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EXHIBIT 4.1
FUTURELINK
DISTRIBUTION CORP.
STOCK OPTION PLAN
UPDATED AS PER SHAREHOLDER RESOLUTION OF SEPTEMBER 23, 1999
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TABLE OF CONTENTS
PAGE
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1. Purpose ........................................................... 1
2. Incentive and Non-Qualified Stock Options ......................... 1
3. Definitions ....................................................... 1
3.1 Board ..................................................... 1
3.2 Code ...................................................... 1
3.3 Common Stock .............................................. 1
3.4 Company ................................................... 1
3.5 Disabled or Disability .................................... 1
3.6 Fair Market Value ......................................... 1
3.7 Incentive Stock Option .................................... 2
3.8 Non-Qualified Stock Option ................................ 2
3.9 Optionee .................................................. 2
3.10 Plan ...................................................... 2
3.11 Plan Administrator ........................................ 2
3.12 Stock Option or Option .................................... 2
4. Administration .................................................... 2
4.1 Administration by Board ................................... 2
4.2 Administration by Committee ............................... 3
5. Eligibility ....................................................... 3
6. Shares Subject to Options ......................................... 4
7. Terms and Conditions of Options ................................... 4
7.1 Number of Shares Subject to Option ........................ 4
7.2 Option Price .............................................. 4
7.3 Notice and Payment ........................................ 5
7.4 Term of Option ............................................ 6
7.5 Exercise of Option ........................................ 6
7.6 No Transfer of Option ..................................... 6
7.7 Limit on Incentive Stock Options .......................... 6
7.8 Restriction on Issuance of Shares ......................... 7
7.9 Investment Representation ................................. 7
7.10 Rights as a Shareholder or Employee ....................... 7
7.11 No Fractional Shares ...................................... 8
7.12 Exercisability in the Event of Death ...................... 8
7.13 Recapitalization or Reorganization of Company ............. 8
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7.14 Modification, Extension, and Renewal of Options ........... 9
7.15 Other Provisions .......................................... 9
8. Termination or Amendment of the Plan .............................. 9
9. Indemnification ................................................... 10
10. Effective Date and Term of Plan ................................... 10
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FUTURELINK DISTRIBUTION CORP.
STOCK OPTION PLAN
1. PURPOSE. The purpose of this FutureLink Distribution Corp. Stock Option
Plan ("Plan") is to further the growth and development of FutureLink
Distribution Corp. (the "Company") by providing, through ownership of
stock of the Company, an incentive to officers, other key employees and
directors who are in a position to contribute materially to the prosperity
of the Company, to increase such persons' interests in the Company's
welfare, to encourage them to continue their services to the Company or
its subsidiaries, and to attract individuals of outstanding ability to
enter the employment of the Company or its subsidiaries, to remain or
become directors of the Company and to provide valuable services to the
Company or its subsidiaries.
2. INCENTIVE AND NON-QUALIFIED STOCK OPTIONS. Two types of Stock Options
(referred to herein as "Options" without distinction between such two
types) may be granted under the Plan: Options intended to qualify as
Incentive Stock Options under Section 422 of the Code and Non-Qualified
Stock Options not specifically authorized or qualified for favourable
income tax treatment by the Code.
3. DEFINITIONS. The following definitions are applicable to the Plan:
3.1 BOARD. The Board of Directors of the Company.
3.2 CODE. The Internal Revenue Code of 1986, as amended from time to
time.
3.3 COMMON STOCK. The shares of the $.0001 par value per share common
stock of the Company.
3.4 COMPANY. FutureLink Distribution Corp., a Colorado corporation.
3.5 DISABLED OR DISABILITY. For the purposes of Section 7.4, a
disability of the type defined in Section 22(e)(3) of the Code. The
determination of whether an individual is disabled or has a
Disability is determined under procedures established by the Plan
Administrator for purposes of the Plan.
3.6 FAIR MARKET VALUE. For purposes of the Plan, the "fair market value"
per share of the Common Stock of the Company at any date shall be
(a) if the Common Stock is listed on an established stock exchange
or exchanges or the NASDAQ National Market System, the closing price
per share on the last trading day immediately preceding such date on
the principal exchange on which it is traded or as reported by
NASDAQ, or (b) if the Common Stock is not then listed on an exchange
or the NASDAQ National Market System, the closing price per share on
the last trading day
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immediately preceding such date reported by NASDAQ, or if sales are
not reported by NASDAQ, the average of the closing bid and asked
prices per share for the Common Stock in the over-the-counter market
as quoted on NASDAQ on the last trading day immediately preceding
such date, or (c) if the Common Stock is not then listed on an
exchange, the NASDAQ National Market System or quoted on NASDAQ, an
amount determined in good faith by the Plan Administrator.
3.7 INCENTIVE STOCK OPTION. Any Stock Option intended to be and
designated as an "incentive stock option" within the meaning of
Section 422 of the Code.
3.8 NON-QUALIFIED STOCK OPTION. Any Stock Option that is not an
Incentive Stock Option.
3.9 OPTIONEE. The recipient of a Stock Option.
3.10 PLAN. The FutureLink Distribution Corp. Stock Option Plan, as
amended from time to time.
3.11 PLAN ADMINISTRATOR. The Board or the Compensation Committee
designated pursuant to Section 4.2 hereof to administer, construe
and interpret the terms of the Plan.
3.12 STOCK OPTION OR OPTION. Any option to purchase shares of Common
Stock granted pursuant to Section 7 hereof.
4. ADMINISTRATION.
4.1 ADMINISTRATION BY BOARD. Subject to Section 4.2 hereof, the Plan
Administrator shall be the Board of Directors of the Company (the
"Board") during such periods of time as all members of the Board are
"outside directors" as defined in Treas. Regs. ss.1.162-27(e)(3)
("outside directors"). Anything to the contrary notwithstanding, the
requirement that all members of the Board be outside directors shall
not apply for any period of time during which the Company's Common
Stock is not registered pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended. Subject to the provisions of the
Plan, the Plan Administrator shall have authority to construe and
interpret the Plan, to promulgate, amend, and rescind rules and
regulations relating to its administration, from time to time to
select from among the eligible employees and directors (as
determined pursuant to Section 5) of the Company and its
subsidiaries those employees and directors to whom Stock Options
will be granted, to determine the timing and manner of the grant of
the Options, to determine the exercise price, the number of shares
covered by and all of the terms of the Stock Options, to determine
the duration and purpose of
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leaves of absence which may be granted to Stock Option holders
without constituting termination of their employment for purposes of
the Plan, and to make all of the determinations necessary or
advisable for administration of the Plan. The interpretation and
construction by the Plan Administrator of any provision of the Plan,
or of any agreement issued and executed under the Plan, shall be
final and binding upon all parties. No member of the Board shall be
liable for any action or determination undertaken or made in good
faith with respect to the Plan or any agreement executed pursuant to
the Plan.
4.2 ADMINISTRATION BY COMMITTEE. The Board may, in its sole discretion,
delegate any or all of its duties as Plan Administrator and, subject
to the provisions of Section 4.1 of the Plan, at any time the Board
includes any person who is not an outside director, the Board shall
delegate all of its duties as Plan Administrator during such period
of time to a compensation committee (the "Committee") of not fewer
than two (2) members of the Board, all of the members of which
Committee shall be persons who, in the opinion of the counsel to the
Company are outside directors and "non-employee directors" within
the meaning of Rule 16b-3(b)(3)(i) promulgated by the Securities and
Exchange Commission, to be appointed by and serve at the pleasure of
the Board. Anything to the contrary notwithstanding, the requirement
that all members of the Committee be non-employee directors and
outside directors shall not apply for any period of time during
which the Company's Common Stock is not registered pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended. Those
provisions of the Plan that make express reference to Rule 16b-3
under the Securities Exchange Act of 1934, as amended, shall apply
only to reporting persons. From time to time, the Board may increase
or decrease (to not less than two members) the size of the
Committee, and add additional members to, or remove members from,
the Committee. The Committee shall act pursuant to a majority vote,
or the written consent of a majority of its members, and the minutes
shall be kept of all of its meetings and copies thereof shall be
provided to the Board. Subject to the provisions of the Plan and the
directions of the Board, the Committee may establish and follow such
rules and regulations for the conduct of its business as it may deem
advisable. No member of the Committee shall be liable for any action
or determination undertaken or made in good faith with respect to
the Plan or any agreement executed pursuant to the Plan.
5. ELIGIBILITY. Any employee, director or consultant (including any officer
or director who is an employee) of the Company or any of its subsidiaries
shall be eligible to receive Options under the Plan; provided, however,
that no person who owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any of its
parent or subsidiary corporations shall be eligible to receive an
Incentive Stock Option under the Plan unless at the
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time such Incentive Stock Option is granted the Option price (determined
in the manner provided in Section 7.2 hereof) is at least 110% of the Fair
Market Value of the shares subject to the Option and such Option by its
terms is not exercisable after the expiration of five years from the date
such Option is granted. An Optionee may receive more than one Option under
the Plan. However, non-employee directors are not eligible to receive an
Incentive Stock Option under the Plan.
6. SHARES SUBJECT TO OPTIONS. The stock available for grant of Options under
the Plan shall be shares in the Company's authorized but unissued or
reacquired, Common Stock. The aggregate number of shares which may be
issued pursuant to exercise of Options granted under the Plan, as amended,
shall not exceed twenty percent of the shares of Common Stock, calculated
on a fully diluted basis not including Common Stock underlying outstanding
stock options, at the time of each grant (subject to adjustment as
provided in Section 7.13 hereof) including shares previously issued under
the Plan. The maximum number of shares with respect to which options may
be granted to any employee in any one calendar year shall be 500,000
shares. In the event that any outstanding Option under the Plan for any
reason expires, or is terminated, the shares of the Common Stock allocable
to the unexercised portion of the Option shall again be available for
Options under the Plan as if no Option had been granted with respect to
such shares.
7. TERMS AND CONDITIONS OF OPTIONS. Options granted under the Plan shall be
evidenced by agreements (which need not be identical) to such form and
containing such provisions which are consistent with the Plan as the Plan
Administrator shall from time to time approve. Such agreements may
incorporate all or any of the terms hereof by reference and shall comply
with and be subject to the following terms and conditions.
7.1 NUMBER OF SHARES SUBJECT TO OPTION. Each Option agreement shall
specify the number of shares subject to the Option.
7.2 OPTION PRICE. The purchase price for the shares subject to any
option shall be determined by the Plan Administrator at the time of
grant, but shall not be less than par value per share. Anything to
the contrary notwithstanding, the purchase price for the shares
subject to any Incentive Stock Option shall not be less than 100% of
the Fair Market Value of the shares of Common Stock of the Company
on the date the Stock Option is granted. In the case of an Incentive
Stock Option granted to an employee who owns stock possessing more
than 10% of the total combined voting power of all classes of stock
of the Company or any of its parent or subsidiary corporations, the
Option price shall not be less than 110% of the Fair Market Value
per share of the Common Stock of the Company on the date the Option
is granted.
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7.3 NOTICE AND PAYMENT. Any exercisable portion of a Stock Option may be
exercised only by:
(a) delivery of a written notice to the Company, prior to the time
when such Stock Option becomes unexerciseable under Section
7.4 hereof, stating the number of shares being purchased and
complying with all applicable rules established by the Plan
Administrator;
(b) payment in full of the exercise price of such Option by, as
applicable (i) cash or cheque for an amount equal to the
aggregate Option exercise price for the number of shares being
purchased, (ii) in the discretion of the Plan Administrator,
upon such terms as the Plan Administrator shall approve, a
copy of instructions to a broker directing such broker to sell
the Common Stock for which such Option is exercised, and to
remit to the Company the aggregate exercise price of such
Options (a "cashless exercise"), or (iii) in the discretion of
the Plan Administrator, upon such terms as the Plan
Administrator shall approve, the Optionee may pay all or a
portion of the purchase price for the number of shares being
purchased by tendering shares of the Company's Common Stock
owned by the Optionee, duly endorsed for transfer to the
Company, with a Fair Market Value on the date of delivery
equal to the aggregate purchase price of the shares with
respect to which such Stock Option or portion is thereby
exercised (a "stock for stock exercise");
(c) payment of the amount of tax required to be withheld (if any)
by the Company or any parent or subsidiary corporation as a
result of the exercise of a Stock Option. At the discretion of
the Plan Administrator, upon such terms as the Plan
Administrator shall approve, the Optionee may pay all or a
portion of the tax withholding by (i) cash or cheque payable
to the Company, (ii) cashless exercise, (iii) stock-for-stock
exercise, or (iv) a combination of one or more of the
foregoing payment methods; and
(d) delivery of a written notice to the Company requesting that
the Company direct the transfer agent to issue to the Optionee
(or to his designee) a certificate for the number of shares of
Common Stock for which the Option was exercised or, in the
case of a cashless exercise, for any shares that were not sold
in the cashless exercise.
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Notwithstanding the foregoing, the Company may extend and maintain,
or arrange for the extension and maintenance of, credit to any
Optionee to finance the Optionee's purchase of shares pursuant to
exercise of any Stock Option, on such terms as may be approved by
the Plan Administrator, subject to applicable regulations of the
Federal Reserve Board and any other laws or regulations in effect at
the time such credit is extended.
7.4 TERM OF OPTION. No Option shall be exercisable after the expiration
of the earliest of (a) ten years after the date the option is
granted, (b) three months after the date the Optionee's employment
with the Company and its subsidiaries terminates if such termination
is for any reason other than disability or death, (c) one year after
the date the Optionee's employment with the Company and its
subsidiaries terminates if such termination is a result of death or
disability; provided, however, that the Option agreement for any
Option may provide for shorter periods in each of the foregoing
instances. In the case of an Incentive Stock Option granted to an
employee who owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any
of its parent or subsidiary corporations, the term set forth in (a)
above, shall not be more than five years after the date the Option
is granted.
7.5 EXERCISE OF OPTIONS. No Option shall be exercisable during the
lifetime of an Optionee by any person other than the Optionee.
Subject to the foregoing, the Plan Administrator shall have the
power to set the time or times within which each Option shall be
exercisable and to accelerate the time or times of exercise. Unless
otherwise provided by the Plan Administrator, each Option granted
under the Plan shall become excisable on a cumulative basis as to
one-third (1/3) of the total number of shares covered thereby at any
time after one year from the date the Option is granted and an
additional one third (1/3) of such total number of shares at any
time after the end of each consecutive one-year period thereafter
until the Option has become exercisable as to all of such total
number of shares. To the extend that an Optionee has the right to
exercise an Option and purchase shares pursuant thereto, the Option
may be exercised from time to time by written notice to the Company,
stating the number of shares being purchased and accompanied by
payment in full of the exercise price for such shares.
7.6 NO TRANSFER OF OPTION. No Option shall be transferable by an
Optionee otherwise than by will or the laws of decent and
distribution.
7.7 LIMIT ON INCENTIVE STOCK OPTIONS. The aggregate Fair Market Value
(determined at the time the Option is granted) of the stock with
respect to which Incentive Stock Options granted after 1986 are
exerciseable for the first time by an Optionee during any calendar
year (under all Incentive
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Stock Option plans of the Company and its subsidiaries) shall not
exceed $100,000. To the extent that the aggregate Fair Market Value
(determined at the time the Stock Option is granted) of the Common
Stock with respect to which Incentive Stock Options are exercisable
for the first time by an Optionee during any calendar year (under
all Incentive Stock Option plans of the Company and any parent or
subsidiary corporations) exceeds $100,000 such Stock Options shall
be treated as Non-Qualified Stock Options. The determination of
which Stock Option shall be treated as Non-Qualified Stock Options
shall be made by taking Stock Options into account in the order in
which they were granted.
7.8 RESTRICTION ON ISSUANCE OF SHARES. The issuance of Options and
shares shall be subject to compliance with all of the applicable
requirements of law with respect to the issuance and sale of
securities, including, without limitation, any required
qualification under the securities laws of the United States,
Canada, any state of the United States or any province of Canada. If
an Optionee acquires shares of Common Stock pursuant to the exercise
of an Option at a time when the shares are not registered pursuant
to Section 12 of the Securities Exchange Act of 1934, as amended,
the Plan Administrator, in its sole discretion, may require as a
condition of issuance of shares covered by the Option that the
shares of Common Stock shall be subject to restrictions on transfer.
The Company may place a legend on the certificates evidencing the
shares, reflecting the fact that they are subject to restrictions on
transfer pursuant to the terms of this Section. In addition, the
Optionee may be required to execute a shareholders' agreement in
favour of the Company, its designee and/or other shareholders with
respect to all or any of the shares so acquired. In such event, the
terms of such agreement shall apply to such shares.
7.9 INVESTMENT REPRESENTATION. Each Option shall contain and any
Optionee may be required, as a condition of the grant of the Option
and the issuance of shares covered by his or her Option, to
represent that the Option and the shares to be acquired pursuant to
exercise of the Option will be acquired for investment without a
view to distribution thereof; and in such case, the Company may
place a legend on the certificate evidencing the shares reflecting
the fact that they were acquired for investment and cannot be sold
or transferred unless registered under the Securities Act of 1933,
as amended, or unless counsel for the Company is satisfied that the
circumstances of the proposed transfer do not require such
registration.
7.10 RIGHTS AS A SHAREHOLDER OR EMPLOYEE. An Optionee or transferee of an
Option shall have no right as a shareholder of the Company with
respect to any shares covered by any Option until the date of the
issuance of a share certificate for such shares. No adjustment shall
be made for dividends (ordinary or extraordinary, whether cash,
securities, or other property) or distributions or other rights for
which the record date is prior to the date
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such share certificate is issued, except as provided in Section
7.13. Nothing in the Plan or in any Option agreement shall confer
upon any employee any right to continue in the employ of the Company
or any of its subsidiaries or interfere in any way with any right of
the Company or any subsidiary to terminate the Optionee's employment
at any time.
7.11 NO FRACTIONAL SHARES. In no event shall the Company be required to
issue fractional shares upon the exercise of an Option.
7.12 EXERCISEABILITY IN THE EVENT OF DEATH. In the event of the death of
the Optionee, any Option or unexercised portion thereof granted to
the Optionee, to the extent exercisable by him or her on the date of
death, may be exercised by the Optionee's personal representatives,
heirs, or legatees subject to the provisions of Section 7.4 hereof.
7.13 RECAPITALIZATION OR REORGANIZATION OF COMPANY. Except as otherwise
provided herein, appropriate and proportionate adjustments shall be
made in the number and class of shares subject to the Plan, to the
Option rights granted under the Plan, including any formula grants
or automatic grant authorizations, and the exercise price of such
Option rights, in the event that the number of shares of Common
Stock of the Company are increased or decreased as a result of a
stock dividend (but only on Common Stock), stock split, reverse
stock split, recaptilization, reorganization, merger, consolidation,
separation, or like change in the corporate or capital structure of
the Company. In the event there shall be any other change in the
number or kind of the outstanding shares of Common Stock of the
Company, or any stock or other securities into which such Common
Stock shall have been changed, or for which it shall have been
exchanged, whether by reason of a complete liquidation of the
Company or a merger, reorganization, or consolidation of the Company
with any other corporation in which the Company is not the surviving
corporation or the Company becomes wholly-owned subsidiary of
another corporation, then if the Plan Administrator shall, it its
sole discretion, determine that such change equitably requires an
adjustment to shares of the Common Stock currently subject to
Options under the Plan, or to prices or terms of outstanding
Options, such adjustment shall be made in accordance with such
determination.
To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the
Plan Administrator, the determination of which in that respect shall
be final, binding and conclusive. No right to purchase fractional
shares shall result from any adjustment of Options pursuant to this
Section. In case of any such adjustment, the shares subject to the
option shall be rounded down to the nearest whole share. Notice of
any adjustment shall be given by the Company to each Optionee whose
Options shall have been so adjusted and
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such adjustment (whether or not notice is given) shall be effective
and binding for all purposes of the Plan.
In the event of a complete liquidation of the Company or a merger,
reorganization, or consolidation of the Company with any other
corporation in which the Company is not the surviving corporation or
the Company becomes a wholly-owned subsidiary of another
corporation, any unexercised Options theretofore granted under the
Plan shall be deemed cancelled unless the surviving corporation in
any such merger, reorganization, or consolidation elects to assume
the Options under the Plan or to issue substitute Options in place
thereof; provided, however, that, notwithstanding the foregoing, if
such Options would be cancelled in accordance with the foregoing,
the Optionee shall have the right, exercisable during a ten-day
period ending on the fifth day prior to such liquidation, merger, or
consolidation, to exercise such Option in whole or in part without
regard to any installment exercise provisions in the Option
Agreement.
7.14 MODIFICATION, EXTENSION, AND RENEWAL OF OPTIONS. Subject to the
terms and conditions and within the limitations of the Plan, the
Plan Administrator may modify, extend, or renew outstanding Options
granted under the Plan, and accept the surrender of outstanding
Options (to the extent not theretofore exercised). The Plan
Administrator shall not, however, modify any outstanding Incentive
Stock Option in any manner which would cause the Option not to
qualify as an Incentive Stock Option within the meaning of Section
422 of the Code. Notwithstanding the foregoing, no modification of
an Option shall, without the consent of the Optionee, alter or
impair any rights of the Optionee under the Option. However, a
termination of the Option in which the Optionee receives a cash
payment equal to the difference between the Fair Market Value and
the exercise price for all shares subject to exercise under any
outstanding Option shall not alter or impair any rights of the
Optionee.
7.15 OTHER PROVISIONS. Each Option may contain such other terms,
provisions, and conditions not inconsistent with the Plan as may be
determined by the Plan Administrator.
8. TERMINATION OR AMENDMENT OF THE PLAN. The Board may at any time terminate
or amend the Plan; provided that, without approval of the holders of a
majority of the shares of Common Stock of the Company represented and
voting at a duly held meeting at which a quorum is present (which shares
voting affirmatively also constitute a majority of the required quorum) or
by the written consent of a majority of the outstanding shares of Common
Stock, there shall be, except by operation of the provisions of Section
7.13, no increase in the total number of shares covered by the Plan, no
change in the class of persons eligible to receive Options granted under
the Plan, and no extension of the term of the Plan beyond
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ten (10) years after the earlier of the date the Plan is adopted or the
date the Plan is approved by the Company's shareholders; and provided
further that, without the consent of the Optionee or as provided by
Section 7.14 hereof, no amendment may adversely affect any then
outstanding Option or any unexercised portion thereof.
9. INDEMNIFICATION. To the extent permitted by law, the Certificate of
Incorporation of the Company, the Bylaws of the Company and any indemnity
agreements between the Company and its directors or employees, between the
Company and its directors or employees, the Company shall indemnify each
member of the Board and of the Plan Administrator, and any other employee
of the Company with duties under the Plan, against expenses (including any
amount paid in settlement) reasonably incurred by him in connection with
any claims against him by reason of his conduct in the performance of his
duties under the Plan.
10. EFFECTIVE DATE AND TERM OF PLAN. This Plan shall become effective (the
"Effective Date") on June 29, 1998. No options granted under the Plan will
be effective unless the Plan is approved by shareholders of the Company
within 12 months of the date of adoption. Unless sooner terminated by the
Board in its sole discretion, the Plan will expire on June 28, 2008.
Amended as of September 27, 1999.
FUTURELINK DISTRIBUTION CORP.
/s/ Raghu Kilambi
By: __________________________________
Raghu Kilambi
Chief Financial Officer
/s/ K.B. Scott
By: __________________________________
Kyle B.A. Scott
General Counsel & Secretary
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