Exhibit 4.1
FRISBY TECHNOLOGIES, INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
PURPOSE OF THE PLAN
This 2000 Employee Stock Purchase Plan is intended to promote the interests
of Frisby Technologies, Inc., a Delaware corporation, by providing eligible
employees with the opportunity to acquire a proprietary interest in the
Corporation through participation in a payroll-deduction based employee stock
purchase plan designed to qualify under Section 423 of the Code.
Capitalized terms herein shall have the meanings assigned to such terms in
the attached Appendix.
ADMINISTRATION OF THE PLAN
The Plan Administrator shall have full authority to interpret and construe
any provision of the Plan and to adopt such rules and regulations for
administering the Plan as it may deem necessary in order to comply with the
requirements of Section 423 of the Code. Decisions of the Plan Administrator
shall be final and binding on all parties having an interest in the Plan.
STOCK SUBJECT TO PLAN
The stock purchasable under the Plan shall be shares of authorized but
unissued or reacquired Common Stock, including shares of Common Stock purchased
on the open market. The maximum number of shares of Common Stock which may be
issued over the term of the Plan shall not exceed two hundred thousand (200,000)
shares.
Should any change be made to the Common Stock by reason of any stock split,
stock dividend, recapitalization, combination of shares, exchange of shares or
other change affecting the outstanding Common Stock as a class without the
Corporation's receipt of consideration, appropriate adjustments shall be made to
(i) the maximum number and class of securities issuable under the Plan, (ii) the
maximum number and class of securities purchasable per Participant on any one
Purchase Date and (iii) the number and class of securities and the price per
share in effect under each outstanding purchase right in order to prevent the
dilution or enlargement of benefits thereunder.
OFFERING PERIODS
Shares of Common Stock shall be offered for purchase under the Plan through
a series of successive offering periods until such time as (i) the maximum
number of shares of Common Stock available for issuance under the Plan shall
have been purchased or (ii) the Plan shall have been sooner terminated.
Each offering period shall be of such duration (not to exceed eighteen (18)
months) as determined by the Plan Administrator prior to the start date of such
offering period. However, the initial offering period shall commence at the
Effective Time and terminate on the 31st day in December 2000. Subsequent
offering periods shall commence as designated by the Plan Administrator.
Each offering period shall be comprised of a series of one or more
successive Purchase Intervals. Purchase Intervals shall run from the 1st day in
January each year to the 30th day in June of the following year and from the 1st
day in July each year to the 31th day in December of the same year. However, the
first Purchase Interval in effect under the initial offering period shall
commence at the Effective Time and terminate on the 30th day in June 2000.
Should the Fair Market Value per share of Common Stock on any Purchase Date
within an offering period be less than the Fair Market Value per share of Common
Stock on the start date of that offering period, then that offering period shall
automatically terminate immediately after the purchase of shares of Common Stock
on such Purchase Date, and a new offering period shall commence on the next
business day following such Purchase Date. The new offering period shall have a
duration of six (6) months, unless a different duration is established by the
Plan Administrator within five (5) business days following the start date of
that offering period.
Notwithstanding anything to the contrary herein, should the total number of
shares of Common Stock to be purchased on any particular date exceed the number
of shares then available for issuance under the Plan, then the Plan
Administrator shall have the right to terminate the offering period during which
such purchase occurs and to determine when a new offering period shall commence.
ELIGIBILITY
Each individual who is an Eligible Employee on the start date of the
initial offering period under the Plan may enter that offering period on such
start date or on any subsequent Semi-Annual Entry Date within that offering
period, provided he or she remains an Eligible Employee.
Each individual who is an Eligible Employee on the start date of any
subsequent offering period under the Plan may enter that offering period on such
start date or on any subsequent Semi-Annual Entry Date within that offering
period, provided in each case that he or she has completed at least thirty (30)
days of continuous employment with the Corporation or a Corporate Affiliate
prior to such date.
Each individual who first becomes an Eligible Employee after the start date
of an offering period may enter that offering period on any subsequent
Semi-Annual Entry Date within that offering period on which he or she is an
Eligible Employee, provided he or she has completed at least thirty (30) days of
continuous employment with the Corporation or a Corporate Affiliate prior to
such Semi-Annual Entry Date.
The date an individual enters an offering period shall be designated his or
her Entry Date for purposes of that offering period.
To participate in the Plan for a particular offering period, the Eligible
Employee must complete the enrollment forms prescribed by the Plan Administrator
(including a stock purchase agreement and a payroll deduction authorization) and
file such forms with the Plan Administrator (or its designate) on or before his
or her scheduled Entry Date.
PAYROLL DEDUCTIONS
The payroll deduction authorized by the Participant for purposes of
acquiring shares of Common Stock during an offering period may be any multiple
of one percent (1%) of the Cash Earnings paid to the Participant during each
Purchase Interval within that offering period, up to a maximum of fifteen
percent (15%). The deduction rate so authorized shall continue in effect
throughout the offering period, except to the extent such rate is changed in
accordance with the following guidelines:
The Participant may, at any time during the offering period, reduce his or
her rate of payroll deduction to become effective as soon as possible after
filing the appropriate form with the Plan Administrator. The Participant may
not, however, effect more than one (1) such reduction per Purchase Interval.
The Participant may, prior to the commencement of any new Purchase Interval
within the offering period, increase the rate of his or her payroll deduction by
filing the appropriate form with the Plan Administrator. The new rate (which may
not exceed the fifteen percent (15%) maximum) shall become effective on the
start date of the first Purchase Interval following the filing of such form.
Payroll deductions shall begin on the first pay day following the
Participant's Entry Date into the offering period and shall (unless sooner
terminated by the Participant) continue through the pay day ending with or
immediately prior to the last day of that offering period. The amounts so
collected shall be credited to the Participant's book account under the Plan,
but no interest shall be paid on the balance from time to time outstanding in
such account. The amounts collected from the Participant shall not be required
to be held in any segregated account or trust fund and may be commingled with
the general assets of the Corporation and used for general corporate purposes.
Payroll deductions shall automatically cease upon the termination of the
Participant's purchase right in accordance with the provisions of the Plan.
The Participant's acquisition of Common Stock under the Plan on any
Purchase Date shall neither limit nor require the Participant's acquisition of
Common Stock on any subsequent Purchase Date, whether within the same or a
different offering period.
PURCHASE RIGHTS
Grant of Purchase Right. A Participant shall be granted a separate purchase
right for each offering period in which he or she participates. The purchase
right shall be granted on the Participant's Entry Date into the offering period
and shall provide the Participant with the right to purchase shares of Common
Stock, in a series of successive installments over the remainder of such
offering period, upon the terms set forth below. The Participant shall execute a
stock purchase agreement embodying such terms and such other provisions (not
inconsistent with the Plan) as the Plan Administrator may deem advisable.
Under no circumstances shall purchase rights be granted under the Plan to
any Eligible Employee if such individual would, immediately after the grant, own
(within the meaning of Code Section 424(d)) or hold outstanding options or other
rights to purchase, stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Corporation or any
Corporate Affiliate.
Exercise of the Purchase Right. Each purchase right shall be automatically
exercised in installments on each successive Purchase Date within the offering
period, and shares of Common Stock shall accordingly be purchased on behalf of
each Participant (other than Participants whose payroll deductions have
previously been refunded pursuant to the Termination of Purchase Right
provisions below) on each such Purchase Date. The purchase shall be effected by
applying the Participant's payroll deductions for the Purchase Interval ending
on such Purchase Date to the purchase of whole shares of Common Stock at the
purchase price in effect for the Participant for that Purchase Date.
Purchase Price. The purchase price per share at which Common Stock will be
purchased on the Participant's behalf on each Purchase Date within the offering
period shall be equal to eighty-five percent (85%) of the lower of (i) the Fair
Market Value per share of Common Stock on the Participant's Entry Date into that
offering period or (ii) the Fair Market Value per share of Common Stock on that
Purchase Date.
Number of Purchasable Shares. The number of shares of Common Stock
purchasable by a Participant on each Purchase Date during the offering period
shall be the number of whole shares obtained by dividing the amount collected
from the Participant through payroll deductions during the Purchase Interval
ending with that Purchase Date by the purchase price in effect for the
Participant for that Purchase Date. However, the maximum number of shares of
Common Stock purchasable per Participant on any one Purchase Date shall not
exceed five thousand (5,000) shares, subject to periodic adjustments in the
event of certain changes in the Corporation's capitalization.
Excess Payroll Deductions. Any payroll deductions not applied to the
purchase of shares of Common Stock on any Purchase Date because they are not
sufficient to purchase a whole share of Common Stock shall be held for the
purchase of Common Stock on the next Purchase Date. However, any payroll
deductions not applied to the purchase of Common Stock by reason of the
limitation on the maximum number of shares purchasable on the Purchase Date
shall be promptly refunded.
Termination of Purchase Right. The following provisions shall govern the
termination of outstanding purchase rights:
A Participant may, at any time prior to the next scheduled Purchase Date in
the offering period, terminate his or her outstanding purchase right by filing
the appropriate form with the Plan Administrator (or its designate), and no
further payroll deductions shall be collected from the Participant with respect
to the terminated purchase right. Any payroll deductions collected during the
Purchase Interval in which such termination occurs shall, at the Participant's
election, be immediately refunded or held for the purchase of shares on the next
Purchase Date. If no such election is made at the time such purchase right is
terminated, then the payroll deductions collected with respect to the terminated
right shall be refunded as soon as possible.
The termination of such purchase right shall be irrevocable, and the
Participant may not subsequently rejoin the offering period for which the
terminated purchase right was granted. In order to resume participation in any
subsequent offering period, such individual must re-enroll in the Plan (by
making a timely filing of the prescribed enrollment forms) on or before his or
her scheduled Entry Date into that offering period.
Should the Participant cease to remain an Eligible Employee for any reason
(including death, disability or change in status) while his or her purchase
right remains outstanding, then that purchase right shall immediately terminate,
and all of the Participant's payroll deductions for the Purchase Interval in
which the purchase right so terminates shall be immediately refunded. However,
should the Participant cease to remain in active service by reason of an
approved unpaid leave of absence, then the Participant shall have the right,
exercisable up until the last business day of the Purchase Interval in which
such leave commences, to (a) withdraw all the payroll deductions collected to
date on his or her behalf for that Purchase Interval or (b) have such funds held
for the purchase of shares on his or her behalf on the next scheduled Purchase
Date. In no event, however, shall any further payroll deductions be collected on
the Participant's behalf during such leave. Upon the Participant's return to
active service (i) within ninety (90) days following the commencement of such
leave or, (ii) prior to the expiration of any longer period for which such
Participant's right to reemployment with the Corporation is guaranteed by either
statute or contract, his or her payroll deductions under the Plan shall
automatically resume at the rate in effect at the time the leave began. However,
should the Participant's leave of absence exceed ninety (90) days and his or her
re-employment rights not be guaranteed by either statute or contract, then the
Participant's status as an Eligible Employee will be deemed to terminate on the
ninety-first (91st) day of that leave, and such Participant's purchase right for
the offering period in which that leave began shall thereupon terminate. An
individual who returns to active employment following such a leave shall be
treated as a new Employee for purposes of the Plan and must, in order to resume
participation in the Plan, re-enroll in the Plan (by making a timely filing of
the prescribed enrollment forms) on or before his or her scheduled Entry Date
into the offering period.
Corporate Transaction. Each outstanding purchase right shall automatically
be exercised, immediately prior to the effective date of any Corporate
Transaction, by applying the payroll deductions of each Participant for the
Purchase Interval in which such Corporate Transaction occurs to the purchase of
whole shares of Common Stock at a purchase price per share equal to eighty-five
percent (85%) of the lower of (i) the Fair Market Value per share of Common
Stock on the Participant's Entry Date into the offering period in which such
Corporate Transaction occurs or (ii) the Fair Market Value per share of Common
Stock immediately prior to the effective date of such Corporate Transaction.
However, the applicable limitations on the number of shares of Common Stock
purchasable per Participant and in the aggregate shall continue to apply to any
such purchase.
The Corporation shall use its best efforts to provide at least ten
(10)-days prior written notice of the occurrence of any Corporate Transaction,
and Participants shall, following the receipt of such notice, have the right to
terminate their outstanding purchase rights prior to the effective date of the
Corporate Transaction.
Proration of Purchase Rights. Should the total number of shares of Common
Stock to be purchased pursuant to outstanding purchase rights on any particular
date exceed the number of shares then available for issuance under the Plan, the
Plan Administrator shall make a pro-rata allocation of the available shares on a
uniform and nondiscriminatory basis, and the payroll deductions of each
Participant, to the extent in excess of the aggregate purchase price payable for
the Common Stock pro-rated to such individual, shall be refunded.
Assignability. The purchase right shall be exercisable only by the
Participant and shall not be assignable or transferable by the Participant.
Stockholder Rights. A Participant shall have no stockholder rights with
respect to the shares subject to his or her outstanding purchase right until the
shares are purchased on the Participant's behalf in accordance with the
provisions of the Plan and the Participant has become a holder of record of the
purchased shares.
ACCRUAL LIMITATIONS
No Participant shall be entitled to accrue rights to acquire Common Stock
pursuant to any purchase right outstanding under this Plan if and to the extent
such accrual, when aggregated with (i) rights to purchase Common Stock accrued
under any other purchase right granted under this Plan and (ii) similar rights
accrued under other employee stock purchase plans (within the meaning of Code
Section 423) of the Corporation or any Corporate Affiliate, would otherwise
permit such Participant to purchase more than Twenty-Five Thousand Dollars
($25,000) worth of stock of the Corporation or any Corporate Affiliate
(determined on the basis of the Fair Market Value per share on the date or dates
such rights are granted) for each calendar year such rights are at any time
outstanding.
For purposes of applying such accrual limitations to the purchase rights
granted under the Plan, the following provisions shall be in effect:
The right to acquire Common Stock under each outstanding purchase right
shall accrue in a series of installments on each successive Purchase Date during
the offering period on which such right remains outstanding.
No right to acquire Common Stock under any outstanding purchase right shall
accrue to the extent the Participant has already accrued in the same calendar
year the right to acquire Common Stock under one (1) or more other purchase
rights at a rate equal to Twenty-Five Thousand Dollars ($25,000) worth of Common
Stock (determined on the basis of the Fair Market Value per share on the date or
dates of grant) for each calendar year such rights were at any time outstanding.
If by reason of such accrual limitations, any purchase right of a
Participant does not accrue for a particular Purchase Interval, then the payroll
deductions which the Participant made during that Purchase Interval with respect
to such purchase right shall be promptly refunded.
In the event there is any conflict between the provisions of this Article
and one or more provisions of the Plan or any instrument issued thereunder, the
provisions of this Article shall be controlling.
EFFECTIVE DATE AND TERM OF THE PLAN
The Plan was adopted by the Board on October 27, 1999, and shall become
effective at the Effective Time, provided no purchase rights granted under the
Plan shall be exercised, and no shares of Common Stock shall be issued
hereunder, until (i) the Plan shall have been approved by the stockholders of
the Corporation and (ii) the Corporation shall have complied with all applicable
requirements of the 1933 Act (including the registration of the shares of Common
Stock issuable under the Plan on a Form S-8 registration statement filed with
the Securities and Exchange Commission), all applicable listing requirements of
any stock exchange (or the Nasdaq National Market, if applicable) on which the
Common Stock is listed for trading and all other applicable requirements
established by law or regulation. In the event such stockholder approval is not
obtained, or such compliance is not effected, within twelve (12) months after
the date on which the Plan is adopted by the Board, the Plan shall terminate and
have no further force or effect, and all sums collected from Participants during
the initial offering period hereunder shall be refunded.
Unless sooner terminated by the Board, the Plan shall terminate upon the
earliest of (i) the last business day in November 2009, (ii) the date on which
all shares available for issuance under the Plan shall have been sold pursuant
to purchase rights exercised under the Plan or (iii) the date on which all
purchase rights are exercised in connection with a Corporate Transaction. No
further purchase rights shall be granted or exercised, and no further payroll
deductions shall be collected, under the Plan following such termination.
AMENDMENT/TERMINATION OF THE PLAN
The Board may alter, amend, suspend or terminate the Plan at any time to
become effective immediately following the close of any Purchase Interval.
However, the Plan may be amended or terminated immediately upon Board action, if
and to the extent necessary to assure that the Corporation will not recognize,
for financial reporting purposes, any compensation expense in connection with
the shares of Common Stock offered for purchase under the Plan, should the
financial accounting rules applicable to the Plan at the Effective Time be
subsequently revised so as to require the recognition of compensation expense in
the absence of such amendment or termination.
In no event may the Board effect any of the following amendments or
revisions to the Plan without the approval of the Corporation's stockholders:
(i) increase the number of shares of Common Stock issuable under the Plan or the
maximum number of shares purchasable per Participant on any one Purchase Date,
except for permissible adjustments in the event of certain changes in the
Corporation's capitalization, (ii) alter the purchase price formula so as to
reduce the purchase price payable for the shares of Common Stock purchasable
under the Plan or (iii) modify eligibility requirements for participation in the
Plan.
GENERAL PROVISIONS
Nothing in the Plan shall confer upon the Participant any right to continue
in the employ of the Corporation or any Corporate Affiliate for any period of
specific duration or interfere with or otherwise restrict in any way the rights
of the Corporation (or any Corporate Affiliate employing such person) or of the
Participant, which rights are hereby expressly reserved by each, to terminate
such person's employment at any time for any reason, with or without cause.
All costs and expenses incurred in the administration of the Plan shall be
paid by the Corporation; however, each Plan Participant shall bear all costs and
expenses incurred by such individual in the sale or other disposition of any
shares purchased under the Plan.
The provisions of the Plan shall be governed by the laws of the State of
New York without regard to that State's conflict of laws rules.
<PAGE>
Schedule A
Corporations Participating in
Employee Stock Purchase Plan
As of the Effective Time
Frisby Technologies, Inc.
Extreme Comfort, Inc.
<PAGE>
APPENDIX
The following definitions shall be in effect under the Plan:
Board shall mean the Corporation's Board of Directors.
Cash Earnings shall mean the (i) base salary payable to a Participant by
one or more Participating Corporations during such individual's period of
participation in one or more offering periods under the Plan plus (ii) all
overtime payments, bonuses, commissions, current profit-sharing distributions
and other incentive-type payments. Such Cash Earnings shall be calculated before
deduction of (A) any income or employment tax withholdings or (B) any pretax
contributions made by the Participant to any Code Section 401(k) salary deferral
plan or any Code Section 125 cafeteria benefit program now or hereafter
established by the Corporation or any Corporate Affiliate. However, Cash
Earnings shall not include any contributions (other than Code Section 401(k) or
Code Section 125 contributions) made on the Participant's behalf by the
Corporation or any Corporate Affiliate to any employee benefit or welfare plan
now or hereafter established.
Code shall mean the Internal Revenue Code of 1986, as amended.
Common Stock shall mean the Corporation's common stock.
Corporate Affiliate shall mean any parent or subsidiary corporation of the
Corporation (as determined in accordance with Code Section 424), whether now
existing or subsequently established.
Corporate Transaction shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:
a merger or consolidation in which securities possessing more
than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities are transferred to a person or
persons different from the persons holding those securities
immediately prior to such transaction, or
the sale, transfer or other disposition of all or substantially
all of the assets of the Corporation in complete liquidation or
dissolution of the Corporation.
Corporation shall mean Frisby Technologies, Inc., a Delaware corporation,
any wholly-owned subsidiaries, and any corporate successor to all or
substantially all of the assets or voting stock of Frisby Technologies, Inc.
which shall by appropriate action adopt the Plan.
Effective Time shall mean the time at which the Underwriting Agreement is
executed. Any Corporate Affiliate which becomes a Participating Corporation
after such Effective Time shall designate a subsequent Effective Time with
respect to its employee Participants.
Eligible Employee shall mean any person who is employed by a Participating
Corporation on a basis under which he or she is regularly expected to render
more than twenty (20) hours of service per week for more than five (5) months
per calendar year for earnings considered wages under Code Section 3401(a).
Entry Date shall mean the date an Eligible Employee first commences
participation in the offering period in effect under the Plan. The earliest
Entry Date under the Plan shall be the Effective Time.
Fair Market Value per share of Common Stock on any relevant date shall be
determined in accordance with the following provisions:
If the Common Stock is at the time traded on the Nasdaq National Market,
then the Fair Market Value shall be the closing selling price per share of
Common Stock on the date in question, as such price is reported by the National
Association of Securities Dealers on the Nasdaq National Market or any successor
system. If there is no closing selling price for the Common Stock on the date in
question, then the Fair Market Value shall be the closing selling price on the
last preceding date for which such quotation exists.
If the Common Stock is at the time listed on any other Stock Exchange, then
the Fair Market Value shall be the closing selling price per share of Common
Stock on the date in question on the Stock Exchange determined by the Plan
Administrator to be the primary market for the Common Stock, as such price is
officially quoted in the composite tape of transactions on such exchange. If
there is no closing selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
1933 Act shall mean the Securities Act of 1933, as amended.
Participant shall mean any Eligible Employee of a Participating Corporation
who is actively participating in the Plan.
Participating Corporation shall mean the Corporation and such Corporate
Affiliate or Affiliates as may be authorized from time to time by the Board to
extend the benefits of the Plan to their Eligible Employees. The Participating
Corporations in the Plan are listed in attached Schedule A.
Plan shall mean the Corporation's 2000 Employee Stock Purchase Plan, as set
forth in this document.
Plan Administrator shall mean the committee of two (2) or more Board
members appointed by the Board to administer the Plan.
Purchase Date shall mean the last business day of each Purchase Interval.
The initial Purchase Date shall be June 30, 2000.
Purchase Interval shall mean each successive six (6) month period within
the offering period at the end of which there shall be purchased shares of
Common Stock on behalf of each Participant.
Semi-Annual Entry Date shall mean the first business day in January1 and
December 31 each year on which an Eligible Employee may first enter an offering
period.
Stock Exchange shall mean the NASDAQ, American Stock Exchange or the New
York Stock Exchange.
