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EXHIBIT 4.1
ALPHA-BETA TECHNOLOGY, INC.
1997 STOCK OPTION AND GRANT PLAN
SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS
The name of the plan is the Alpha-Beta Technology, Inc. 1997 Stock
Option and Grant Plan (the "Plan"). The purpose of the Plan is to encourage and
enable the officers, employees, Independent Directors (as defined below),
consultants, advisors and other key persons of Alpha-Beta Technology, Inc. (the
"Company") and its Subsidiaries (as defined below) upon whose judgment,
initiative and efforts the Company largely depends for the successful conduct of
its business to acquire a proprietary interest in the Company. It is anticipated
that providing such persons with a direct stake in the Company's welfare will
assure a closer identification of their interests with those of the Company,
thereby stimulating their efforts on the Company's behalf and strengthening
their desire to remain with the Company.
The following terms shall be defined as set forth below:
"Act" means the Securities Exchange Act of 1934, as amended.
"Award" or "Awards," except where referring to a particular category of
grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options and outright grants of Stock under the Plan.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor Code, and related rules, regulations and interpretations.
"Committee" has the meanings specified in Section 2.
"Director Fees" are defined in Section 5(b).
"Fair Market Value" of the Stock on any given date means (i) if the
Stock is admitted to quotation on the National Association of Securities Dealers
Automated Quotation System ("NASDAQ"), the Fair Market Value on any given date
shall not be less than the average of the highest bid and lowest asked prices of
the Stock reported for such date or, if no bid and asked prices were reported
for such date, for the last day preceding such date for which such prices were
reported; or (ii) if the Stock is admitted to trading on a national securities
exchange or the NASDAQ National Market System, the Fair Market Value on any date
shall not be less than the closing price reported for the Stock on such exchange
or system for such date or, if no sales were reported for
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such date, for the last date preceding such date for which a sale was reported;
or (iii) if the Stock is not publicly traded on a securities exchange or traded
in the over-the-counter market or, if traded or quoted, there are no
transactions or quotations within the last ten trading days or trading has been
halted for extraordinary reasons, the Fair Market Value on any given date shall
be determined in good faith by the Committee with reference to the rules and
principles of valuation set forth in Section 20.2031-2 of the Treasury
Regulations.
"Incentive Stock Option" means any Stock Option designated and
qualified as an "incentive stock option" as defined in Section 422 of the Code.
"Independent Director" means a member of the Board who is not also an
employee of the Company or any Subsidiary.
"Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
"Option" or "Stock Option" means any option to purchase shares of Stock
granted pursuant to Section 5.
"Stock" means the Common Stock, par value $.01 per share, of the
Company, subject to adjustments pursuant to Section 3.
"Subsidiary" means any corporation or other entity (other than the
Company) in any unbroken chain of corporations or other entities, beginning with
the Company, if each of the corporations or entities (other than the last
corporation or entity in the unbroken chain) owns stock or other interests
possessing 50% or more of the economic interest or the total combined voting
power of all classes of stock or other interests in one of the other
corporations or entities in the chain.
SECTION 2. ADMINISTRATION OF PLAN; COMMITTEE AUTHORITY TO SELECT PARTICIPANTS
AND DETERMINE AWARDS
(a) COMMITTEE. The Plan shall be administered by the Board of
Directors of the Company, or at the discretion of the Board by a committee of
the Board of not less than two "Non-Employee Directors" within the meaning of
Rule 16b-3(b)(3)(i) under the Act, or any successor definition under said rule.
Each member of the Committee shall be an "Outside Director" within the meaning
of Section 162(m) of the Code and the regulations promulgated thereunder. All
references herein to the Committee shall be deemed to refer to the entity then
responsible for administration of this Plan at the relevant time (i.e., either
the Board of Directors or a committee of the Board, as applicable).
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(b) POWERS OF COMMITTEE. The Committee shall have the power and
authority to grant Awards consistent with the terms of the Plan, including the
power and authority:
(i) to select the officers, employees, Independent Directors,
consultants, advisors and key persons of the Company and its
Subsidiaries to whom Awards may from time to time be granted;
(ii) to determine the time or times of grant, and the extent,
if any, of Incentive Stock Options, Non-Qualified Stock Options or
Stock, or any combination of the foregoing, granted under the Plan to
any one or more participants;
(iii) to determine the number of shares of Stock to be covered
by any Award;
(iv) to determine and modify from time to time the terms and
conditions, including restrictions, not inconsistent with the terms of
the Plan, of any Award, which terms and conditions may differ among
individual Awards and participants, and to approve the form of written
instruments evidencing the Awards;
(v) to accelerate at any time the exercisability or vesting of
all or any portion of any Award and/or to include provisions in Awards
providing for such acceleration;
(vi) to impose any limitations on Awards granted under the
Plan, including limitations on transfers, repurchase provisions and the
like and to exercise repurchase rights or obligations;
(vii) subject to the provisions of Section 5(a)(ii), to extend
at any time the period in which Stock Options may be exercised;
(viii) to determine at any time whether, to what extent, and
under what circumstances Stock and other amounts payable with respect
to an Award shall be deferred either automatically or at the election
of the participant and whether and to what extent the Company shall pay
or credit amounts constituting interest (at rates determined by the
Committee) or dividends or deemed dividends on such deferrals; and
(ix) at any time to adopt, alter and repeal such rules,
guidelines and practices for administration of the Plan and for its own
acts and proceedings as it shall deem advisable; to interpret the terms
and provisions of the Plan and any
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Award (including related written instruments); to make all
determinations it deems advisable for the administration of the Plan;
to decide all disputes arising in connection with the Plan; and to
otherwise supervise the administration of the Plan.
All decisions and interpretations of the Committee shall be binding on
all persons, including the Company and Plan participants.
(c) DELEGATION OF AUTHORITY TO GRANT AWARDS. The Committee, in its
discretion, may delegate to the Chief Executive Officer of the Company all or
part of the Committee's authority and duties with respect to the granting of
Stock Options at Fair Market Value, to individuals who are not subject to the
reporting and other provisions of Section 16 of the Act or "covered employees"
within the meaning of Section 162(m) of the Code. Any such delegation by the
Committee shall include a limitation as to the amount of Stock Options that may
be granted each year. The Committee may revoke or amend the terms of a
delegation at any time but such action shall not invalidate any prior actions of
the Committee's delegate or delegates that were consistent with the terms of the
Plan.
SECTION 3. STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION
(a) STOCK ISSUABLE. The maximum number of shares of Stock reserved
and available for issuance under the Plan (whether pursuant to outright grants
or options) shall be such aggregate number of shares of Stock as does not exceed
the sum of (i) 837,165 shares; plus (ii) as of each June 30 and December 31
after December 31, 1996, an additional positive number equal to five percent
(5%) of the shares of Stock issued by the Company during that six month period;
provided, however, that the maximum number of shares of Stock for which
Incentive Stock Options may be granted under the Plan shall not exceed 837,165
shares, and the maximum number of shares of stock which may be the subject of
outright grants shall not exceed 100,000 shares. For purposes of the foregoing
limitations, the shares of Stock underlying any Awards which are forfeited,
canceled, reacquired by the Company, satisfied without the issuance of Stock or
otherwise terminated shall be added back to the shares of Stock available for
issuance under the Plan. Stock Options with respect to no more than 200,000
shares of Stock may be granted to any one individual participant during any one
calendar year period. The shares available for issuance under the Plan may be
authorized but unissued shares of Stock or shares of Stock reacquired by the
Company.
(b) RECAPITALIZATIONS. Subject to Section 3(c), if, through or as a
result of any merger, consolidation, sale of all or substantially all of the
assets of the Company, reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse stock split or other similar transaction, the
outstanding shares of Stock are increased or
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decreased or are exchanged for a different number or kind of shares or other
securities of the Company or any successor company, or additional shares or new
or different shares or other securities of the Company or any successor Company
or other non-cash assets are distributed with respect to such shares of Stock or
other securities, the Committee shall make an appropriate or proportionate
adjustment in (i) the maximum number of shares reserved for issuance under the
Plan, (ii) the number of Stock Options that can be granted to any one individual
participant, (iii) the number and kind of shares or other securities subject to
any then outstanding Awards under the Plan, and (iv) the price for each share
subject to any then outstanding Stock Options under the Plan, without changing
the aggregate exercise price (i.e., the exercise price multiplied by the number
of shares) as to which such Stock Options remain exercisable. The adjustment by
the Committee shall be final, binding and conclusive. No fractional shares of
Stock shall be issued under the Plan resulting from any such adjustment, but the
Committee in its discretion may make a cash payment in lieu of fractional
shares.
(c) MERGERS AND OTHER TRANSACTIONS. In the case of (i) the
dissolution or liquidation of the Company, (ii) a merger, reorganization or
consolidation in which a majority of the outstanding voting power of the Company
is acquired by another person or entity (other than a holding company formed by
the Company), (iii) the sale of all or substantially all of the assets of the
Company to an unrelated person or entity, or (iv) the sale of all of the Stock
of the Company to an unrelated person or entity (in each case, a "Transaction"),
the Plan and all Awards granted hereunder shall terminate upon the effectiveness
of the Transaction, unless provision is made in connection with the Transaction
for the assumption of Awards theretofore granted, or the substitution of such
Awards with new Awards of the successor entity or parent thereof, with
appropriate adjustment as to the number and kind of shares and, if appropriate,
the per share exercise prices, as provided in Section 3(b) above. In the event
of such termination, each optionee shall be permitted, within a specified period
determined by the Committee, to exercise all outstanding Options held by such
optionee whether or not otherwise exercisable during such period, subject to the
consummation of the Transaction.
(d) SUBSTITUTE AWARDS. The Committee may grant Awards under the Plan
in substitution for stock and stock based awards held by employees of another
corporation who become employees of the Company or a Subsidiary as the result of
a merger or consolidation of the employing corporation with the Company or a
Subsidiary or the acquisition by the Company or a Subsidiary of property or
stock of the employing corporation. The Committee may direct that the substitute
awards be granted on such terms and conditions as the Committee considers
appropriate in the circumstances.
SECTION 4. ELIGIBILITY
Participants in the Plan will be such full and part-time officers and
other
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employees, Independent Directors, consultants, advisors and other key persons of
the Company and its Subsidiaries who are responsible for or contribute to the
management, growth or profitability of the Company and its Subsidiaries as are
selected from time to time by the Committee, in its sole discretion.
SECTION 5. STOCK OPTIONS
Any Stock Option granted under the Plan shall be pursuant to a stock
option agreement which shall be in such form as the Committee may from time to
time approve. Option agreements need not be identical.
Stock Options granted under the Plan may be either Incentive Stock
Options or Non-Qualified Stock Options. Incentive Stock Options may be granted
only to employees of the Company or any Subsidiary that is a "subsidiary
corporation" within the meaning of Section 424(f) of the Code, including members
of the Board who are also employees of the Company or any such Subsidiary.
Non-Qualified Stock Options may be granted to officers, employees, Independent
Directors, consultants, advisors and other key persons of the Company and its
Subsidiaries. To the extent that any Option does not qualify as an Incentive
Stock Option, it shall be deemed a Non-Qualified Stock Option.
No Incentive Stock Option shall be granted under the Plan after April
23, 2007.
(a) TERMS OF STOCK OPTIONS. Stock Options granted under the Plan
shall be subject to the following terms and conditions and shall contain such
additional terms and conditions, not inconsistent with the terms of the Plan, as
the Committee shall deem desirable:
(i) EXERCISE PRICE. The exercise price per share for the Stock
covered by an Incentive Stock Option shall be determined by the
Committee at the time of grant but shall not be less than 100% of the
Fair Market Value on the date of grant. If an employee owns or is
deemed to own (by reason of the attribution rules applicable under
Section 424(d) of the Code) more than 10% of the combined voting power
of all classes of stock of the Company or any parent or subsidiary
corporation and an Incentive Stock Option is granted to such employee,
the option price of such Incentive Stock Option shall be not less than
110% of the Fair Market Value on the grant date. The purchase price per
share of Stock covered by a Non-Qualified Stock Option shall be
determined by the Committee at the time of grant and shall not be
subject to the restrictions described in the preceding two sentences.
(ii) OPTION TERM. The term of each Stock Option shall be fixed
by the Committee, but no Incentive Stock Option shall be exercisable
more than ten
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years after the date the option is granted. If an employee owns or is
deemed to own (by reason of the attribution rules of Section 424(d) of
the Code) more than 10% of the combined voting power of all classes of
stock of the Company or any parent or subsidiary corporation and an
Incentive Stock Option is granted to such employee, the term of such
option shall be no more than five years from the date of grant.
(iii) EXERCISABILITY; RIGHTS OF A STOCKHOLDER. Stock Options
shall become vested and exercisable at such time or times, whether or
not in installments, as shall be determined by the Committee at or
after the grant date; provided, however, that Stock Options granted in
lieu of cash compensation shall be exercisable in full as of the grant
date. The minimum number of shares with respect to which an option may
be exercised at any one time shall be one hundred (100) shares, or such
lesser number as is subject to exercise under the Stock Option at the
time. The Committee may at any time accelerate the exercisability of
all or any portion of any Stock Option. An optionee shall have the
rights of a stockholder only as to shares acquired upon the exercise of
a Stock Option and not as to unexercised Stock Options.
(iv) METHOD OF EXERCISE. Stock Options may be exercised in
whole or in part, by giving written notice of exercise to the Company,
specifying the number of shares to be purchased. Payment of the
purchase price may be made by one or more of the following methods:
(A) In cash, by certified or bank check or other
instrument acceptable to the Committee;
(B) In the form of shares of Stock that are not then
subject to restrictions under any Company plan and that have been
held by the optionee free of such restrictions for at least six
months, if permitted by the Committee in its discretion. Such
surrendered shares shall be valued at Fair Market Value on the
exercise date; or
(C) By the optionee delivering to the Company a properly
executed exercise notice together with irrevocable instructions
to a broker to promptly deliver to the Company cash or a check
payable and acceptable to the Company to pay the purchase price;
provided that in the event the optionee chooses to pay the
purchase price as so provided, the optionee and the broker shall
comply with such procedures and enter into such agreements of
indemnity and other agreements as the Committee shall prescribe
as a condition of such payment procedure.
Payment instruments will be received subject to collection. The
delivery of
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certificates representing the shares of Stock to be purchased pursuant
to the exercise of a Stock Option will be contingent upon receipt from
the optionee (or a purchaser acting in his or her stead in accordance
with the provisions of the Stock Option) by the Company of the full
purchase price for such shares and the fulfillment of any other
requirements contained in the Stock Option or applicable provisions of
law.
(v) TERMINATION. Stock Options shall terminate at such times
as are specified in the relevant Award.
(vi) ANNUAL LIMIT ON INCENTIVE STOCK OPTIONS. To the extent
required for "incentive stock option" treatment under Section 422 of
the Code, the aggregate Fair Market Value (determined as of the time of
grant) of the shares of Stock with respect to which Incentive Stock
Options granted under this Plan and any other plan of the Company or
its parent and subsidiary corporations become exercisable for the first
time by an optionee during any calendar year shall not exceed $100,000.
To the extent that any Stock Option exceeds this limit, it shall
constitute a Non-Qualified Stock Option.
(b) GRANT OF OPTIONS IN LIEU OF DIRECTOR FEES. Each Independent
Director may, pursuant to a written election delivered to the Company, receive
all of such Independent Director's cash retainer and other cash fees payable to
such Independent Director in respect of his or her attendance at any meetings of
the Board or any committee thereof ("Director Fees") in the form of
Non-Qualified Stock Options to purchase such number of shares of Stock having a
present value equal to the amount of such Director Fees as shall be determined
in accordance with the Black-Scholes option pricing model on the date or dates
the Director Fees would otherwise be paid in cash. All Non-Qualified Stock
Options granted under this Section 5(b) shall have a per share exercise price
which is equal to the per share Fair Market Value of the Stock on the date such
Non-Qualified Stock Options are granted. The Committee, in its discretion, may
grant additional Non-Qualified Stock Options to Independent Directors.
(c) NON-TRANSFERABILITY OF OPTIONS. No Stock Option shall be
transferable by the optionee otherwise than by will or by the laws of descent
and distribution and all Stock Options shall be exercisable, during the
optionee's lifetime, only by the optionee, or his or her guardian or legal
representative. Notwithstanding the foregoing, the Committee may provide in an
option agreement that the optionee may transfer, without consideration for the
transfer, his or her Non-Qualified Stock Options to members of his or her
immediate family, to trusts for the benefit of such family members, to
partnerships in which such family members are the only partners; or to
charitable organizations; provided, however, that the transferee agrees in
writing with the Company to be bound by the terms and conditions of this Plan
and the applicable Option Agreement.
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SECTION 6. GRANTS OF STOCK
Grants of Stock may be made to any officers, employees, Independent
Directors, consultants, advisors and other key persons of the Company and its
Subsidiaries. As a condition precedent to the grant of Stock to any grantee
under the Plan, the grantee shall grant to the Company such repurchase rights on
the Stock which is the subject of the grant as the Committee shall deem
necessary or appropriate. The Committee may also impose such other terms and
conditions on the grant of any Stock under the Plan as it may determine.
SECTION 7. TAX WITHHOLDING
(a) PAYMENT BY PARTICIPANT. Each participant shall, no later than the
date as of which the value of an Award or of any Stock or other amounts received
thereunder first becomes includable in the gross income of the participant for
federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Committee regarding payment of, any federal, state, or local
taxes of any kind required by law to be withheld with respect to such income.
The Company and its Subsidiaries shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to the
participant.
(b) PAYMENT IN STOCK. Subject to approval by the Committee, a
participant may elect to have such tax withholding obligation satisfied, in
whole or in part, by (i) authorizing the Company to withhold from shares of
Stock to be issued pursuant to any Award a number of shares with an aggregate
Fair Market Value (as of the date the withholding is effected) that would
satisfy the withholding amount due, or (ii) transferring to the Company shares
of Stock owned by the participant with an aggregate Fair Market Value (as of the
date the withholding is effected) that would satisfy the withholding amount due.
SECTION 8. TRANSFER, LEAVE OF ABSENCE, ETC.
For purposes of the Plan, the following events shall not be deemed a
termination of employment:
(a) a transfer to the employment of the Company from a Subsidiary or
from the Company to a Subsidiary, or from one Subsidiary to another; or
(b) an approved leave of absence for military service or sickness, or
for any other purpose approved by the Company, if the employee's right to
re-employment is guaranteed either by a statute or by contract or under the
policy pursuant to which the leave of absence was granted or if the Committee
otherwise so provides in writing.
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SECTION 9. AMENDMENTS AND TERMINATION
The Board may, at any time, amend or discontinue the Plan and the
Committee may, at any time, amend or cancel any outstanding Award for the
purpose of satisfying changes in law or for any other lawful purpose, but no
such action shall adversely affect rights under any outstanding Award without
the holder's consent. The Committee may provide substitute Awards at the same or
reduced exercise or purchase price or with no exercise or purchase price in a
manner not inconsistent with the terms of the Plan, but such price, if any, must
satisfy the requirements which would apply to the substitute or amended Award if
it were then initially granted under this Plan, but no such action shall
adversely affect rights under any outstanding Award without the holder's
consent. If and to the extent determined by the Committee to be required by the
Code to ensure that Incentive Stock Options granted under the Plan are qualified
under Section 422 of the Code, Plan amendments shall be subject to approval by
the Company stockholders who are eligible to vote at a meeting of stockholders.
SECTION 10. STATUS OF PLAN
With respect to the portion of any Award which has not been exercised
and any payments in cash, Stock or other consideration not received by a
participant, a participant shall have no rights greater than those of a general
creditor of the Company unless the Committee shall otherwise expressly determine
in connection with any Award or Awards.
SECTION 11. GENERAL PROVISIONS
(a) NO DISTRIBUTION; COMPLIANCE WITH LEGAL REQUIREMENTS. The
Committee may require each person acquiring Stock pursuant to an Award to
represent to and agree with the Company in writing that such person is acquiring
the shares without a view to distribution thereof.
No shares of Stock shall be issued pursuant to an Award until all
applicable securities law and other legal and stock exchange or similar
requirements have been satisfied. The Committee may require the placing of such
stop-orders and restrictive legends on certificates for Stock and Awards as it
deems appropriate.
(b) OTHER COMPENSATION ARRANGEMENTS; NO EMPLOYMENT RIGHTS. Nothing
contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, including trusts, and such arrangements may be either
generally applicable or applicable only in specific cases. The adoption of this
Plan and the grant of Awards do not confer upon any employee any right to
continued employment with the Company or any Subsidiary.
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SECTION 12. EFFECTIVE DATE OF PLAN
This Plan shall become effective upon approval by the holders of a
majority of the votes cast at a meeting of stockholders at which a quorum is
present. Subject to such approval by the stockholders and to the requirement
that no Stock may be issued hereunder prior to such approval, Stock Options and
other awards may be granted hereunder on and after adoption of this Plan by the
Board.
SECTION 13. GOVERNING LAW
This Plan shall be governed by Massachusetts law except to the extent
such law is preempted by federal law.
DATE APPROVED BY BOARD OF DIRECTORS: April 23, 1997
DATE APPROVED BY STOCKHOLDERS: May 28, 1997
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