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EXHIBIT 4.2
AlphaNet Solutions, Inc.
1995 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1. Purpose. This Non-Qualified Stock Option Plan, to be known as
the 1995 Non-Employee Director Stock Option Plan (the "Plan"), is intended to
promote the interests of AlphaNet Solutions, Inc. (the "Company") by providing
an inducement to obtain and retain the services of qualified persons who are
not employees or officers of the Company to serve as members of its Board of
Directors (the "Board"), each such person hereinafter referred to as a
"Non-Employee Director."
2. Available Shares. The total number of shares of Common Stock,
par value $.01 per share, of the Company (the "Common Stock") for which options
may be granted under the Plan shall not exceed 100,000 shares, subject to
adjustment in accordance with Section 10 of the Plan. Shares subject to the
Plan are authorized but unissued shares, or shares that were once issued and
subsequently reacquired by the Company. If any options granted under the Plan
are surrendered before exercise or lapse without exercise, in whole or in part,
the shares reserved therefor shall continue to be available under the Plan.
3. Administration. The Plan shall be administered by the Board
or by a committee appointed by the Board (the "Committee"). In the event the
Board fails to appoint or refrains from appointing a Committee, the Board shall
have all power and authority to administer the Plan. In such event, the word
"Committee" wherever used herein shall be deemed to mean the Board. The
Committee shall, subject to the provisions of the Plan, have the power to
construe the Plan, to determine all questions hereunder, and to adopt and amend
such rules and regulations for the administration of the Plan, as it may deem
desirable. No member of the Board or the Committee shall be liable for any
action or determination made in good faith with respect to the Plan or any
option granted under it.
4. Automatic Grant of Options. Subject to the availability of
shares under the Plan:
(a) each Non-Employee Director who is a member of the
Board on the effective date of the Company's initial public offering (the
"IPO") shall be automatically granted on the effective date of the IPO, without
further action by the Board, an option to purchase 20,000 shares of the Common
Stock; and
(b) each Non-Employee Director who first becomes a member
of the Board after the IPO shall be automatically granted, on the date such
person becomes a member of the Board, an option to purchase 20,000 shares of
the Common Stock.
The term "Grant Date" as used hereinafter shall mean, in the case of a
grant under Section 4(a), the effective date of the IPO, or, in the case of a
grant under Section 4(b), the date the optionee becomes a member of the Board.
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The options to be granted under this Section 4 shall be the only
options ever to be granted at any such time to such member under the Plan.
5. Option Price. The purchase price of the stock covered by an
option granted pursuant to the Plan shall be 100% of the fair market value of
such shares on the Grant Date. The option price will be subject to adjustment
in accordance with the provisions of Section 10 of the Plan. For purposes of
the Plan, "fair market value" shall be determined as of the last business day
for which the prices or quotes discussed in this sentence are available prior
to the date such option is granted and shall mean (i) the average (on that
date) of the high and low prices of the Common Stock on the principal national
securities exchange on which the Common Stock is traded, if the Common Stock is
then traded on a national securities exchange; or (ii) the last reported sale
price (on that date) of the Common Stock on the Nasdaq National Market, if the
Common Stock is not then traded on a national securities exchange; or (iii) the
closing bid price (or average of bid prices) last quoted (on that date) by an
established quotation service for over-the-counter securities, if the Common
Stock is not reported on the Nasdaq National Market. The "fair market value" of
the stock issuable upon exercise of an option granted pursuant to Section 4(a)
hereof shall be deemed to be equal to the initial public offering price per
share.
6. Period of Option. Unless sooner terminated in accordance with
the provisions of Section 8 of the Plan, an option granted hereunder shall
expire on the date which is ten (10) years after the Grant Date.
7. (a) Vesting of Shares and Non-Transferability of Options.
Options granted under the Plan shall not be exercisable until they become
vested. Options granted under the Plan shall vest in the optionee and thus
become exercisable in accordance with the following schedule, provided that the
optionee has continuously served as a member of the Board through such vesting
date, and subject also to Subsection (b) of this Section 7:
Percentage of Option Shares for which
Option Will be Exercisable Date of Vesting
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20% One year from Grant Date
40% Two years from Grant Date
60% Three years from Grant Date
80% Four years from Grant Date
100% Five years from Grant Date
The number of shares as to which options may be exercised shall be
cumulative, so that once the option shall become exercisable as to any shares
it shall continue to be exercisable as to said shares, until expiration or
termination of the option as provided in the Plan.
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(b) Notwithstanding Subsection (a) of this Section 7, if
an optionee attends less than 80% of the Board meetings (whether regular or
special) held in any fiscal year (a "Default Year"), then either (i) the
optionee shall forfeit his exercise rights with respect to the option
installment which vested on the preceding annual vesting date, in proportion to
the percentage of Board meetings actually attended by such optionee during the
Default Year; or (ii) in the event that the optionee does not own a sufficient
number of exercisable options to satisfy the forfeiture obligation described
above, the optionee shall forfeit his right to receive the next succeeding
annual installment of the option, in proportion to the percentage of Board
meetings which the optionee actually attended in the Default Year. By way of
illustration, if an optionee attends only 50% of the actual meetings of the
Board of Directors (whether regular or special) held in any fiscal year, then
the optionee shall forfeit the right to exercise 50% of the option installment
which became exercisable on the preceding annual vesting date. If, however,
the optionee had already exercised 75% of the preceding option installment, and
did not own any additional unexercised options available to satisfy the
forfeiture obligation, the optionee would forfeit the remaining 25% of the
prior installment, and would also forfeit the right to receive or exercise 25%
of the next succeeding annual option installment. Attendance at Board meetings
may be in person or via teleconference, or any manner consistent with the
Amended and Restated Bylaws of the Company.
(c) Non-transferability. Any option granted pursuant to
the Plan shall not be assignable or transferable other than by will or the laws
of descent and distribution or pursuant to a domestic relations order and shall
be exercisable during the optionee's lifetime only by him or her.
8. Termination of Option Rights.
(a) In the event that an optionee ceases to be a member
of the Board by reason of his or her death or permanent disability, any option
granted to such optionee shall be immediately and automatically accelerated and
become fully vested and all unexercised options shall be exercisable by the
optionee (or by the optionee's personal representative, heir or legatee, in the
event of death) at any time prior to the scheduled expiration date of the
option.
(b) In the event any optionee: (i) ceases to be a member
of the Board of Directors at the request of the Company; (ii) is removed
without cause; or (iii) otherwise does not stand for nomination or re-election
as a Director of the Company at the request of the Company, then any
unexercised options, to the extent not vested at the date of the applicable
event, shall immediately terminate and become void, and to the extent any such
options are vested at such date, they shall continue to be exercisable for a
period of one year from the date of the applicable event; provided, however,
that no portion of any option, vested or unvested, may be exercised if the
optionee is removed from the Board of Directors for any one of the following
reasons: (i) disloyalty, gross negligence, dishonesty or breach of fiduciary
duty to the Company; (ii) the commission of an act of embezzlement, fraud or
deliberate disregard of the rules or policies of the Company which results in
loss, damage or injury to the Company, whether directly or indirectly; (iii)
the unauthorized disclosure of any trade secret or confidential information of
the Company; (iv) the commission of an act which constitutes unfair competition
with the Company
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or which induces any customer of the Company to breach a contract with the
Company; or (v) engages in any conduct or activity on behalf of any
organization or entity which is a competitor of the Company (unless such
conduct or activity is approved by a majority of the members of the Board of
Directors).
9. Exercise of Option. Subject to the terms and conditions of
the Plan and the option agreements, an option granted hereunder shall, to the
extent then exercisable, be exercisable in whole or in part by giving written
notice to the Company by mail or in person addressed to AlphaNet Solutions,
Inc., 7 Ridgedale Avenue, Cedar Knolls, New Jersey 07927, Attention:
President, or at its then principal executive offices, stating the number of
shares with respect to which the option is being exercised, accompanied by
payment in full for such shares. Payment may be (a) in United States dollars
in cash or by check, (b) in whole or in part in shares of Common Stock of the
Company already owned by the person or persons exercising the option or shares
subject to the option being exercised (subject to such restrictions and
guidelines as the Board may adopt from time to time) valued at fair market
value determined in accordance with the provisions of Section 5, or (c)
consistent with applicable law, through the delivery of an assignment to the
Company of a sufficient amount of the proceeds from the sale of the Common
Stock acquired upon exercise of the option and an authorization to the broker
or selling agent to pay that amount to the Company, which sale shall be at the
participant's direction at the time of exercise. There shall be no such
exercise at any one time as to fewer than one hundred (100) shares or all of
the remaining shares then purchasable by the person or persons exercising the
option, if fewer than one hundred (100) shares. The Company's transfer agent
shall, on behalf of the Company, prepare a certificate or certificates
representing such shares acquired pursuant to exercise of the option, shall
register the optionee as the owner of such shares on the books of the Company
and shall cause the fully executed certificate(s) representing such shares to
be delivered to the optionee as soon as practicable after payment of the option
price in full. The holder of an option shall not have any rights of a
stockholder with respect to the shares covered by the option, except to the
extent that one or more certificates for such shares shall be delivered to him
or her upon the due exercise of the option.
10. Adjustments Upon Changes in Capitalization and Other Events.
Upon the occurrence of any of the following events, an optionee's rights with
respect to options granted to him or her hereunder shall be adjusted as
hereinafter provided:
(a) Stock Dividends and Stock Splits. If the shares of
Common Stock shall be subdivided or combined into a greater or smaller number
of shares or if the Company shall issue any shares of Common Stock as a stock
dividend on its outstanding Common Stock, the number of shares of Common Stock
deliverable upon the exercise of options shall be appropriately increased or
decreased proportionately, and appropriate adjustments shall be made in the
purchase price per share to reflect such subdivision, combination or stock
dividend.
(b) Recapitalization Adjustments. If the Company is to
be consolidated with or acquired by another entity in a merger, sale of all or
substantially all of the Company's assets or otherwise, each option granted
under the Plan which is outstanding but unvested as of the effective date of
such event shall become exercisable in full twenty (20) days prior to the
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effective date of such event. In the event of a reorganization,
recapitalization, merger, consolidation, or any other change in the corporate
structure or shares of the Company, to the extent permitted by Rule 16b-3 under
the Securities Exchange Act of 1934, as amended, adjustments shall be made in
the number and kind of shares authorized by the Plan and in the number of and
kind of shares covered by, and the option price of, outstanding options under
the Plan, in each case, as necessary to maintain the proportionate interest of
the optionee and preserve, without exceeding, the value of such option.
Notwithstanding the foregoing, no such adjustments shall be made which would,
within the meaning of any applicable provisions of the Internal Revenue Code of
1986, as amended, constitute a modification, extension or renewal of any option
or a grant of additional benefits to the holder of an option.
(c) Issuance of Securities. Except as expressly provided
herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares subject to options. No adjustments shall be made for dividends paid
in cash or in property other than securities of the Company.
(d) Adjustments. Upon the happening of any of the
foregoing events, the class and aggregate number of shares set forth in Section
2 of the Plan that are subject to options which previously have been or
subsequently may be granted under the Plan shall also be appropriately adjusted
to reflect such events. The Board shall determine the specific adjustments to
be made under this Section 10 and its determination shall be conclusive.
11. Restrictions on Issuances of Shares. Notwithstanding the
provisions of Sections 4 and 9 of the Plan, the Company shall have no
obligation to deliver any certificate or certificates upon exercise of an
option until one of the following conditions shall be satisfied:
(a) The issuance of shares with respect to which the
option has been exercised is at the time of the issue of such shares registered
under applicable Federal and state securities laws as now in force or hereafter
amended; or
(b) Counsel for the Company shall have given an opinion
that the issuance of such shares is exempt from registration under Federal and
state securities laws as now in force or hereafter amended; and that the
Company has complied with all applicable laws and regulations with respect
thereto, including without limitation, all regulations required by any stock
exchange upon which the Company's outstanding Common Stock is then listed.
12. Legend on Certificates. The certificate representing shares
issued pursuant to the exercise of an option granted hereunder shall carry such
appropriate legend, and such written instructions shall be given to the
Company's transfer agent, as may be deemed necessary or advisable by counsel to
the Company in order to comply with the requirements of the Securities Act of
1933, as amended, or any state securities laws.
13. Representation of Optionee. If requested by the Company, the
optionee shall deliver to the Company written representations and warranties
upon exercise of the option that are necessary to show compliance with Federal
and state securities laws, including
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representations and warranties to the effect that a purchase of shares under
the option is made for investment and not with a view to their distribution (as
that term is used in the Securities Act of 1933, as amended).
14. Option Agreement. Each option granted under the provisions of
the Plan shall be evidenced by an option agreement, which agreement shall be
duly executed and delivered on behalf of the Company and by the optionee to
whom such option is granted. The option agreement shall contain such terms,
provisions and conditions not inconsistent with the Plan as may be determined
by the officer executing it.
15. Termination and Amendment of Plan. The Plan shall terminate
on the earlier to occur of August 31, 2005 or at such time as all shares
reserved for issuance hereunder (including any amendments hereto) shall have
been issued. The Board may at any time terminate the Plan or make such
modification or amendment thereof as it deems advisable; provided, however,
that the Board may not, without approval by the affirmative vote of the holders
of a majority of the shares of Common Stock present in person or by proxy and
voting on such matter at a meeting, (a) increase the maximum number of shares
for which options may be granted under the Plan (except by adjustment pursuant
to Section 10), (b) materially modify the requirements as to eligibility to
participate in the Plan, (c) materially increase benefits accruing to option
holders under the Plan, or (d) amend the Plan in any manner which would cause
Rule 16b-3 under the Securities Exchange Act of 1934, as amended, to become
inapplicable to the Plan; and provided further that the provisions of the Plan
specified in Rule 16b-3(c)(2)(ii)(A) (or any successor or amended provision
thereto) under the Securities Act of 1934, as amended (including without
limitation, provisions as to eligibility, amount, price and timing of awards)
may not be amended more than once every six months, other than to comport with
changes in the Internal Revenue Code, the Employee Retirement Income Security
Act, or the rules thereunder. Termination or any modification or amendment of
the Plan shall not, without consent of a participant, affect his or her rights
under an option previously granted to him or her.
16. Withholding of Income Taxes. Upon the exercise of an option,
the Company, in accordance with Section 3402(a) of the Internal Revenue Code,
as amended, may require the optionee to pay withholding taxes in respect of
amounts considered to be compensation includible in the optionee's gross
income.
17. Compliance with Regulations. It is the Company's intent that
the Plan comply in all respects with Rule 16b-3 under the Securities Exchange
Act of 1934, as amended, and any applicable Securities and Exchange commission
interpretations thereof. If any provision of the Plan is deemed not to be in
compliance with Rule 16b-3, such provision of the Plan shall be null and void.
18. Governing Law. The validity and construction of the Plan and
the instruments evidencing options shall be governed by the laws of the State
of New Jersey, without giving effect to the principles of conflicts of law
thereof.
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19. Acceleration and Vesting of Option for Business Combinations.
Upon any merger, consolidation, sale of all (or substantially all) of the
assets of the Company, or a business combination involving the sale or transfer
of all (or substantially all) of the capital stock or assets of the Company in
which the Company is not the surviving entity, or, if it is the surviving
entity, does not survive as an operating going concern in substantially the
same line of business, then the options granted under the Plan shall,
immediately prior to the consummation of any of the foregoing events, become
fully vested and immediately exercisable by the optionee.
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