EXHIBIT 4.2
SECOND AMENDMENT
TO THE
CNS, INC. 1989 EMPLOYEE STOCK
PURCHASE PLAN
This SECOND Amendment to the CNS, Inc. 1989 Employee Stock Purchase
Plan (the "Plan") is made and adopted by CNS, Inc., a Delaware corporation, and
shall be effective as of January 1, 2001.
WHEREAS, CNS, Inc. adopted, effective as of July 1, 1989, an employee
stock purchase plan in accordance with Section 423 of the internal Revenue Code;
and
WHEREAS, CNS, Inc. (hereinafter referred as the "Company") amended the
Plan as of July 1, 1999 to extend the term of the Plan to July 1, 2009; and
WHEREAS, as of December 31, 2000, there remained 11,493 share of stock
unissued under said Plan; and
WHEREAS, the Board of Directors desires, subject to shareholder
approval, to increase the number of shares authorized under the Plan by an
additional 200,000 shares.
AMENDMENT
1. THE FIRST SENTENCE OF SECTION 4, SUBSECTION (b) SHALL BE AMENDED IN ITS
ENTIRETY TO READ AS FOLLOWS:
(b) The Plan shall be carried out in one or more Phases, each
Phase being for a period of six months, or such shorter or
longer period of time (not to exceed 27 months) as may be
determined by the Committee prior to the commencement of a
Phase.
2. SECTION 6 IS AMENDED BY ADDING A NEW PARAGRAPH TO READ IN FULL AS
FOLLOWS:
Once enrolled in the Plan, a Participant will continue to participate
in the Plan until he or she ceases to be an Eligible Employee,
withdraws from the Plan pursuant to Section 9 or reaches the end of the
Plan Phase. A Participant who withdraws from the Plan pursuant to
Section 9 may again become a Participant, if he or she is then an
Eligible Employee, on the Commencement Date of any subsequent Phase by
proceeding as provided in Section 7. A Participant whose payroll
deductions were discontinued because of Section 8(a)(iv)(A) will
automatically resume participation at the beginning of the earliest
Phase of the Plan ending in the next calendar year, if he or she is
then an Eligible Employee.
3. SECTION 8, SUBSECTION (a)(iv)(a) SHALL BE AMENDED IN ITS ENTIRETY TO
READ AS FOLLOWS:
A. Which permits his rights to purchase stock under all employee
stock purchase plans of the Company, its Subsidiaries or its
parent, if any, to accrue at a rate which exceeds the lesser
of Twenty-Five Thousand Dollars ($25,000) of the Fair Market
Value of such stock (determined at the time such option is
granted) for each calendar year in which such option is
outstanding at any time or 10,000 shares per Phase under the
Plan; or
4. SECTION 8, SUBSECTION (b)(i) SHALL BE AMENDED IN ITS ENTIRETY TO READ
AS FOLLOWS:
(i) Unless a Participant gives written notice to the Company
pursuant to Section 9 prior to the Termination Date of a
Phase, his option for the purchase of shares will be exercised
automatically for him as of Termination Date for the purchase
of the number of full shares of Company common stock which the
accumulated payroll deductions in his account at that time
will purchase at the applicable option price, but in no event
shall the number of full shares be greater than the number of
full shares to which a Participant would have been eligible to
purchase under Section 8(a)(i), and subject to the limitations
set forth in Section 10 hereof.
5. SECTION 8, SUBSECTION (b)(iii) SHALL BE AMENDED IN ITS ENTIRETY TO READ
AS FOLLOWS:
(iii) The Committee may appoint a registered broker dealer to act as
agent for the Company in holding and performing ministerial
duties in connection with the Plan, including, but not limited
to, maintaining records of stock ownership by Participants and
holding stock in its own name for the benefit of the
Participants. No trust or escrow arrangement shall be express
or implied by the exercise of such duties by the agent. A
Participant may, at any time, request of the agent that any
shares allocated to the Participant be registered in the name
of the Participant or in joint tenancy with the Participant,
in which event the agent shall issue a certificate for the
whole number of shares in the name of the Participant (and his
joint tenant, if any) and shall deliver to the Participant any
cash for fractional shares, based on the then Fair Market
Value of the shares on the date of issuance.
6. SECTION 8 IS AMENDED BY ADDING A NEW SUBPARAGRAPH (c) TO READ AS
FOLLOWS:
(c) Dividend Reinvestment.
Unless the Committee designates otherwise, and except
as provided in this section, dividends on a
Participant's shares will automatically be reinvested
in additional shares of stock of the Company. If a
Participant
desires to receive dividends in the form of cash, he
must request that a certificate for such shares be
issued in the name of the Participant by filing an
appropriate form with the Company. Any shares
purchased through the reinvestment of dividends may
be issued from the shares authorized under this Plan
or purchased on the open market, as directed by the
Committee. If the shares are purchased directly from
the Company, the purchase price shall be the Fair
Market Value of a share or the date such dividends
are paid. Otherwise, the purchase price may be an
average of shares purchased on the open market with
the aggregate amount of dividends.
7. SECTION 9 IS AMENDED BY ADDING A NEW SUBPARAGRAPH (c) TO READ AS
FOLLOWS:
(c) Notwithstanding the provisions of Section 9(a) above, if a
Participant files reports pursuant to Section 16 of the
Securities Exchange Act of 1934 (at the Commencement Date of a
Phase or becomes obligated to file such reports during a
Phase) then such a Participant's participation, including the
ability to make changes and withdrawals, in a Phase and in the
Plan shall be in accordance with Section 10b5-1 promulgated
under the Securities Exchange Act of 1934.
8. SECTION 10, SUBSECTION (a) SHALL BE AMENDED IN ITS ENTIRETY TO READ AS
FOLLOWS:
(a) The maximum number of shares of the Company's common stock to
be issued upon the exercise of options to be granted under the
Plan after December 31, 2000 shall be 211,493 representing
11,493 shares that remained unissued as of December 31, 2000
and an additional 200,000 shares which are subject to approval
by the shareholders with 12 months of Board authorization for
such shares. Such shares may, at the election of the Board of
Directors, be either shares authorized but not issued or
shares acquired in the open market by the Company. Shares
subject to the unexercised portion of any lapsed or expired
option may again be subject to option under the Plan.
9. SECTION 19, SUBSECTION (c) SHALL BE AMENDED IN ITS ENTIRETY TO READ AS
FOLLOWS:
(c) "Pay" is the regular pay for employment for each employee as
annualized for a twelve (12) month period, including salary
reduction contributions by the Participant under any plan of
the Employer pursuant to Code ss.ss. 401(k) or 125, but
exclusive of overtime, commissions, bonuses, disability
payments, shift differentials, incentives and other similar
payments, determined as of the Commencement Date of each
Phase.
10. SECTION 19 IS AMENDED BY ADDING A NEW SUBPARAGRAPH (d) TO READ AS
FOLLOWS:
(d) "Fair Market Value" of a share of stock of the Company shall
be the closing price of the stock on the applicable date or
the nearest prior business day on which trading occurred on
the exchange on which the stock is traded or on the Nasdaq
Stock Market. If the common stock is not traded on any
exchange or listed on the
Nasdaq Stock Market, the Fair Market Value of a share of
common stock of the Company shall be determined by the
Committee for each valuation date in a manner acceptable under
Section 423 of the Internal Revenue Code of 1986, as amended.
11. THE PLAN SHALL BE OTHERWISE AMENDED FOR NON-SUBSTANTIVE AND CONFORMING
CHANGES AS IS DETERMINED TO BE NECESSARY BY MANAGEMENT OF THE COMPANY.
12. EXCEPT AS OTHERWISE AMENDED ABOVE, THE PLAN SHALL REMAIN IN FULL FORCE
AND EFFECT.
IN WITNESS WHEREOF, CNS, Inc. has caused this Second Amendment to the
Plan to be executed on the date written below by its proper officer, who has
been duly authorized by its Board of Directors, has caused this Second Amendment
to be executed on the date written below.
CNS, INC.
Dated: January 18, 2001 By /s/ Daniel Cohen
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Its Chief Executive Officer
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