As filed with the Securities and Exchange Commission on March 8, 2000.
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
ANDOVER.NET, INC.
(Exact name of issuer as specified in its charter)
Delaware 04-3153168
(State of Incorporation) (IRS Employer Identification Number)
50 Nagog Park, Acton, Massachusetts 01720
(Address of Principal Executive Offices) (Zip Code)
ANDOVER.NET, INC.
1999 STOCK OPTION PLAN
ANDOVER ADVANCED TECHNOLOGIES, INC.
1995 STOCK PLAN
(Full title of the Plans)
Bruce A. Twickler
President and Chief Executive Officer
Andover.Net, Inc.
50 Nagog Park
Acton, Massachusetts 01720
(Name and address of agent for service)
(978) 635-5300
(Telephone number, including area code, of agent for service)
copy to:
David P. Kreisler, Esquire
Hutchins, Wheeler & Dittmar
A Professional Corporation
101 Federal Street
Boston, Massachusetts 02110
(617) 951-6600
(Name, address and telephone number of agent for service)
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Securities to be Amount to be registered (1) Proposed Maximum Proposed Maximum Amount of
registered Offering Price Per Aggregate Offering Registration Fee
Unit
<S> <C> <C> <C> <C>
1999 Stock Option Plan Price
Common Stock, par value 775,595 $ 6.60(2) $ 5,118,927.00(2) $ 1,351.40(2)
$.01 per share 960,630 $39.66(3) $38,098,585.80(3) $10,058.03(3)
1995 Stock Plan
Common Stock, par value 969,453 $ 1.06(4) $ 1,027,620.18(4) $ 271.30(4)
$.01 per share
</TABLE>
(1) Also registered hereunder are such additional number of shares of Common
Stock, presently indeterminable, as may be necessary to satisfy the antidilution
provisions of the Plans to which this Registration Statement relates.
(2) Computed solely for the purpose of calculating the registration fee under
rule 457(h) under the Securities Act on the basis of the weighted average
exercise price.
(3) Computed solely for the purpose of calculating the registration fee under
Rule 457(h) under the Securities Act on the basis of the average of the high and
low prices of the Common Stock on the Nasdaq National Market on March 1, 2000.
(4) Computed solely for the purpose of calculating the registration fee under
Rule 457(h) under the Securities Act on the basis of the maximum per share
exercise price.
<PAGE>
PART I
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 1. PLAN INFORMATION
Not filed as part of this Registration Statement pursuant to Note to
Part 1 of Form S-8.
ITEM 2. REGISTRATION INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION
Not filed as part of this Registration Statement pursuant to Note to
Part 1 of Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
Andover.Net, Inc. (the "Company" or "Andover.Net") hereby incorporates
by reference the documents listed in (a) through (c) below. In addition, all
documents subsequently filed by Andover.Net pursuant to Section 13(a), 13(c), 14
and 15(d) of the Securities Exchange Act of 1934 (prior to the filing of a
Post-Effective Amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold) shall be deemed
to be incorporated by reference in this Registration Statement and to be a part
thereof from the date of filing of such documents. Any statement contained
herein or in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Registration Statement to the extent that a statement contained herein or in any
other subsequently filed documents which also is or is deemed to be incorporated
by reference herein modifies or supersedes such earlier statement. Any statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Registration Statement, except as so
modified or superseded.
(a) Andover.Net's Prospectus filed pursuant to Rule 424(b) under the
Securities Act of 1933 on December 8, 1999.
(b) All other reports filed pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 since December 8, 1999.
(c) The description of Andover.Net's Common Stock which is contained in
the Registration Statement filed by Andover.Net on December 2, 1999 under the
Securities Exchange Act of 1934, including any amendment or report filed for the
purpose of updating such description.
ITEM 4. DESCRIPTION OF SECURITIES
Inapplicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
The validity of the authorization and issuance of the shares of Common
Stock offered hereby will be passed upon by Hutchins, Wheeler & Dittmar, A
Professional Corporation, Boston, Massachusetts, counsel to Andover.Net. Certain
members of Hutchins, Wheeler & Dittmar may be deemed to have a beneficial
interest in an aggregate of 6,247 shares of Common Stock. David P. Kreisler, a
member of Hutchins, Wheeler & Dittmar, is also the Secretary of Andover.Net.
<PAGE>
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by the Delaware General Corporation Law, Andover.Net has
included in its certificate of incorporation a provision to eliminate the
personal liability of its directors for monetary damages for breach or alleged
breach of their fiduciary duties as directors, other than breaches of their duty
of loyalty, actions not in good faith or which involve intentional misconduct,
or transactions from which they derive improper personal benefit. In addition,
its bylaws provide that Andover.Net is required to indemnify its officers and
directors under certain circumstances, including those circumstances in which
indemnification would otherwise be discretionary, and Andover.Net is required to
advance expenses to its officers and directors as incurred in connection with
proceedings against them for which they may be indemnified. At present,
Andover.Net is not aware of any pending or threatened litigation or proceeding
involving its directors, officers, employees or agents in which indemnification
would be required or permitted. Andover.Net believes that its certificate of
incorporation provisions and indemnification agreements are necessary to attract
and retain qualified persons as directors and officers.
In addition to indemnification provisions in its certificate of
incorporation and bylaws, Andover.Net has entered into agreements to indemnify
its non-employee directors. These agreements provide for indemnification for
some types of expenses, including attorneys' fees, judgments, fines and
settlement amounts incurred by persons in any action or proceeding, including
any action by or in the right of Andover.Net, arising out of their services as a
director of Andover.Net.
Andover.Net has purchased insurance with respect to, among other
things, the liabilities that may arise under the provisions referred to above.
The directors and officers of Andover.Net also are insured against certain
liabilities, including certain liabilities arising under the Securities Act of
1933, as amended, which might be incurred by them in such capacities and against
which they are not indemnified by Andover.Net.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Inapplicable.
ITEM 8. EXHIBITS
Exhibit
Number
4.1 Andover.Net, Inc. 1999 Stock Option Plan.
4.2 Andover Advanced Technologies, Inc. 1995 Stock Plan.
4.3* Amended and Restated Certificate of Incorporation of the Registrant.
4.4** Amended and Restated Bylaws of the Registrant.
5.1 Opinion of Hutchins, Wheeler & Dittmar, A Professional Corporation.
23.1 Consent of Arthur Andersen LLP Boston, Independent Accountants
regarding Andover.Net, Inc.
23.2 Consent of Hutchins, Wheeler & Dittmar, A Professional Corporation.
(included in Exhibit 5.1).
24.1 Powers of Attorney (included on the signature page of this
Registration Statement).
- -------------------------
* Filed as Exhibit 3.1 to Registrant's Registration Statement on Form S-1 (File
No. 33-87257) and incorporated herein by reference.
** Filed as Exhibit 3.2 to Registrant's Registration Statement on Form S-1
(File No. 33-87257) and incorporated herein by reference.
<PAGE>
ITEM 9. UNDERTAKINGS
The undersigned registrant hereby undertakes the following:
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) The undersigned registrant hereby undertakes, that, insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Acton, Commonwealth of Massachusetts on March 8,
2000.
ANDOVER.NET, INC.
By: /s/ Bruce A. Twickler
Bruce A. Twickler
President
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Bruce A. Twickler and Peter A. Phelps and each of
them, with the power to act without the other, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him or in his name, place and stead, in any and all capacities to sign any
and all amendments or post-effective amendments to this Registration Statement,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agents or either of them, or their or his substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Bruce A. Twickler President, Chief Executive Officer and March 8, 2000
- ---------------------------
Bruce A. Twickler Chairman of the Board (principal executive
officer)
/s/ Peter A. Phelps Chief Financial Officer, (principal March 8, 2000
- ---------------------------
Peter A. Phelps financial officer)
/s/ Walter M. Bird, III Director March 8, 2000
- ---------------------------
Walter M. Bird, III
/s/ James D. Logan Director March 8, 2000
- ---------------------------
James D. Logan
/s/ Louis Page Director March 8, 2000
- ---------------------------
Louis Page
/s/ John E. Trombly Director March 8, 2000
- ---------------------------
John E. Trombly
/s/ Thomas R. Shepherd Director March 8, 2000
- ---------------------------
Thomas R. Shepherd
/s/ Robert Malda Director March 8, 2000
- ------------------------------------
Robert Malda
/s/ Jonathan M. Goldstein Director March 8, 2000
- -------------------------
Jonathan M. Goldstein
</TABLE>
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number
4.1 Andover.Net, Inc. 1999 Stock Option Plan.
4.2 Andover Advanced Technologies, Inc. 1995 Stock Plan.
4.3* Amended and Restated Certificate of Incorporation of the Registrant.
4.4** Amended and Restated Bylaws of the Registrant.
5.1 Opinion of Hutchins, Wheeler & Dittmar, A Professional Corporation.
23.1 Consent of Arthur Andersen LLP Boston, Independent Accountants
regarding Andover.Net, Inc.
23.3 Consent of Hutchins, Wheeler & Dittmar, A Professional Corporation
(included in Exhibit 5.1).
24.1 Powers of Attorney (included on the signature page of this
Registration Statement).
- -------------------------
* Filed as Exhibit 3.1 to Registrant's Registration Statement on Form S-1
(File No. 33-87257) and incorporated herein by reference.
** Filed as Exhibit 3.2 to Registrant's Registration Statement on Form S-1
(File No. 33-87257) and incorporated herein by reference.
EXHIBIT 4.1
ANDOVER.NET, INC.
1999 STOCK OPTION PLAN
1. Purpose of the Plan.
-------------------
This stock option plan (the "Plan") is intended to encourage ownership
of the stock of Andover.Net, Inc., a Delaware corporation (the "Company") by
employees, consultants and advisors of the Company and its subsidiaries, to
induce qualified personnel to enter and remain in the employ of the Company or
its subsidiaries and otherwise to provide additional incentive for optionees to
promote the success of its business.
2. Stock Subject to the Plan.
-------------------------
(a) The total number of shares of the authorized but unissued or
Treasury shares of the common stock, par value $.01 per share, of the Company
("Common Stock") for which options may be granted under the Plan shall not
exceed eighty six thousand four hundred (86,400) shares, subject to adjustment
as provided in Section 12 hereof.
(b) If an option granted hereunder shall expire or terminate for any
reason without having vested fully or having been exercised in full, the
unvested and/or unpurchased shares subject thereto shall again be available for
subsequent option grants under the Plan.
(c) Stock issuable upon exercise of an option granted under the Plan
may be subject to such restrictions on transfer, repurchase rights or other
restrictions as shall be determined by the Committee.
3. Administration of the Plan.
--------------------------
At the discretion of the Company's Board of Directors, the Plan shall
be administered either (i) by the full Board of Directors of the Company or (ii)
by a committee (the "Committee") consisting of two or more members of the
Company's Board of Directors. In the event the full Board of Directors is the
administrator of the Plan, references herein to the Committee shall be deemed to
include the full Board of Directors. The Board of Directors may from time to
time appoint a member or members of the Committee in substitution for or in
addition to the member or members then in office and may fill vacancies on the
Committee however caused. The Committee shall choose one of its members as
Chairman and shall hold meetings at such times and places as it shall deem
advisable. A majority of the members of the Committee shall constitute a quorum
and any action may be taken by a majority of those present and voting at any
meeting.
Any action may also be taken without the necessity of a meeting by a
written instrument signed by a majority of the Committee. The decision of the
Committee as to all questions of interpretation and application of the Plan
shall be final, binding and conclusive on all persons. The Committee shall have
the authority to adopt, amend and rescind such rules and regulations as, in its
opinion, may be advisable in the administration of the Plan. The Committee may
correct any defect or supply any omission or reconcile any inconsistency in the
Plan or in any option agreement granted hereunder in the manner and to the
extent it shall deem expedient to carry the Plan into effect and shall be the
sole and final judge of such expediency. No Committee member shall be liable for
any action or determination made in good faith.
<PAGE>
4. Type of Options.
---------------
Options granted pursuant to the Plan shall be authorized by action of
the Committee and may be designated as either incentive stock options meeting
the requirements of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), or non-qualified options which are not intended to meet the
requirements of such Section 422 of the Code, the designation to be in the sole
discretion of the Committee. The Plan shall be administered by the Committee in
such manner as to permit options to qualify as incentive stock options under the
Code.
5. Eligibility.
-----------
Options designated as incentive stock options shall be granted only to
employees (including officers and directors who are also employees) of the
Company or any of its subsidiaries, including subsidiaries which become such
after adoption of the Plan. Options designated as non-qualified options may be
granted to officers, employees, consultants, advisors and directors of the
Company or of any of its subsidiaries, including subsidiaries which become such
after adoption of the Plan. "Subsidiary" or "subsidiaries" shall be as defined
in Section 424 of the Code and the Treasury Regulations promulgated thereunder
(the "Regulations").
The Committee shall, from time to time, at its sole discretion, select
from such eligible individuals those to whom options shall be granted and shall
determine the number of shares to be subject to each option. In determining the
eligibility of an individual to be granted an option, as well as in determining
the number of shares to be granted to any individual, the Committee in its sole
discretion shall take into account the position and responsibilities of the
individual being considered, the nature and value to the Company or its
subsidiaries of his or her service and accomplishments, his or her present and
potential contribution to the success of the Company or its subsidiaries, and
such other factors as the Committee may deem relevant.
No option designated as an incentive stock option shall be granted to
any employee of the Company or any subsidiary if such employee owns, immediately
prior to the grant of an option, stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or of a parent or a
subsidiary, unless the purchase price for the stock under such option shall be
at least 110% of its fair market value at the time such option is granted and
the option, by its terms, shall not be exercisable more than five years from the
date it is granted. In determining the stock ownership under this paragraph, the
provisions of Section 424(d) of the Code shall be controlling. In determining
the fair market value under this paragraph, the provisions of Section 7 hereof
shall apply.
The maximum number of shares of the Company's Common Stock with respect
to which an option or options may be granted to any employee in any calendar
year shall not exceed eighty six thousand four hundred (86,400) shares, taking
into account shares subject to options granted and terminated, or repriced,
during such calendar year.
<PAGE>
6. Option Agreement.
----------------
Each option shall be evidenced by an option agreement (the "Agreement")
duly executed on behalf of the Company and by the optionee to whom such option
is granted, which Agreement shall comply with and be subject to the terms and
conditions of the Plan. The Agreement may contain such other terms, provisions
and conditions which are not inconsistent with the Plan as may be determined by
the Committee, provided that options designated as incentive stock options shall
meet all of the conditions for incentive stock options as defined in Section 422
of the Code. The date of grant of an option shall be as determined by the
Committee. More than one option may be granted to an individual.
7. Option Price.
------------
The option price or prices of shares of the Company's Common Stock for
options designated as non-qualified stock options shall be as determined by the
Committee. The option price or prices of shares of the Company's Common Stock
for incentive stock options shall be not less than the fair market value of such
Common Stock at the time the option is granted as determined by the Committee in
accordance with the Regulations promulgated under Section 422 of the Code. If
such shares are then listed on any national securities exchange, the fair market
value shall be the mean between the high and low sales prices, if any, on the
largest such exchange on the date of the grant of the option or, if none, shall
be determined by taking a weighted average of the means between the highest and
lowest sales prices on the nearest date before and the nearest date after the
date of grant in accordance with Treasury Regulations Section 25.2512-2. If the
shares are not then listed on any such exchange, the fair market value of such
shares shall be the mean between the high and low sales prices, if any, as
reported in the National Association of Securities Dealers Automated Quotation
National Market ("NASDAQ/NM") for the date of the grant of the option, or, if
none, shall be determined by taking a weighted average of the means between the
highest and lowest sales on the nearest date before and the nearest date after
the date of grant in accordance with Treasury Regulations Section 25.2512-2. If
the shares are not then either listed on any such exchange or quoted in
NASDAQ/NM, the fair market value shall be the mean between the average of the
"Bid" and the average of the "Ask" prices, if any, as reported in the National
Daily Quotation Service for the date of the grant of the option, or, if none,
shall be determined by taking a weighted average of the means between the
highest and lowest sales prices on the nearest date before and the nearest date
after the date of grant in accordance with Treasury Regulations Section
25.2512-2. If the fair market value cannot be determined under the preceding
three sentences, it shall be determined in good faith by the Committee.
8. Manner of Payment; Manner of Exercise.
-------------------------------------
(a) Options granted under the Plan may provide for the payment of the
exercise price, as determined by the Committee, and as set forth in the Option
Agreement, by delivery of (i) cash or a check payable to the order of the
Company in an amount equal to the exercise price of such options, (ii) shares of
Common Stock of the Company owned by the optionee having a fair market value
equal in amount to the exercise price of the options being exercised, (iii) any
combination of (i) and (ii), provided, however, that payment of the exercise
price by delivery of shares of Common Stock of the Company owned by such
optionee may be made only if such payment does not result in a charge to
earnings for financial accounting purposes as determined by the Committee or
(iv) by delivery of a properly executed exercise notice to the Company, together
with a copy of irrevocable instruments to a broker to deliver promptly to the
Company the amount of sale or loan proceeds to pay the exercise price. The fair
market value of any shares of the Company's Common Stock which may be delivered
upon exercise of an option shall be determined by the Committee in accordance
with Section 7 hereof. To facilitate clause (iv) above, the Company may enter
into agreements for coordinated procedures with one or more brokerage firms. The
date of exercise shall be the date of delivery of such exercise notice or
payment.
<PAGE>
(b) To the extent that the right to purchase shares under an option has
accrued and is in effect, options may be exercised in full at one time or in
part from time to time, by giving written notice, signed by the person or
persons exercising the option, to the Company, stating the number of shares with
respect to which the option is being exercised, accompanied by payment in full
for such shares as provided in subparagraph (a) above. Upon such exercise,
delivery of a certificate for paid-up non-assessable shares shall be made at the
principal office of the Company to the person or persons exercising the option
at such time, during ordinary business hours, not more than ten (10) days from
the date of receipt of the notice by the Company, as shall be designated in such
notice, or at such time, place and manner as may be agreed upon by the Company
and the person or persons exercising the option. Upon exercise of the option and
payment as provided above, the optionee shall become a shareholder of the
Company as to the Shares acquired upon such exercise.
9. Exercise of Options.
-------------------
Each option granted under the Plan shall, subject to Section 10(b) and
Section 12 hereof, be exercisable at such time or times and during such period
as determined by the Committee which shall be set forth in the Agreement;
provided, however, that no option granted under the Plan shall have a term in
excess of ten (10) years from the date of grant.
To the extent that an option to purchase shares is not exercised by an
optionee when it becomes initially exercisable, it shall not expire but shall be
carried forward and shall be exercisable, on a cumulative basis, until the
expiration of the exercise period. No partial exercise may be made for less than
fifty (50) full shares of Common Stock.
Notwithstanding the foregoing, the Committee may in its discretion
accelerate the exercisability of any option subject to such terms and conditions
as the Committee deems necessary and appropriate.
<PAGE>
10. Term of Options; Exercisability.
(a) Term.
----
(1) Each option shall expire not more than ten (10) years from
the date of the granting thereof, but shall be subject to earlier termination as
herein provided.
(2) Except as otherwise provided in this Section 10, an option
granted to any employee optionee who ceases to be an employee of the Company or
one of its subsidiaries shall terminate 60 days after the date such optionee
ceases to be an employee of the Company or one of its subsidiaries, or on the
date on which the option expires by its terms, whichever occurs first.
(3) If such termination of employment is because of dismissal
for cause or because the employee is in breach of any employment agreement, such
option will terminate on the date the optionee ceases to be an employee of the
Company or one of its subsidiaries.
(4) If such termination of employment is because the optionee
has become permanently disabled (within the meaning of Section 22(e)(3) of the
Code), such option shall terminate on the last day of the twelfth month from the
date such optionee ceases to be an employee, or on the date on which the option
expires by its terms, whichever occurs first.
(5) In the event of the death of any optionee, any option
granted to such optionee shall terminate on the last day of the twelfth month
from the date of death, or on the date on which the option expires by its terms,
whichever occurs first.
(6) Notwithstanding subparagraphs (2), (3), (4) and (5) above,
the Committee shall have the authority to extend the expiration date of any
outstanding option in circumstances in which it deems such action to be
appropriate, provided that no such extension shall extend the term of an option
beyond the date on which the option would have expired if no termination of the
optionee's employment had occurred.
<PAGE>
(b) Exercisability.
--------------
(1) Except as provided below, an option granted to an employee
optionee who ceases to be an employee of the Company or one of its subsidiaries
shall be exercisable only to the extent that the right to purchase shares under
such option has accrued and is in effect on the date such optionee ceases to be
an employee of the Company or one of its subsidiaries.
(2) An option granted to an employee optionee who ceases to be
an employee of the Company or one of its subsidiaries because he or she has
become permanently disabled, as defined in Section 22(e)(3) of the Code, shall
be exercisable by such person or his or her legal representative only to the
extent that the right to purchase shares under such option has accrued and is in
effect on the date such optionee ceases to be an employee of the Company or one
of its subsidiaries.
(3) In the event of the death of any optionee, the option
granted to such optionee may be exercised only to the extent that the right to
purchase shares under such option is accrued and is in effect on the date of the
death of such optionee by the estate of such optionee, or by any person or
persons who acquired the right to exercise such option by bequest or inheritance
or by reason of the death of such optionee.
11. Options Not Transferable.
------------------------
The right of any optionee to exercise any option granted to him or her
shall not be assignable or transferable by such optionee otherwise than by will
or the laws of descent and distribution, except that an optionee may transfer
options that are not incentive stock options granted under Plan to the
optionee's spouse or children or to a trust or family limited partnership or
similar organization established for the sole benefit of one or more of the
optionee, the optionee's spouse or the optionee's children; provided, that prior
to any registration by the Company under the Securities Act of 1933, as amended
(the "Securities Act"), no optionee shall assign or transfer any option if the
result of such assignment or transfer shall be to increase, upon exercise of the
option, the total number of holders of Common Stock without the prior written
consent of the Committee, which consent may be withheld by the Committee if it
reasonably believes that withholding such consent will reduce the likelihood
that the Company would be required to register its Common Stock under the
Securities Act. Incentive stock options shall be exercisable during the lifetime
of such optionee only by him/her. Any option granted under the Plan shall be
null and void and without effect upon the bankruptcy of the optionee to whom the
option is granted, or upon any attempted assignment or transfer, except as
herein provided, including without limitation any purported assignment, whether
voluntary or by operation of law, pledge, hypothecation or other disposition,
attachment, divorce, trustee process or similar process, whether legal or
equitable, upon such option.
<PAGE>
12. Recapitalizations, Reorganizations and the Like.
-----------------------------------------------
(a) In the event that the outstanding shares of the Common Stock of the
Company are changed into or exchanged for a different number or kind of shares
or other securities of the Company or of another corporation by reason of any
reorganization, merger, consolidation, recapitalization, reclassification, stock
split-up, combination of shares, or dividends payable in capital stock,
appropriate adjustment shall be made in the number and kind of shares as to
which options may be granted under the Plan and as to which outstanding options
or portions thereof then unexercised shall be exercisable, to the end that the
proportionate interest of the optionee shall be maintained as before the
occurrence of such event; such adjustment in outstanding options shall be made
without change in the total price applicable to the unexercised portion of such
options and with a corresponding adjustment in the option price per share.
(b) In addition, unless otherwise determined by the Committee in its
sole discretion, in the case of any (i) sale or conveyance to another entity of
all or substantially all of the property and assets of the Company, including,
without limitation, by way of merger or consolidation, or (ii) Change in Control
(as hereinafter defined) of the Company, the purchaser(s) of the Company's
assets or stock may, in his, her or its discretion, deliver to the optionee the
same kind of consideration that is delivered to the shareholders of the Company
as a result of such sale, conveyance or Change in Control, the Committee may
cancel all outstanding options in exchange for consideration in cash or in kind
which consideration shall be equal in value to the value of those shares of
stock or other securities the optionee would have received had the option been
exercised (to the extent then exercisable) and no disposition of the shares
acquired upon such exercise been made prior to such sale, conveyance or Change
in Control, less the option price therefor. Upon receipt of such consideration
by the optionee, his or her option shall immediately terminate and be of no
further force and effect. The value of the stock or other securities the
optionee would have received if the option had been exercised shall be
determined in good faith by the Committee, and in the case of shares of the
Common Stock of the Company, in accordance with the provisions of Section 7
hereof. The Committee shall also have the power and right to accelerate the
exercisability of any options, notwithstanding any limitations in this Plan or
in the Agreement upon such a sale, conveyance or Change in Control. Upon such
acceleration, any options or portion thereof originally designated as incentive
stock options that no longer qualify as incentive stock options under Section
422 of the Code as a result of such acceleration shall be redesignated as
non-qualified stock options. A "Change in Control" shall be deemed to have
occurred if any person, together with all affiliates of such person or persons,
who prior to such time owned less than thirty percent (30%) of the then
outstanding Common Stock of the Company, shall acquire, whether by purchase,
exchange, tender offer, merger, consolidation or otherwise, such additional
shares of the Company's Common Stock in one or more transactions, or series of
transactions, such that following such transaction or transactions, such person
and affiliates beneficially own fifty percent (50%) or more of the Company's
Common Stock outstanding; provided, that in no event shall the consummation of
an initial public offering by the Company constitute a Change of Control.
<PAGE>
(c) Upon dissolution or liquidation of the Company, all options granted
under this Plan shall terminate, but each optionee (if at such time in the
employ of or otherwise associated with the Company or any of its subsidiaries)
shall have the right, immediately prior to such dissolution or liquidation, to
exercise his or her option to the extent then exercisable.
(d) No fraction of a share shall be purchasable or deliverable upon the
exercise of any option, but in the event any adjustment hereunder of the number
of shares covered by the option shall cause such number to include a fraction of
a share, such fraction shall be adjusted to the nearest smaller whole number of
shares.
13. No Special Employment Rights.
----------------------------
Nothing contained in the Plan or in any option granted under the Plan
shall confer upon any option holder any right with respect to the continuation
of his or her employment by the Company (or any subsidiary) or interfere in any
way with the right of the Company (or any subsidiary), subject to the terms of
any separate employment agreement to the contrary, at any time to terminate such
employment or to increase or decrease the compensation of the option holder from
the rate in existence at the time of the grant of an option. Whether an
authorized leave of absence, or absence in military or government service, shall
constitute termination of employment shall be determined by the Committee at the
time.
14. Withholding.
-----------
The Company's obligation to deliver shares upon the exercise of any
option granted under the Plan and any payments or transfers under Section 12
hereof shall be subject to the option holder's satisfaction of all applicable
Federal, state and local income, excise, employment and any other tax
withholding requirements.
<PAGE>
15. Restrictions on Issue of Shares.
-------------------------------
(a) Notwithstanding the provisions of Section 8, the Company may delay
the issuance of shares covered by the exercise of an option and the delivery of
a certificate for such shares until one of the following conditions shall be
satisfied:
(i) The shares with respect to which such option has been exercised are at
the time of the issue of such shares effectively registered or qualified under
applicable Federal and state securities acts now in force or as hereafter
amended; or
(ii) Counsel for the Company shall have given an opinion, which opinion
shall not be unreasonably conditioned or withheld, that such shares are exempt
from registration and qualification under applicable Federal and state
securities acts now in force or as hereafter amended.
(b) It is intended that all exercises of options shall be effective,
and the Company shall use its best efforts to bring about compliance with the
above conditions within a reasonable time, except that the Company shall be
under no obligation to qualify shares or to cause a registration statement or a
post-effective amendment to any registration statement to be prepared for the
purpose of covering the issue of shares in respect of which any option may be
exercised, except as otherwise agreed to by the Company in writing.
16. Purchase for Investment; Rights of Holder on Subsequent Registration.
--------------------------------------------------------------------
Unless the shares to be issued upon exercise of an option granted under
the Plan have been effectively registered under the Securities Act of 1933, as
now in force or hereafter amended, the Company shall be under no obligation to
issue any shares covered by any option unless the person who exercises such
option, in whole or in part, shall give a written representation and undertaking
to the Company which is satisfactory in form and scope to counsel for the
Company and upon which, in the opinion of such counsel, the Company may
reasonably rely, that he or she is acquiring the shares issued pursuant to such
exercise of the option for his or her own account as an investment and not with
a view to, or for sale in connection with, the distribution of any such shares,
and that he or she will make no transfer of the same except in compliance with
any rules and regulations in force at the time of such transfer under the
Securities Act of 1933, or any other applicable law, and that if shares are
issued without such registration, a legend to this effect may be endorsed upon
the securities so issued. In the event that the Company shall, nevertheless,
deem it necessary or desirable to register under the Securities Act of 1933 or
other applicable statutes any shares with respect to which an option shall have
been exercised, or to qualify any such shares for exemption from the Securities
Act of 1933 or other applicable statutes, then the Company may take such action
and may require from each optionee such information in writing for use in any
registration statement, supplementary registration statement, prospectus,
preliminary prospectus or offering circular as is reasonably necessary for such
purpose and may require reasonable indemnity to the Company and its officers and
directors and controlling persons from such holder against all losses, claims,
damages and liabilities arising from such use of the information so furnished
and caused by any untrue statement of any material fact therein or caused by the
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
under which they were made.
<PAGE>
17. Loans.
-----
The Company may make loans to optionees to permit them to exercise
options. If loans are made, the requirements of all applicable Federal and state
laws and regulations regarding such loans must be met.
18. Modification of Outstanding Options.
-----------------------------------
The Committee may authorize the amendment of any outstanding option
with the consent of the optionee when and subject to such conditions as are
deemed to be in the best interests of the Company and in accordance with the
purposes of this Plan.
19. Approval of Stockholders.
------------------------
The Plan shall be subject to approval by the vote of stockholders
holding at least a majority of the voting stock of the Company present, or
represented, and entitled to vote at a duly held stockholders' meeting, or by
written consent of the stockholders as provided for under applicable state law,
within twelve (12) months after the adoption of the Plan by the Board of
Directors and shall take effect as of the date of adoption by the Board of
Directors upon such approval. The Committee may grant options under the Plan
prior to such approval, but any such option shall become effective as of the
date of grant only upon such approval and, accordingly, no such option may be
exercisable prior to such approval.
20. Termination and Amendment.
-------------------------
Unless sooner terminated as herein provided, the Plan shall terminate
ten (10) years from the date upon which the Plan was duly adopted by the Board
of Directors of the Company. The Board of Directors may at any time terminate
the Plan or make such modification or amendment thereof as it deems advisable;
provided, however, that except as provided in this Section 20, the Board of
Directors may not, without the approval of the stockholders of the Company
obtained in the manner stated in Section 19, increase the maximum number of
shares for which options may be granted or change the designation of the class
of persons eligible to receive options under the Plan, or make any other change
in the Plan which requires stockholder approval under applicable law or
regulations.
<PAGE>
21. Reservation of Stock.
--------------------
The Company shall at all times during the term of the Plan reserve and
keep available such number of shares of stock as will be sufficient to satisfy
the requirements of the Plan and shall pay all fees and expenses necessarily
incurred by the Company in connection therewith.
22. Limitation of Rights in the Option Shares.
-----------------------------------------
An optionee shall not be deemed for any purpose to be a stockholder of
the Company with respect to any of the options except to the extent that the
option shall have been exercised with respect thereto and, in addition, a
certificate shall have been issued theretofore and delivered to the optionee.
23. Notices.
-------
Any communication or notice required or permitted to be given under the Plan
shall be in writing, and mailed by registered or certified mail or delivered by
hand, if to the Company, to its principal place of business, attention:
President, and, if to an optionee, to the address as appearing on the records of
the Company.
EXHIBIT 4.2
ANDOVER ADVANCED TECHNOLOGIES, INC.
1995 STOCK PLAN
1. Purpose. This 1995 Stock Plan (the "Plan") is intended to provide
incentives: (a) to the officers and other employees of ANDOVER ADVANCED
TECHNOLOGIES, INC. (the "Company"), its parent (if any) and any present or
future subsidiaries of the Company (collectively, "Related Corporations") by
providing them with opportunities to purchase stock in the Company pursuant to
options granted hereunder which qualify as "incentive stock options" under
Section 422(b) of the Internal Revenue Code of 1986, as amended (the "Code")
("ISO" or "ISOs"); (b) to directors, officers, employees and consultants of the
Company and Related Corporations by providing them with opportunities to
purchase stock in the Company pursuant to options granted hereunder which do not
qualify as ISOs ("Non-Qualified Option" or "Non-Qualified Options"); (c) to
directors, officers, employees and consultants of the Company and Related
Corporations by providing them with awards of stock in the Company ("Awards");
and (d) to directors, officers, employees and consultants of the Company and
Related Corporations by providing them with opportunities to make direct
purchases of stock in the Company ("Purchases"). Both ISOs and Non-Qualified
Options are referred to hereafter individually as an "Option" and collectively
as "Options". Options, Awards and authorizations to make Purchases are referred
to hereafter collectively as "Stock Rights". As used herein, the terms "parent"
and "subsidiary" mean "parent corporation" and "subsidiary corporation",
respectively, as those terms are defined in Section 425 of the Code.
2. Administration of the Plan.
--------------------------
A. The Plan shall be administered by the Board of Directors of the
Company (the "Board"). Members of the Board who are either (i) eligible for
Stock Rights pursuant to the Plan or (ii) have been granted Stock Rights may
vote on any matters affecting the administration of the Plan or the grant of any
Stock Rights pursuant to the Plan, except that no such member shall act upon the
granting to himself of Stock Rights, but any such member may be counted in
determining the existence of a quorum at any meeting of the Board during which
action is taken with respect to the granting to him of Stock Rights. All
references in the Plan to the Committee shall mean the Board if no Committee has
been appointed pursuant to subparagraphs B or C of this Section 2 below.
<PAGE>
B. The Board may delegate its powers with respect to the administration
of the Plan to a compensation committee (the "Committee") appointed by the
Board, provided that such Committee shall be composed pursuant to subparagraph C
below if the Company registers any class of any equity security pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). The Committee may select one of its members as its chairman, and shall
hold meetings at such time and places as it may determine. Acts by a majority of
the Committee, or acts reduced to or approved in writing by a majority of the
members of the Committee, shall be the valid acts of the Committee. From time to
time the Board may increase or decrease the size of the Committee and appoint
additional members thereof, remove members (with or without cause) and appoint
new members in substitution therefor, fill vacancies however caused, or remove
all members of the Committee and thereafter directly administer the Plan.
C. Notwithstanding the foregoing, if the Company registers any class of
any equity security pursuant to Section 12 of the Exchange Act, the Plan shall
be administered by the Committee (unless and until its members are not qualified
to serve on the Committee pursuant to the provisions of the Plan) which shall be
composed of not fewer than two (2) members of the Board who shall be appointed
from time to time by the Board. No member of such Committee may exercise
discretion with respect to, or participate in, the administration of the Plan
if, at any time, while a member of the Committee or during the twelve (12)-month
period prior to such exercise or participation, he has been granted or awarded
Stock Rights or any other derivative security of the Company or any of its
affiliate under this Plan or any similar plan of the Company, except that:
(a) participation in a "Formula Plan" shall not disqualify a
director from being a disinterested person. A Formula Plan is a plan which:
(i) permits officers and/or directors to receive awards and
either (A) states the amount and price of securities to be
awarded to designated officers and directors or categories of
officers and directors, though not necessarily to others who
may participate in the plan, and specifies the time of awards
to officers and directors or (B) sets forth a formula that
determines the amount, price and timing of awards, using
objective criteria such as earnings of the Company, value of
the securities, years of service, job classification, and
compensation levels; and
(ii) provides that these plan provisions shall not be amended
more than once every six (6) months, other than to comport
with changes in the Code, the Employee Retirement Income
Security Act ("ERISA"), or the rules thereunder;
<PAGE>
(b) participation in an ongoing securities acquisition plan which
meets the following conditions shall not disqualify a director from being a
disinterested person:
(i) the plan provides for broad-based employee participation and the
terms of the plan do not discriminate in favor of highly compensated
employees;
(ii) officer or director participants making withdrawals must cease
further purchases in the plan for six (6) months, or the securities so
distributed must be held by the participant six (6) months prior to
disposition; provided, however, that extraordinary distributions of all of
the Company's securities held by the plan and distributions in connection
with death, retirement, disability, termination of employment, or a
qualified domestic relations order as defined by the Code or Title I of
ERISA, or the rules thereunder, are not subject to this requirement;
(iii) officer or director participants who cease participation in the
plan may not participate again for at least six (6) months; and
(iv) for stock purchase plans under Section 423 of the Internal
Revenue Code or similar plans, where the purchase price of the stock is not
fixed and the participant is not obligated to purchase the stock until
exercise of a right, in addition to the foregoing conditions, the stock
acquired is held for six (6) months from the date the stock purchase price
is fixed.
(c) an election to receive an annual retainer fee in either cash or
an equivalent amount of securities, or partly in cash and partly in securities,
shall not disqualify a director from being a disinterested person; and
(d) participation in a plan shall not disqualify a director from
being a disinterested person for the purpose of administering another plan that
does not permit participation by directors.
<PAGE>
Members of the Committee shall be subject to any additional
restrictions necessary to satisfy the requirements for disinterested
administration of the Plan as set forth in Rule 16b-3 under the Exchange Act, as
it may be amended from time to time. If at any time any member of the Committee
does not satisfy such disinterested administration requirements, no stock
options shall be granted under the Plan to any director or officer until such
time as all members of the Committee satisfy such requirements.
D. Subject to ratification of the grant or authorization of each Stock
Right by the Board (if so required by applicable state law), and subject to the
terms of the Plan, the Committee, if so appointed, shall have the authority to
(i) determine the employees of the Company and Related Corporations (from among
the class of employees eligible under paragraph 3 to receive ISOs) to whom ISOs
may be granted, and to determine (from among the class of individuals and
entities eligible under paragraph 3 to receive Non-Qualified Options and Awards
and to make Purchases) to whom Non-Qualified Options, awards and authorizations
to make Purchases may be granted; (ii) determine the time or times at which
Options or Awards may be granted or Purchases made; (iii) determine the option
price of shares subject to each Option, which price shall not be less than the
minimum price of shares subject to each Purchase; (iv) determine whether each
Option granted shall be an ISO or a Non-Qualified Option; (v) determine (subject
to paragraph 7) the time or times when each Option shall become exercisable and
the duration of the exercise period; (vi) determine whether restrictions such as
repurchase options are to be imposed on shares subject to Options, Awards and
Purchases and the nature of such restrictions, if any; and (vii) interpret the
Plan and prescribe and rescind rules and regulations relating to it. If the
Committee determines to issue a Non-Qualified Option, it shall take whatever
actions it deems necessary, under Section 422 of the Code and the regulations
promulgated thereunder, to ensure that such Option is not treated as an ISO. The
interpretation and construction by the Committee of any provisions of the Plan
or of any Stock Right granted under it shall be final unless otherwise
determined by the Board. The Committee may from time to time adopt such rules
and regulations for carrying out the Plan as it may deem best. No member of the
Board or the Committee shall be liable for any action or determination made in
good faith with respect to the Plan or any Stock Right granted under it.
3. Eligible Employees and Others. ISOs may be granted to any employee
of the Company or any Related Corporation. Those officers and directors of the
Company who are not employees may not be granted ISOs under the Plan.
Non-Qualified Options, Awards and authorizations to make Purchases may be
granted to any director (whether or not an employee), officer, employee or
consultant of the Company or any Related Corporation. The granting of any Stock
Right to any individual or entity shall neither entitle that individual or
entity to, nor disqualify him from, participation in any other grant of Stock
Rights.
<PAGE>
4. Stock. The stock subject to Options, Awards and Purchases shall be
authorized but unissued shares of Common Stock of the Company, no par value per
share (the "Common Stock"), or shares of Common Stock reacquired by the Company
in any manner. The aggregate number of shares which may be issued pursuant to
the Plan is Twelve Thousand Two Hundred and Fifty (12,250), subject to
adjustment as provided in paragraph 13. Any such shares may be issued as ISOs,
Non-Qualified Options or Awards, or to persons or entities making Purchases, so
long as the number of shares so issued does not exceed such number, as adjusted.
If any Option granted under the Plan shall expire or terminate for any reason
without having been exercisable in whole or in part, or if the Company shall
reacquire any vested shares issued pursuant to Awards or Purchases, the
unpurchased shares subject to such Options and any unvested shares so reacquired
by the Company shall again be available for grants of Stock Rights under the
Plan.
5. Granting of Stock Rights. Stock Rights may be granted under the Plan
at any time after October 12, 1995 and prior to October 12, 2005. The date of
grant of a Stock Right under the Plan will be the date specified by the
Committee at the time it grants the Stock Right; provided, however, that such
date shall not be prior to the date on which the Committee acts to approve the
grant. The Committee shall have the right, with the consent of the optionee, to
convert any ISO granted under the Plan to a Non-Qualified Option pursuant to
paragraph 16.
6. Minimum Option Price; ISO Limitations.
-------------------------------------
A. The price per share specified in the agreement relating to each ISO
granted under the Plan shall not be less than the fair market value per share of
Common Stock on the date of such grant. In the case of an ISO to be granted to
an employee owning stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or any Related
Corporation, the price per share specified in the agreement relating to such ISO
shall not be less than one hundred ten percent (110%) of the fair market value
per share of Common Stock on the date of grant.
<PAGE>
B. In no event shall the aggregate fair market value (determined at the
time an ISO is granted) of Common Stock for which ISOs granted to any employee
are exercisable for the first time by such employee during any calendar year
(under all stock option plans of the Company and any Related Corporation) exceed
$100,000; provided that this paragraph 6(B) shall have no force or effect if its
inclusion in the Plan is not necessary for Options issued as ISOs to qualify as
ISOs pursuant to Section 422(d) of the Code.
C. If, at the time an Option is granted under the Plan, the Company's
Common Stock is publicly traded, "fair market value" shall be determined as of
the last business day for which the prices or quotes discussed in this sentence
are available prior to the date such Option is granted and shall mean (i) the
average (on that date) of the high and low prices of the Common Stock on the
principal national securities exchange on which the Common Stock is traded, if
the Common Stock is then traded on a national securities exchange; or (ii) the
last reported sale price (on that date) of the Common Stock on the NASDAQ
National Market List, if the Common Stock is not then traded on a national
securities exchange; or (iii) the closing bid price (or average of bid prices)
last quoted (on that date) by an established quotation service for
over-the-counter securities, if the Common Stock is not reported on the NASDAQ
National Market List. However, if the Common Stock is not publicly traded at the
time an Option is granted under the Plan, "fair market value" shall be deemed to
be the fair value of the Common Stock as determined by the Committee after
taking into consideration all factors which it deems appropriate, including,
without limitation, recent sale and offer prices of the Common Stock in private
transactions negotiated at arm's length.
7. Option Duration. Subject to earlier termination as provided in
paragraphs 9 and 10, each Option shall expire on the date specified by the
Committee, but not more than (i) ten (10) years and one day from the date of
grant in the case of Non-Qualified Options, (ii) ten (10) years from the date of
grant in the case of ISOs generally, and (iii) five (5) years from the date of
grant in the case of ISOs granted to an employee owning stock possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or any Related Corporation. Subject to earlier termination
as provided in paragraphs 9 and 10, the term of each ISO shall be the term set
forth in the original instrument granting such ISO, except with respect to any
part of such ISO that is converted into a Non-Qualified Option pursuant to
paragraph 16.
<PAGE>
8. Exercise of Option. Subject to the provisions of paragraphs 9
------------------
through 12, each Option granted under the Plan shallbe exercisable as follows:
A. The Option shall either be fully exercisable on the date of grant or
shall become exercisable thereafter in such installments as the Committee may
specify.
B. Once an installment becomes exercisable it shall remain exercisable
until expiration or termination of the Option, unless otherwise specified by the
Committee.
C. Each Option or installment may be exercised at any time or from time to
time, in whole or in part, for up to the total number of shares with respect to
which it is then exercisable.
D. The Committee shall have the right to accelerate the date of exercise of
any installment of any Option; provided that the Committee shall not accelerate
the exercise date of any installment of any Option granted to any employee as an
ISO (and not previously converted into a Non-Qualified Option pursuant to
paragraph 16) if such acceleration would violate the annual vesting limitation
contained in Section 422(d) of the Code, as described in paragraph 6(C).
<PAGE>
9. Termination of Employment. If an ISO optionee ceases to be employed
by the Company and all Related Corporations other than by reason of death or
disability as defined in paragraph 10, no further installments of his ISOs shall
become exercisable, and his ISOs shall terminate after the passage of sixty (60)
days, from the date of termination of his employment, but in no event later than
on their specified expiration dates, except to the extent that such ISOs (or
unexercised installments thereof) have been converted into Non-Qualified Options
pursuant to paragraph 16. Employment shall be considered as continuing
uninterrupted during a bona fide leave of absence (such as those attributable to
illness, military obligations or governmental service) provided that the period
of such leave does not exceed ninety (90) days or, if longer, any period during
which such optionee's right to reemployment is guaranteed by statute. A bona
fide leave of absence with the written approval of the Committee shall not be
considered an interruption of employment under the Plan, provided that such
written approval contractually obligates the Company or any Related Corporation
to continue the employment of the optionee after the approved period of absence.
ISOs granted under the Plan shall not be affected by any change of employment
within or among the Company and Related Corporations, so long as the optionee
continues to be an employee of the Company or any Related Corporation. Nothing
in the Plan shall be deemed to give any grantee of any Stock Right the right to
be retained in employment or other service by the Company or any Related
Corporation for any period of time.
10. Death; Disability.
-----------------
A. If an ISO optionee ceases to be employed by the Company and all
Related Corporations by reason of his death, any ISO of his may be exercised, to
the extent of the number or shares with respect to which he could have exercised
it on his death, by his estate, personal representative or beneficiary who has
acquired the ISO by will or by the laws of descent and distribution, at any time
prior to the earlier of the ISO's specified expiration date or 180 days from the
date of the optionee's death.
B. If an ISO optionee ceases to be reemployed by the Company and all
Related Corporations by reason of his disability, he shall have the right to
exercise any ISO held by him on the date of termination of employment, to the
extent of the number of shares with respect to which he could have exercised it
on that date, at any time prior to the earlier of the ISO's specified expiration
date or 180 days from the date of the termination of the optionee's employment.
For the purposes of the Plan, the term "disability" shall mean "permanent and
total disability" as defined in Section 22(e)(3) of the Code or successor
statute.
<PAGE>
11. Assignability. No Stock Right shall be assignable or
-------------
transferable by the grantee except by will or by the laws of descent and
distribution, and during the lifetime of the grantee each Stock Right shall be
exercisable only by him.
12. Terms and Conditions of Options. Options shall be evidenced by
---------------------------------
instruments (which need not be identical) in such forms as the Committee may
from time to time approve. Such instruments shall conform to the terms and
conditions set forth in paragraphs 6 through 11 hereof and may contain such
other provisions as the Committee deems advisable which are not inconsistent
with the Plan, including restrictions applicable to shares of Common Stock
issuable upon exercise of Options. In granting any Non-Qualified Option, the
Committee may specify that such Non-Qualified Option shall be subject to the
restrictions set forth herein with respect to ISOs, or to such other termination
and cancellation provisions as the Committee may determine. The Committee may
from time to time confer authority and responsibility on one or more of its own
members and/or one or more officers of the Company to execute and deliver such
instruments. The proper officers of the Company are authorized and directed to
take any and all action necessary or advisable from time to time to carry out
the terms of such instruments.
13. Adjustments. Upon the occurrence of any of the following
-----------
events, an optionee's rights with respect to Options granted to him hereunder
shall be adjusted as hereinafter provided, unless otherwise specifically
provided in the written agreement between the optionee and the Company relating
to such Option:
A. If the shares of Common Stock shall be subdivided or combined into a
greater or smaller number of shares or if the Company shall issue any shares of
Common Stock as a stock dividend on its outstanding Common Stock, the number of
shares of Common Stock deliverable upon the exercise of Options shall be
appropriately increased or decreased proportionately, and appropriate
adjustments shall be made in the purchase price per share to reflect such
subdivision, combination or stock dividend.
<PAGE>
B. If the Company is to be consolidated with or acquired by another
entity in a merger, sale of all or substantially all of the Company's assets or
otherwise (an "Acquisition"), the Committee or the Board of Directors of any
entity assuming the obligations of the Company hereunder (the "Successor
Board"), shall, as to outstanding Options either (i) make appropriate provision
for the continuation of such Options by substituting on an equitable basis for
the shares then subject to such Options the consideration payable with respect
to the outstanding shares of Common Stock in connection with the Acquisition; or
(ii) upon written notice to the optionee, provide that all Options must be
exercised, to the extent then exercisable, within a specified number of days of
the date of such notice, at the end of which period the Options shall terminate;
or (iii) terminate all Options in exchange for a cash payment equal to the
excess of the fair market value of the shares subject to such Options (to the
extent then exercisable) over the exercise price thereof.
C. In the event of recapitalization or reorganization of the Company
(other than a transaction described in subparagraph B above) pursuant to which
securities of the Company or of another corporation are issued with respect to
the outstanding shares of Common Stock, an optionee upon exercising an Option
shall be entitled to receive for the purchase price paid upon such exercise the
securities he would have received if he had exercised his Option prior to such
recapitalization or reorganization.
D. Notwithstanding the foregoing, any adjustments made pursuant to
subparagraphs A, B or C with respect to ISOs shall be made only after the
Committee, after consulting with counsel for the Company, determines whether
such adjustments would constitute a "modification" of such ISOs (as that term is
defined in Section 425 of the Code) or would cause any adverse tax consequences
for the holders of such ISOs. If the Committee determines that such adjustments
made with respect to ISOs would constitute a modification of such ISOs, it may
refrain from making such adjustments.
<PAGE>
E. In the event of the proposed dissolution or liquidation of the
Company, each Option will terminate immediately prior to the consummation of
such proposed action or at such other time and subject to such other conditions
as shall be determined by the Committee.
F. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares subject to Options. No adjustments
shall be made for dividends paid in cash or in property other than securities of
the Company.
G. No fractional shares shall be issued under the Plan and the
optionee shall receive from the Company cash in lieu of such fractional shares.
H. Upon the happening of any of the foregoing events described in
subparagraphs A, B or C above, the class and aggregate number of shares set
forth in paragraph 4 hereof that are subject to Stock Rights which previously
have been or subsequently may be granted under the Plan shall also be
appropriately adjusted to reflect the events described in such subparagraphs.
The Committee or the Successor Board shall determine the specific adjustments to
be made under this paragraph 13 and, subject to paragraph 2, its determination
shall be conclusive.
If any person or entity owning restricted Common Stock obtained by exercise of a
Stock Right made hereunder receives shares or securities or cash in connection
with a corporate transaction described in subparagraphs A, B or C above as a
result of owning such restricted Common Stock, such shares or securities or cash
shall be subject to all of the conditions and restrictions applicable to the
restricted Common Stock with respect to which such shares or securities or cash
were issued, unless otherwise determined by the Committee or the Successor
Board.
<PAGE>
14. Means of Exercising Stock Rights. A Stock Right (or any part or
-----------------------------------
installment thereof) shall be exercised by giving written notice to the Company
at its principal office address. Such notice shall identify the Stock Right
being exercised and specify the number of shares as to which such Stock Right is
being exercised, accompanies by full payment of the purchase price therefor
either (a) in the United States dollars in cash or by check, or (b) at the
discretion of the Committee, through delivery of shares of Common Stock having a
fair market value equal as of the date of the exercise to the cash exercise
price of the Stock Right, or (c) at the discretion of the Committee, by delivery
oft he grantee's personal recourse note bearing interest payable not less than
annually at no less than 100% of the lowest applicable Federal rate, as defined
in Section 1274(d) of the Code, or (d) at the discretion of the Committee, by
any combination of (a), (b) and (c) above. If the Committee exercises its
discretion to permit payment of the exercise price of an ISO by means of the
methods set forth in clauses (b), (c), or (d) of the preceding sentence, such
discretion shall be exercised in writing at the time of the grant of the ISO in
question. The holder of a Stock Right shall not have the rights of a stockholder
with respect to the shares covered by his Option until the date of issuance of a
stock certificate to him for such shares. Except as expressly provided above in
paragraph 13 with respect to changes in capitalization and stock dividends, no
adjustment shall be made for dividends or similar rights for which the record
date is before the date such stock certificate is issued.
15. Terms and Amendment of Plan. This Plan was adopted by the Board and
---------------------------
stockholders on October 12, 1995. Any Stock Rights granted prior to such
stockholder approval shall become null and void if such stockholder approval is
not obtained. The Plan shall expire on October 12, 2005; provided, however, that
the Plan and all Stock Rights granted under the Plan prior to such date shall
remain in effect and subject to adjustment and amendment as herein provided
until they have been satisfied or terminated in accordance with the terms of the
respective grants or awards and the related option instruments. The Board may
terminate or amend the Plan in any respect at any time without the authorization
of stockholders to the extent allowed by law, including without limitation any
rules issued by the Securities and Exchange Commission under Section 16 of the
Exchange Act, except that, unless approved by the stockholders, it may not: (a)
increase the total number of shares that may be issued under the Plan (except by
adjustment pursuant to paragraph 13); (b) modify the provisions of paragraph 3
regarding eligibility for grants of ISOs; (c) modify the provisions of paragraph
6(B) regarding the exercise price at which shares may be offered pursuant to
ISOs (except by adjustment pursuant to paragraph 13); and (d) extend the
expiration date of the Plan. In no event may action of the Board or stockholders
alter or impair the rights of a grantee, without his consent, under any Stock
Right previously granted to him.
<PAGE>
16. Conversion of ISOs into Non-Qualified Options; Termination of ISOs.
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The Committee, at the written request of any optionee, may in its discretion
take such actions as may be necessary to convert such optionee's ISO's for any
installment or portions of installments thereof) that have not been exercised on
the date of conversion into Non-Qualified Options at any time prior to the
expiration of such ISOs, regardless of whether the optionee is an employee of
the Company or a Related Corporation at the time of such conversion. Such
actions may include, but are not limited to, extending the exercise period or
reducing the exercise price of the appropriate installments of such Options. At
the time of such conversion, the Committee (with the consent of the Optionee)
may impose such conditions on the exercise of the resulting Non-Qualified
Options as the Committee in its discretion may determine, provided that such
conditions shall not be inconsistent with this Plan. Nothing in the Plan shall
be deemed to give any optionee the right to have such optionee's ISOs converted
into Non-Qualified Options, and no such conversion shall occur until and unless
the Committee takes appropriate action. The Committee, with the consent of the
optionee, may also terminate any portion of any ISO that has not been exercised
at the time of such termination.
17. Application of Funds. The proceeds received by the company
--------------------
from the sale of shares pursuant to Options granted and Purchases authorized
under the Plan shall be used for general corporate purposes.
18. Governmental Regulation. The Company's obligation to sell
-----------------------
and deliver shares of the Common Stock under this Plan is subject to the
approval of any governmental authority required in connection with the
authorization, issuance or sale of such shares.
<PAGE>
19. Withholding of Additional Income Taxes. Upon the exercise of a
Non-Qualified Option, the grant of an award, the making of a Purchase of Common
Stock for less than its fair market value, the making of a Disqualifying
Disposition (as defined in paragraph 20) or the vesting of restricted Common
Stock acquired on the exercise of a Stock Right hereunder, the Company, in
accordance with Section 3402(a) of the Code, may require the optionee, Award
recipient or purchaser to pay additional withholding taxes in respect of the
amount that is considered compensation includible in such person's gross income.
The Committee in its discretion may condition (i) the exercise of an Option,
(ii) the grant of an Award, (iii) the making of a Purchase of Common Stock for
less than its fair market value, or (iv) the vesting of restricted Common Stock
acquired by exercising a Stock Right on the grantee's payment of such additional
withholding taxes.
20. Notice to Company of Disqualified Disposition. Each employee who
-----------------------------------------------
receives an ISO must agree to notify the Company in writing immediately after
the employee makes a Disqualifying Disposition of any Common Stock acquired
pursuant to the exercise of an ISO. A Disqualifying Disposition is any
disposition (including any sale) of such Common Stock before the later of (a)
two (2) years after the date the employee was granted the ISO or (b) one (1)
year after the date the employee has died before such stock is sold, these
holding period requirements do not apply and no Disqualifying Disposition can
occur thereafter.
21. Governing Law; Construction. The validity and construction of the
Plan and the instruments evidencing Stock Rights shall be governed by the laws
of The Commonwealth of Massachusetts. In construing this Plan, the singular
shall include the plural and the masculine gender shall include the feminine and
neuter, unless the context otherwise requires.
<PAGE>
AMENDMENT NO. 1 TO 1995 STOCK OPTION PLAN
In accordance with the provisions of Section 15 of the Andover Advanced
Technologies, Inc. 1995 Stock Option Plan, the Plan is hereby amended as
follows:
1. Section 4 of the Plan is hereby amended by increasing the number of
shares subject to the Plan from 12,250 shares to 32,250 shares of the no par
value common stock of the Corporation.
2. This amendment shall take effect as of the date of its adoption by the
Andover Advanced Technologies, Inc. Board of Directors and upon its approval by
the stockholders of Andover Advanced Technologies, Inc. in accordance with
Section 15 of the Plan.
3. Executed as herein above provided, the Plan is hereby ratified and
confirmed in all respects. Adopted by the Board of Directors and Stockholders
July 31, 1996
AMENDMENT NO. 2 TO 1995 STOCK OPTION PLAN
In accordance with the provisions of Section 15 of the Andover Advanced
Technologies, Inc. 1995 Stock Option Plan, the Plan is hereby amended as
follows:
1. Section 4 of the Plan is hereby amended by increasing the number of
shares subject to the Plan from 32,250 shares to 50,000 shares of the no par
value common stock of the Corporation.
2. This amendment shall take effect as of the date of its adoption by the
Andover Advanced Technologies, Inc. Board of Directors and upon its approval by
the stockholders of Andover Advanced Technologies, Inc. in accordance with
Section 15 of the Plan.
3. Executed as herein above provided, the Plan is hereby ratified and
confirmed in all respects. Adopted by the Board of Directors and Stockholders
June 24, 1997.
<PAGE>
AMENDMENT NO. 3 TO 1995 STOCK OPTION PLAN
In accordance with the provisions of Section 15 of the Andover Advanced
Technologies, Inc. 1995 Stock Option Plan, the Plan is hereby amended as
follows:
1. Section 4 of the Plan is hereby amended by increasing the number of
shares subject to the Plan from 50,000 shares to 75,000 shares of the no par
value common stock of the Corporation.
2. This amendment shall take effect as of the date of its adoption by the
Andover Advanced Technologies, Inc. Board of Directors and upon its approval by
the stockholders of Andover Advanced Technologies, Inc. in accordance with
Section 15 of the Plan.
3. Executed as herein above provided, the Plan is hereby ratified and
confirmed in all respects. Adopted by the Board of Directors and Stockholders
November 12, 1998
EXHIBIT 5.1
OPINION OF COUNSEL
March 7, 2000
Andover.Net, Inc.
50 Nagog Park
Acton, MA 01720
REGISTRATION STATEMENT ON FORM S-8
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-8 (the
"Registration Statement") to be filed by Andover.Net, Inc. (the "Company") with
the Securities and Exchange Commission (the "Commission") on or about March 7,
2000 in connection with the registration under the Securities Act of 1933, as
amended, of 2,705,678 shares of the Company's Common Stock reserved for issuance
under the 1999 Stock Option Plan and 1995 Stock Plan (the "Plans"). As the
Company's legal counsel in connection with this transaction, we have examined
the proceedings taken and are familiar with the proceedings proposed to be taken
by the Company in connection with the sale and issuance of the foregoing shares
under the Plans, (collectively, the "Shares").
Based upon the foregoing, and having regard for such legal
considerations as we deem relevant, we are of the opinion that the Shares, when
issued and sold in the manner described in the Registration Statement will be
legally and validly issued, fully paid and non-assessable, and no personal
liability will attach thereto.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to us under the caption "Interests
of Named Experts and Counsel" in the Registration Statement.
Very truly yours,
/s/ Hutchins, Wheeler & Dittmar
HUTCHINS, WHEELER & DITTMAR,
A Professional Corporation
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement on Form S-8 of our report dated
October 22, 1999 included in Andover.Net, Inc.'s Form S-1/A dated December 8,
1999 and to all references to our Firm included in this registration statement.
/s/ ARTHUR ANDERSEN LLP
Boston, Massachusetts
March 7, 2000
