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EXHIBIT 4.4
2/27/97
HARVARD TRANSLATIONS, INC.
1997 STOCK OPTION PLAN
1. Purpose
The purpose of this plan (the "Plan") is to secure for Harvard
Translations, Inc. (the "Company") and its shareholders the benefits arising
from capital stock ownership by employees, officers and directors of, and
consultants or advisors to, the Company and its parent and subsidiary
corporations who are expected to contribute to the Company's future growth and
success. Except where the context otherwise requires, the term "Company" shall
include the parent and all present and future subsidiaries of the Company as
defined in Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as
amended or replaced from time to time (the "Code"). Those provisions of the Plan
which make express reference to Section 422 shall apply only to Incentive Stock
Options (as that term is defined in the Plan).
2. Types of Options and Administration.
(a) Types of Options. Options granted pursuant to the Plan ("Options")
shall be authorized by action of the Board of Directors of the Company and may
be either incentive stock options ("Incentive Stock Options") meeting the
requirements of Section 422 of the Code or non-statutory Options which are not
intended to meet the requirements of Section 422 of the Code. All Options when
granted are intended to be non-statutory Options, unless the applicable Option
Agreement (as defined below) explicitly states that the Option is intended to be
an Incentive Stock Option. If an Option is intended to be an Incentive Stock
Option, and if for any reason such Option (or any portion thereof) shall not
qualify as an Incentive Stock Option, then, to the extent of such
nonqualification, such Option (or portion thereof) shall be regarded as a
non-statutory Option appropriately granted under the Plan provided that such
Option (or portion thereof) otherwise meets the Plan's requirements relating to
non-statutory Options.
(b) Administration. The Plan shall be administered by the Board of
Directors of the Company, whose construction and interpretation of the terms and
provisions of the Plan shall be final and conclusive. The Board of Directors may
in its sole discretion grant options to purchase shares of the Company's common
stock, $.01 par value ("Common Stock"), and issue shares upon exercise of such
Options as provided in the Plan. The Board shall have authority, subject to the
express provisions of the Plan, to construe the respective Option Agreements and
the Plan, to prescribe, amend and rescind rules and regulations relating to the
Plan, to determine the terms and provisions of the respective Option Agreements,
which need not be identical, and to make all other determinations in the
judgment of the Board of Directors necessary or desirable for the administration
of the Plan. The Board of Directors may correct any defect or supply any
omission or reconcile any inconsistency in the Plan or in any Option Agreement
in the manner and to the extent it shall deem expedient to carry the Plan into
effect and it shall be the sole and final judge of such expediency. No director
or person acting pursuant to authority delegated by the Board of Directors shall
be liable for any action or determination under the Plan made in good faith. The
Board of Directors may, to the full extent permitted by or consistent with
applicable laws or regulations (including, without limitation, applicable state
law, delegate any or all of its powers under the Plan to a committee (the
"Committee") appointed by the Board of Directors, and if the Committee is so
appointed all references to the Board of Directors in the Plan shall mean and
relate to such Committee.
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3. Eligibility.
Options may be granted to persons who are, at the time of such grant,
employees, officers or directors of, or consultants or advisors to, the Company;
provided, that the class of persons to whom Incentive Stock Options may be
granted shall be limited to employees of the Company.
4. Stock Subject to Plan.
Subject to adjustment as provided in Section 14 below, the maximum number
of shares of Common Stock of the Company which may be issued under the Plan is
40,000 shares. If an Option shall expire or terminate for any reason without
having been exercised in full, the unpurchased shares subject to such Option
shall again be available for subsequent Option grants under the Plan. If shares
issued upon exercise of an Option are tendered to the Company in payment of the
exercise price of an Option, such tendered shares shall again be available for
subsequent Option grants under the Plan; provided that in no event shall the
total number of shares issued pursuant to the exercise of Incentive Stock
Options under the Plan, on a cumulative basis, exceed the number of shares
authorized for issuance under the Plan, exclusive of shares made available for
issuance pursuant to this sentence.
5. Forms of Option Agreements.
(a) Option Agreement. As a condition to the grant of an Option, each
recipient of an Option shall execute an option agreement ("Option Agreement") in
such form not inconsistent with the Plan as may be approved by the Board of
Directors. Such Option Agreements may differ among recipients.
(b) "Stand-Off" Agreement. Unless the Board of Directors specifies
otherwise, each Option Agreement shall provide that upon the request of the
Company or the managing Underwriter(s), the holder of any Option shall, in
connection with an initial public offering of the Common Stock, agree in writing
that for a period of time (not to exceed 180 days) from the effective date of
the Securities and Exchange Commission registration statement for such offering,
the holder or purchaser will not sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any shares of Common Stock
owned or controlled by him.
6. Purchase Price.
(a) General. The purchase price per share of stock deliverable upon the
exercise of an Option shall be determined by the Board of Directors, provided,
however, that in the case of an Incentive Stock Option, the exercise price shall
not be less than 100% of the fair market value of such stock, as determined by
the Board of Directors at the time of grant of such Option, or less than 110% of
such fair market value in the case of Options described in Section 11(b).
(b) Payment of Purchase Price. Option Agreements may provide for the
payment of the exercise price by delivery of cash or a check to the order of the
Company in an amount equal to the exercise price of such Options, or, to the
extent provided in the applicable Option Agreement, (i) by delivery to the
Company of shares of common stock of the Company having a fair market value
equal in amount to the exercise price of the Options being exercised, (ii) by
any other means (including, without limitation, by delivery of a promissory note
of the optionee payable on such terms as are specified by the Board of
Directors) which the Board of Directors determines are consistent with the
purpose of the Plan and with applicable laws and regulations, or (iii) by any
combination of such methods of payment. The fair market value of any shares of
the Company's
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common stock or other non-cash consideration which may be delivered upon
exercise of an Option shall be determined by the Board of Directors.
7. Option Period.
Each Option and all rights thereunder shall expire on such date as shall
be set forth in the applicable Option Agreement; provided that, in any event, in
the case of an Incentive Stock Option, such date shall not be later than 10
years after the date on which the Option is granted (or five years in the case
of Options described in Section 11(b)) and, in the case of non-statutory
Options, not later than 10 years after the dates on which the Option is granted,
and, in either case, shall be subject to earlier termination as provided in the
Plan.
8. Exercise of Options.
Each Option shall be exercisable either in full or in installments at such
time or times and during such period as shall be set forth in the agreement
evidencing such Option, subject to the provisions of the Plan.
9. Nontransferability of Options.
No Option shall be assignable or transferable by the person to whom it is
granted, either voluntarily or by operation of law, except by will or the laws
of descent and distribution. During the life an optionee, an Option held by him
or her shall be exercisable only by the optionee.
10. Effect of Termination.
No Incentive Stock Option may be exercised unless, at the time of such
exercise, the optionee is, and has continuously since the date of grant of his
or her Incentive Stock Option, been employed by the Company except that, unless
the Option Agreement expressly provides otherwise:
(a) except as provided in paragraphs (b) and (c) below, the
Incentive Stock Option may be exercised within the period of ninety days after
the date the optionee ceases to be an employee of the Company for any reason
other than termination of the optionee's employment voluntarily by the optionee
or by the Company for cause (as determined by the Company) or within ninety days
after the optionee's retirement in good standing from the Company for reasons of
age under the then established rules of the Company;
(b) if the optionee dies while in the employ of the Company, the
Incentive Stock Option may be exercised by the person to whom it is transferred
by will or the laws of descent and distribution within the period of one year
after the date of death (or within such lesser period as may be specified in the
applicable Option Agreement); and
(c) if the optionee becomes disabled (within the meaning of Section
22(e)(3) of the Code or any successor provision thereto) while in the employ of
the Company, the Incentive Stock Option may be exercised within the period of
one year after the date the optionee ceases to be such an employee because of
such disability (or within such lesser period as may be specified in the
applicable Option Agreement);
provided, however, that (i) any Incentive Stock Option may only be exercised to
the extent such Option was exercisable by the optionee on the date of
termination of the optionee's employment with the Company and (ii) in no event
may any Incentive Stock Option be exercised after the expiration date of the
Incentive Stock Option. For all purposes of the Plan and any Incentive Stock
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Option granted hereunder, "employment" shall be defined in accordance with the
provisions of Section 1.421-7(h) of the Income Tax Regulations (or any successor
regulations).
Unless the applicable Option Agreement expressly provides otherwise, a
non-statutory Option granted to an employee shall be subject to the foregoing
provisions of this Section 10 as if it were an Incentive Stock Option, but a
non-statutory Option may also be exercised so long as the optionee maintains a
relationship with the Company as a director, consultant, or adviser.
11. Incentive Stock Options.
Options which are intended to be Incentive Stock Options shall be subject
to the following additional terms and conditions:
(a) Express Designation. All Incentive Stock Options shall, at the time of
grant, be specifically designated as such in the Option Agreement covering such
Incentive Stock Options.
(b) 10% Shareholder. If any employee to whom in Incentive Stock Option is
to be granted is, at the time of the grant of such Option, the owner of stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company (after taking into account the attribution of stock
ownership rules of Section 424(d) of the Code), then the following special
provisions shall be applicable to the Incentive Stock Option granted to such
individual:
(i) The purchase price per share of the Common Stock subject to such
Incentive Stock Option shall not be less than 110% of the fair market
value of one share of Common Stock at the time of grant; and
(ii) the option exercise period shall not exceed five years from the
date of grant.
(c) Dollar Limitation. For so long as the Code shall so provide, Options
granted to any employee under the Plan (and any other incentive stock option
plans of the Company) which are intended to constitute Incentive Stock Options
shall not constitute Incentive Stock Options to the extent that such Options, in
the aggregate, become exercisable for the first time in any one calendar year
for shares of Common Stock with an aggregate fair market value (determined as of
the respective date or dates of grant) of more than $100,000.
12. Additional Provisions.
(a) Additional Provisions. The Board of Directors may, in its sole
discretion, include additional provisions in Option Agreements, including
without limitation restrictions on transfer, rights of the Company to repurchase
shares of Common Stock acquired upon exercise of Options or rights of first
refusal of the Company with respect to such shares, commitments to pay cash
bonuses, to make, arrange for or guaranty loans or to transfer other property to
optionees upon exercise of Options, or such other provisions as shall be
determined by the Board of Directors; provided that such additional provisions
shall not be inconsistent with any other term or condition of the Plan and such
additional provisions shall not be such as to cause any Incentive Stock Option
to fail to qualify as an Incentive Stock Option within the meaning of Section
422 of the Code.
(b) Acceleration, Extension, Etc. The Board of Directors may, in its sole
discretion, (i) accelerate the date or dates on which all or any particular
Option or Options may be exercised or (ii) extend the dates during which all, or
any particular, Option or Options may be exercised; provided, however, that no
such extension shall be permitted if it would cause the Plan to fail to comply
with Section 422 of the Code.
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13. Rights as a Shareholder.
The holder of an Option shall have no rights as a shareholder with respect
to any shares covered by the Option (including, without limitation, any rights
to receive dividends or non-cash distributions with respect to such shares)
until the date of issue of a stock certificate to him or her for such shares. No
adjustment shall be made for dividends or other rights for which the record date
is prior to the date such stock certificate is issued.
14. Adjustment Provisions for Recapitalizations and Related Transactions.
(a) General. 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, (i) the outstanding shares of Common Stock
are increased, decreased or exchanged for a different number or kind of shares
or other securities of the Company, or (ii) additional shares or new or
different shares or other securities of the Company or other non-cash assets are
distributed with respect to such shares of Common Stock or other securities, an
appropriate and proportionate adjustment may be made in (x) the maximum number
and kind of shares reserved for issuance under the Plan, (y) the number and kind
of shares or other securities subject to any then outstanding Options, and (z)
the price for each share subject to any then outstanding Options, without
changing the aggregate purchase price as to which such Options remain
exercisable. Notwithstanding the foregoing, no adjustment shall be made pursuant
to this Section 14 if such adjustment would cause the Plan to fail to comply
with Section 422 of the Code.
(b) Board Authority to Make Adjustments. Any adjustments under this
Section 14 will be made by the Board of Directors, whose determination as to
what adjustments, if any, will be made and the extent thereof will be final,
binding and conclusive. No fractional shares will be issued under the Plan on
account of any such adjustments.
15. Merger, Consolidation, Asset Sale, Liquidation, etc.
(a) General. In the event of a consolidation or merger or sale of all or
substantially all of the stock or assets of the Company in which outstanding
shares of Common Stock are exchanged for securities, cash or other property of
any other corporation or business entity or in the event of a liquidation of the
Company, the Board of Directors of the Company, or the board of directors of any
corporation assuming the obligations of the Company, may, in its discretion,
take any one or more of the following actions, as to some or all outstanding
Options (and need not take the same action as to each such Option): (i) provide
that such Options shall be assumed, or equivalent Options shall be substituted,
by the acquiring or succeeding corporation (or an affiliate thereof), provided
that any such Options substituted for Incentive Stock Options shall meet the
requirements of Section 424(a) of the Code, (ii) upon written notice to the
optionees, provide that all unexercised Options will terminate immediately prior
to the consummation of such transaction unless exercised by the optionee within
a specified period following the date of such notice, (iii) in the event of a
merger under the terms of which holders of the Common Stock of the Company will
receive upon consummation thereof a cash payment for each share surrendered in
the merger (the "Merger Price"), make or provide for a cash payment to the
optionees equal to the difference between (A) the Merger Price times the number
of shares of Common Stock subject to such outstanding Options (to the extent
then exercisable at prices not in excess of the Merger Price) and (B) the
aggregate exercise price of all such outstanding Options in exchange for the
termination of such Options, and (iv) provide that the vesting of all or any
outstanding Options shall be accelerated in whole or in part immediately prior
to such event.
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(b) Substitute Options. The Company may grant Options in substitution for
Options held by employees of another corporation who become employees of the
Company, or a subsidiary of the Company, as the result of a merger or
consolidation of the employing corporation with the Company or a subsidiary of
the Company, or as a result of the acquisition by the Company, or one of its
subsidiaries, of property or stock of the employing corporation. The Company may
direct that substitute Options be granted on such terms and conditions as the
Board of Directors considers appropriate in the circumstances.
16. No Special Employment Rights.
Nothing contained in the Plan or in any Option shall confer upon any
optionee any right with respect to the continuation of his or her employment by
the Company or interfere in any way with the right of the Company at any time to
terminate such employment or to increase or decrease the compensation of the
optionee.
17. Other Employee Benefits.
The amount of any compensation deemed to be received by an employee as a
result of the grant or exercise of an Option or the sale of shares received upon
such exercise will not constitute compensation with respect to which any other
employee benefits of such employee are determined, including, without
limitation, benefits under any bonus, pension, profit-sharing, life insurance or
salary continuation plan, except as otherwise specifically determined by the
Board of Directors.
18. Amendment of the Plan.
(a) The Board of Directors may at any time, and from time to time, modify
or amend the Plan in any respect, except that if at any time the approval of the
shareholders of the Company is required under Section 422 of the Code or any
successor provision with respect to Incentive Stock Options, the Board of
Directors may not effect such modification or amendment without such approval.
(b) The termination or any modification or amendment of the Plan shall
not, without the consent of an optionee, affect his or her rights under an
Option previously granted to him or her. With the consent of the optionee
affected, the Board of Directors may amend outstanding Option Agreements in a
manner not inconsistent with the Plan. The Board of Directors shall have the
right to amend or modify the terms and provisions of the Plan and of any
outstanding Incentive Stock Options to the extent necessary to qualify any or
all such Options for such favorable federal income tax treatment (including
deferral of taxation upon exercise) as may be afforded incentive stock options
under Section 422 of the Code.
19. Withholding.
The Company shall have the right to deduct from payments of any kind
otherwise due to the optionee any federal, state or local taxes of any kind
required by law to be withheld with respect to issuance of any shares upon
exercise of Options. Subject to the prior approval of the Company, which may be
withheld by the Company in its sole discretion, the obligor may elect to satisfy
such obligations, in whole or in part, (i) by causing the Company to withhold
shares of Common Stock otherwise issuable or (ii) by delivering to the Company
shares of Common Stock already owned by the obligor. The shares so delivered or
withheld shall have a fair market value equal to such withholding obligation.
The fair market value of the shares used to satisfy such withholding obligation
shall be determined by the Company as of the date that the amount of tax to be
withheld
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is to be determined. A person who has made an election pursuant to this Section
19 may only satisfy his or her withholding obligation with shares of Common
Stock which are not subject to any repurchase, forfeiture, unfulfilled vesting
or other similar requirements.
20. Effective Date and Duration of the Plan.
(a) Effective Date. The Plan shall become effective when adopted by the
Board of Directors, but no Incentive Stock Option shall become exercisable
unless and until the Plan shall have been approved by the Company's
shareholders. If such shareholder approval is not obtained within twelve months
after the date of the Board's adoption of the Plan, no Options previously
granted under the Plan shall be deemed to be Incentive Stock Options and no
Incentive Stock Options shall be granted thereafter. Amendments to the Plan not
requiring shareholder approval shall become effective when adopted by the Board
of Directors; amendments requiring shareholder approval (as provided in Section
18) shall become effective when adopted by the Board of Directors, but no
Incentive Stock Option granted after the date of such amendment shall become
exercisable (to the extent that such amendment to the Plan was required to
enable the Company to grant such Incentive Stock Option to a particular
optionee) unless and until such amendment shall have been approved by the
Company's shareholders. If such shareholder approval is not obtained within
twelve months of the Board's adoption of such amendment, any Incentive Stock
Options granted on or after the date of such amendment shall terminate to the
extent that such amendment to the Plan was required to enable the Company to
grant such Option to a particular optionee. Subject to this limitation, Options
may be granted under the Plan at any time after the effective date and before
the date fixed for termination of the Plan.
(b) Termination. Unless sooner terminated in accordance with Section 15 or
by the Board of Directors the Plan shall terminate upon the close of business on
the day next preceding the tenth anniversary of the date of its adoption by the
Board of Directors. Options outstanding on such date shall continue in force and
effect in accordance with the provisions of the Plan and the applicable Option
Agreements.
21. Restriction on Transfer or Exercise to Preserve the Company's
S-Corporation Status.
In addition to any other restriction on the transfer or encumbrance of
Common Stock acquired upon exercise of an Option, no holder thereof may transfer
any shares of such Common Stock whether by sale, gift, bequest, operation of
law, or otherwise, if, in the opinion of legal counsel to the Company, transfer
might result in the termination of the Company's S-corporation status for any
reason (including by reason of creating more than the allowed number of
shareholders under Section 1361 of the Code). No such holder may encumber Common
Stock of the Company acquired upon exercise of any Option if, in the opinion of
legal counsel to the Company, a possible result thereof might be a subsequent
transfer prohibited under the immediately preceding sentence. Any such transfer
or encumbrance in violation of this Section 21 shall be null and void and shall
not be recognized on the books and records of the Company, and the holder making
the purported transfer shall retain the right to vote and receive distributions
and shall continue to report the share of income or loss allocated by the
Company to such holder for tax purposes.
No Option granted hereunder may be exercised if, in the opinion of legal
counsel to the Company, such exercise might result in termination of the
Company's S-corporation status for any reason (including by reason of creating
more than the allowed number of shareholders under Section 1361 of the Code),
except that this provision shall not postpone the right of exercise of any
Option beyond its expiration.
22. Provision for Foreign Participants.
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The Board of Directors may, without amending the Plan, modify the terms of
Option Agreements to differ from those specified in the Plan with respect to
participants who are foreign nationals or employed outside the United States to
recognize differences in laws, rules, regulations or customs of such foreign
jurisdictions with respect to tax, securities, currency, employee benefit or
other matters.
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