityoutstanding immediately after such merger or consolidation or (B) a merger orconsolidation effected to implement a recapitalization of the Company (orsimilar transaction) in which no “person” (as herein above defined) acquiresmore than 50% of the combined voting power of the Company’s then outstandingsecurities; or

 

(iv)                              thestockholders of the Company approve a plan of complete liquidation of theCompany or an agreement for the sale or disposition by the Company of all orsubstantially all of the Company’s assets.

 

(e)                                  “Code”shall mean the Internal Revenue Code of 1986, as amended from time to time.

 

(f)                                    “Committee”shall mean the Compensation Committee of the Board of Directors.  The Committee shall consist of two or morepersons each of whom is an “outside director” within the meaning ofSection 162(m) of the Code and a “Non-Employee Director” within themeaning of Rule 16b-3 under the Exchange Act (or who satisfies any othercriteria for administering employee benefit plans as may be specified by theSecurities and Exchange Commission in order for transactions under such plan tobe exempt from the provisions of Section 16(b) of the Exchange Act).

 

(g)                                 “Company”shall mean, Caldera International, Inc., a Delaware corporation.

 

(h)                                 “CommonStock” shall mean the common stock of the Company, no par value per share.

 

(i)                                     “Disability”shall mean: (1) any physical or mental condition that would qualify aParticipant for a disability benefit under the long-term disability planmaintained by the Company or a Subsidiary of the Company and applicable to suchParticipant; or (2) when used in connection with the exercise of an IncentiveStock Option following termination of employment, disability within the meaningof Section 22(e)(3) of the Code.

 

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(j)                                     “EffectiveDate” shall mean the date upon which this Plan is adopted by the Board ofDirectors.

 

(k)                                  “ExchangeAct” shall mean the Securities Exchange Act of 1934, as amended from time totime.

 

(l)                                     “ExecutiveOfficer” shall have the meaning set forth in Rule 3b-7 promulgated under theExchange Act.

 

(m)                               “ExerciseDate” shall mean the date on which a Participant may exercise an IncentiveAward.

 

(n)                                 “FairMarket Value” of a share of Common Stock, as of a date of determination, shallmean (i) the closing sales price per share of Common Stock on the nationalsecurities exchange on which such stock is principally traded for the lastpreceding date on which there was a sale of such stock on such exchange, or(ii) if the shares of Common Stock are not listed or admitted to trading on anysuch exchange, the closing price as reported by the Nasdaq Stock Market for thelast preceding date on which there was a sale of such stock on such exchange,or (iii) if the shares of Common Stock are not then listed on the Nasdaq StockMarket, the average of the highest reported bid and lowest reported askedprices for the shares of Common Stock as reported by the National Associationof Securities Dealers, Inc. Automated Quotations System for the last precedingdate on which there was a sale of such stock in such market, or (iv) if theshares of Common Stock are not then listed on a national securities exchange ortraded in an over-the-counter market, such value as determined by the Committeein good faith.

 

(o)                                 “IncentiveAward” shall mean an Option, Tandem SAR, Stand-Alone SAR, Restricted Stockgrant, Phantom Stock grant or Stock Bonus granted pursuant to the terms of thePlan.

 

(p)                                 “IncentiveStock Option” shall mean an Option that is an “incentive stock option” withinthe meaning of Section 422 of the Code.

 

(q)                                 “IssueDate” shall mean the date established by the Company on which certificatesrepresenting shares of Restricted Stock shall be issued by the Company pursuantto the terms of Section 10(e)of the Plan.

 

(r)                                    “Non-QualifiedStock Option” shall mean an Option that is not an Incentive Stock Option.

 

(s)                                  “Option”shall mean an option to purchase shares of Common Stock granted pursuant toSection 7 of the Plan.

 

(t)                                    “Participant”means any person who is both eligible to receive an Incentive Award pursuant tothe Plan (as set forth in Section 5) and to whom an Incentive Award isgranted pursuant to the Plan, and, upon his or her death, his or hersuccessors, heirs, executors and administrators, as the case may be.

 

(u)                                 “PhantomStock” shall mean the right, granted pursuant to Section 11 of the Plan,to receive in cash the Fair Market Value of a share of Common Stock.

 

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(v)                                 “Plan”shall mean this 2002 Omnibus Stock Incentive Plan, as amended from time totime.

 

(w)                               “ReferenceValue” shall mean, with respect to Stand-Alone SARs, the greater of the FairMarket Value or the value given by the Compensation Committee.

 

(x)                                   “RestrictedStock” shall mean a share of Common Stock that is granted pursuant to the termsof Section 10 hereof and that is subject to the restrictions set forth inSection 10 of the Plan.

 

(y)                                 “Rule16b-3” shall mean Rule 16b-3 promulgated under the Exchange Act.

 

(z)                                   “Section 162(m)”shall mean Section 162(m) of the Code and the regulations promulgatedthereunder.

 

(aa)                            “SecuritiesAct” shall mean the Securities Act of 1933, as amended from time to time.

 

(ab)                           “Stand-AloneSAR” shall mean a stock appreciation right granted pursuant to Section 9of the Plan that is not related to any Option.

 

(ac)                            “StockBonus” shall mean a bonus payable in shares of Common Stock granted pursuant toSection 12 of the Plan.

 

(ad)                           “Subsidiary”shall mean a “subsidiary corporation” within the meaning of Section 424(f)of the Code.

 

(ae)                            “TandemSAR” shall mean a stock appreciation right granted pursuant to Section 8of the Plan that is related to an Option.

 

(af)                              “Terminationof employment,” or words of similar import, in the Plan shall be deemed, (i)when applied to non-employee Directors, to mean “termination of service as adirector,” and (ii) when applied to employee-Directors, to mean “termination ofservice as an employee and a director.” Reference to “termination of employment,” or words of similar import, inthe Plan shall not be deemed to apply to persons who were not employees or adirector of the Company or a Subsidiary of the Company.

 

(ag)                           “VestingDate” shall mean the date established by the Committee on which an IncentiveAward may vest.

 

3.                                       StockSubject to the Plan.

 

(a)                                  Shares Available for Awards.

 

Themaximum number of shares of Common Stock reserved for issuance under the Planshall be 1,500,000 shares (subject to adjustment as provided herein).  The total number of shares reserved forissuance hereunder may be authorized but unissued Common Stock or authorizedand issued Common Stock held in the Company’s treasury or acquired by theCompany for the purposes of the Plan. The Committee may direct that any stock certificate evidencing sharesissued

 

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pursuantto the Plan shall bear a legend setting forth such restrictions ontransferability as may apply to such shares pursuant to the Plan.  The grant of a Tandem SAR shall not reducethe number of shares of Common Stock with respect to which Incentive Awards maybe granted pursuant to the Plan.  Uponthe exercise of any Tandem SAR, the related Option shall be canceled to theextent of the number of shares of Common Stock as to which the Tandem SAR isexercised and, notwithstanding the foregoing, such number of shares shall nolonger be available for Incentive Awards under the Plan.  Subject to adjustment underSection 3(c) below, the maximum number of shares of Common Stock that maybe issued under the Plan shall be increased as of November 1 each year,beginning November 1, 2003, by three percent (3%) of the total number ofshares of Common Stock that are issued and outstanding on the immediatelypreceding October 31st. This increase shall be in lieu of the increase provided for inSection 3(a) of the Caldera Systems, Inc. 1999 Omnibus Stock IncentivePlan following the increase scheduled for November 1, 2002 pursuant to theterms of that plan, and Section 3(a) of the Caldera Systems, Inc. 1999Omnibus Stock Incentive Plan is hereby amended to provide that no automaticannual increase in the number of shares of Common Stock authorized for issuanceunder that plan shall occur after November 1, 2002.  Any provision herein to the contrarynotwithstanding, the maximum number of shares of Common Stock that may issuedpursuant to Incentive Stock Options granted hereunder shall not exceed1,500,000, subject to adjustment under Section 3(c) below.

 

(b)                                 IndividualLimitation.

 

Thetotal number of shares of Common Stock subject to Incentive Awards (includingIncentive Awards payable in cash but denominated as shares of Common Stock,i.e., Stand-Alone SARs and Phantom Stock), awarded to any employee during anytax year of the Company, shall not exceed 400,000 shares.  Determinations under the preceding sentenceshall be made in a manner that is consistent with Section 162(m) of theCode.

 

(c)                                  Adjustmentfor Change in Capitalization.

 

In theevent that the Committee shall determine that any dividend or otherdistribution (whether in the form of cash, Common Stock, or other property),recapitalization, stock split, reverse stock split, reorganization, merger,consolidation, spin-off, combination, repurchase, or share exchange, or othersimilar corporate transaction or event, affects the Common Stock such that anadjustment is appropriate in order to prevent dilution or enlargement of therights of Participants under the Plan, then the Committee shall make suchequitable changes or adjustments as it deems necessary or appropriate to any orall of (i) the number and kind of shares of stock that may thereafter be issuedin connection with Incentive Awards, (ii) the number and kind of shares ofstock issued or issuable in respect of outstanding Incentive Awards, and (iii)the exercise price, grant price, or purchase price relating to any IncentiveAward; provided that, with respect to Incentive Stock Options, such adjustmentshall be made in accordance with Section 424 of the Code.

 

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(d)                                 Re-Useof Shares.

 

Thefollowing shares of Common Stock shall again become available for IncentiveAwards:  any shares subject to anIncentive Award that remain unissued upon the cancellation, surrender, exchangeor termination of such award for any reason whatsoever; any shares ofRestricted Stock forfeited; and any shares in respect of which a stockappreciation right is settled for cash.

 

4.                                       Administrationof the Plan.

 

ThePlan shall be administered by the Committee. The Committee shall have the authority in its sole discretion, subject toand not inconsistent with the express provisions of the Plan, to administer thePlan and to exercise all the powers and authorities either specifically grantedto it under the Plan or necessary or advisable in the administration of thePlan, including, without limitation, the authority to grant Incentive Awards;to determine the persons to whom and the time or times at which IncentiveAwards shall be granted; to determine the type and number of Incentive Awardsto be granted, the number of shares of Stock to which an Award may relate andthe terms, conditions, restrictions and performance criteria relating to anyIncentive Award; to determine whether, to what extent, and under whatcircumstances an Incentive Award may be settled, canceled, forfeited, exchanged,or surrendered; to subject shares of Stock to which an Award may relate torights of repurchase or rights of refusal in favor of the Company under thecircumstances and upon the terms set forth in an Award Agreement; to makeadjustments in the performance goals in recognition of unusual or non-recurringevents affecting the Company or the financial statements of the Company (to theextent in accordance with Section 162(m)of the Code, if applicable), or inresponse to changes in applicable laws, regulations, or accounting principles;to construe and interpret the Plan and any Incentive Award; to prescribe, amendand rescind rules and regulations relating to the Plan; to determine the termsand provisions of Award Agreements; and to make all other determinations deemednecessary or advisable for the administration of the Plan.

 

TheCommittee may, in its absolute discretion, without amendment to the Plan, (i)accelerate the date on which any Tandem SAR or Stand-Alone SAR or IncentiveAward relating to Phantom Stock granted under the Plan becomes exercisable,waive or amend the operation of Plan provisions respecting exercise aftertermination of employment or otherwise adjust any of the terms of such Optionor Stand-Alone SAR, and (ii) accelerate the Exercise Date or Issue Date, orwaive any condition imposed hereunder, with respect to any share of RestrictedStock or Phantom Stock or otherwise adjust any of the terms applicable to suchshare.

 

Nomember of the Committee shall be liable for any action, omission ordetermination relating to the Plan, and the Company shall indemnify and holdharmless each member of the Committee and each other director or employee ofthe Company to whom any duty or power relating to the administration orinterpretation of the Plan has been delegated against any cost or expense(including counsel fees) or liability (including any sum paid in settlement ofa claim with the approval of the Committee) arising out of any action, omissionor determination relating to the Plan, if, in either case, such action,omission or determination was taken or made by such member, director oremployee in good faith and in a manner such member, director or employeereasonably believed to be in or not opposed to the best interests of theCompany.

 

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5.                                       Eligibility.

 

Thepersons who shall be eligible to receive Incentive Awards pursuant to the Planshall be all employees and directors of the Company and its Subsidiaries andsuch other persons whom the Committee determines are expected to make acontribution to the Company; provided, however, that no Incentive Awards shallbe granted to any “officers” or “directors” of the Company or its Subsidiaries(within the meaning of the rules of Nasdaq Stock Market or any other securitiesexchange on which Company shares are traded) unless and until the shareholdersof the Company formally approve the Plan at a duly called shareholders meeting.Subject to the foregoing, the Committee may grant Incentive Awards to any, allor none of such eligible persons at any time, from time to time, during theterm of the Plan.  Nothing herein shallrequire the Company to submit the Plan to Company shareholders for theirapproval and any Incentive Awards granted to persons other than Company“officers” and “directors” shall be effective notwithstanding the absence ofshareholder approval.

 

6.                                       AwardsUnder the Plan; Award Agreement.

 

TheCommittee may grant Options, Tandem SARs, Stand-Alone SARs, shares ofRestricted Stock, shares of Phantom Stock and Stock Bonuses, in such amountsand with such terms and conditions as the Committee shall determine, subject tothe provisions of the Plan.

 

EachIncentive Award granted under the Plan (except an unconditional Stock Bonus)shall be evidenced by an Award Agreement that shall contain such provisions asthe Committee may in its sole discretion deem necessary or desirable.  By accepting an Incentive Award, aParticipant thereby agrees that the award shall be subject to all of the termsand provisions of the Plan and the applicable Award Agreement.

 

7.                                       Options.

 

(a)                                  Identificationof Options.

 

EachOption shall be clearly identified in the applicable Award Agreement as eitheran Incentive Stock Option or a Non-Qualified Stock Option.

 

(b)                                 ExercisePrice.

 

EachAward Agreement with respect to an Option shall set forth the amount (the“option exercise price”) payable by the grantee to the Company upon exercise ofthe Option.  The Option exercise priceper share shall be set by the Committee in its discretion on a case by casebasis, but in the case of an Incentive Stock Option shall not be less than theFair Market Value of a share of Common Stock on the date of grant.

 

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(c)                                  Termand Exercise of Options.

 

(1)                                  Unlessthe applicable Award Agreement provides otherwise, an Option shall becomecumulatively exercisable as to 25 percent of the shares covered thereby on eachof the first, second, third and fourth anniversaries of the date of grant.  The Committee shall determine the expirationdate of each Option; provided, however, that no Incentive Stock Option shall beexercisable more than 10 years after the date of grant.  Unless the applicable Award Agreement providesotherwise, no Option shall be exercisable prior to the first anniversary of thedate of grant.

 

(2)                                  AnOption shall be exercised by delivering notice to the Company’s principaloffice, to the attention of its Secretary, no less than one business day inadvance of the effective date of the proposed exercise.  An Option may also be exercisedelectronically by notifying the Company’s agent, pursuant to the methods thenin use by that agent.  Such notice shallspecify the number of shares of Common Stock with respect to which the Optionis being exercised and the effective date of the proposed exercise and shall besigned by the Participant or other person then having the right to exercise theOption.  Such notice may be withdrawn atany time prior to the close of business on the business day immediatelypreceding the effective date of the proposed exercise.  Payment for shares of Common Stock purchasedupon the exercise of an Option shall be made on the effective date of suchexercise by one or a combination of the following means: (i) in cash, bycertified check, bank cashier’s check or wire transfer; (ii) by delivering aproperly executed exercise notice to the Company together with a copy ofirrevocable instructions to a broker to deliver promptly to the Company theamount of sale or loan proceeds to pay the full amount of the Purchase Price,(iii) by delivering shares of Common Stock owned by the Participant for atlease six months with appropriate stock powers, or (iv) any combination of theforegoing forms.  In determining thenumber of shares of Common Stock necessary to be delivered to or retained bythe Company, such shares shall be valued at their Fair Market Value as of theexercise date.

 

(3)                                  Certificatesfor shares of Common Stock purchased upon the exercise of an Option shall beissued in the name of the Participant or other person entitled to receive suchshares, and delivered to the Participant or such other person as soon aspracticable following the effective date on which the Option is exercised.  In the event of an exercise by way ofelectronic means, no actual Certificates need be issued.

 

(d)                                 Limitationson Incentive Stock Options.

 

(1)                                  Tothe extent that the aggregate Fair Market Value of shares of Common Stock withrespect to which Incentive Stock Options are exercisable for the first time bya Participant during any calendar year under the Plan and any other stockoption plan of the Company (or any Subsidiary of the Company) shall exceed$100,000, or such higher value as may be permitted under Section 422 ofthe Code, such Options shall be treated as Non-Qualified Stock Options.  Such Fair Market Value shall be determinedas of the date on which each such Incentive Stock Option is granted.

 

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(2)                                  NoIncentive Stock Option may be granted to an individual if, at the time of thegrant, such individual owns stock possessing more than ten percent of the totalcombined voting power of all classes of stock of the Company unless (i) theexercise price per share of such Incentive Stock Option is at least 110 percentof the Fair Market Value of a share of Common Stock at the time such IncentiveStock Option is granted and (ii) such Incentive Stock Option is not exercisableafter the expiration of five years from the date such Incentive Stock Option isgranted.

 

(e)                                  Effectof Termination of Employment.

 

(1)                                  Unlessthe applicable Award Agreement provides otherwise, in the event that theemployment of a Participant with the Company or a Subsidiary of the Companyshall terminate for any reason other than death, Disability or Cause, (i)Options granted to such Participant, to the extent that they are exercisable atthe time of such termination, shall remain exercisable until the date that isninety (90) days (or 120 days in the case of a “Non-Qualified Stock Option”)after such termination, on which date they shall expire, and (ii) Optionsgranted to such Participant, to the extent that they were not exercisable atthe time of such termination, shall expire at the close of business on the dateof such termination.  Notwithstandingthe foregoing, no Option shall be exercisable after the expiration of its term.

 

(2)                                  Unlessthe applicable Award Agreement provides otherwise, in the event that theemployment of a Participant with the Company or a Subsidiary of the Companyshall terminate on account of the Disability or death of the Participant (i)Options granted to such Participant, to the extent that they were exercisableat the time of such termination, shall remain exercisable until the firstanniversary of such termination, on which date they shall expire, and (ii)Options granted to such Participant, to the extent that they were notexercisable at the time of such termination, shall expire at the close ofbusiness on the date of such termination. Notwithstanding the foregoing, no Option shall be exercisable after theexpiration of its term.

 

(3)                                  Unlessan applicable Award Agreement issued after the date hereof provides otherwise,if a Participant’s employment with the Company or a Subsidiary of the Companyis terminated for Cause, Options granted to the Participant, to the extent theyare then exercisable, shall remain exercisable for 30 days following the dateof termination of employment, on which date they shall expire.  Notwithstanding the foregoing, no Optionshall be exercisable after expiration of its term.

 

(f)                                    Effectof Change in Control.

 

Upon the occurrence of aChange in Control, (i) Options granted to a Participant, to the extent thatthey were exercisable at the time of a Change in Control, shall remainexercisable until their expiration notwithstanding the provisions ofSection 7(e)(1) and (2) of the Plan, and (ii) Options granted to suchParticipant, to the extent they were not exercisable at the time of a Change inControl, shall expire at the close of business on the date of such Change inControl.  Notwithstanding the foregoing,no Option shall be exercisable after the expiration of its term.

 

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Any vested, exercisableOptions outstanding at the time of a Change in Control shall be cashed out,converted to options of the acquiring entity, assumed by the acquiring entityor otherwise disposed of in the manner provided in any shareholder-approvedagreement or plan governing or providing for such Change in Control (“Change inControl Agreement”); provided that any such cash-out, conversion, assumption ordisposition of the Options shall not deprive the Option holder of the inherentvalue of his Options, measured solely by the excess of the Fair Market Value ofthe underlying Option shares immediately prior to the Change in Control overthe Option exercise price, without the holder’s consent.  In the absence of such governing provisionsin a Change in Control Agreement, the Committee in its sole discretion may on acase by case basis require any vested, exercisable Options that remainoutstanding upon a Change in Control to be cashed out and terminated inexchange for a lump sum cash payment, shares of the acquiring entity or acombination thereof equal in value to the fair market value of the Option,measured in the manner described above, immediately prior to the Change inControl. Any non-vested Options shall terminate upon a Change in Controlunless: (i) otherwise provided in the Change in Control Agreement or in awritten agreement , such as a severance agreement, between the Company and theParticipant; or (ii) the Committee in its sole discretion on a case by casebasis elects in writing to waive termination

 

8.                                       TandemSARs.

 

The Committee may grant inconnection with any Option granted hereunder one or more Tandem SARs relatingto a number of shares of Common Stock less than or equal to the number ofshares of Common Stock subject to the related Option.  A Tandem SAR may be granted at the same time as, or, in the caseof a Non-Qualified Stock Option, subsequent to the time that, its relatedOption is granted.

 

(a)                                  BenefitUpon Exercise.

 

Theexercise of a Tandem SAR with respect to any number of shares of Common Stockshall entitle the Participant to a cash payment, for each such share, equal tothe excess of (i) the Fair Market Value of a share of Common Stock on theexercise date over (ii) the option exercise price per share of the relatedOption.  Such payment shall be made assoon as practicable after the effective date of such exercise.

 

(b)                                 Termand Exercise of Tandem SAR.

 

(1)                                  ATandem SAR shall be exercisable only if and to the extent that its relatedOption is exercisable.

 

(2)                                  Theexercise of a Tandem SAR with respect to a number of shares of Common Stockshall cause the immediate and automatic cancellation of its related Option withrespect to an equal number of shares. The exercise of an Option, or the cancellation, termination or expirationof an Option (other than pursuant to this Section 8(b)(2)), with respectto a number of shares of Common Stock shall cause the automatic and immediatecancellation of any related

 

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TandemSARs to the extent that the number of shares of Common Stock remaining subjectto such Option is less than the number of shares then subject to such TandemSAR.  Such Tandem SARs shall be canceledin the order in which they become exercisable.

 

(3)                                  NoTandem SAR shall be assignable or transferable otherwise than together with itsrelated Option, and any such transfer or assignment will be subject to theprovisions of Section 20 of the Plan.

 

(4)                                  ATandem SAR shall be exercisable by delivering notice to the Company’s principaloffice, to the attention of its Secretary, no less than one business day inadvance of the effective date of the proposed exercise.  A Tandem SAR may also be exercisedelectronically by notifying the Company’s agent, pursuant to the methods thenin use by that agent.  Such notice shallspecify the number of shares of Common Stock with respect to which the TandemSAR is being exercised and the effective date of the proposed exercise andshall be signed by the Participant or other person then having the right toexercise the Option to which the Tandem SAR is related.  Such notice may be withdrawn at any timeprior to the close of business on the business day immediately preceding theeffective date of the proposed exercise.

 

9.                                       Stand-AloneSARs.

 

(a)                                  BenefitUpon Exercise.

 

Theexercise of a Stand-Alone SAR with respect to any number of shares of CommonStock shall entitle the Participant to a cash payment, for each such share,equal to the excess of (i) the Fair Market Value of a share of Common Stock onthe exercise date over (ii) the Reference Value of the Stand-Alone SAR.  Such payments shall be made as soon aspracticable after the effective date of such exercise.

 

(b)                                 Termand Exercise of Stand-Alone SARs.

 

(1)                                  Unlessthe applicable Award Agreement provides otherwise, a Stand-Alone SAR shallbecome cumulatively exercisable as to 25 percent of the shares covered therebyon each of the first, second, third and fourth anniversaries of the date ofgrant.  The Committee shall determinethe expiration date of each Stand-Alone SAR. Unless the applicable Award Agreement provides otherwise, no Stand-AloneSAR shall be exercisable prior to the first anniversary of the date of grant.

 

(2)                                  AStand-Alone SAR shall be exercised by delivering notice to the Company’sprincipal office, to the attention of its Secretary, no less than one businessday in advance of the effective date of the proposed exercise.  A Stand-Alone SAR may also be exercisedelectronically by notifying the Company’s agent, pursuant to the methods thenin use by that agent.  Such notice shallspecify the number of shares of Common Stock with respect to which theStand-Alone SAR is being exercised, and the effective date of the proposedexercise, and shall be signed by the Participant.  The Participant may withdraw such notice at any time prior to theclose of business on the business day immediately preceding the effective dateof the proposed exercise.

 

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(c)                                  Effectof Termination of Employment.

 

Theprovisions set forth in Section 7(e) with respect to the exercise ofOptions following termination of employment shall apply as well to the exerciseof Stand-Alone SARs.

 

(d)                                 Effectof Change in Control.

 

Upon the occurrence of aChange in Control, (i) Stand-Alone SARs granted under the Plan, to the extentexercisable at the time of a Change of Control, shall remain exercisable untiltheir expiration notwithstanding the provisions of Section 7(e) of thePlan that are incorporated into this Section 9, and (ii) Stand-Alone SARsnot exercisable at the time of a Change in Control shall expire at the close ofbusiness on the date of such Change in Control.  Any vested, exercisable Non-Tandem SARs shall, upon a Change inControl, be cashed out, converted, assumed or otherwise disposed of in the samemanner as applies to Options under Section 7(f).

 

10.                                 RestrictedStock.

 

(a)                                  IssueDate and Vesting Date.

 

At thetime of the grant of shares of Restricted Stock, the Committee shall establishan Issue Date or Issue Dates and a Vesting Date or Vesting Dates with respectto such shares.  The Committee maydivide such shares into classes and assign a different Issue Date and/orVesting Date for each class.  If thegrantee is employed by the Company or a Subsidiary of the Company on an IssueDate (which may be the date of grant), the specified number of shares ofRestricted Stock shall be issued in accordance with the provisions ofSection 10(e) of the Plan. Provided that all conditions to the vesting of a share of RestrictedStock imposed pursuant to Section 10(b) of the plan are satisfied, andexcept as provided in Section 10(g) of the Plan, upon the occurrence ofthe Vesting Date with respect to a share of Restricted Stock, such share shallvest and the restrictions of Section 10(c) of the Plan shall lapse.

 

(b)                                 Conditionsto Vesting.

 

At thetime of the grant of shares of Restricted Stock, the Committee may impose suchrestrictions or conditions to the vesting of such shares as it, in its absolutediscretion, deems appropriate.

 

(c)                                  Restrictionson Transfer Prior to Vesting.

 

Priorto the vesting of a share of Restricted Stock, no transfer of a Participant’srights with respect to such share, whether voluntary or involuntary, byoperation of law or otherwise, shall be permitted.  Immediately upon any attempt to transfer such rights, such share,and all of the rights related thereto, shall be forfeited by the Participant.

 

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(d)                                 Dividendson Restricted Stock.

 

TheCommittee in its discretion may require that any dividends paid on shares ofRestricted Stock shall be held in escrow until all restrictions on such shareshave lapsed.

 

(e)                                  Issuanceof Certificates.

 

(1)                                  Reasonablypromptly after the Issue Date with respect to shares of Restricted Stock, theCompany shall cause to be issued a stock certificate, registered in the name ofthe Participant to whom such shares were granted, evidencing such shares;provided, that the Company shall not cause such a stock certificate to beissued unless it has received a stock power duly endorsed in blank with respectto such shares.  Each such stockcertificate shall bear the following legend: The transferability of thiscertificate and the shares of stock represented hereby are subject to therestrictions, terms and conditions (including forfeiture provisions andrestrictions against transfer) contained in the 2002 Omnibus Stock IncentivePlan of Caldera International, Inc. and an Award Agreement entered into betweenthe registered owner of such shares and Caldera Systems, Inc.  A copy of such Plan and Award Agreement ison file in the office of the Secretary of Caldera International, Inc., 320South 520 West, Suite 100, Lindon,  Utah84042.  Such legend shall not be removeduntil such shares vest pursuant to the terms of the applicable Award Agreement.

 

(2)                                  Eachcertificate issued pursuant to this Section 10(e), together with the stockpowers relating to the shares of Restricted Stock evidenced by suchcertificate, shall be held by the Company unless the Committee determines otherwise.

 

(f)                                    Consequencesof Vesting.

 

Uponthe vesting of a share of Restricted Stock pursuant to the terms of theapplicable Award Agreement, the restrictions of Section 10(c) of the Planshall lapse, except as otherwise provided in the Award Agreement.  Reasonably promptly after a share ofRestricted Stock vests, the Company shall cause to be delivered to theParticipant to whom such shares were granted, a certificate evidencing suchshare, free of the legend set forth in Section 10(e) of the Plan.

 

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(g)                                 Effectof Termination of Employment.

 

(1)                                  Subjectto such other provision as the Committee may set forth in the applicable AwardAgreement, and to the Committee’s amendment authority pursuant to Section 4of the Plan, upon the termination of a Participant’s employment by the Companyor any Subsidiary of the Company for any reason other than Cause, any and allshares to which restrictions on transferability apply shall be immediatelyforfeited by the Participant and transferred to the Company, provided that ifthe Committee, in its sole discretion and within thirty (30) days after suchtermination of employment notifies the Participant in writing of its decisionnot to terminate the Participant’s rights in such shares, then the Participantshall continue to be the owner of such shares subject to such continuingrestrictions as the Committee may prescribe in such notice.  If shares of Restricted Stock are forfeitedin accordance with the provision of this Section 10, the Company shallalso have the right to require the return of all dividends paid on such shares,whether by termination of any escrow arrangement under which such dividends areheld or otherwise.

 

(2)                                  Inthe event of the termination of a Participant’s employment for Cause, allshares of Restricted Stock granted to such Participant that have not vested asof the date of such termination shall immediately be returned to the Company,together with any dividends paid on such shares.

 

(h)                                 Effectof Change in Control.

 

Uponthe occurrence of a Change in Control, all restrictions on outstanding vestedshares shall immediately lapse and all outstanding shares of Restricted Stockthat have not theretofore vested shall immediately expire and be cancelled.

 

(i)                                     SpecialProvisions Regarding Restricted Stock Awards.

 

The Committee maydesignate on a case-by-case basis whether Restricted Stock Awards are intendedto be “performance based compensation” within the meaning of CodeSection 162(m).  The grant of RestrictedStock so designated shall be based on the attainment by the Company (or aSubsidiary or division of the Company if applicable) of performance goalspre-established by the Committee, based on one or more of the followingcriteria:  (i) the attainment of aspecified percentage return on total stockholder equity of the Company; (ii)the attainment of a specified percentage increase in earnings per share ofCommon Stock; (iii) the attainment of a specified percentage increase in netincome of the Company; and (iv) the attainment of a specified percentageincrease in profit before taxation of the Company (or a Subsidiary or divisionof the Company if applicable). Attainment of any such performance criteria shall be determined inaccordance with generally accepted accounting principles as in effect from timeto time.  Such shares shall be releasedfrom restrictions only after the attainment of such performance measures havebeen certified by the Committee.

 

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11.                                 PhantomStock.

 

(a)                                  VestingDate.

 

At thetime of the grant of shares of Phantom Stock, the Committee shall establish aVesting Date or Vesting Dates with respect to such shares.  The Committee may divide such shares intoclasses and assign a different Vesting Date for each class.  Provided that all conditions to the vestingof a share of Phantom Stock imposed pursuant to Section 11(c) of the Planare satisfied, and except as provided in Section 11(d) of the Plan, uponthe occurrence of the Vesting Date with respect to a share of Phantom Stock,such share shall vest.

 

(b)                                 BenefitUpon Vesting.

 

Uponthe vesting of a share of Phantom Stock, the Participant shall be entitled toreceive in cash, within 30 days of the date on which such share vests, an amountequal to the sum of (i) the Fair Market Value of a share of Common Stock on thedate on which such share of Phantom Stock vests and (ii) the aggregate amountof cash dividends paid with respect to a share of Common Stock during theperiod commencing on the date on which the share of Phantom Stock was grantedand terminating on the date on which such share vests.

 

(c)                                  Conditionsto Vesting.

 

At thetime of the grant of shares of Phantom Stock, the Committee may impose suchrestrictions or conditions to the vesting of such shares as it, in its absolutediscretion, deems appropriate.

 

(d)                                 Effectof Termination of Employment.

 

(1)                                  Subjectto such other provisions as the Committee may set forth in the applicable AwardAgreement, and to the Committee’s amendment authority pursuant toSection 4 of the Plan, shares of Phantom Stock that have not vested,together with any dividends credited on such shares, shall be forfeited uponthe Participant’s termination of employment for any reason other than Cause.

 

(2)                                  Inthe event of the termination of a Participant’s employment for Cause, allshares of Phantom Stock granted to such Participant that have not vested as ofthe date of such termination shall immediately be forfeited, together with anydividends credited on such shares.

 

(e)                                  Effectof Change in Control.

 

Uponthe occurrence of a Change in Control, all outstanding shares of Phantom Stockthat have not theretofore vested shall immediately expire and be cancelled.

 

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(f)                                    SpecialProvisions Regarding Phantom Stock Awards.

 

TheCommittee may designate on a case by case basis whether Phantom Stock Awardsare intended to be “performance based compensation” within the meaning of CodeSection162 (m).  The grant of PhantomStock so designated shall be based on the attainment by the Company (or aSubsidiary or division of the Company if applicable) of performance goalspre-established by the Committee, based on one or more of the followingcriteria:  (i) the attainment of aspecified percentage return on total stockholder equity of the Company; (ii)the attainment of a specified percentage increase in earnings per share ofCommon Stock; (iii) the attainment of a specified percentage increase in netincome of the Company; and (iv) the attainment of a specified percentageincrease in profit before taxation of the Company (or a Subsidiary or divisionof the Company if applicable). Attainment of any such performance criteria shall be determined inaccordance with generally accepted accounting principles as in effect from timeto time.  Such shares shall be releasedfrom restrictions only after the attainment of such performance measures havebeen certified by the Committee.

 

12.                                 StockBonuses.

 

In the event that theCommittee grants a Stock Bonus, a certificate for the shares of Common Stockcomprising such Stock Bonus shall be issued in the name of the Participant towhom such grant was made and delivered to such Participant as soon aspracticable after the date on which such Stock Bonus is payable.

 

13.                                 Rightsas a Stockholder.

 

Noperson shall have any rights as a stockholder with respect to any shares ofCommon Stock covered by or relating to any Incentive Award until the date ofissuance of a stock certificate with respect to such shares.  Except as otherwise expressly provided inSection 3(c) of the Plan, no adjustment to any Incentive Award shall bemade for dividends or other rights for which the record date occurs prior tothe date such stock certificate is issued.

 

14.                                 NoSpecial Employment Rights; No Right to Incentive Award.

 

Nothing contained in thePlan or any Award Agreement shall confer upon any Participant any right withrespect to the continuation of employment by the Company or any Subsidiary ofthe Company or interfere in any way with the right of the Company or anySubsidiary of the Company, subject to the terms of any separate employmentagreement to the contrary, at any time to terminate such employment or toincrease or decrease the compensation of the Participant.  No person shall have any claim or right toreceive an Incentive Award hereunder. The Committee’s granting of an Incentive Award to a Participant at anytime shall neither require the Committee to grant any other Incentive Award tosuch Participant or other person at any time or preclude the Committee frommaking subsequent grants to such Participant or any other person.

 

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15.                                 SecuritiesMatters.

 

(a)                                  TheCompany shall be under no obligation to effect the registration pursuant to theSecurities Act of any interests in the Plan or any shares of Common Stock to beissued hereunder or to effect similar compliance under any state laws.  Notwithstanding anything herein to thecontrary, the Company shall not be obligated to cause to be issued or deliveredany certificates evidencing shares of Common Stock pursuant to the Plan unlessand until the Company is advised by its counsel that the issuance and deliveryof such certificates is in compliance with all applicable laws, regulations ofgovernmental authority and the requirements of any securities exchange on whichshares of Common Stock are traded.  TheCommittee may require, as a condition of the issuance and delivery ofcertificates evidencing shares of Common Stock pursuant to the terms hereof andof the applicable Award Agreement, that the recipient of such shares make suchcovenants, agreements and representations, and that such certificates bear suchlegends, as the Committee, in its sole discretion, deems necessary ordesirable.

 

(b)                                 Thetransfer of any shares of Common Stock hereunder shall be effective only atsuch time as counsel to the Company shall have determined that the issuance anddelivery of such shares is in compliance with all applicable laws, regulationsof governmental authority and the requirements of any securities exchange onwhich shares of Common Stock are traded. The Committee may, in its solediscretion, defer the effectiveness of any transfer of shares of Common Stockhereunder in order to allow the issuance of such shares to be made pursuant toregistration or an exemption from registration or other methods for complianceavailable under federal or state securities laws.  The Committee shall inform the Participant in writing of itsdecision to defer the effectiveness of a transfer.  During the period of such deferral in connection with theexercise of an Option, the Participant may, by written notice, withdraw suchexercise and obtain the refund of any amount paid with respect thereto.

 

16.                                 WithholdingTaxes.

 

Whenever cash is to be paidpursuant to an Incentive Award, the Company (or its agent) shall have the rightto deduct there from an amount sufficient to satisfy any federal, state andlocal withholding tax requirements related thereto.  Whenever shares of Common Stock are to be delivered pursuant toan Incentive Award, the Company (or its agent) shall have the right to requirethe Participant to remit to the Company in cash an amount sufficient to satisfyany federal, state and local withholding tax requirements related thereto.  With the approval of the Committee, aParticipant may satisfy the foregoing requirement by electing to have theCompany (or its agent) withhold from delivery shares of Common Stock having afair market value equal to the amount of tax to be withheld.  Such shares shall be valued at their FairMarket Value on the date on which the amount of tax to be withheld isdetermined (the “Tax Date”).  Fractionalshare amounts shall be settled in cash. Such a withholding election may be made with respect to all or anyportion of the shares to be delivered pursuant to an Incentive Award.

 

17.                                 Notificationof Election Under Section 83(b) of the Code.

 

If anyParticipant shall, in connection with the acquisition of shares of Common Stockunder the Plan, make the election permitted under Section 83(b) of theCode (i.e., an election to

 

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include in gross incomein the year of transfer the amounts specified in Section 83(b)), suchParticipant shall notify the Company of such election within 10 days of filingnotice of the election with the Internal Revenue Service, in addition to anyfiling and a notification required pursuant to regulation issued under theauthority of Code Section 83(b).

 

18.                                 NotificationUpon Disqualifying Disposition Under Section 421(b) of the Code.

 

EachAward Agreement with respect to an Incentive Stock Option shall require theParticipant to notify the Company of any disposition of shares of Common Stockissued pursuant to the exercise of such Option under the circumstancesdescribed in Section 421(b) of the Code (relating to certain disqualifyingdispositions), within 10 days of such disposition.

 

19.                                 Amendmentor Termination of the Plan.

 

The Board of Directors may,at any time, suspend or terminate the Plan or revise or amend it in any respectwhatsoever; provided, however, that stockholder approval shall be required ifand to the extent the Board of Directors determines that such approval is appropriatefor purposes of satisfying Section 162(m) or 422 of the Code or to theextent such approval is required by the rules of any stock exchange on whichthe Common Stock is listed.  Nothingherein shall restrict the Committee’s ability to exercise its discretionaryauthority pursuant to Section 4 of the Plan, which discretion may beexercised without amendment to the Plan. No action hereunder may, without the consent of a Participant, reducethe Participant’s rights under any outstanding Incentive Award.

 

20.                                 TransfersUpon Death; Non-Assignability.

 

Uponthe death of a Participant, outstanding Incentive Awards granted to suchParticipant may be exercised only by the executor or administrator of theParticipant’s estate or by a person who shall have acquired the right to suchexercise by will or by the laws of descent and distribution.  No transfer of an Incentive Award by will orthe laws of descent and distribution shall be effective to bind the Companyunless the Committee shall have been furnished with (a) written notice thereofand with a copy of the will and/or such evidence as the Committee may deemnecessary to establish the validity of the transfer and (b) an agreement by thetransferee to comply with all the terms and conditions of the Incentive Awardthat are or would have been applicable to the Participant and to be bound bythe acknowledgments made by the Participant in connection with the grant of theIncentive Award.

 

Duringa Participant’s lifetime, the Committee may permit the transfer, assignment orother encumbrance of an outstanding Option or outstanding shares of RestrictedStock unless such Option is an Incentive Stock Option and the Committee and theParticipant intend that it shall retain such status. Notwithstanding theforegoing, subject to any conditions as the Committee may prescribe, aParticipant may, upon providing written notice to the Secretary of the Company,elect to transfer any or all Options granted to such Participant pursuant tothe Plan to members of his or her immediate family, including, but not limitedto, children, grandchildren and spouse or to trusts for the benefit of suchimmediate family members or to partnerships in which such family members arethe only partners; provided, however, that no such transfer by any Participantmay be made in exchange for consideration.

 

21.                                 Expensesand Receipts.

 

The expenses of the Planshall be paid by the Company.  Anyproceeds received by the Company in connection with any Incentive Award will beused for general corporate purposes.

 

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22.                                 Failureto Comply.

 

In addition to the remediesof the Company elsewhere provided for herein, failure by a Participant (orbeneficiary or transferee) to comply with any of the terms and conditions ofthe Plan or the applicable Award Agreement, unless such failure is remedied bysuch Participant (or beneficiary or transferee) within ten days after notice ofsuch failure by the Committee, shall be grounds for the cancellation andforfeiture of such Incentive Award, in whole or in part, as the Committee, inits absolute discretion, may determine.

 

23.                                 EffectiveDate and Term of Plan.

 

The Plan became effective onthe Effective Date, but the Plan (and any grants of Incentive Awards made priorto stockholder approval of the Plan) shall be subject to the requisite approvalof the stockholders of the Company.  Inthe absence of such approval, such Incentive Awards shall be null and void.  Unless earlier terminated by the Board ofDirectors, the right to grant Incentive Awards under the Plan will terminate onthe tenth anniversary of the Effective Date. Incentive Awards outstanding at Plan termination will remain in effectaccording to their terms and the provisions of the Plan.

 

24.                                 ApplicableLaw.

 

Exceptto the extent preempted by any applicable federal law, the Plan will beconstrued and administered in accordance with the laws of the State of Utah,without reference to the principles of conflicts of law.

 

25.                                 ParticipantRights.

 

NoParticipant shall have any claim to be granted any Incentive Award under thePlan, and there is no obligation for uniformity of treatment forParticipants.  Except as providedspecifically herein, a Participant or a transferee of an Incentive Award shallhave no rights as a stockholder with respect to any shares covered by any awarduntil the date of the issuance of a Common Stock certificate to him for suchshares.

 

26.                                 Unfunded Status of Awards.

 

The Plan is intended toconstitute an “unfunded” plan for incentive and deferred compensation.  With respect to any payments not yet made toa Participant pursuant to an Incentive Award, nothing contained in the Plan orany Award Agreement shall give any such Participant any rights that are greaterthan those of a general creditor of the Company.

 

27.                                 NoFractional Shares.

 

Nofractional shares of Common Stock shall be issued or delivered pursuant to thePlan.  The Committee shall determinewhether cash, other Incentive Awards, or other property shall be issued or paidin lieu of such fractional shares or whether such fractional shares or anyrights thereto shall be forfeited or otherwise eliminated.

 

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28.                                 Beneficiary.

 

A Participant may file withthe Committee a written designation of a beneficiary on such form as may beprescribed by the Committee and may, from time to time, amend or revoke suchdesignation.  If no designatedbeneficiary survives the Participant, the executor or administrator of theParticipant’s estate shall be deemed to be the Participant’s beneficiary.

 

29.                                 Interpretation.

 

The Plan is designed andintended to comply with Rule 16b-3 promulgated under the Exchange Act and, withSection 162(m) of the Code, and all provisions hereof shall be construedin a manner to so comply.

 

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