RSA SECURITY INC/DE/
EX-10.5 AMEND & RESTATED 1998 STOCK PLAN
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<TYPE>EX-10.5
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<FILENAME>b38172rsex10-5.txt
<DESCRIPTION>EX-10.5 AMEND & RESTATED 1998 STOCK PLAN
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                                                                    EXHIBIT 10.5

                                RSA SECURITY INC.

                              AMENDED AND RESTATED
                 1998 NON-OFFICER EMPLOYEE STOCK INCENTIVE PLAN
                 ----------------------------------------------


1.   RESTATEMENT, PURPOSE

     (a) RESTATEMENT. This Amended and Restated 1998 Non-Officer Employee Stock
Incentive Plan (the "Plan") of RSA Security Inc., a Delaware corporation (the
"Company"), amends and restates the 1998 Non-Officer Employee Stock Incentive
Plan of the Company initially approved by the Company's Board of Directors on
December 9, 1998 and subsequently amended.

     (b) PURPOSE. The purpose of the Plan is to advance the interests of the
Company's stockholders by enhancing the Company's ability to attract, retain and
motivate persons who make (or are expected to make) important contributions to
the Company by providing such persons with equity ownership opportunities and
performance-based incentives and thereby better aligning the interests of such
persons with those of the Company's stockholders. Except where the context
otherwise requires, the term "Company" shall include any of the Company's
present or future subsidiary corporations as defined in Section 424(f) of the
Internal Revenue Code of 1986, as amended, and any regulations promulgated
thereunder (the "Code").

2.   ELIGIBILITY

     All of the Company's employees (and any individuals who have accepted an
offer for employment), consultants and advisors, other than those who are also
officers (within the meaning of Section 16 of the Securities Exchange Act, as
amended (the "Exchange Act"), and the rules and regulations promulgated
thereunder) or directors of the Company, are eligible to be granted options,
restricted stock awards, or other stock-based awards (each, an "Award") under
the Plan. Each person who has been granted an Award under the Plan shall be
deemed a "Participant."

3.   ADMINISTRATION, DELEGATION

     (a) ADMINISTRATION BY BOARD OF DIRECTORS. The Plan will be administered by
the Board of Directors of the Company (the "Board"). The Board shall have
authority to grant Awards and to adopt, amend and repeal such administrative
rules, guidelines and practices relating to the Plan as it shall deem advisable.
The Board may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it shall
deem expedient to carry the Plan into effect and it shall be the sole and final
judge of such expediency. All decisions by the Board shall be made in the
Board's sole discretion and shall be final and binding on all persons having or
claiming any interest in the Plan or in any Award. No director or person acting
pursuant to the authority delegated by the Board shall be liable for any action
or determination relating to or under the Plan made in good faith.


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     (b) DELEGATION TO EXECUTIVE OFFICERS. To the extent permitted by applicable
law, the Board may delegate to one or more executive officers of the Company the
power to make Awards and exercise such other powers under the Plan as the Board
may determine, provided that the Board shall fix the maximum number of shares
subject to Awards and the maximum number of shares for any one Participant to be
made by such executive officers.

     (c) APPOINTMENT OF COMMITTEES. To the extent permitted by applicable law,
the Board may delegate any or all of its powers under the Plan to one or more
committees or subcommittees of the Board (a "Committee"). All references in the
Plan to the "Board" shall mean the Board or a Committee of the Board or the
executive officer referred to in Section 3(b) to the extent that the Board's
powers or authority under the Plan have been delegated to such Committee or
executive officer.

4.   STOCK AVAILABLE FOR AWARDS

     Subject to adjustment under Section 8, Awards may be made under the Plan
for up to 4,760,959 shares of common stock, $.01 par value per share, of the
Company (the "Common Stock"). If any Award expires or is terminated, surrendered
or canceled without having been fully exercised or is forfeited in whole or in
part or results in any Common Stock not being issued, the unused Common Stock
covered by such Award shall again be available for the grant of Awards under the
Plan. Shares issued under the Plan may consist in whole or in part of authorized
but unissued shares or treasury shares.

5.   NONSTATUTORY STOCK OPTIONS

     (a) GENERAL. The Board may grant nonstatutory stock options to purchase
Common Stock (each, an "Option") and determine the number of shares of Common
Stock to be covered by each Option, the exercise price of each Option and the
conditions and limitations applicable to the exercise of each Option, including
conditions relating to applicable federal or state securities laws, as it
considers necessary or advisable. No Option granted under the Plan shall be
intended to be an "incentive stock option" as defined in Section 422 of the
Code.

     (b) EXERCISE PRICE. The Board shall establish the exercise price at the
time each Option is granted and specify it in the applicable option agreement.

     (c) DURATION OF OPTIONS. Each Option shall be exercisable at such times and
subject to such terms and conditions as the Board may specify in the applicable
option agreement; provided that Options may not be granted for a term in excess
of ten years.

     (d) EXERCISE OF OPTION. Options may be exercised by delivery to the Company
of a written notice of exercise signed by the proper person or by any other form
of notice (including electronic notice) approved by the Board together with
payment in full as specified in Section 5(e) for the number of shares for which
the Option is exercised.

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     (e) PAYMENT UPON EXERCISE. Common Stock purchased upon the exercise of an
Option granted under the Plan shall be paid for as follows:

         (1) in cash or by check, payable to the order of the Company;

         (2) except as the Board may, in its sole discretion, otherwise provide
in an option agreement, by (i) delivery of an irrevocable and unconditional
undertaking by a creditworthy broker to deliver promptly to the Company
sufficient funds to pay the exercise price or (ii) delivery by the Participant
to the Company of a copy of irrevocable and unconditional instructions to a
creditworthy broker to deliver promptly to the Company cash or a check
sufficient to pay the exercise price;

         (3) to the extent permitted by the Board, in its sole discretion, by
delivery of shares of Common Stock owned by the Participant valued at their fair
market value as determined by (or in a manner approved by) the Board in good
faith ("Fair Market Value"), provided (i) such method of payment is then
permitted under applicable law and (ii) such Common Stock was owned by the
Participant at least six months prior to such delivery;

         (4) to the extent permitted by the Board, in its sole discretion, by
(i) delivery of a promissory note of the Participant to the Company on terms
determined by the Board, or (ii) payment of such other lawful consideration as
the Board may determine; or

         (5) by any combination of the above-permitted forms of payment.

     (f) DEFERRAL. Any Participant who is a participant in a deferred
compensation plan established by the Company may elect with the permission of
the Board and in accordance with rules established by the Board to defer the
receipt of any shares of Common Stock issuable upon the exercise of an Option
provided that such election is irrevocable and made at least that number of days
prior to the exercise of the Option which shall be determined by the Board. The
Participant's account under such deferred compensation plan shall be credited
with a number of stock units equal to the number of shares so deferred.

6.   RESTRICTED STOCK

     (a) GRANTS. The Board may grant Awards entitling recipients to acquire
shares of Common Stock, subject to the right of the Company to repurchase all or
part of such shares at their issue price or other stated or formula price (or to
require forfeiture of such shares if issued at no cost) from the recipient in
the event that conditions specified by the Board in the applicable Award are not
satisfied prior to the end of the applicable restriction period or periods
established by the Board for such Award (each, a "Restricted Stock Award").

     (b) TERMS AND CONDITIONS. The Board shall determine the terms and
conditions of any such Restricted Stock Award, including the conditions for
repurchase (or forfeiture) and the issue price, if any. Any stock certificates
issued in respect of a Restricted Stock Award shall be

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registered in the name of the Participant and, unless otherwise determined by
the Board, deposited by the Participant, together with a stock power endorsed in
blank, with the Company (or its designee). At the expiration of the applicable
restriction periods, the Company (or such designee) shall deliver the
certificates no longer subject to such restrictions to the Participant or if the
Participant has died, to the beneficiary designated, in a manner determined by
the Board, by a Participant to receive amounts due or exercise rights of the
Participant in the event of the Participant's death (the "Designated
Beneficiary"). In the absence of an effective designation by a Participant,
Designated Beneficiary shall mean the Participant's estate.

7.   OTHER STOCK-BASED AWARDS

     The Board shall have the right to grant other Awards based upon the Common
Stock having such terms and conditions as the Board may determine, including the
grant of shares based upon certain conditions, the grant of securities
convertible into Common Stock and the grant of stock appreciation rights.

8.   ADJUSTMENTS FOR CHANGES IN COMMON STOCK AND CERTAIN OTHER EVENTS

     (a) CHANGES IN CAPITALIZATION. In the event of any stock split, reverse
stock split, stock dividend, recapitalization, combination of shares,
reclassification of shares, spin-off or other similar change in capitalization
or event, or any distribution to holders of Common Stock other than a normal
cash dividend, (i) the number and class of securities available under this Plan,
(ii) the number and class of securities and exercise price per share subject to
each outstanding Option, (iii) the repurchase price per share subject to each
outstanding Restricted Stock Award, and (iv) the terms of each other outstanding
Award shall be appropriately adjusted by the Company (or substituted Awards may
be made, if applicable) to the extent the Board shall determine, in good faith,
that such an adjustment (or substitution) is necessary and appropriate. If this
Section 8(a) applies and Section 8(c) also applies to any event, Section 8(c)
shall be applicable to such event, and this Section 8(a) shall not be
applicable.

     (b) LIQUIDATION OR DISSOLUTION. In the event of a proposed liquidation or
dissolution of the Company, the Board shall upon written notice to the
Participants provide that all then-unexercised Options will (i) become
exercisable in full as of a specified time at least ten business days prior to
the effective date of such liquidation or dissolution and (ii) terminate
effective upon such liquidation or dissolution, except to the extent exercised
before such effective date. The Board may specify the effect of a liquidation or
dissolution on any Restricted Stock Award or other Award granted under the Plan
at the time of the grant of such Award.

     (c) ACQUISITION EVENTS

         (1) DEFINITION. An "Acquisition Event" shall mean: (a) any merger or
consolidation of the Company with or into another entity as a result of which
the Common Stock is converted into or exchanged for the right to receive cash,
securities or other property or (b) any

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exchange of shares of the Company for cash, securities or other property
pursuant to a statutory share exchange transaction.

         (2) CONSEQUENCES OF AN ACQUISITION EVENT ON OPTIONS. Upon the
occurrence of an Acquisition Event, or the execution by the Company of any
agreement with respect to an Acquisition Event, the Board may take any one or
more of the following actions:

         (i)   provide that outstanding Options shall be assumed, or equivalent
               options shall be substituted, by the acquiring or succeeding
               corporation (or an affiliate thereof);

         (ii)  upon written notice to the Participants, provide that all then
               unexercised Options will become exercisable in full as of a
               specified time prior to the Acquisition Event and will terminate
               immediately prior to the consummation of such Acquisition Event,
               except to the extent exercised by the Participants before the
               consummation of such Acquisition Event;

         (iii) in the event of an Acquisition Event under the terms of which
               holders of Common Stock will receive upon consummation thereof a
               cash payment for each share of Common Stock surrendered pursuant
               to such Acquisition Event (the "Acquisition Price"), provide that
               all outstanding Options shall terminate upon consummation of such
               Acquisition Event and each Participant shall receive, in exchange
               therefor, a cash payment equal to the amount (if any) by which
               (A) the Acquisition Price multiplied by the number of shares of
               Common Stock subject to such outstanding Options (to the extent
               then exercisable), exceeds (B) the aggregate exercise price of
               such Options; and

         (iv)  provide that all or any outstanding Options shall become
               exercisable in full immediately prior to such event.

         (3) CONSEQUENCES OF AN ACQUISITION EVENT ON RESTRICTED STOCK AWARDS.
Upon the occurrence of an Acquisition Event, the repurchase and other rights of
the Company under each outstanding Restricted Stock Award shall inure to the
benefit of the Company's successor and shall apply to the cash, securities or
other property which the Common Stock was converted into or exchanged for
pursuant to such Acquisition Event in the same manner and to the same extent as
they applied to the Common Stock subject to such Restricted Stock Award.

         (4) CONSEQUENCES OF AN ACQUISITION EVENT ON OTHER AWARDS. The Board
shall specify the effect of an Acquisition Event on any other Award granted
under the Plan at the time of the grant of such Award.

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9.   GENERAL PROVISIONS APPLICABLE TO AWARDS

     (a) TRANSFERABILITY OF AWARDS. Except as the Board may otherwise determine
or provide in an Award, Awards shall not be sold, assigned, transferred, pledged
or otherwise encumbered by the person to whom they are granted, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution, and, during the life of the Participant, shall be exercisable only
by the Participant. References to a Participant, to the extent relevant in the
context, shall include references to authorized transferees.

     (b) DOCUMENTATION. Each Award shall be evidenced by a written instrument in
such form as the Board shall determine. Each Award may contain terms and
conditions in addition to those set forth in the Plan.

     (c) BOARD DISCRETION. Except as otherwise provided by the Plan, each Award
may be made alone or in addition or in relation to any other Award. The terms of
each Award need not be identical, and the Board need not treat Participants
uniformly.

     (d) TERMINATION OF STATUS. The Board shall determine the effect on an Award
of the disability, death, retirement, authorized leave of absence or other
change in the employment or other status of a Participant and the extent to
which, and the period during which, the Participant, the Participant's legal
representative, conservator, guardian or Designated Beneficiary may exercise
rights under the Award.

     (e) WITHHOLDING. Each Participant shall pay to the Company, or make
provision satisfactory to the Board for payment of, any taxes required by law to
be withheld in connection with Awards to such Participant no later than the date
of the event creating the tax liability. Except as the Board may otherwise
provide in an Award, when the Common Stock is registered under the Exchange Act,
Participants may, to the extent then permitted under applicable law, satisfy
such tax obligations in whole or in part by delivery of shares of Common Stock,
including shares retained from the Award creating the tax obligation, valued at
their Fair Market Value. The Company may, to the extent permitted by law, deduct
any such tax obligations from any payment of any kind otherwise due to a
Participant.

     (f) AMENDMENT OF AWARD. The Board may amend, modify or terminate any
outstanding Award, including but not limited to, substituting therefor another
Award of the same or a different type and changing the date of exercise or
realization, provided that the Participant's consent to such action shall be
required unless the Board determines that the action, taking into account any
related action, would not materially and adversely affect the Participant.
Without intending to limit the generality of the preceding sentence, the Board
may, without amending the Plan, modify Awards granted to Participants who are
foreign nationals or employed outside the United States to reorganize
differences in laws, rules, regulations or customers of such foreign
jurisdiction with respect to tax, securities, currency, employee benefits or
other matters.

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     (g) CONDITIONS ON DELIVERY OF STOCK. The Company will not be obligated to
deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules
or regulations.

     (h) ACCELERATION. The Board may at any time provide that any Options shall
become immediately exercisable in full or in part, that any Restricted Stock
Awards shall be free of restrictions in full or in part or that any other Awards
may become exercisable in full or in part or free of some or all restrictions or
conditions, or otherwise realizable in full or in part, as the case may be.

10.  MISCELLANEOUS

     (a) NO RIGHT TO EMPLOYMENT OR OTHER STATUS. No person shall have any claim
or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan, except as expressly provided in the
applicable Award.

     (b) NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed with
respect to an Award until becoming the record holder of such shares.
Notwithstanding the foregoing, in the event the Company effects a split of the
Common Stock by means of a stock dividend and the exercise price of and the
number of shares subject to such Option are adjusted as of the date of the
distribution of the dividend (rather than as of the record date for such
dividend), then an optionee who exercises an Option between the record date and
the distribution date for such stock dividend shall be entitled to receive, on
the distribution date, the stock dividend with respect to the shares of Common
Stock acquired upon such Option exercise, notwithstanding the fact that such
shares were not outstanding as of the close of business on the record date for
such stock dividend.

     (c) EFFECTIVE DATE AND TERM OF PLAN. The Plan is effective as of December
9, 1998, the date on which it was adopted by the Board (the "Effective Date").
No Awards shall be granted under the Plan after the completion of ten years from
the Effective Date, but Awards previously granted may extend beyond that date.

     (d) AMENDMENT OF PLAN. The Board may amend, suspend or terminate the Plan
or any portion thereof at any time.

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     (e) GOVERNING LAW. The provisions of the Plan and all Awards made hereunder
shall be governed by and interpreted in accordance with the laws of the State of
Delaware, without regard to any applicable conflicts of law.


                                  Adopted by the Board of Directors on
                                  December 9, 1998

                                  Amended and restated by the Board of
                                  Directors on February 8, 2000







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                                RSA SECURITY INC.


                                 AMENDMENT NO. 1
                                       TO
                              AMENDED AND RESTATED
                 1998 NON-OFFICER EMPLOYEE STOCK INCENTIVE PLAN

     The RSA Security Inc. Amended and Restated 1998 Non-Officer Employee Stock
Incentive Plan (the "Plan") is hereby amended as set forth below:

          1.  Section 4 of the Plan is hereby amended by deleting the first
              sentence thereof and substituting the following therefor:

              "Subject to adjustment under Section 8, Awards may be made under
              the Plan for up to 5,064,731 shares of common stock, $.01 par
              value per share, of the Company (the "Common Stock")."

          2.  In all other respects, the Plan shall remain in full force and
              effect.

                                      Adopted by the Board of Directors on
                                      April 12, 2000




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                                RSA SECURITY INC.


                                 AMENDMENT NO. 2
                                       TO
                              AMENDED AND RESTATED
                 1998 NON-OFFICER EMPLOYEE STOCK INCENTIVE PLAN

      The RSA Security Inc. Amended and Restated 1998 Non-Officer Employee
Stock Incentive Plan, as amended (the "Plan"), is hereby amended as set forth
below:

          1.  Section 4 of the Plan is hereby amended by deleting the first
              sentence thereof and substituting the following therefor:

              "Subject to adjustment under Section 8, Awards may be made under
              the Plan for up to 6,921,581 shares of common stock, $.01 par
              value per share, of the Company (the "Common Stock")."

          2.  In all other respects, the Plan shall remain in full force and
              effect.

                                      Adopted by the Board of Directors on
                                      May 17, 2000



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                                RSA SECURITY INC.


                                 AMENDMENT NO. 3
                                       TO
                              AMENDED AND RESTATED
                 1998 NON-OFFICER EMPLOYEE STOCK INCENTIVE PLAN

      The RSA Security Inc. Amended and Restated 1998 Non-Officer Employee
Stock Incentive Plan, as amended (the "Plan"), is hereby amended as set forth
below:

          1.  Section 4 of the Plan is hereby amended by deleting the first
              sentence thereof and substituting the following therefor:

              "Subject to adjustment under Section 8, Awards may be made under
              the Plan for up to 8,021,581 shares of common stock, $.01 par
              value per share, of the Company (the "Common Stock")."

          2.  In all other respects, the Plan shall remain in full force and
              effect.

                                      Adopted by the Board of Directors on
                                      July 12, 2000





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                                RSA SECURITY INC.


                                 AMENDMENT NO. 4
                                       TO
                              AMENDED AND RESTATED
                 1998 NON-OFFICER EMPLOYEE STOCK INCENTIVE PLAN

     The RSA Security Inc. Amended and Restated 1998 Non-Officer Employee Stock
Incentive Plan, as amended (the "Plan"), is hereby amended as set forth below:

          1.  Section 4 of the Plan is hereby amended by deleting the first
              sentence thereof and substituting the following therefor:

              "Subject to adjustment under Section 8, Awards may be made under
              the Plan for up to 8,571,581 shares of common stock, $.01 par
              value per share, of the Company (the "Common Stock")."

          2.  In all other respects, the Plan shall remain in full force and
              effect.

                                      Adopted by the Board of Directors on
                                      November 30, 2000




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                                RSA SECURITY INC.


                                 AMENDMENT NO. 5
                                       TO
                              AMENDED AND RESTATED
                 1998 NON-OFFICER EMPLOYEE STOCK INCENTIVE PLAN

     The RSA Security Inc. Amended and Restated 1998 Non-Officer Employee Stock
Incentive Plan, as amended (the "Plan"), is hereby amended as set forth below:

          1.  Section 4 of the Plan is hereby amended by deleting the first
              sentence thereof and substituting the following therefor:

              "Subject to adjustment under Section 8, Awards may be made under
              the Plan for up to 9,571,581 shares of common stock, $.01 par
              value per share, of the Company (the "Common Stock")."

          2.  In all other respects, the Plan shall remain in full force and
              effect.

                                      Adopted by the Board of Directors on
                                      January 17, 2001




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