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EXHIBIT 4.1
VOICE PROCESSING CORPORATION
1989 STOCK PLAN
1. Purpose. This 1989 Stock Plan (the "Plan") is intended to
provide incentives: (a) to the officers and other employees of Voice
Processing Corporation (the "Company"), its parent (if any) and any present or
future subsidiaries of the Company (collectively, "Related Corporations") by
providing them with opportunities to purchase stock in the Company pursuant to
options granted hereunder which qualify as "incentive stock options" under
Section 422A(b) of the Internal Revenue Code of 1986, as amended (the "Code")
("ISO" or "ISOs"); (b) to directors, officers, employees and consultants of
the Company and Related Corporations by providing them with opportunities to
purchase stock in the Company pursuant to options granted hereunder which do
not qualify as ISOs ("Non-Qualified Option" or "Non-Qualified Options"); (c)
to directors, officers, employees and consultants of the Company and Related
Corporations by providing them with awards of stock in the Company ("Awards");
and (d) to directors, officers, employees and consultants of the Company and
Related Corporations by providing them with opportunities to make direct
purchases of stock in the Company ("Purchases"). Both ISOs and Non-Qualified
Options are referred to hereafter individually as an "Option" and collectively
as "Options". Options, Awards and authorizations to make Purchases are
referred to hereafter collectively as "Stock Rights". As used herein, the
terms "parent" and "subsidiary" mean "parent corporation" and "subsidiary
corporation", respectively, as those terms are defined in Section 425 of the
Code.
2. Administration of the Plan.
A. Board or Committee Administration. The Plan shall be
administered by the Board of Directors of the Company (the "Board"). The Board
may appoint a Stock Plan Committee (the "Committee") of three or more of its
members to administer this Plan. Hereinafter, all references in this Plan to
the "Committee" shall mean the Board if no Committee has been appointed.
Subject to ratification of the grant or authorization of each Stock Right by
the Board (if so required by applicable state law), and subject to the terms of
the Plan, the Committee shall have the authority to (i) determine the employees
of the Company and Related Corporations (from among the class of employees
eligible under paragraph 3 to receive ISOs) to whom ISOs may be granted, and to
determine (from among the class of individuals and entities eligible under
paragraph 3 to receive Non-Qualified Options and Awards and to make Purchases)
to whom Non-Qualified Options, Awards and authorizations to make Purchases may
be granted; (ii) determine the time or times at which Options or Awards may be
granted or Purchases made; (iii) determine the option price of shares subject
to each Option, which price shall not be less than
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the minimum price specified in paragraph 6, and the purchase price of shares
subject to each Purchase; (iv) determine whether each Option granted shall be
an ISO or a Non-Qualified Option; (v) determine (subject to paragraph 7) the
time or times when each Option shall become exercisable and the duration of the
exercise period; (vi) determine whether restrictions such as repurchase options
are to be imposed on shares subject to Options, Awards and Purchases and the
nature of such restrictions, if any, and (vii) interpret the Plan and prescribe
and rescind rules and regulations relating to it. If the Committee determines
to issue a Non-Qualified Option, it shall take whatever actions it deems
necessary, under Section 422A of the Code and the regulations promulgated
thereunder, to ensure that such Option is not treated as an ISO. The
interpretation and construction by the Committee of any provisions of the Plan
or of any Stock Right granted under it shall be final unless otherwise
determined by the Board. The Committee may from time to time adopt such rules
and regulations for carrying out the Plan as it may deem best. 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 Stock Right granted under it.
B. Committee Actions. The Committee may select one of its
members as its chairman, and shall hold meetings at such time and places as it
may determine. Acts by a majority of the Committee, or acts reduced to or
approved in writing by a majority of the members of the Committee, shall be the
valid acts of the Committee. From time to time the Board may increase the size
of the Committee and appoint additional members thereof, remove members (with
or without cause) and appoint new members in substitution therefor, fill
vacancies however caused, or remove all members of the Committee and thereafter
directly administer the Plan.
C. Grant of Stock Rights to Board Members. Stock Rights may
be granted to members of the Board, but any such grant shall be made and
approved in accordance with paragraph 2 (D), if applicable. All grants of
Stock Rights to members of the Board shall in all other respects be made in
accordance with the provisions of this Plan applicable to other eligible
persons. Members of the Board who are either (i) eligible for Stock Rights
pursuant to the Plan or (ii) have been granted Stock Rights may vote on any
matters affecting the administration of the Plan or the grant of any Stock
Rights pursuant to the Plan, except that no such member shall act upon the
granting to himself of Stock Rights, but any such member may be counted in
determining the existence of a quorum at any meeting of the Board during which
action is taken with respect to the granting to him of Stock Rights.
D. Compliance with Federal Securities Laws. In the event the
Company registers any class of any equity security
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pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), any grant of Stock Rights to a member of the Board (made at
any time from the effective date of such registration until six months after
the termination of such registration) must be approved by a majority vote of
the other members of the Board; provided, however, that if a majority of the
Board is eligible for selection to participate in the Plan or in any other
stock option or other stock plan of the Company or any of its affiliates, or
has been so eligible at any time within the preceding year, any grant of Stock
Rights to a member of the Board must be made by, or only in accordance with the
recommendation of, the Committee or a committee consisting of three or more
persons, who may but need not be directors or employees of the Company,
appointed by the Board but having full authority to act in the matter, none of
whom is eligible to participate in this Plan or any other stock option or other
stock plan of the Company or any of its affiliates, or has been so eligible at
any time within the preceding year. The requirements imposed by the preceding
sentence shall also apply with respect to grants to officers who are not also
directors. Once appointed, such committee shall continue to serve until
otherwise directed by the Board.
3. Eligible Employees and Others. ISOs may be granted to any
employee of the Company or any Related Corporation. Those officers and
directors of the Company who are not employees may not be granted ISOs under
the Plan. Non-Qualified Options, Awards and authorizations to make Purchases
may be granted to any employee, officer or director (whether or not also an
employee) or consultant of the Company or any Related Corporation. The
Committee may take into consideration a recipient's individual circumstances in
determining whether to grant an ISO, a Non-Qualified Option, an Award or an
authorization to make a Purchase. Granting of any Stock Right to any
individual or entity shall neither entitle that individual or entity to, nor
disqualify him from, participation in any other grant of Stock Rights.
4. Stock. The stock subject to Options, Awards and Purchases shall
be authorized but unissued shares of Common Stock of the Company, par value
$.01 per share (the "Common Stock"), or shares of Common Stock reacquired by
the Company in any manner. The aggregate number of shares which may be issued
pursuant to the Plan is 1,500,000, subject to adjustment as provided in
paragraph 13. Any such shares may be issued as ISOs, Non-Qualified Options or
Awards, or to persons or entities making Purchases, so long as the number of
shares so issued does not exceed such number, as adjusted. If any Option
granted under the Plan shall expire or terminate for any reason without having
been exercised in full or shall cease for any reason to be exercisable in whole
or in part, or if the Company shall reacquire any unvested shares issued
pursuant to Awards or Purchases, the unpurchased shares subject to such Options
and any unvested shares so reacquired by the Company
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shall again be available for grants of Stock Rights under the Plan.
5. Granting of Stock Rights. Stock Rights may be granted under the
Plan at any time after December 29, 1989 and prior to December 29, 1999. The
date of grant of a Stock Right under the Plan will be the date specified by the
Committee at the time it grants the Stock Right; provided, however, that such
date shall not be prior to the date on which the Committee acts to approve the
grant. The Committee shall have the right, with the consent of the optionee,
to convert an ISO granted under the Plan to a Non-Qualified pursuant to
paragraph 16.
6. Minimum Option Price; ISO Limitations.
A. Price for Non-Qualified Options. The exercise price per
share specified in the agreement relating to each Non-Qualified Option granted
under the Plan shall in no event be less than the lesser of (i) the book value
per share of Common Stock as of the end of the fiscal year of the Company
immediately preceding the date of such grant, or (ii) fifty percent (50%) of
the fair market value per share of Common Stock on the date of such grant.
B. Price for ISOs. The exercise price per share specified in
the agreement relating to each ISO granted under the Plan shall not be less
than the fair market value per share of Common Stock on the date of such grant.
In the case of an ISO to be granted to an employee owning stock possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or any Related Corporation, the price per share specified
in the agreement relating to such ISO shall not be less than one hundred ten
percent (110%) of the fair market value per share of Common Stock on the date
of grant.
C. $100,000 Annual Limitation on ISOs. Each eligible
employee may be granted ISOs only to the extent that, in the aggregate under
this Plan and all incentive stock option plans of the Company and any Related
Corporation, such ISOs do not become exercisable for the first time by such
employee during any calendar year in a manner which would entitle the employee
to purchase more than $100,000 in fair market value (determined at the time the
ISOs were granted) of Common Stock in that year. Any options granted to an
employee in excess of such amount will be granted as Non-Qualified Options.
D. Determination of Fair Market Value. If, at the time an
Option is granted under the Plan, the Company's Common Stock is publicly
traded, "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 the date) of
the high and low prices of the Common Stock on the principal
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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 List, 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
List. However, if the Common Stock is not publicly traded at the time an
Option is granted under the Plan, "fair market value" shall be deemed to be the
fair value of the Common Stock as determined by the Committee after taking into
consideration all factors which it deems appropriate, including, without
limitation, recent sale and offer prices of the Common Stock in private
transactions negotiated at arm's length.
7. Option Duration. Subject to earlier termination as provided in
paragraphs 9 and 10, each Option shall expire on the date specified by the
Committee, but not more than (i) ten years and one day from the date of grant
in the case of Non-Qualified Options, (ii) ten years from the date of the grant
in the case of ISOs generally, and (iii) five years from the date of grant in
the case of ISOs granted to an employee owning stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or any Related Corporation. Subject to earlier terminating as provided
in paragraphs 9 and 10, the term of each ISO shall be the term set forth in the
original instrument granting such ISO, except with respect to any part of such
ISO that is converted into a Non-Qualified Option pursuant to paragraph 16.
8. Exercise of Option. Subject to the provisions of paragraphs 9
through 12, each Option granted under the Plan shall be exercisable as follows:
A. Vesting. The Option shall either be fully exercisable on
the date of grant or shall become exercisable thereafter in such installments
as the Committee may specify.
B. Full Vesting of Installments. Once an installment becomes
exercisable it shall remain exercisable until expiration or termination of the
Option, unless otherwise specified by the Committee.
C. Partial Exercise. Each Option or installment may be
exercised at any time or from time to time, in whole or in part, for up to the
total number of shares with respect to which it is then exercisable.
D. Acceleration of Vesting. The Committee shall have the
right to accelerate the date of the exercise of any installment of any Option;
provided that the Committee shall not,
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without the consent of an optionee, accelerate the exercise date of any
installment of any Option granted to any employee as an ISO (and not previously
converted into a Non-Qualified Option pursuant to paragraph 16) if such
acceleration would violate the annual vesting limitation contained in Section
422A (d) of the Code, as described in paragraph 6 (C).
9. Termination of Employment. If an ISO optionee ceases to be
employed by the Company and all Related Corporations other than by reason of
death or disability as defined in paragraph 10, no further installments of his
ISOs shall become exercisable, and his ISOs shall terminate after the passage
of 90 days from the date of termination of his employment, but in no event
later than on their specified expiration dates, except to the extent that such
ISOs (or unexercised installments thereof) have been converted into Non-
Qualified Options pursuant to paragraph 16. Employment shall be considered as
continuing uninterrupted during any bona fide leave of absence (such as those
attributable to illness, military obligations or governmental service) provided
that the period of such leave does not exceed 90 days or, if longer, any period
during which such optionee's right to reemployment is guaranteed by statute. A
bona fide leave of absence with the written approval of the Committee shall not
be considered an interruption of employment under the Plan, provided that such
written approval contractually obligates the Company or any Related Corporation
to continue the employment of the optionee after the approved period of
absence. ISOs granted under the Plan shall not be affected by any change or
employment within or among the Company and Related Corporations, so long as the
optionee continues to be an employee of the Company or any Related Corporation.
Nothing in the Plan shall be deemed to give any grantee of any Stock Right the
right to be retained in employment or other service by the Company or any
Related Corporation for any period of time.
10. Death; Disability.
A. Death. If an ISO optionee ceases to be employed by the
Company and all Related Corporations by reason of his death, any ISO of his may
be exercised, to the extent of the number of shares with respect to which he
could have exercised it on the date of his death, by his estate, personal
representative or beneficiary who has acquired the ISO by will or by the laws
of descent and distribution, at any time prior to the earlier of the specified
expiration date of the ISO or 180 days from the date of the optionee's death.
B. Disability. If an ISO optionee ceases to be employed by
the Company and all Related Corporations by reason of his disability, he shall
have the right to exercise any ISO held by him on the date of termination of
employment, to the extent of the number of shares with respect to which he
could have exercised it on that date, at any time prior to the earlier of the
specified
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expiration date of the ISO or 180 days from the date of the termination of the
optionee's employment. For the purposes of the Plan, the term "disability"
shall mean "permanent and total disability" as defined in Section 22(e) (3) of
the Code or successor statute.
11. Assignability. No Option shall be assignable or transferable by
the optionee except by will or by the laws of descent and distribution, and
during the lifetime of the optionee each Option shall be exercisable only by
him.
12. Terms and Conditions of Options. Options shall be evidenced by
instruments (which need not be identical) in such forms as the Committee may
from time to time approve. Such instruments shall conform to the terms and
conditions set forth in paragraphs 6 through 11 hereof and may contain such
other provisions as the Committee deems advisable which are not inconsistent
with the Plan, including restrictions applicable to shares of Common Stock
issuable upon exercise of Options. In granting any Non-Qualified Option, the
Committee may specify that such Non-Qualified Option shall be subject to the
restrictions set forth herein with respect to ISOs, or to such other
termination and cancellation provisions as the Committee may determine. The
Committee may from time to time confer authority and responsibility on one or
more of its own members and/or one or more officers of the Company to execute
and deliver such instruments. The proper officers of the Company are
authorized and directed to take any and all actions necessary or advisable from
time to time to carry out the terms of such instruments.
13. Adjustments. Upon the occurrence of any of the following events,
an optionee's rights with respect to Options granted to him hereunder shall be
adjusted as hereinafter provided, unless otherwise specifically provided in the
written agreement between the optionee and the Company relating to such Option:
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. Consolidations or Mergers. 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 (an "Acquisition"), the
Committee or the board of directors of any entity assuming the obligations of
the Company hereunder (the
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"Successor Board"), shall, as to outstanding Options, either (i) make
appropriate provision for the continuation of such Options by substituting on
an equitable basis for the shares then subject to such Options the
consideration payable with respect to the outstanding shares of Common Stock in
connection with the Acquisition; or (ii) upon written notice to the optionees,
provide that all Options must be exercised, to the extent then exercisable,
within a specified number of days of the date of such notice, at the end of
which period the Options shall terminate; or (iii) terminate all Options in
exchange for a cash payment equal to the excess of the fair market value of the
shares subject to such Options (to the extent then exercisable) over the
exercise price thereof.
C. Recapitalization or Reorganization. In the event of a
recapitalization or reorganization of the Company (other than a transaction
described in subparagraph B above) pursuant to which securities of the Company
or of another corporation are issued with respect to the outstanding shares of
Common Stock, an optionee upon exercising an Option shall be entitled to
receive for the purchase price paid upon such exercise the securities he would
have received if he had exercised his Option prior to such recapitalization or
reorganization.
D. Modification of ISOs. Notwithstanding the foregoing, any
adjustments made pursuant to subparagraphs A, B or C with respect to ISOs shall
be made only after the Committee, after consulting with counsel for the
Company, determines whether such adjustments would constitute a "modification"
of such ISOs (as that term is defined in Section 425 of the Code) or would
cause any adverse tax consequences for the holders of such ISOs. If the
Committee determines that such adjustments made with respect to ISOs would
constitute a modification of such ISOs, it may refrain from making such
adjustments.
E. Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, each Option will terminate
immediately prior to the consummation of such proposed action or at such other
time and subject to such other conditions as shall be determined by the
Committee.
F. Issuances 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.
G. Fractional Shares. No fractional shares shall be issued
under the Plan and the optionee shall receive from the Company cash in lieu of
such fractional shares.
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H. Adjustments. Upon the happening of any of the events
described in subparagraphs A, B or C above, the class and aggregate number of
shares set forth in paragraph 4 hereof that are subject to Stock Rights which
previously have been or subsequently may be granted under the Plan shall also
be appropriately adjusted to reflect the events described in such
subparagraphs. The Committee or the Successor Board shall determine the
specific adjustments to be made under this paragraph 13 and, subject to
paragraph 2, its determination shall be conclusive.
If any person or entity owning restricted Common Stock obtained by
exercise of a Stock Right made hereunder receives shares or securities or cash
in connection with a corporate transaction described in subparagraphs A, B or C
above as a result of owning such restricted Common Stock, such shares or
securities or cash shall be subject to all of the conditions and restrictions
applicable to the restricted Common Stock with respect to which such shares or
securities or cash were issued, unless otherwise determined by the Committee or
the Successor Board.
14. Means of Exercising Stock Rights. A Stock Right (or any part or
installment thereof) shall be exercised by giving written notice to the Company
at its principal office address. Such notice shall identify the Stock Right
being exercised and specify the number of shares as to which such Stock Right
is being exercised, accompanied by full payment of the purchase price therefor
either (a) in United States dollars in cash or by check, or (b) at the
discretion of the Committee, through delivery of shares of Common Stock having
a fair market value equal as of the date of the exercise to the cash exercise
price of the Stock Right, or (c) at the discretion of the Committee, by
delivery of the grantee's personal recourse note bearing interest payable not
less than annually at no less than 100% of the lowest applicable Federal rate,
as defined in Section 1274 (d) of the Code, or (d) at the discretion of the
Committee, by any combination of (a), (b) and (c) above. If the Committee
exercises its discretion to permit payment of the exercise price of an ISO by
means of the methods set forth in clauses (b), (c) or (d) of the preceding
sentence, such discretion shall be exercised in writing at the time of the
grant of the ISO in question. The holder of a Stock Right shall not have the
rights of a shareholder with respect to the shares covered by his Stock Right
until the date of issuance of a Stock certificate to him for such shares.
Except as expressly provided above in paragraph 13 with respect to changes in
capitalization and stock dividends, no adjustment shall be made for dividends
or similar rights for which the record date is before the date such stock
certificate is issued.
15. Term and Amendment of Plan. This Plan was adopted by the Board
on December 29, 1989, subject (with respect to the
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validation of ISOs granted under the Plan) to approval of the Plan by the
stockholders of the Company at the next Meeting of Stockholders or, in lieu
thereof, by written consent. If the approval of stockholders is not obtained
prior to December 29, 1990, any grants of ISOs under the Plan made prior to
that date will be rescinded. The Plan shall expire at the end of the day on
December 29, 1999 (except as to Options outstanding on that date). Subject to
the provisions of paragraph 5 above, Stock Rights may be granted under the Plan
prior to the date of stockholder approval of the Plan. The Board may terminate
or amend the Plan in any respect at any time, except that, without the approval
of the stockholders obtained within 12 months before or after the Board adopts
a resolution authorizing any of the following actions: (a) the total number of
shares that may be issued under the Plan may not be increased (except by
adjustment pursuant to paragraph 13); (b) the provisions of paragraph 3
regarding eligibility for grants of ISOs may not be modified; (c) the
provisions of paragraph 6(b) regarding the exercise price at which shares may
be offered pursuant to ISOs may not be modified (except by adjustment pursuant
to paragraph 13); and (d) the expiration date of the Plan may not be extended.
Except as otherwise provided in this paragraph 15, in no event may action of
the Board or stockholders alter or impair the rights of a grantee, without his
consent, under any Stock Right previously granted to him.
16. Conversion of ISOs into Non-Qualified Options; Termination of
ISOs. The Committee, at the written request of any optionee, may in its
discretion take such actions as may be necessary to convert such optionee's
ISOs (or any installments or portions of installments thereof) that have not
been exercised on the date of conversion into Non-Qualified Options at any time
prior to the expiration of such ISOs, regardless of whether the optionee is an
employee of the Company or a Related Corporation at the time of such
conversion. Such actions may include, but not be limited to, extending the
exercise period or reducing the exercise price of the appropriate installments
of such ISOs. At the time of such conversion, the Committee (with the consent
of the optionee) may impose such conditions on the exercise of the resulting
Non-Qualified Options as the Committee in its discretion may determine,
provided that such conditions shall not be inconsistent with this Plan.
Nothing in the Plan shall be deemed to give any optionee the right to have such
optionee's ISOs converted into Non-Qualified Options, and no such conversion
shall occur until and unless the Committee takes appropriate action. The
Committee, with the consent of the optionee, may also terminate any portion of
any ISO that has not been exercised at the time of such termination.
17. Application of Funds. The proceeds received by the Company from
the sale of shares pursuant to Options granted and Purchases authorized under
the Plan shall be used for general corporate purposes.
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18. Governmental Regulation. The Company's obligation to sell and
deliver shares of the Common Stock under this Plan is subject to the approval
of any governmental authority required in connection with the authorization,
issuance or sale of such shares.
19. Withholding of Additional Income Taxes. Upon the exercise of a
Non-Qualified Option, the grant of an Award, the making of a Purchase of Common
Stock for less than its fair market value, the making of a Disqualifying
Disposition (as defined in paragraph 20) or the vesting of restricted Common
Stock acquired on the exercise of a Stock Right hereunder, the Company, in
accordance with Section 3402 (a) of the Code, may require the optionee, Award
recipient or purchaser to pay additional withholding taxes in respect of the
amount that is considered compensation includible in such person's gross
income. The Committee in its discretion may condition (i) the exercise of an
Option, (ii) the grant of an Award, (iii) the making of a Purchase of Common
Stock for less than its fair market value, or (iv) the vesting of restricted
Common Stock acquired by exercising a Stock Right, on the grantee's payment of
such additional withholding taxes.
20. Notice to Company of Disqualifying Disposition. Each employee
who receives an ISO must agree to notify the Company in writing immediately
after the employee makes a Disqualifying Disposition of any Common Stock
acquired pursuant to the exercise of an ISO. A Disqualifying Disposition is
any disposition (including any sale) of such Common Stock before the later of
(a) two years after the date the employee was granted the ISO, or (b) one year
after the date the employee acquired Common Stock by exercising the ISO. If
the employee has died before such stock is sold, these holding period
requirements do not apply and no Disqualifying Disposition can occur
thereafter.
21. Governing Law; Construction. The validity and construction of
the Plan and the instruments evidencing Stock Rights shall be governed by the
laws of the Commonwealth of Massachusetts, or the laws of any jurisdiction in
which the Company or its successors in interest may be organized. In
construing this Plan, the singular shall include the plural and the masculine
gender shall include the feminine and neuter, unless the context otherwise
requires.
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