<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
-------
For the quarterly period ended December 31, 1994 or
______ Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ___________ to ___________
Commission file number 1-6435
--------------------------
Bolt Beranek and Newman Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 04-2164398
------------------------------------ --------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
150 CambridgePark Drive, Cambridge, Massachusetts 02140
--------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 873-2000
--------------------
__________________________________________________________________________
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months(or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
--------- -------
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Number of shares of common stock, $1.00 par value, outstanding as of
January 31, 1995: 17,221,571
Exhibit index appears on page 15<PAGE>
<PAGE>
BOLT BERANEK AND NEWMAN INC.
INDEX
Page No.
--------
Part I. Financial Information
Consolidated Statements of Operations -
Three Months Ended December 31, 1994 and 1993...... 3
Consolidated Statements of Operations -
Six Months Ended December 31, 1994 and 1993........ 4
Consolidated Balance Sheets -
as of December 31, 1994 and June 30, 1994.......... 5
Consolidated Statements of Cash Flows -
Six Months Ended December 31, 1994 and 1993........ 6
Notes to Consolidated Financial Statements........... 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations................10
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K............14
Signatures...........................................14<PAGE>
<PAGE>
PART I. FINANCIAL INFORMATION
BOLT BERANEK AND NEWMAN INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Dollars in thousands, except per-share data
Three Months Ended
-------------------------
December 31 December 31
1994 1993
------------ ------------
Revenue:
Services $ 40,994 $ 40,448
Products 10,178 7,959
------------ ------------
51,172 48,407
------------ ------------
Costs and expenses:
Cost of services 27,633 27,370
Cost of products 4,390 3,195
Research and development expenses 6,345 5,874
Selling, general and administrative expenses 17,911 14,496
------------ ------------
56,279 50,935
------------ ------------
Loss from operations (5,107) (2,528)
Interest income 593 535
Interest expense (1,094) (1,135)
Minority interests 445 585
Other income (expense), net 3,538 877
------------ ------------
Loss before income taxes (1,625) (1,666)
Provision for income taxes 300
------------ ------------
Net loss $ (1,925)$ (1,666)
============ ============
Net loss per share $ (.11)$ (.10)
============ ============
Shares used in per-share calculations 16,819,000 16,079,000
The accompanying notes are an integral
part of the consolidated financial statements<PAGE>
<PAGE>
BOLT BERANEK AND NEWMAN INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Dollars in thousands, except per-share data
Six Months Ended
-------------------------
December 31 December 31
1994 1993
------------ ------------
Revenue:
Services $ 85,370 $ 83,243
Products 17,545 15,094
------------ ------------
102,915 98,337
------------ ------------
Costs and expenses:
Cost of services 56,293 57,588
Cost of products 6,975 6,020
Research and development expenses 12,300 11,178
Selling, general and administrative expenses 33,946 27,603
------------ ------------
109,514 102,389
------------ ------------
Loss from operations (6,599) (4,052)
Interest income 1,210 1,224
Interest expense (2,220) (2,336)
Minority interests 741 585
Other income (expense), net 3,535 966
------------ ------------
Loss before income taxes (3,333) (3,613)
Provision for income taxes 400
------------ ------------
Net loss $ (3,733)$ (3,613)
============ ============
Net loss per share $ (.22)$ (.23)
============ ============
Shares used in per-share calculations 16,717,000 16,029,000
The accompanying notes are an integral
part of the consolidated financial statements<PAGE>
<PAGE>
BOLT BERANEK AND NEWMAN INC.
CONSOLIDATED BALANCE SHEETS
Dollars in thousands December 31 June 30
1994 1994
----------- -----------
(Unaudited) (Audited)
ASSETS
Current assets:
Cash and temporary investments $ 56,572 $ 67,115
Accounts receivable, net 42,301 41,503
Inventories, net 985 1,114
Other current assets 5,621 3,592
----------- -----------
Total current assets 105,479 113,324
Property, plant and equipment, net 22,147 19,658
Other assets 7,647 2,958
----------- -----------
$ 135,273 $ 135,940
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,868 $ 4,279
Accrued compensation and retirement plan 6,492 5,198
Accrued restructuring charges 10,533 12,566
Other accrued costs 15,458 19,832
Deferred revenue 13,883 11,112
----------- -----------
Total current liabilities 52,234 52,987
6% convertible subordinated debentures due 2012 73,510 73,510
Commitments and contingencies
Minority interests 1,479 2,172
Shareholders' equity:
Common stock, $1 par value, authorized:
100,000,000 shares; issued: 21,558,635 shares at
December 31, 1994 and 21,253,890 shares at
June 30, 1994 21,559 21,254
Additional paid-in capital 58,215 55,916
Foreign currency translation adjustment 323 337
Accumulated deficit (39,860) (36,127)
----------- -----------
40,237 41,380
Less shares in treasury, at cost: 4,527,464 shares
at December 31, 1994 and 4,797,734 shares at
June 30, 1994 32,187 34,109
----------- -----------
Total shareholders' equity 8,050 7,271
----------- -----------
$ 135,273 $ 135,940
=========== ===========
The accompanying notes are an integral
part of the consolidated financial statements<PAGE>
<PAGE>
BOLT BERANEK AND NEWMAN INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Dollars in thousands
Six Months Ended
-----------------------
December 31 December 31
1994 1993
----------- -----------
Cash flows from operating activities:
Net loss $ (3,733)$ (3,613)
Adjustments to reconcile net loss to net cash provided
(used) by operating activities:
Depreciation and amortization 4,733 4,435
Amortization of goodwill and capitalized software 374 704
Contract adjustments (3,546) (913)
Change in assets and liabilities:
Accounts receivable (298) 4,057
Inventories 50 586
Other assets (2,347) 1,741
Accounts payable and other liabilities 1,355 1,918
Accrued restructuring charges (2,033) (2,686)
Deferred revenue 1,971 (1,932)
Other (654) (1,130)
----------- -----------
Total adjustments (395) 6,780
----------- -----------
Net cash provided(used) by operating
activities (4,128) 3,167
Cash (used) by investing activities:
Additions to property, plant and equipment (6,112) (2,600)
Acquisition of BARRNET (2,000)
----------- -----------
Cash (used) by investing activities (8,112) (2,600)
----------- -----------
Cash provided by financing activities:
Proceeds from sale of LightStream stock 5,000
Proceeds from employee stock purchase and
option plans 1,697 1,685
Sale of treasury shares 213
----------- -----------
Cash provided by financing activities 1,697 6,898
----------- -----------
Net increase(decrease)in cash and temporary
investments (10,543) 7,465
Cash and temporary investments-beginning of period 67,115 56,835
----------- -----------
Cash and temporary investments-end of period $ 56,572 $ 64,300
=========== ===========
Supplemental cash flow information:
Interest paid $ 2,205 $ 2,213
=========== ===========
The accompanying notes are an integral
part of the consolidated financial statements<PAGE>
<PAGE>
BOLT BERANEK AND NEWMAN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Basis of Presentation
The financial information included herein, with the exception of the
consolidated balance sheet at June 30, 1994, has not been audited.
However, in the opinion of management, all material adjustments,
consisting only of normal recurring accruals necessary for a fair
presentation of the results for these periods, have been reflected. The
results for these periods are not necessarily indicative of the results
for the full fiscal year.
Certain amounts reported for the prior periods presented have been
reclassified to be consistent with the current year's presentation.
These reclassifications primarily relate to the formation in FY1995 of
distinct commercial business units.
B. BARRNET Acquisition
On August 19, 1994, BBN Internet Services Corporation acquired, from
Stanford University, the Bay Area Regional Research Network ("BARRNET"),
a leading provider of Internet services in the San Francisco Bay Area,
for approximately $6,500,000 consisting principally of $2,000,000 of
cash, 270,270 shares of BBN's common stock and 200,000 shares of BBN
Internet Services Corporation's common stock. The common stocks issued
were valued at their fair value which reflects a discount attributable
to their restricted nature. The transaction was accounted for using the
purchase method of accounting. Accordingly, the acquired assets and
liabilities were recorded at their estimated fair values on the date of
the acquisition. The aggregate cost in excess of net assets acquired of
approximately $4,500,000 is being amortized over ten years.
C. SURAnet Acquisition
In December 1994, BBN Internet Services Corporation and the Southeastern
Universities Research Association ("SURA") signed a non-binding letter
of intent under which BBN Internet Services Corporation would acquire
the SURAnet Internet service, a leading provider of Internet services in
the Southeast.
D. Sale of LightStream Corporation
On December 8, 1994, Cisco Systems, Inc. ("Cisco") and LightStream
Corporation, a majority-owned subsidiary of the company ("LightStream"),
entered into an Asset Purchase Agreement (the "Asset Purchase
Agreement") pursuant to which Cisco agreed to buy all or substantially
all of the assets of LightStream, a corporation which develops and
markets computer networking products based upon asynchronous transfer
mode ("ATM") technology, for a cash consideration of $120,000,000. The
sale, which was completed on January 11, 1995, will be reflected in the
company's third quarter results. Under the terms of the sale, the
company, which owns in excess of 80% of the equity interest in
LightStream, will receive from LightStream approximately 83% of the net
distribution of the proceeds of the transaction, and UB Networks, Inc.,
which owns the minority interest in LightStream, will receive the
remainder. Of the cash consideration paid to LightStream, $12,000,000
was placed in an escrow fund, and periodically declining portions of<PAGE>
<PAGE>
BOLT BERANEK AND NEWMAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
D. Sale of LightStream Corporation (continued)
such amount are to be maintained for up to two years following the
closing of the transaction, subject to any claims under the Asset
Purchase Agreement by Cisco. As part of the sale, Cisco hired
substantially all of the employees of LightStream, and will operate from
the company's former facility in Billerica, Massachusetts. The company
anticipates it will record a gain from the sale, net of tax, of
approximately $80,000,000 after considering the minority interest and
estimated costs to be incurred in connection with the sale. For the
six months ended December 31, 1994, LightStream reported revenue of
approximately $8,400,000 and an operating loss of approximately
$3,700,000, and for the period from inception on October 16, 1993
through December 31, 1993, LightStream reported revenue of approximately
$500,000 and an operating loss of approximately $3,000,000. In FY1994,
prior to the formation of LightStream, the company's ATM activities
were conducted by its then Communications Division and resulted in an
operating loss of approximately $3,600,000 for the first quarter ended
September 30, 1993. These results are not included in the results of
LightStream for the six months ended December 31, 1993.
E. Other Income
In December 1994, the company settled a claim with the U.S. government
for approximately $700,000. This settlement resulted in an approximately
$2,550,000 reduction in liabilities and is included in other income
for the three and six months ended December 31, 1994.
Other income for the three and six months ended December 31, 1994 and
1993 also includes approximately $900,000 resulting from lower than
expected costs associated with a previously divested contract.
F. Commitments and Contingencies
The company, like other companies doing business with the U.S.
government, is subject to routine audit, and in certain circumstances to
inquiry, review, or investigation, by U.S. government agencies, of its
compliance with government procurement policies and practices. In April
1991, the company was informed that it was the subject of an
investigation by U.S. government agencies of its compliance with certain
government procurement policies and practices. No allegations have been
made by the government agencies. Based upon government procurement
regulations, under certain circumstances a contractor violating or not
complying with procurement regulations can be subject to legal or
administrative proceedings, including fines and penalties, as well as be
suspended or debarred from contracting with the government. The
company's policy has been and continues to be to conduct its activities
in compliance with all applicable rules and regulations.
The company is subject to other legal proceedings and claims which arise
in the ordinary course of its business. In the opinion of management,
the results of these other legal proceedings and claims will not have a
material effect on the company's consolidated financial position and
results of operations.<PAGE>
<PAGE>
BOLT BERANEK AND NEWMAN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
G. Segment Information
The following is a summary of business segments information for the
three and six months ended December 31, 1994 and 1993, respectively.
All data are shown net of intersegment transactions.
Three Months Ended Six Months Ended
December 31 December 31
_________________ _________________
Dollars in thousands 1994 1993 1994 1993
________ ________ ________ ________
Revenue:
Internetworking $ 22,603 $ 18,525 $ 46,289 $ 38,647
Data analysis software 8,338 9,061 16,391 17,609
Collaborative systems &
acoustic technologies 20,231 20,821 40,235 42,081
________ ________ ________ ________
$ 51,172 $ 48,407 $102,915 $ 98,337
======== ======== ======== ========
Income (loss) from operations:
Internetworking $ (2,441)$ (3,071) $ (3,194)$ (4,795)
Data analysis software (2,014) (25) (2,285) 334
Collaborative systems &
acoustic technologies 41 1,072 222 1,232
Unallocated corporate expenses (693) (504) (1,342) (823)
________ _________ ________ ________
$ (5,107)$ (2,528) $ (6,599)$ (4,052)
======== ========= ======== ========
Certain amounts reported for the prior periods presented have been
reclassified to be consistent with the current year's presentation.
<PAGE>
<PAGE>
BOLT BERANEK AND NEWMAN INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Summary
---------
For the three months ended December 31, 1994, the company reported a net
loss of $1.9 million, or $.11 per share, on revenue of $51.2 million,
compared to a net loss of $1.7 million, or $.10 per share, on revenue of
$48.4 million for the same period a year ago.
For the six months ended December 31, 1994, the company reported a net
loss of $3.7 million, or $.22 per share, on revenue of $102.9 million,
compared to a net loss of $3.6 million, or $.23 per share, on revenue of
$98.3 million for the same period a year ago. Results for the three and
six month periods of the current year include other income of $3.5 million
and results for the prior year periods included approximately $0.9
million, arising from adjustments to contracts associated with the
company's former simulation business.
Results for the current year include losses at BBN Internet Services
Corporation and at BBN Software Products Corporation, reflecting increased
investment in sales and marketing activities. The increase in the
company's revenue reflects increases primarily at LightStream Corporation
and also at BBN Internet Services Corporation, which were partially offset
by a decline in the company's acoustic and defense communications
activities and in lower sales of its mature data analysis software
products.
The previously announced sale of substantially all of the assets of
LightStream Corporation to Cisco Systems, Inc., which was completed on
January 11, 1995, will be reflected in the company's third quarter
results. The LightStream sale is expected to result in a gain to the
company of approximately $80.0 million.
Revenue
---------
Revenue for the three and six months ended December 31, 1994 increased
$2.8 million and $4.6 million, respectively, from the prior year periods,
primarily reflecting increases of approximately $3.8 million and $7.9
million, respectively, at LightStream Corporation. These increases,
together with lower increases at BBN Internet Services Corporation, were
partially offset by continued declines in the company's acoustic and
defense communications activities and in lower sales of its mature data
analysis software products. Services revenue from LightStream Corporation
for the three and six months ended December 31, 1994 of $1.2 million and
$3.6 million, respectively, included up-front technology license and
initial development fees from previously announced strategic partnering
agreements with Tellabs Operations, Inc. and NEC Corporation.
The company, like other companies doing business with the Department of
Defense, has been adversely affected by reduced defense spending and
expects this general decline and attendant increased competition within
the defense industry to continue over the next several years. Uncertainty
continues to exist on the size and scope of reductions in future defense
budgets and their impact on the company's defense-related business.
Further, there is the possibility that funding limitations could result in
a reduction, delay, or cancellation of existing or emerging programs.
These factors have reduced the company's U.S. government revenue and
operating margins in recent fiscal years, and this trend is continuing in
FY1995, particularly in the acoustic and defense communications systems
areas.<PAGE>
<PAGE>
BOLT BERANEK AND NEWMAN INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
In FY1991, the Defense Information Systems Agency awarded the company a
one-year contract in support of the Defense Data Network, with up to four
one-year optional extensions. In September 1994, the company completed the
third option year of the contract, valued at approximately $20 million. In
October 1994, the company was awarded the fourth and last option year of
the contract, valued at approximately $15 million, which will continue
these activities through October 1995. There can be no assurance that this
activity will continue beyond October 1995, and if there is additional
activity related to this contract, the value of any such award, even if
received by the company, would be expected to be lower than the value of
the current year's option award. The company is not aware of any other
defense communications procurements or requests for proposals for which
the company could compete to replace the company's activities under this
contract. Approximately $9.7 million and $10.3 million of revenue has been
recorded under the contract in the six months ended December 31, 1994 and
1993, respectively.
The company conducts its commercial businesses in environments
characterized by intense competition, shortened product cycles and rapid
technological change, which require significant research and development
expenditures to develop new products which address emerging market
requirements and to improve existing products. In recent years, the
company's traditional commercial businesses, consisting principally of
RS/Series(TM) data analysis and visualization software products and X.25
network systems, has been experiencing substantially lower revenue.
During that period, the company has been investing heavily in the
development of products, primarily the LightStream(TM) Asynchronous
Transfer Mode ("ATM") switch, BBN/Cornerstone(TM) data analysis and
visualization software and the T/10(TM) Integrated Access Device.
On December 8, 1994, Cisco Systems, Inc. ("Cisco") agreed to buy all of
the assets of LightStream Corporation. The sale, which was completed on
January 11, 1995, will be reflected in the company's third quarter
results. Reference is made to footnote D to the consolidated financial
statements for further discussion of this transaction. The company's T/10
activities are now being primarily focused on a limited number of reseller
and strategic opportunities, and the future success of the T/10 is highly
dependent on these opportunities. To date revenue from the T/10 has not
been financially significant.
The company's data analysis software products business has been affected
by the growth of distributed processing and the associated use of personal
computers, workstations, and other desktop computers. The company's mature
data analysis software products, primarily the RS/Series software,
currently operate primarily on minicomputer systems. As demand for
minicomputer-based software continues to decline, the company is
experiencing substantially lower RS/Series software revenue and downward
pressure on prices. During the fourth quarter of FY1993, BBN Software
Products Corporation introduced its BBN/Cornerstone data analysis and
visualization software specifically designed for use on desktop computers
in a client/server environment. The initial release of BBN/Cornerstone
<PAGE>
<PAGE>
BOLT BERANEK AND NEWMAN INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
software operates on Unix-based workstations, utilizing a number of
established graphical user interfaces. Planned subsequent releases will
operate on personal computers. Sales of BBN/Cornerstone to date in FY1995
have not been financially significant. The company is more tightly
integrating BBN/Cornerstone software with its RS/Series products to
provide platform migration and ease of use for its existing RS/Series
customer base, and to provide greater capabilities and flexibility in
client/server computing environments. As part of this effort, the company
is increasing its research and development expenditures and is investing
in additional sales and marketing personnel. The company is focusing its
software application solutions primarily on the manufacturing and health
industries. The company believes that the future success of its data
analysis and visualization software will primarily depend upon the timely
integration of its BBN/Cornerstone and RS/Series software and the release
of future software applications that permit operation on personal
computers.
The company is significantly increasing its investment in the emerging
market for Internet services. Such investment includes a substantial
increase in engineering and sales personnel to support expansion
of Internet connectivity services and to develop value-added services.
These investments are expected to adversely affect the company's
financial results for FY1995 and FY1996. The company's strategy is to
provide managed connectivity services and value-added services to
businesses and other organizations. The market for Internet services is
rapidly expanding, and there are considerable uncertainties as to how the
market will develop. Further, the Internet services business is intensely
competitive, and competition is expected to increase. Competitors and
companies announcing plans to enter the market currently include large
communications and software companies, including MCI, IBM, AT&T, and
Microsoft, and there are no substantial barriers to entry. The company's
success in the Internet services market will depend heavily upon its
ability to timely establish geographic coverage and related support
capabilities and to provide high quality managed Internet connectivity and
functional, unique, value-added services for organizational users of the
Internet at a competitive cost. The company needs to continue to rapidly
attract additional experienced personnel in order to continue to expand
the existing customer base and grow the business. Moreover, the company
may make additional acquisitions in support of its Internet business
strategy.
In August 1994, BBN Internet Services Corporation acquired the Bay Area
Regional Research Network ("BARRNET"), a leading provider of Internet
services in the San Francisco Bay Area, for approximately $6.5 million
consisting principally of $2.0 million of cash, 270,270 shares of BBN's
common stock and 200,000 shares of BBN Internet Services Corporation's
common stock. In December 1994, the company and the Southeastern
Universities Research Association ("SURAnet") signed a non-binding letter
of intent under which BBN Internet Services Corporation would acquire the
SURAnet Internet service, the leading provider of Internet services in the
Southeast. That transaction is expected to be completed during the third
quarter.<PAGE>
<PAGE>
BOLT BERANEK AND NEWMAN INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
Cost of Sales
---------------
Cost of services and products as a percentage of revenue for the three
and six months ended December 31, 1994 was 63% and 61%, respectively,
compared to 63% and 65%, respectively, for the corresponding prior year
periods. The decrease in the cost of sales percentage for the six-month
period in FY1995 is principally due to the technology license and initial
development fees from strategic partnering agreements at LightStream
Corporation.
Research and Development Expenses
-----------------------------------
Research and development expenses for the three and six months ended
December 31, 1994 were $6.3 million and $12.3 million, respectively,
compared to $5.9 million and $11.2 million, respectively, for the
comparable prior year periods. Research and development spending on the
LightStream ATM products for the three and six months ended December 31,
1994 was $1.9 million and $3.9 million, respectively, compared to $2.2
million and $4.3 million, respectively, for the comparable prior year
periods. The majority of the company's internally funded research and
development spending is currently directed principally toward data
analysis and visualization software products. The increase in FY1995
relates primarily to data analysis and visualization software products.
Selling, General and Administrative Expenses
----------------------------------------------
Selling, general and administrative expenses for the three and six
months ended December 31, 1994 increased $3.4 million and $6.3 million,
respectively, from the prior year periods reflecting the investment the
company is making primarily in the sales and marketing of its new products
and services at BBN Internet Services Corporation, BBN Software Products
Corporation and BBN Hark Systems Corporation. The company expects that
this trend will continue through FY1995.
Liquidity and Capital Resources
---------------------------------
As of December 31, 1994, the company's cash and temporary investments,
which consisted primarily of money market funds and short term U.S.
government securities, were $56.6 million, a decrease of $10.5 million
from June 30, 1994. The decrease is primarily attributable to capital
additions and the BARRNET acquisition.
The company expects to net approximately $80.0 million from the sale of
substantially all of the assets of LightStream Corporation, after
considering income taxes (including utilization of substantially all of
the Company's net operating loss carryforwards and tax credit
carryforwards), the minority interest and estimated costs to be incurred
in connection with the sale.<PAGE>
<PAGE>
PART II. OTHER INFORMATION
BOLT BERANEK AND NEWMAN INC.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
10.1 1986 Stock Incentive Plan, as amended
10.2 BBN Hark Systems Corporation 1995 Stock Option Plan
10.3 BBN Internet Services Corporation 1994 Stock Option Plan
10.4 BBN Software Products Corporation 1993 Stock Option Plan,
as amended
11.1 Computation of Net Loss Per Share
27.1 Financial Data Schedule
(b) The company filed a Current Report on Form 8-K dated
January 11, 1995 with the Commission on January 26, 1995,
reporting on the sale of the assets of LightStream Corporation
to Cisco Systems, Inc. and filing pro forma financial
information consisting of a pro forma balance sheet as of
December 31, 1994, and pro forma statements of operations for
the year ended June 30, 1994 and for the six months ended
December 31, 1994.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BOLT BERANEK AND NEWMAN INC.
By Ralph A. Goldwasser
----------------------------------
Ralph A. Goldwasser
Senior Vice President and Chief Financial Officer
Date: February 14, 1995<PAGE>
<PAGE>
BOLT BERANEK AND NEWMAN INC.
LIST OF EXHIBITS
10.1 1986 Stock Incentive Plan, as amended
10.2 BBN Hark Systems Corporation 1995 Stock Option Plan
10.3 BBN Internet Services Corporation 1994 Stock Option Plan
10.4 BBN Software Products Corporation 1993 Stock Option Plan, as
amended
11.1 Computation of Net Loss Per Share
27.1 Financial Data Schedule <PAGE>
<PAGE>
<PAGE>
BOLT BERANEKK AND NEWMAN INC.
EXHIBIT 10.1
1986 STOCK INCENTIVE PLAN
SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS.
The name of the plan is the Bolt Beranek and Newman Inc.
1986 Stock Incentive Plan (the "Plan"). The purpose of the Plan
is to secure for Bolt Beranek and Newman Inc. (the "Company") and
its stockholders the benefit of the incentives of Common Stock
ownership and the receipt of incentive awards by directors of the
Company and by selected key employees of the Company and its
subsidiaries, and by other key persons and entities, who
contribute to and will be responsible for continued long-term
growth of the Company. The Plan is intended to stimulate the
efforts of such persons by providing an opportunity for capital
appreciation and giving suitable recognition for services which
contribute materially to the success of the Company.
The following terms shall be defined as set forth below:
a. "Act" means the Securities Exchange Act of 1934.
b. "Award" or "Awards" except where referring to a
particular category of grant under the Plan shall
include Incentive Stock Options, Non-Qualified Stock
Options, Stock Appreciation Rights, Restricted Stock
Awards, Unrestricted Stock Awards, Deferred Stock
Awards, Performance Unit Awards, and Other Stock-based
Awards.
c. "Board" means the Board of Directors of the
Company.
d. "Code" means the Internal Revenue Code of 1986,
as amended, and any successor Code, and related rules,
regulations, and interpretations.
e. "Committee" means the Committee referred to in
Section 2. If at any time no Committee shall be in
office, the functions of the Committee shall be
exercised by the
f. "Deferred Stock Award" is defined in Section
9(a).
g. "Disability" means disability as determined in
accordance with standards and procedures similar to
those used under the Company's long-term disability
program.
h. "Disinterested Person" shall have the meaning
set forth in Rule 16b-3(d)(3) promulgated under the
Act, or any successor definition under the Act. <PAGE>
<PAGE>
i. "Fair Market Value" on any given date means the
last sale price regular way at which Stock is traded
on such date as reflected in the New York Stock
Exchange-Composite Transactions Index or, where
applicable, the value of a share of Stock as
determined by the Committee in accordance with the
applicable provisions of the Code.
j. "Incentive Stock Option" means any Stock Option
intended to be and designated as an "incentive stock
option" as defined in the Code.
k. "Non-employee Director" means an individual who
is a director of the Company but who is not a full-
time employee of the Company or a Subsidiary.
l. "Non-Qualified Stock Option" means any Stock
Option that is not an Incentive Stock Option.
m. "Normal Retirement" means retirement from
active employment with the Company and its
Subsidiaries on or after the normal retirement date
specified in the Bolt Beranek and Newman Inc.
Retirement Trust Agreement.
n. "Other Stock-based Award" is defined in
Section 11(a).
o. "Performance Unit Award" is defined in
Section 10(a).
p. "Restricted Stock Award" is defined in
Section 8(a).
q. "Stock" means the Common Stock, $1.00 par
value, of the Company, subject to adjustments pursuant
to Section 3.
r. "Stock Appreciation Right" means a right
described in Section 7(a) and granted, either
independently of other Awards or in tandem with the
grant of a Stock Option.
s. "Stock Option" means any option to purchase
shares of Stock granted pursuant to Section 6.
t. "Subsidiary" means any corporation or other
entity (other than the Company) in an unbroken chain
beginning with the Company if each of the entities
(other than the last entity in the unbroken chain) <PAGE>
<PAGE>
owns stock or other interests possessing 50% or more
of the total combined voting power of all classes of
stock or other interest in one of the other
corporations in the chain.
u. "Unrestricted Stock Award" is defined in
Section 8(f).
SECTION 2. COMMITTEE AUTHORITY TO SELECT PARTICIPANTS AND
DETERMINE AWARDS, ETC.
The Plan shall be administered by a Committee of Directors
who are both Disinterested Persons and "outside directors" within
the meaning of Section 162(m)(4)(C)(i) of the Code (as construed
and applied consistent with proposed or final rules issued
thereunder). The Committee shall be appointed by the Board and
shall serve at the pleasure of the Board.
The Committee shall have the power and authority to grant
Awards consistent with the terms of the Plan, including the power
and authority:
i. to select from among the eligible persons and
entities described in Section 4 those to whom
Awards may from time to time be granted;
ii. to determine the time or times of grant, and
the extent, if any, of Incentive Stock Options,
Non-Qualified Stock Options, Stock Appreciation
Rights, Restricted Stock, Unrestricted Stock,
Deferred Stock, Performance Units, and any
Other Stock-based Awards, or any combination of
the foregoing, granted to any one or more
participants;
iii. to determine the number of shares to be covered
by any Award;
iv. to determine the terms and conditions,
including restrictions, not inconsistent with
the terms of the Plan, of any Award, which
terms and conditions may differ among
individual Awards and participants;
v. to determine whether, to what extent, and under
what circumstances Stoc and c and other amounts
payable with respect to an Award shall be
deferred either automatically or at the
election of the participant and whether and to
what extent the Company shall pay or credit
amounts equal to interest (at rates determined
by the Committee) or dividends or deemed
dividends on such deferrals; and<PAGE>
<PAGE>
vi. to adopt, alter, and repeal such rules,
guidelines and practices for administration of
the Plan and for its own acts and proceedings
as it shall deem advisable; to interpret the
terms and provisions of the Plan and any Award
(including related Award Agreements); to make
all determinations it deems advisable for the
administration of the Plan; to decide all
disputes arising in connection with the Plan;
and to otherwise supervise the administration
of the Plan.
All decisions and interpretations of the Committee shall be
binding on all persons, including the Company and Plan
participants.
SECTION 3. SHARES ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION
a. SHARES ISSUABLE. The maximum number of shares
of Stock reserved and available for issuance under the
Plan shall be 3,000,000, including shares issued in
lieu of or upon reinvestment of dividends arising from
Awards. Of this number, 150,000 are reserved and
available for issuance under stock options granted to
Non-employee Directors under Section 6(m). For
purposes of the foregoing limitations and to the
maximum extent consistent with continued qualification
of the Plan under Section 422 of the Code and Rule
16b-3 promulgated under the Act, Awards and Stock
which are forfeited, reacquired by the Company, or
satisfied without the issuance of Stock shall not be
counted. Subject to such overall limitation, shares
may be issued up to such maximum pursuant to any type
or types of Award, including Incentive Stock Options.
Shares issued under the Plan may be authorized but
unissued shares or shares reacquired by the Company.
The maximum number of shares of Stock for which any
individual (other than a Non-employee Director) may be
issued Stock Options under the Plan during the
limitation period shall be 750,000 shares. The
maximum number of shares of Stock as to which any
individual may be issued Stock Appreciation Rights
under the Plan during the limitation period shall
likewise be 750,000 shares. For purposes of the two
preceding sentences, (i) the limitation period shall
be the period beginning January 1, 1994 and ending
December 1, 1999, and (ii) Stock Options granted prior
to January 1, 1994 but subject to shareholder approval
occurring after January 1, 1994 shall be treated as
having been granted during the limitation period. The <PAGE>
<PAGE>
limitations described in this paragraph shall be
construed and applied in accordance with Section
162(m) of the Code and the regulations thereunder.
Subject to the foregoing, a Stock Option or Stock
Appreciation Right that is canceled and reissued, or
repriced, shall be treated as a new Award, and both
the old Award and the new Award shall count against
the applicable limit described in this paragraph.
b. STOCK DIVIDENDS, MERGERS, ETC. In the event of
a stock dividend, stock split, or similar change in
capitalization affecting the Stock, the Committee
shall make appropriate adjustments in (i) the number
and kind of shares of stock or securities on which
Awards may thereafter be granted, (ii) the number and
kind of shares remaining subject to outstanding
Awards, and (iii) the option or purchase price in
respect of such shares. In the event of any merger,
consolidation, dissolution, or liquidation of the
Company, the Committee in its sole discretion may, as
to any outstanding Awards, make such substitution or
adjustment in the aggregate number of shares reserved
for issuance under the Plan and in the number and
purchase price (if any) of shares subject to such
Awards as it may determine, or accelerate, amend, or
terminate such Awards upon such terms and conditions
as it shall provide (which, in the case of the
termination of the vested portion of any Award, shall
require payment or other consideration which the
Committee deems equitable in the circumstances);
provided, however, that no adjustment pursuant to this
sentence shall affect options granted under subsection
(m) of Section 6 of the Plan if the effect of such
adjustment shall cause the members of the Committee to
fail to be disinterested persons under Section 16(b)
of the Act.
c. SUBSTITUTE AWARDS. The Company may grant
Awards under the Plan in substitution for stock and
stock based awards held by employees of or other
persons providing services to another corporation who
concurrently become employees of or providers of
service to the Company or a Subsidiary as the result
of a merger or consolidation of the employing
corporation with the Company or a Subsidiary or the
acquisition by the Company or a Subsidiary of property
or stock of the employing corporation. The Committee
may direct that the substitute awards be granted on
such terms and conditions as the Committee considers
appropriate in the circumstances. The shares which
may be delivered under such substitute Awards shall be
in addition to the maximum number of shares provided
for in the first paragraph of Section 3(a) only to the <PAGE>
<PAGE>
extent that the substitute Awards are both granted to
persons whose relationship to the Company does not
make (and is not expected to make) them subject to
Section 16(b) of the Act and are granted in
substitution for awards issued under a plan approved,
to the extent then required under Rule 16b-3 (or any
successor rule under the Act) by the stockholders of
the entity which issued such predecessor awards.
SECTION 4 ELIGIBILITY.
Participants in the Plan will be such full or part time
officers and other key employees of the Company and its
Subsidiaries ("Employees") and other persons or entities who are
responsible for or contribute to the management, growth, or
profitability of the Company and its Subsidiaries and who are
selected from time to time by the Committee. Notwithstanding the
foregoing, persons who are directors of the Company, other than
any such person who is a full time employee, shall not be
eligible for awards under the Plan except as provided in
Section 6(m).
SECTION 5. LIMITATIONS ON TERM AND DATES OF AWARDS
a. DURATION OF AWARDS. Subject to Sections 15(a),
15(c), and 15(d) below, no restrictions or limitations
on Awards shall extend beyond 10 years (or 10 years
and one day in the case of Non-Qualified Stock
Options) from the grant date, except that deferrals,
elected by participants, of the receipt of Stock or
other benefits under the Plan may extend beyond such
date.
b. LATEST GRANT DATE. No Award shall be granted
after December 1, 1999, but then-outstanding Awards
may extend beyond such date.
SECTION 6 STOCK OPTIONS.
Any stock option granted under the Plan shall be in such
form as the Committee may from time to time approve.
Stock Options granted under the Plan may be either Incentive
Stock Options or Non-Qualified Stock Options. To the extent that
any option does not qualify as an Incentive Stock Option, it
shall constitute a Non-Qualified Stock Option. Incentive Stock
Options may be granted only to Employees.
Anything in the Plan to the contrary notwithstanding, no
term of this Plan relating to Incentive Stock Options shall be
interpreted, amended, or altered, nor shall any discretion or
authority granted to the Committee under the Plan be so
exercised, so as to disqualify the Plan or, without the consent <PAGE>
<PAGE>
of the optionee, any Incentive Stock Option under Section 422 of
the Code.
Stock Options granted under the Plan shall be subject to the
following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of the
Plan, as the Committee shall deem desirable.
a. OPTION PRICE. The option price per share of
Stock purchasable under a Stock Option shall be
determined by the Committee at the time of grant but
shall be, in the case of Incentive Stock Options, not
less than 100% of Fair Market Value on the date of
grant and, in the case of Non-Qualified Stock Options,
not less than 50% of Fair Market Value on the date of
grant. If an employee owns or is deemed to own (by
reason of the attribution rules applicable under
Section 424(d) of the Code) more than 10% of the
combined voting power of all classes of stock of the
Company or any Subsidiary or parent corporation and an
Incentive Stock Option is granted to such employee,
the option price shall be no less than 110% of Fair
Market Value on the date of grant.
b. OPTION TERM. The term of each Stock Option
shall be fixed by the Committee, but no Incentive
Stock Option shall be exercisable more than 10 years
after the date the option is granted and no Non-
Qualified Stock Option shall be exercisable more than
10 years and one day after the date the option is
granted. If an employee owns or is deemed to own (by
reason of the attribution rules of Section 424(d) of
the Code) more than 10% of the combined voting power
of all classes of stock of the Company or any
Subsidiary or parent corporation and an Incentive
Stock Option is granted to such employee, the term of
such option shall be no more than five years from the
date of grant.
c. EXERCISABILITY. Stock Options shall be
exercisable at such future time or times, whether or
not in installments, as shall be determined by the
Committee at or after the date of grant. The
Committee may at any time accelerate the
exercisability of all or any portion of any Stock
Option.
d. [Intentionally left blank.]
e. METHODS OF EXERCISE. Stock Options may be
exercised in whole or in part, by giving written
notice of exercise to the Company specifying the
number of shares to be purchased. Such notice shall <PAGE>
<PAGE>
be accompanied by payment in full of the purchase
price, either by certified or bank check or other
instrument acceptable to the Committee. As determined
by the Committee, in its discretion, at (or, in the
case of Non-Qualified Stock Options, at or after) the
time of grant, payment in full or in part may also be
made in the form of shares of Stock not then subject
to restrictions under any Company plan (but which may
include shares the disposition of which constitutes a
disqualifying disposition for purposes of obtaining
incentive stock option treatment for federal tax
purposes), unless the Board should in any case
determine otherwise. Such surrendered shares shall be
valued at Fair Market Value on the exercise date. An
optionee shall have the rights of a shareholder only
as to shares acquired upon the exercise of a Stock
Option and not as to unexercised Stock Options.
f. NON-TRANSFERABILITY OF OPTIONS. No Stock
Option shall be transferable by the optionee otherwise
than by will or by the laws of descent and
distribution, and all Stock Options shall be
exercisable, during the optionee's lifetime, only by
the optionee.
g. TERMINATION BY DEATH. If an optionee's
employment by or other service relationship with the
Company and its Subsidiaries terminates by reason of
death, the Stock Option may thereafter be exercised,
both as to that portion which was exercisable by the
optionee immediately prior to death and, except as
otherwise determined by the Committee, as to any
remaining portion, by the legal representative or
legatee of the optionee, for a period of three years
(or such other period, not to exceed three years, as
the Committee shall specify at or after the time of
grant) from the date of death or until the expiration
of the stated term of the option, if earlier.
h. TERMINATION BY REASON OF DISABILITY. Any
Stock Option held by an optionee whose employment by
or whose service relationship with the Company and its
Subsidiaries has terminated, or who has been
designated an inactive employee, by reason of
Disability may thereafter be exercised to the extent
it was exercisable at the time of the earlier of such
termination or such designation (or on such
accelerated basis as the Committee shall at any time
determine prior to such termination or designation)
for a period of three years (or such other period, not
to exceed three years, as the Committee shall specify
at or after the time of grant) from the date of such
termination of employment or other service <PAGE>
<PAGE>
relationship or designation or until the expiration of
the stated term of the option, if earlier. Except as
otherwise provided by the Committee at the time of
grant, the death of an optionee during the final year
of such exercise period shall extend such period for
one year following death, or until the expiration of
the stated term of the option, if earlier. The
Committee shall have the authority to determine
whether a participant has been terminated or
designated an inactive employee by reason of
Disability.
i. TERMINATION BY REASON OF NORMAL RETIREMENT. If
an optionee's employment by the Company and its
Subsidiaries terminates by reason of Normal
Retirement, any Stock Option held by such optionee may
thereafter be exercised to the extent that it was then
exercisable (or on such accelerated basis as the
Committee shall at any time determine) for a period of
three years (or such other period, not to exceed three
years, as the Committee shall specify at or after the
time of grant) from the date of Normal Retirement or
until the expiration of the stated term of the option,
if earlier. Except as otherwise provided by the
Committee at the time of grant, the death of an
optionee during the final year of such exercise period
shall extend such period for one year following death,
or until the expiration of the stated term of the
option, if earlier.
j. OTHER TERMINATION. Unless otherwise determined
by the Committee, if an optionee's employment by or
other service relationship with the Company or its
Subsidiaries terminates for any reason other than
death, Disability or Normal Retirement, any Stock
Option held by such optionee may thereafter be
exercised to the extent it was exercisable on the date
of termination of employment or other termination of
the service relationship (or on such accelerated basis
as the Committee shall determine at or after the time
of grant) for a period of sixty (60) days (or such
longer period up to three years as the Committee shall
specify at or after the time of grant) from the date
of termination of employment or other termination of
the service relationship or until the expiration of
the stated term of the option, if earlier, provided,
that if the optionee's employment or other service
relationship is terminated for "cause" as a result of
the optionee's misconduct which, in the judgment of
the Committee, casts discredit on him or her, or is
otherwise harmful to the business, interests or
reputation of the Company, its parent, or a
Subsidiary, all Stock Options shall terminate
immediately.<PAGE>
<PAGE>
For purposes of the preceding paragraph, if an
optionee's employment by the Company or its
Subsidiaries is terminated under circumstances
entitling the optionee to cash severance pay under any
written severance plan, program, policy, or agreement
of the Company or its Subsidiaries in force at the
time of such termination of employment (a "Severance
Program"), then except as otherwise determined by the
Committee any Stock Option held by the optionee at
termination of employment shall be treated as
"exercisable on the date of termination of employment"
as to those shares for which it was in fact
exercisable immediately prior to termination of
employment plus any additional shares for which it
would have become exercisable during the severance
period (as hereinafter defined) had the optionee
remained employed by the Company or its Subsidiaries.
For purposes of the preceding sentence, the severance
period in the case of any terminated employee entitled
to severance under a Severance Program shall be the
period of weeks over which his or her cash severance,
if paid as salary continuation, would have been paid
(whether or not such severance is in fact so paid in
such form).
k. INCENTIVE STOCK OPTIONS. Notwithstanding any
designation of a Stock Option as an Incentive Stock
Option, such Stock Option shall be treated for tax
purposes as a Non-Qualified Stock Option to the extent
prescribed under Section 422(d) of the Code.
l. FORM OF SETTLEMENT. Subject to Sections 15(a),
15(c), and 15(d) below, shares of Stock issued upon
exercise of a Stock Option shall be free of all
restrictions under the Plan, except as provided in the
following sentence. The Committee may provide at time
of grant that the shares to be issued upon the
exercise of a Stock Option shall be in the form of
Restricted Stock or Deferred Stock, or may reserve the
right to so provide after time of grant.
m. OPTIONS GRANTED TO NON-EMPLOYEE DIRECTORS.
Subject to the limits and adjustment provisions set
forth in Section 3, each Non-employee Director serving
in such position on the third business day following
the date of each annual meeting of the stockholders of
the Company (such third day being hereinafter referred
to as the "determination date") shall be granted
effective as of the determination date a Non-Qualified
Stock Option covering 3,000 shares of Stock. The <PAGE>
<PAGE>
option price under such Stock Option shall be the fair
market value of the Stock on the determination date.
If, on account of the limit set forth in the second
sentence of Section 3(a), there are insufficient
shares as of any determination date to permit the
grant of a Stock Option covering 3,000 shares (as
adjusted) to each Non-employee Director then eligible
for a grant, the number of shares available for grant
shall be allocated evenly (disregarding any fractional
shares) among the Non-employee Directors then eligible
for a grant (an "incomplete grant"), and if additional
shares later become available under said limit while
any such Non-employee Director who received an
incomplete grant remains a Non-employee Director and
during the terms of the Plan, such Non-employee
Director shall be granted automatically upon such
availability a supplemental Non-Qualified Stock Option
covering a number of shares equal to the lesser of (a)
3,000 shares (appropriately adjusted pursuant to
Section 3) less the number of shares (as so adjusted)
covered by the incomplete grant, or (b) the number of
shares then available under Section 3, subject to
allocation among Non-employee Directors in accordance
with the preceding provisions of this paragraph. The
option price of any supplemental Stock Option shall be
the fair market value of the Stock on the date of
grant (i.e., the date of the availability of
additional shares).
Each Stock Option granted under this subsection (m)
may be exercised as follows:
(1) (A) 25% of the shares subject to such Stock Option
may be purchased commencing one year after the date of
grant, and
(B) an additional 25% of such shares may be
purchased commencing on the second, third, and fourth
anniversaries of the date of grant; and
(2) subject to (1) above, such Stock Option may only
be exercised during the five-year period beginning on
the date the Stock Option is granted.
To the extent that a Stock Option granted hereunder to
a Non-employee Director is not exercised when it
initially becomes exercisable, it shall be carried
forward and be exercisable until the expiration of the
term of such Stock Option as described in (2) above;
provided, that if the Non-employee Director ceases to
be a Director for any reason other than death, any
Stock Option held by such Non-employee Director may
thereafter be exercised, as to that portion of the <PAGE>
<PAGE>
Stock Option which was exercisable immediately prior
to the date the optionee ceased to be a Director, only
within the three-month period beginning from such date
(but in no event beyond the five-year term described
in (2) above); and further provided, that if a Non-
employee Director ceases to be a Director by reason of
death, any Stock Option held by such Non-employee
Director immediately prior to death, whether or not
then exercisable, shall be exercisable in whole or in
part at any time within the three-month period
beginning from the date of death (but in no event
beyond the five-year term described in (2) above) and
then shall terminate.
All options granted under this subsection (m) may be
exercised by delivery of cash and/or Stock.
Non-employee Directors shall not be granted any Award
or Grant under this Plan (including any Stock
Appreciation Right or Supplemental Grant) other than
Stock Options as specifically provided hereunder.
SECTION 7. STOCK APPRECIATION RIGHTS; DISCRETIONARY PAYMENTS.
a. NATURE OF STOCK APPRECIATION RIGHT. A Stock
Appreciation Right is an Award entitling the recipient
to receive an amount in cash or shares of Stock (or
forms of payment permitted under paragraph (e) below)
or a combination thereof having a value equal to (or
if the Committee shall so determine at time of grant,
less than) the excess of the Fair Market Value of a
share of Stock on the date of exercise over the Fair
Market Value of a share of Stock on the date of grant
(or over the option exercise price, if the Stock
Appreciation Right was granted in tandem with a Stock
Option) multiplied by the number of shares with
respect to which the Stock Appreciation Right shall
have been exercised, with the Committee having the
right to determine the form of payment.
b. GRANT AND EXERCISE OF STOCK APPRECIATION
RIGHTS. Stock Appreciation Rights may be granted in
tandem with, or independently of, any Stock Option
granted under the Plan. In the case of a Stock
Appreciation Right granted in tandem with a Non-
Qualified Stock Option, such Right may be granted
either at or after the time of the grant of such
option. In the case of a Stock Appreciation Right
granted in tandem with an Incentive Stock Option, such
Right may be granted only at the time of the grant of
the option. <PAGE>
<PAGE>
A Stock Appreciation Right or applicable portion thereof
granted in tandem with a given Stock Option shall terminate
and no longer be exercisable upon the termination or
exercise of the related Stock Option, except that a Stock
Appreciation Right granted with respect to less than the
full number of shares covered by a related Stock Option
shall not be reduced until the exercise or termination of
the related Stock Option exceeds the number of shares not
covered by the Stock Appreciation Right.
c. TERMS AND CONDITIONS OF STOCK APPRECIATION
RIGHTS. Stock Appreciation Rights shall be subject to
such terms and conditions as shall be determined from
time to time by the Committee, subject to the
following:
i. Stock Appreciation Rights granted in tandem
with Stock Options shall be exercisable only
at such time or times and to the extent that
the related Stock Options shall be
exercisable.
ii. Upon the exercise of a Stock Appreciation
Right, the applicable portion of any related
Stock Option shall be surrendered.
iii. Stock Appreciation Rights granted in tandem
with a Stock Option shall be transferable only
with such Stock Option. Stock Appreciation
Rights shall not be transferable otherwise
than by will or the laws of descent and
distribution. All Stock Appreciation Rights
shall be exercisable during the participant's
lifetime only by the participant or the
participant's legal representative.
iv. A Stock Appreciation Right granted in tandem
with an Incentive Stock Option may be
exercised only when the market price of the
Stock subject to the Incentive Stock Option
exceeds the exercise price of such option.
d. DISCRETIONARY PAYMENTS. Notwithstanding that
a Stock Option at the time of exercise shall not be
accompanied by a related Stock Appreciation Right, if
the market price of the shares subject to such Stock
Option exceeds the exercise price of such Stock Option
at the time of its exercise, the Committee may, in its
discretion, cancel such Stock Option, in which event
the Company shall pay to the person exercising such
Stock Option an amount equal to the difference between
the Fair Market Value of the Stock to have been
purchased pursuant to such exercise of such Stock <PAGE>
<PAGE>
Option (determined on the date the Stock Option is
cancelled) and the aggregate consideration to have
been paid by such person upon such exercise. Such
payment shall be by check or in Stock (or in a form of
payment permitted under paragraph (e) below) having a
Fair Market Value (determined on the date the payment
is to be made) equal to the amount of such payments or
any combination thereof, as determined by the
Committee. The Committee may exercise its discretion
under the first sentence of this paragraph (d) only in
the event of a written request of the person
exercising the option, which request shall not be
binding on the Committee.
e. SETTLEMENT IN THE FORM OF RESTRICTED SHARES OR
RIGHTS TO RECEIVE DEFERRED STOCK. Subject to Sections
15(a), 15(c), and 15(d) below, shares of Stock issued
upon exercise of a Stock Appreciation Right or as a
Discretionary Payment shall be free of all
restrictions under the Plan, except as provided in the
following sentence. The Committee may provide at time
of grant in the case of a Stock Appreciation Right
(and at the time of payment in the case of a
Discretionary Payment) that such shares shall be in
the form of shares of Restricted Stock or rights to
acquire Deferred Stock, or in the case of a Stock
Appreciation Right may reserve the right to so provide
at any time after the time of grant. Any such shares
and any shares subject to rights to acquire Deferred
Stock shall be valued at Fair Market Value on the date
of exercise of the Stock Appreciation Right or the
date the Stock Option is cancelled in the case of
Discretionary Payments.
f. RULES RELATING TO EXERCISE. In the case of a
participant subject to the restrictions of Section
16(b) of the Act, no stock appreciation right (as
referred to in Rule 16b-3(e) or any successor Rule
under the Act) shall be exercised (and no request or
payment under paragraph (d) above shall be honored or
made) except in compliance with any applicable
requirements of Rule 16b-3(e) or any successor rule.
Notwithstanding paragraph (a) above, in the event of
such exercise (or request and payment) during an
exercise period currently prescribed by such rule, the
Committee may prescribe, by rule of general
application, such other measure of value as it may
determine but not in excess of the highest per share
closing sale price of the Common Stock reported on the
New York Stock Exchange Composite Transactions Index
during such period and, where a Stock Appreciation
Right relates to an Incentive Stock Option, not in
excess of an amount consistent with the qualification<PAGE>
<PAGE>
of such Stock Option as an "incentive stock option"
under Section 422 of the Code.
SECTION 8. RESTRICTED STOCK; UNRESTRICTED STOCK.
a. NATURE OF UNRESTRICTED STOCK AWARD. A
Restricted Stock Award is an Award entitling the
recipient to acquire shares of Stock for a purchase
price (which may be zero), subject to such conditions,
including a Company right during a specified period or
periods to repurchase such shares at their original
purchase price (or to require forfeiture of such
shares, if the purchase price was zero) upon the
participant's termination of employment or other
service relationship, as the Committee may determine
at the time of grant. The original purchase price, if
any, shall be determined by the Committee, but if any
purchase price is payable in an amount which exceeds
the lesser of the par value of the shares or 10% of
the fair market value of the Common Stock on the award
date, it shall be equal to at least 50% of the fair
market value of the Common Stock on the award date.
b. AWARD AGREEMENT. A participant who is granted
a Restricted Stock Award shall have no rights with
respect to such Award unless the participant shall
have accepted the Award within 60 days (or such
shorter date as the Committee may specify) following
the award date by making payment to the Company by
certified or bank check or other instrument acceptable
to the Committee in an amount equal to the specified
purchase price, if any, of the shares covered by the
Award and by executing and delivering to the Company a
Restricted Stock Award Agreement in such form as the
Committee shall determine.
c. RIGHTS AS A SHAREHOLDER. Upon complying with
paragraph (b) above, a participant shall have all the
rights of a shareholder with respect to the Restricted
Stock including voting and dividend rights, subject to
nontransferability restrictions and Company repurchase
or forfeiture rights described in this Section and
subject to any other conditions contained in the Award
Agreement. Unless the Committee shall otherwise
determine, certificates evidencing shares of
Restricted Stock shall remain in the possession of the
Company until such shares are free of any restrictions
under the Plan.
d. RESTRICTIONS. Shares of Restricted Stock may
not be sold, assigned, transferred, pledged, or
otherwise encumbered or disposed of except as
specifically provided herein. In the event of <PAGE>
<PAGE>
termination of employment or other service
relationship of the participant with the Company and
its Subsidiaries for any reason, such shares shall be
resold to the Company at their purchase price, or
forfeited to the Company if the purchase price was
zero, except as set forth below.
i. The Committee at the time of grant shall
specify the date or dates (which may depend
upon or be related to the attainment of
performance goals and other conditions) on
which the nontransferability of the Restricted
Stock and the obligation to resell such shares
to the Company shall lapse. The Committee at
any time may accelerate such date or dates and
otherwise waive or, subject to Section 13,
amend any conditions of the Award.
ii. Except as may otherwise be provided in the
Award Agreement, in the event of termination of
employment or other service relationship of a
participant with the Company and its
Subsidiaries for any reason (including death),
the participant or the participant's legal
representative shall offer to resell to the
Company, at the price paid therefor, all
Restricted Stock, and the Company shall have
the right to purchase the same at such price,
or if the price was zero to require forfeiture
of the same, provided that except as provided
in the Award Agreement, the Company must
exercise such right of repurchase or forfeiture
not later than the 60th day following such
termination of employment or other service
relationship.
e. WAIVER, DEFERRAL, AND INVESTMENT OF DIVIDENDS.
The Restricted Stock Award Agreement may require or
permit the immediate payment, waiver, deferral, or
investment of dividends paid on the Restricted Stock.
f. UNRESTRICTED STOCK. The Committee may, in its
sole discretion, grant (or sell at a purchase price
not to exceed the lesser of the par value of the
shares or 10% of the fair market value of the Common
Stock at the time of sale) to any participant shares
of Stock free of restrictions under the Plan
("Unrestricted Stock"). Shares of Unrestricted Stock
may be granted or sold as described in the preceding
sentence in respect of past services or other valid
consideration. Any sale of Unrestricted Stock must
take place within 60 days after the time of grant of
the right to purchase such shares. <PAGE>
<PAGE>
SECTION 9. DEFERRED STOCK AWARDS.
a. NATURE OF DEFERRED STOCK AWARD. A Deferred
Stock Award is an award entitling the recipient to
acquire shares of Stock without payment in one or more
installments at a future date or dates, all as
determined by the Committee. The Committee may also
condition such acquisition on the attainment of
specified performance goals.
b. AWARD AGREEMENT. A participant who is granted
a Deferred Stock Award shall have no rights with
respect to a such Award unless within 60 days of the
grant of such Award or such shorter period as the
Committee may specify, the participant shall have
accepted the Award by executing and delivering to the
Company a Deferred Stock Award Agreement.
c. RESTRICTIONS ON TRANSFER. Deferred Stock
Awards and all rights with respect to such Awards may
not be sold, assigned, transferred, pledged, or
otherwise encumbered. Rights with respect to such
Awards shall be exercisable during the participant's
lifetime only by the participant or the participant's
legal representative.
d. RIGHTS AS A SHAREHOLDER. A participant
receiving a Deferred Stock Award will have rights of a
shareholder only as to shares actually received by the
participant under the Plan and not with respect to
shares subject to the Award but not actually received
by the participant. A participant shall be entitled
to receive a stock certificate for shares of Deferred
Stock only upon satisfaction of all conditions
therefor specified in the Deferred Stock Award
Agreement.
e. TERMINATION. Except as may otherwise be
provided in the Award Agreement, a participant's
rights in all Deferred Stock Awards shall
automatically terminate upon the participant's
termination of employment by or other service
relationship with the Company and its Subsidiaries for
any reason (including death).
f. ACCELERATION, WAIVER, ETC. At any time prior to
the participant's termination of employment or other
service relationship the Committee may in its
discretion accelerate, waive, or, subject to Section
13, amend any or all of the restrictions or conditions
imposed under any Deferred Stock Award. <PAGE>
<PAGE>
g. PAYMENTS IN RESPECT OF DEFERRED STOCK. Without
limiting the right of the Committee to specify
different terms, the Deferred Stock Award Agreement
may either make no provisions for, or may require or
permit the immediate payment, deferral, or investment
of amounts equal to, or less than, any cash dividends
which would have been payable on the Deferred Stock
had such stock been outstanding, all as determined by
the Committee in its sole discretion.
SECTION 10. PERFORMANCE UNIT AWARDS.
a. NATURE OF PERFORMANCE UNITS. A Performance
Unit Award is an award entitling the recipient to
acquire cash or shares of Stock, or a combination of
cash and Stock, upon the attainment of specified
performance goals. The Committee in its sole
discretion shall determine whether and to whom
Performance Unit Awards shall be made, the performance
goals applicable under each such Award, the periods
during which performance is to be measured, and all
other limitations and conditions applicable to the
awarded Performance Unit. Performance Units may be
awarded independent of or in connection with the
granting of any other Award under the Plan.
b. AWARD AGREEMENT. A participant shall have no
rights with respect to a Performance Unit Award unless
within 60 days of the grant of such Award or such
shorter period as the Committee may specify, the
participant shall have accepted the Award by executing
and delivering to the Company a Performance Unit Award
Agreement.
c. RESTRICTIONS ON TRANSFER. Performance Unit
Awards and all rights with respect to such Awards may
not be sold, assigned, transferred, pledged, or
otherwise encumbered, and if exercisable over a
specified period, shall be exercisable during the
participant's lifetime only by the participant or the
participant's legal representative.
d. RIGHTS AS A SHAREHOLDER. A participant
receiving a Performance Unit Award will have rights of
a shareholder only as to shares actually received by
the participant under the Plan and not with respect to
shares subject to the Award but not actually received
by the participant. A participant shall be entitled
to receive a stock certificate evidencing the
acquisition of shares of Stock under a Performance
Unit Award only upon satisfaction of all conditions
therefor specified in the Performance Unit Award
Agreement. <PAGE>
<PAGE>
e. TERMINATION. Except as may otherwise be
provided by the Committee at any time prior to
termination of employment or other service
relationship, a participant's rights in all
Performance Unit Awards shall automatically terminate
upon the participant's termination of employment by or
other service relationship with the Company and its
Subsidiaries for any reason (including death).
f. ACCELERATION, WAIVER, ETC. At any time prior to
the participant's termination of employment by or
other service relationship with the Company and its
Subsidiaries, the Committee may in its sole discretion
accelerate, waive, or, subject to Section 13, amend
any or all of the goals, restrictions, or conditions
imposed under any Performance Unit Award.
g. EXERCISE. The Committee in its sole discretion
shall establish procedures to be followed in
exercising any Performance Unit, which procedures
shall be set forth in the Performance Unit Award
Agreement. The Committee may at any time provide that
payment under a Performance Unit shall be made, upon
satisfaction of the applicable performance goals,
without exercise by the participant. Except as
otherwise specified by the Committee, (i) a
Performance Unit granted in tandem with a Stock Option
may be exercised only while the Stock Option is
exercisable, and (ii) the exercise of a Performance
Unit granted in tandem with any Award shall reduce the
number of shares subject to the related Award on such
basis as is specified in the Performance Unit Award
Agreement.
SECTION 11. OTHER STOCK-BASED AWARDS; SUPPLEMENTAL GRANTS.
a. NATURE OF AWARDS. The Committee may grant
other Awards under which Stock is or may in the future
be acquired ("Other Stock-based Awards"). Such awards
may include, without limitation, debt securities
convertible into or exchangeable for shares of Stock
upon such conditions, including attainment of
performance goals, as the Committee shall determine.
Subject to the purchase price limitations in paragraph
(b) below, such convertible or exchangeable securities
may have such terms and conditions as the Committee may
determine at the time of grant. However, no
convertible or exchangeable debt shall be issued unless
the Committee shall have provided (by Company right of <PAGE>
<PAGE>
repurchase, right to require conversion or exchange, or
other means deemed appropriate by the Committee) a
means of avoiding any right of the holders of such debt
to prevent a Company transaction by reason of covenants
in such debt.
b. PURCHASE PRICE; FORM OF PAYMENT. The Committee
may determine the consideration, if any, payable upon
the issuance or exercise of an Other Stock-based Award.
However, no shares of Stock (whether acquired by
purchase, conversion, or exchange or otherwise) shall
be issued unless (i) issued at no cost to the recipient
(or for a purchase price not in excess of the lesser of
the par value of the Shares or 10% of the Fair Market
Value of the Stock as of the time of sale), or (ii)
sold, exchanged, or converted by the Company, and the
Company shall have received payment for such Stock or
securities so sold, exchanged, or converted equal to at
least 50% of Fair Market Value of the Stock on the
grant or effective date, or the exchange or conversion
date, under the Award, as specified by the Committee.
The Committee may permit payment by certified check or
bank check or other instrument acceptable to the
Committee or by surrender of other shares of Stock
(excluding shares then subject to restrictions under
the Plan).
c. FORFEITURE OF AWARDS; REPURCHASE OF STOCK;
ACCELERATION OR WAIVER OF RESTRICTIONS. The Committee
may determine the conditions under which an Other
Stock-based Award shall be forfeited or, in the case
of an Award involving a payment by the recipient, the
conditions under which the Company may or must
repurchase such Award or related Stock. At any time
the Committee may in its sole discretion accelerate,
waive, or, subject to Section 13, amend any or all of
the limitations or conditions imposed under any Other
Stock-based Award.
d. AWARD AGREEMENTS. A participant shall have no
rights with respect to any Other Stock-based Award
unless within 60 days after the grant of such Award
(or such shorter period as the Committee may specify)
the participant shall have accepted the Award by
executing and delivering to the Company an Other
Stock-based Award Agreement.
e. NONTRANSFERABILITY. Other Stock-based Awards
may not be sold, assigned, transferred, pledged, or
encumbered except as may be provided in the Other
Stock-based Award Agreement. However, in no event
shall any Other Stock-based Award be transferred other
than by will or by the laws of descent and <PAGE>
<PAGE>
distribution or be exercisable during the
participant's lifetime by other than the participant
or the participant's legal representative.
f. RIGHTS AS A SHAREHOLDER. A recipient of any
Other Stock-based Award will have rights of a
shareholder only at the time and to the extent, if
any, specified by the Committee in the Other Stock-
based Award Agreement.
g. DEEMED DIVIDEND PAYMENTS; DEFERRALS. Without
limiting the right of the Committee to specify
different terms, an Other Stock-based Award Agreement
may require or permit the immediate payment, waiver,
deferral, or investment of dividends or deemed
dividends payable or deemed payable on Stock subject
to the Award.
h. SUPPLEMENTAL GRANTS. The Company may in its
sole discretion make a loan to the recipient of an
Award hereunder, either on or after the date of grant
of such Award. Such loans may be made either in
connection with the exercise of a Stock Option, a
Stock Appreciation Right, or an Other Stock-based
Award, in connection with the purchase of shares under
any Award, or in connection with the payment of any
federal income tax in respect of income recognized
under an Award. The Committee shall have full
authority to decide whether to make a loan hereunder
and to determine the amount, term, and provisions of
any such loan, including the interest rate (which may
be zero) charged in respect of any such loan, whether
the loan is to be secured or unsecured, the terms on
which the loan is to be repaid and the conditions, if
any, under which it may be forgiven. However, no loan
hereunder shall provide or reimburse to the borrower
the amount used by him for the payment of the par
value of any shares of Common Stock issued, have a
term (including extensions) exceeding ten years in
duration, or be in an amount exceeding the total
exercise or purchase price paid by the borrower under
an Award or for related Stock under the Plan plus an
amount equal to the cash payment permitted in the
following paragraph.
The Committee may at any time authorize a cash
payment, in respect of the grant or exercise of an
Award under the Plan or the lapse or waiver of
restrictions under an Award which shall not exceed the
amount which would be required in order to pay in full
the federal income tax due as a result of income
recognized by the recipient under both the Award and
such cash payment, in each case assuming that such <PAGE>
<PAGE>
income is taxed at the regular maximum marginal rate
applicable to individuals under the Code as in effect
at the time such income is includable in the
recipient's income. Subject to the foregoing, the
Committee shall have complete authority to decide
whether to make such cash payments in any case, to
make provision for such payments either simultaneously
with or after the grant of the associated Award, and
to determine the amount of each such payment.
SECTION 12. TRANSFER, LEAVE OF ABSENCE, ETC.
For purposes of the Plan, the following events shall not be
deemed a termination of employment:
a. a transfer to the employment of the Company
from a Subsidiary or from the Company to a Subsidiary,
or from one Subsidiary to another; or
b. an approved leave of absence for military
service or sickness, or for any other purpose approved
by the Company, if the employee's right to reemployment
is guaranteed either by a statute or by contract or
under the policy pursuant to which the leave of absence
was granted or if the Committee otherwise so provides
in writing.
For purposes of Section 6(j), Section 8(a), Section
8(d), Section 9(e), Section 9(f), Section 10(e) and
Section 10(f), except as otherwise determined by the
Committee an optionee employed as an employee by the
Company and its Subsidiaries shall be treated as having
incurred a termination of employment by or other
service relationship with the Company and its
Subsidiaries on the date he or she ceases to be an
employee, whether or not he or she continues to provide
services to the Company or its Subsidiaries on some
other basis.
SECTION 13. AMENDMENTS AND TERMINATION.
The Board may at any time amend or discontinue the Plan and
the Committee may at any time amend or cancel any outstanding
Award (or provide substitute Awards at the same or reduced
exercise or purchase price or with no exercise or purchase price,
but such price, if any, must satisfy the requirements which would
apply to the substitute or amended Award if it were then
initially granted under this Plan) for the purpose of satisfying
changes in law or for any other lawful purpose, but no such
action shall adversely affect rights under any outstanding Award
without the holder's consent. However, no such amendment, unless
approved by stockholders, shall be effective if it would cause
the Plan to fail to satisfy the incentive stock option <PAGE>
<PAGE>
requirements of the Code or the requirements of Rule 16b-3 or any
successor rule under the Act as in effect on the date of such
amendment.
SECTION 14. STATUS OF PLAN.
With respect to the portion of any Award which has not been
exercised and any payments in cash, stock, or other consideration
not received by a participant, a participant shall have no rights
greater than those of a general creditor of the Company unless
the Committee shall otherwise expressly determine in connection
with any Award or Awards. In its sole discretion, the Committee
may authorize the creation of trusts or other arrangements to
meet the Company's obligations to deliver Stock or make payments
with respect to awards hereunder, provided that the existence of
such trusts or other arrangements is consistent with the
provision of the foregoing sentence.
SECTION 15. GENERAL PROVISIONS.
a. NO DISTRIBUTION; COMPLIANCE WITH LEGAL
REQUIREMENTS, ETC. The Committee may require each
person acquiring shares pursuant to an Award to
represent to and agree with the Company in writing
that such person is acquiring the shares without a
view to distribution thereof.
No shares of Stock shall be issued pursuant to an Award
until all applicable securities laws and other legal
and stock exchange requirements have been satisfied.
The Committee may require the placing of such stop-
orders and restrictive legends on certificates for
Stock and Awards as it deems appropriate.
b. OTHER COMPENSATION ARRANGEMENTS; NO EMPLOYMENT
RIGHTS. Nothing contained in this Plan shall prevent
the Board of Directors from adopting other or
additional compensation arrangements, subject to
stockholder approval if such approval is required; and
such arrangements may be either generally applicable or
applicable only in specific cases. The adoption of the
Plan does not confer upon any employee or other person
any right to continued employment or the continuation
of any service relationship with the Company or a
Subsidiary, nor does it interfere in any way with the
right of the Company or a Subsidiary to terminate the
employment or other service relationship that may exist
between it and any person.
c. TAX WITHHOLDING, ETC. Each participant shall,
no later than the date as of which the value of an
Award or of any Stock or other amounts received
thereunder first becomes includable in the gross income <PAGE>
<PAGE>
of the participant for Federal income tax purposes, pay
to the Company, or make arrangements satisfactory to
the Committee regarding payment of, any Federal, state,
or local taxes of any kind required by law to be
withheld with respect to such income. The Company and
its Subsidiaries shall, to the extent permitted by law,
have the right to deduct any such taxes from any
payment of any kind otherwise due to the participant.
d. CANCELLATION OF AWARDS. The Committee may
provide, with respect to any Award, that the Award
shall be cancelled or rescinded and any associated
shares forfeited, and that the participant be obligated
to pay to the Company any gain received upon exercise
or vesting, in the event that the participant competes
with the Company or its Subsidiaries, discloses
confidential information of the Company or its
Subsidiaries, or otherwise is not in compliance with
any provision of the Award, in each case on such terms
and conditions as the Committee considers appropriate
in the circumstances.
SECTION 16. EFFECTIVE DATE OF PLAN.
The Plan shall not become effective unless approved by the
vote of the holders of a majority of the shares of capital stock
of the Company represented at a meeting of stockholders. Subject
to such effectiveness, and to the requirement that no Stock may
be issued hereunder prior to such approval, Options and other
Awards may be granted hereunder on and after adoption of the Plan
by the Board. <PAGE>
<PAGE>
<PAGE>
<PAGE>
BBN HARK SYSTEMS CORPORATION
EXHIBIT 10.2
1995 STOCK OPTION PLAN
1. PURPOSE
_______
The purpose of this 1995 Stock Option Plan (the "Plan") is to
advance the interests of BBN HARK Systems Corporation (the "Company")
by enhancing the ability of the Company and its parent and
subsidiaries to attract and retain able employees, consultants or
advisors to the Company; to reward such individuals for their
contributions; and to encourage such individuals to take into account
the long-term interests of the Company through interests in shares of
the Company's common stock, $.01 par value (the "Stock"). Any
employee, consultant, or advisor selected to receive an award under
the Plan is referred to as a "participant".
Options granted pursuant to the Plan may be incentive stock
options as defined in section 422 of the Internal Revenue Code of 1986
(as from time to time amended, the "Code") (any option that is
intended so to qualify as an incentive stock option being referred to
herein as an "incentive option"), or options that are not incentive
options, or both. Except as otherwise expressly provided with respect
to an option grant, no option granted pursuant to the Plan shall be an
incentive option.
2. ADMINISTRATION
______________
The Plan shall be administered by the Board of Directors (the
"Board") of the Company. The Board shall have authority, not
inconsistent with the express provisions of the Plan: (a) to grant
awards consisting of options or stock appreciation rights ("SARs"), or
both, to such participants as the Board may select; (b) to determine
the time or times when awards shall be granted and the number of
shares of Stock subject to each award; (c) to determine which options
are, and which options are not, intended to be incentive options; (d)
to determine the terms and conditions of each award; (e) to prescribe
the form or forms of any instruments evidencing awards and any other
instruments required under the Plan and to change such forms from time
to time; (f) to adopt, amend, and rescind rules and regulations for
the administration of the Plan; and (g) to interpret the Plan and to
decide any questions and settle all controversies and disputes that
may arise in connection with the Plan. Such determinations of the
Board shall be conclusive and shall bind all parties. Subject to
Section 8, the Board shall also have the authority, both generally and
in particular instances, to waive compliance by a participant with any
obligation to be performed by the participant under an award, to waive
any condition or provision of an award, and to amend or cancel any
award (and if an award is cancelled, to grant a new award on such
terms as the Board shall specify) except that the Board may not take
any action with respect to an outstanding award that would adversely
affect the rights of the participant under such award without such
participant's consent. Nothing in the preceding sentence shall be
construed as limiting the power of the Board to make adjustments
required by Section 4(c) and Section 6(j).<PAGE>
<PAGE>
The Board may, in its discretion, delegate some or all of its
powers with respect to the Plan to a committee (the "Committee"), in
which event all references (as appropriate) to the Board hereunder
shall be deemed to refer to the Committee. The Committee, if one is
appointed, shall consist of at least two directors. A majority of the
members of the Committee shall constitute a quorum, and all
determinations of the Committee shall be made by a majority of its
members. Any determination of the Committee under the Plan may be
made without notice or meeting of the Committee by a writing signed by
a majority of the Committee members. On and after registration of the
Stock under the Securities Exchange Act of 1934 (the "1934 Act"), the
Board shall delegate the power to select directors and officers to
receive awards under the Plan and the timing, pricing, and amount of
such awards to a Committee, all members of which shall be
disinterested persons within the meaning of Rule 16b-3 under the 1934
Act and "outside directors" within the meaning of section
162(m)(4)(c)(i) of the Code.
3. EFFECTIVE DATE AND TERM OF PLAN
_______________________________
The Plan shall become effective on the date on which it is
approved by the shareholders of the Company. Grants of awards under
the Plan may be made prior to that date (but after Board adoption of
the Plan), subject to approval of the Plan by the shareholders.
No awards shall be granted under the Plan after the completion of
ten years from the date on which the Plan was adopted by the Board,
but awards previously granted may extend beyond that date.
4. SHARES SUBJECT TO THE PLAN
__________________________
(a) NUMBER OF SHARES. Subject to adjustment as provided in
Section 4(c), the aggregate number of shares of Stock that may be
delivered upon the exercise of award granted under the Plan shall be
1,200,000. If any award granted under the Plan terminates without
having been exercised in full, or upon exercise is satisfied other
than by delivery of Stock, the number of shares of Stock as to which
such award was not exercised shall be available for future grants
within the limits set forth in this Section 4(a).
(b) SHARES TO BE DELIVERED. Shares delivered under the Plan
shall be authorized but unissued Stock or, if the Board so decides in
its sole discretion, previously issued Stock acquired by the Company
and held in its treasury. No fractional shares of Stock shall be
delivered under the Plan.
(c) CHANGES IN STOCK. In the event of a stock dividend, stock
split, or combination of shares, recapitalization, or other change in
the Company's capital stock, the number and kind of shares of stock or
securities of the Company subject to awards then outstanding or
subsequently granted under the Plan, the exercise price of such
awards, the maximum number of shares or securities that may be
delivered under the Plan, and other relevant provisions shall be
appropriately adjusted by the Board, whose determination shall be
binding on all persons.<PAGE>
<PAGE>
The Board may also adjust the number of shares subject to
outstanding awards, the exercise price of outstanding awards, and the
terms of outstanding awards, to take into consideration material
changes in accounting practices or principles, extraordinary
dividends, consolidations or mergers (except as described in Section
6(j)), acquisitions or dispositions of stock or property, or any other
event if it is determined by the Board that such adjustment is
appropriate to avoid distortion in the operation of the Plan, provided
that no such adjustment shall be made in the case of an incentive
option, without the consent of the participant, if it would constitute
a modification, extension, or renewal of the option within the meaning
of Section 424(h) of the Code.
5. ELIGIBILITY FOR AWARDS
______________________
Persons eligible to receive awards under the Plan shall be those
employees of the Company, its parent, or subsidiaries, or consultants,
or advisors to any of them, who in the opinion of the Board are in a
position to make a contribution to the Company. Participants shall be
selected by the Board. A parent for purposes of the Plan shall be a
corporation which owns, directly or indirectly, 50% or more of the
total combined voting power of all classes of the Company's stock. A
subsidiary for purposes of the Plan shall be (i) a corporation in
which the Company owns, directly or indirectly, stock possessing 50%
or more of the total combined voting power of all classes of stock, or
(ii) a corporation in which the Company's parent owns, directly or
indirectly, stock possessing 50% or more of the total combined voting
power of all classes of stock. The Board may grant awards covering up
to the entire number of shares available for issuance under the Plan
(as determined under Section 4(a)) to any one participant or to
several participants, in the sole discretion of the Board.
Incentive options shall be granted only to "employees" as defined
in the provisions of the Code or regulations thereunder applicable to
incentive stock options.
6. TERMS AND CONDITIONS OF OPTIONS AND SARs
________________________________________
(a) EXERCISE PRICE OF OPTIONS. The exercise price of each
option shall be determined by the Board but in the case of an
incentive option shall not be less than 100% (110%, in the case of an
incentive option granted to a ten-percent shareholder) of the fair
market value of the Stock at the time the option is granted; nor shall
the exercise price be less, in the case of an original issue of
authorized stock, than par value. For this purpose, "fair market
value" in the case of incentive options shall have the same meaning as
it does in the provisions of the Code and the regulations thereunder
applicable to incentive options; and "ten-percent shareholder" shall
mean any participant who at the time of grant owns directly, or by
reason of the attribution rules set forth in Section 424(d) of the
Code is deemed to own, stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or of any
of its parent or subsidiary corporations.
(b) DURATION OF OPTIONS. An option shall be exercisable during
such period or periods as the Board may specify. The latest date on
which an option may be exercised (the "Final Exercise Date") shall be
the date which is ten years (five years, in the case of an incentive<PAGE>
<PAGE>
option granted to a "ten-percent shareholder" as defined in (a) above)
from the date the option was granted or such earlier date as may be
specified by the Board at the time the option is granted.
(c) EXERCISE OF OPTIONS.
(1) An option shall become exercisable at such time or times
and upon such conditions as the Board shall specify.
In the case of an option not immediately exercisable in
full, the Board may at any time accelerate the time
at which all or any part of the option may be exercised.
(2) Any exercise of an option shall be in writing, signed by
the proper person and furnished to the Company, accompanied
by (i) such documents, representations, agreements, and
certifications as may be required by the Board and (ii)
payment in full as specified below in Section 6(d) for the
number of shares for which the option is exercised.
(3) In the case of an option that is not an incentive option,
the Board shall have the right to require that the
participant exercising the option remit to the Company an
amount sufficient to satisfy any federal, state, or local
withholding tax requirements (or make other arrangements
satisfactory to the Company with regard to such taxes) prior
to the delivery of any Stock pursuant to the exercise of the
option. If permitted by the Board either at the time of the
grant of the option or the time of exercise, the participant
may elect, at such time and in such manner as the Board may
prescribe, to satisfy such withholding obligation by (i)
delivering to the Company Stock owned by such individual
having a fair market value equal to such withholding
obligation, or (ii) requesting that the Company withhold
from the shares of Stock to be delivered upon the exercise a
number of shares of Stock having a fair market value equal
to such withholding obligation.
In the case of an incentive option, the Board may require as
a condition of exercise that the participant exercising the
option agree to inform the Company promptly of any
disposition (within the meaning of Section 424(c) of the
Code and the regulations thereunder) of Stock received upon
exercise. In addition, if at the time the option is
exercised the Board determines that under applicable law and
regulations the Company could be liable for the withholding
of any federal or state tax with respect to a disposition of
the Stock received upon exercise, the Board may require as a
condition of exercise that the participant exercising the
option agree to give such security as the Board deems
adequate to meet the potential liability of the Company for
the withholding of tax, and to augment such security from<PAGE>
<PAGE>
time to time in any amount reasonably deemed necessary by
the Board to preserve the adequacy of such security.
(4) If an option is exercised by the executor or administrator
of a deceased participant, or by the person or persons to
whom the option has been transferred by the participant's
will or the applicable laws of descent and distribution, the
Company shall be under no obligation to deliver Stock
pursuant to such exercise until the Company is satisfied as
to the authority of the person or persons exercising the
option.
(d) PAYMENT FOR STOCK. Stock purchased upon exercise of an
option under the Plan shall be paid for as follows: (i) in cash,
check acceptable to the Company (determined in accordance with such
guidelines as the Board may prescribe), or money order payable to the
order of the Company, or (ii) if so permitted by the Board (which, in
the case of an incentive option, shall specify such method of payment
at the time of grant), (A) through the delivery of shares of Stock
(which, in the case of Stock acquired from the Company, shall have
been held for at least six months unless the Board specifies a shorter
period) having a fair market value on the date of exercise equal to
the purchase price, or (B) by delivery of a promissory note of the
participant to the Company, such note to be payable on such terms as
are specified by the Board, or (C) by delivery of an unconditional and
irrevocable undertaking by a broker to deliver promptly to the Company
sufficient funds to pay the exercise price, or (D) by any combination
of the permissible forms of payment; provided, that if the Stock
delivered upon exercise of the option is an original issue of
authorized Stock, at least so much of the exercise price as represents
the par value of such Stock shall be paid other than with a personal
check or promissory note of the person exercising the option.
(e) STOCK APPRECIATION RIGHTS. The Board in its discretion
may grant SARs either in tandem with or independent of options awarded
under the Plan. Except as hereinafter provided, each SAR will entitle
the participant to receive upon exercise, with respect to each share
of Stock to which the SAR relates, the excess of (i) the share's value
on the date of exercise, over (ii) the share's fair market value on
the date it was granted. For purposes of clause (i), "value" shall
mean fair market value; provided, that the Board may adjust such value
to take into account dividends on the Stock and may also grant SARs
that provide, in such limited circumstances following a change in
control of the Company (as determined by the Board) as the Board may
specify, that "value" for purposes of clause (i) is to be determined
by reference to an average value for the Stock during a period
immediately preceding the change in control, all as determined by the
Board. The amount payable to a participant upon exercise of an SAR
shall be paid either in cash or in shares of Stock, as the Board
determines. Each SAR shall be exercisable during such period or
periods and on such terms as the Board may specify. No SAR shall be
exercisable after the date which is ten years from the date of grant.
(f) DELIVERY OF STOCK. A participant shall not have the
rights of a shareholder with regard to awards under the Plan except as
to Stock actually received by such participant under the Plan.<PAGE>
<PAGE>
The Company shall not be obligated to deliver any shares of
Stock (i) until, in the opinion of the Company's counsel, all
applicable federal and state laws and regulations have been complied
with, (ii) if the outstanding Stock is at the time listed on any stock
exchange, until the shares to be delivered have been listed or
authorized to be listed on such exchange upon official notice of
issuance, and (iii) until all other legal matters in connection with
the issuance and delivery of such shares have been approved by the
Company's counsel. If the sale of Stock has not been registered under
the Securities Act of 1933, as amended, the Company may require, as a
condition to exercise of the award, such representations or agreements
as counsel for the Company may consider appropriate to avoid violation
of such Act and may require that the certificates evidencing such
Stock bear an appropriate legend restricting transfer.
(g) NONTRANSFERABILITY OF AWARDS. No award may be
transferred other than by will or by the laws of descent and
distribution, and during a participant's lifetime an award may be
exercised only by him or her.
(h) DEATH. Except as otherwise provided in an award, if a
participant dies, each award held by the participant immediately prior
to death may be exercised, to the extent it was exercisable
immediately prior to death, by his executor or administrator, or by
the person or persons to whom the award is transferred by will or the
applicable laws of descent and distribution, at any time within the
period ending (i) 180 days after the participant's death (in the event
the participant's employment or other service relationship with the
Company shall terminate by reason of death), or (ii) 120 days after
the participant's death (in the event the participant dies within the
60-day period following termination of the participant's employment or
other service relationship with the Company), or such longer period as
the Committee may determine. In no event shall an award be exercised
beyond the Final Exercise Date. Except as otherwise provided in an
award, all awards held by a participant immediately prior to death
that are not then exercisable shall terminate on the date of death.
(i) OTHER TERMINATION OF SERVICE. Except as otherwise
provided in an award, if a participant's employment or other service
relationship with the Company terminates for any reason other than
death, all awards held by the participant shall terminate to the
extent not exercisable immediately prior to such event. To the extent
exercisable immediately prior to termination of employment or other
service relationship, the award shall continue to be exercisable
thereafter for a period of 60 days (or such longer period as the Board
may determine, but in no event beyond the Final Exercise Date), unless
the participant's employment or other service relationship is
terminated for "cause" as a result of the participant's misconduct
which, in the judgment of the Board, casts discredit on him or her, or
is otherwise harmful to the business, interests, or reputation of the
Company, its parent, or a subsidiary, in which case all awards shall
terminate immediately. The Board may in any award provide for post-
termination exercise provisions different from those expressly set
forth in the preceding two sentences or in (h) above, including
without limitation terms allowing a later exercise by a former
employee, consultant, or advisor (or, in the case of a former
employee, consultant, or advisor who is deceased, the person or<PAGE>
<PAGE>
persons to whom the award is transferred by will or the laws of
descent and distribution) as to all or any portion of the award not
exercisable immediately prior to termination of employment or other
service relationship, but in no case may an award be exercised after
the Final Exercise Date. Except as otherwise provided in an award,
after completion of that 60-day or longer period, such awards shall
terminate to the extent not previously exercised, expired, or
terminated. For purposes of this Plan, the service relationship shall
not be considered terminated (i) in the case of sick leave or other
bona fide leave of absence approved for purposes of the Plan by the
Board, so long as the participant's right to reemployment or continued
service is guaranteed either by statute or by contract, or (ii) in the
case of a transfer of employment or service relationship between the
Company and a subsidiary or parent, or between subsidiaries of the
Company or parent (provided the participant's direct or indirect
service to the Company continues), or to the service of a corporation
(or a parent or subsidiary corporation of such corporation) issuing or
assuming an award in a transaction to which section 424(a) of the Code
applies.
(j) MERGERS, ETC. In the event of any merger,
consolidation, dissolution, or liquidation of the Company, the Board
in its sole discretion may, as to any outstanding awards, make such
substitution or adjustment in the aggregate number of shares reserved
for issuance under the Plan and in the number and purchase price (if
any) of shares subject to such awards as it may determine, or
accelerate, amend, or terminate such awards upon such terms and
conditions as it shall provide (which, in the case of the termination
of the vested portion of any award, shall require payment or other
consideration which the Board deems equitable in the circumstances).
The Board may grant awards under the Plan in substitution
for awards held by employees, consultants, or advisors of another
corporation who concurrently become employees, consultants, or
advisors of the Company, its parent, or a subsidiary as the result of
a merger or consolidation of that corporation with the Company, its
parent, or a subsidiary, or as the result of the acquisition by the
Company, its parent, or a subsidiary of property or stock of that
corporation. The Company may direct that substitute awards be granted
on such terms and conditions as the Board considers appropriate in the
circumstances.
(k) CANCELLATION OF AWARDS. The Board may provide in any
award that the award shall be cancelled or rescinded and any
associated shares forfeited, and the participant shall be obligated to
pay to the Company any gain received upon exercise, in the event that
the participant competes with the Company, discloses confidential
information of the Company, or otherwise is not in compliance with
applicable provisions of any award, in each case on such terms and
conditions as the Board considers appropriate in the circumstances.
7. EMPLOYMENT RIGHTS
_________________
Neither the adoption of the Plan nor the grant of awards shall
confer upon any participant any right to continue as an employee of,
or consultant or advisor to, the Company, its parent, or any
subsidiary of either or affect in any way the right of the Company,
its parent, or a subsidiary of either to terminate the participant's
relationship at any time. Except as specifically provided by the<PAGE>
<PAGE>
Board in any particular case, the loss of existing or potential profit
in awards granted under this Plan shall not constitute an element of
damages in the event of termination of the relationship of a
participant even if the termination is in violation of an obligation
of the Company, its parent, or a subsidiary of either to the
participant by contract or otherwise.
8. EFFECT, DISCONTINUANCE, CANCELLATION, AMENDMENT, AND TERMINATION
________________________________________________________________
Neither adoption of the Plan nor the grant of awards to a
participant shall affect the Company's right to make awards to such
participant that are not subject to the Plan, to issue to such
participant Stock as a bonus or otherwise, or to adopt other plans or
arrangements under which Stock may be issued, and shall in no way
affect the Company's right to operate its business at its sole
discretion.
The exercise of certain awards granted under the Plan may be
made contingent upon the closing of an initial public offering of the
Company's Stock. The grant of such awards under the Plan shall in no
way obligate the Company to consummate or consider a public offering
of Stock, and the failure of the Company to close a public offering of
Stock shall not entitle a participant granted such an award to any
substitute award or other benefit, or to any damages.
The Board may at any time discontinue granting awards under the
Plan. With the consent of the participant, the Board may at any time
cancel an existing award in whole or in part and grant another award
for such number of shares as the Board specifies. The Board may at
any time or times amend the Plan or any outstanding award for the
purpose of satisfying the requirements of section 422 of the Code or
of any changes in applicable laws or regulations or for any other
purpose that may at the time be permitted by law, or may at any time
terminate the Plan as to any further grants of awards; except that no
such amendment shall adversely affect the rights of any participant
(without his or her consent) under any award previously granted.
<PAGE>
<PAGE>
<PAGE>
<PAGE>
BBN INTERNET SERVICES CORPORATION
EXHIBIT 10.3
1994 STOCK OPTION PLAN
1. PURPOSE
_______
The purpose of this 1994 Stock Option Plan (the "Plan") is to
advance the interests of BBN Internet Services Corporation (the
"Company") by enhancing the ability of the Company and its parent and
subsidiaries to attract and retain able employees, consultants or
advisors to the Company; to reward such individuals for their
contributions; and to encourage such individuals to take into account
the long-term interests of the Company through interests in shares of
the Company's common stock, $.01 par value (the "Stock"). Any
employee, consultant, or advisor selected to receive an award under
the Plan is referred to as a "participant".
Options granted pursuant to the Plan may be incentive stock
options as defined in section 422 of the Internal Revenue Code of 1986
(as from time to time amended, the "Code") (any option that is
intended so to qualify as an incentive stock option being referred to
herein as an "incentive option"), or options that are not incentive
options, or both. Except as otherwise expressly provided with respect
to an option grant, no option granted pursuant to the Plan shall be an
incentive option.
2. ADMINISTRATION
______________
The Plan shall be administered by the Board of Directors (the
"Board") of the Company. The Board shall have authority, not
inconsistent with the express provisions of the Plan: (a) to grant
awards consisting of options or stock appreciation rights ("SARs"), or
both, to such participants as the Board may select; (b) to determine
the time or times when awards shall be granted and the number of
shares of Stock subject to each award; (c) to determine which options
are, and which options are not, intended to be incentive options; (d)
to determine the terms and conditions of each award; (e) to prescribe
the form or forms of any instruments evidencing awards and any other
instruments required under the Plan and to change such forms from time
to time; (f) to adopt, amend, and rescind rules and regulations for
the administration of the Plan; and (g) to interpret the Plan and to
decide any questions and settle all controversies and disputes that
may arise in connection with the Plan. Such determinations of the
Board shall be conclusive and shall bind all parties. Subject to
Section 8, the Board shall also have the authority, both generally and
in particular instances, to waive compliance by a participant with any
obligation to be performed by the participant under an award, to waive
any condition or provision of an award, and to amend or cancel any
award (and if an award is cancelled, to grant a new award on such
terms as the Board shall specify) except that the Board may not take
any action with respect to an outstanding award that would adversely
affect the rights of the participant under such award without such
participant's consent. Nothing in the preceding sentence shall be
construed as limiting the power of the Board to make adjustments
required by Section 4(c) and Section 6(j).
The Board may, in its discretion, delegate some or all of its
powers with respect to the Plan to a committee (the "Committee"), in
which event all references (as appropriate) to the Board hereunder<PAGE>
<PAGE>
shall be deemed to refer to the Committee. The Committee, if one is
appointed, shall consist of at least two directors. A majority of the
members of the Committee shall constitute a quorum, and all
determinations of the Committee shall be made by a majority of its
members. Any determination of the Committee under the Plan may be
made without notice or meeting of the Committee by a writing signed by
a majority of the Committee members. On and after registration of the
Stock under the Securities Exchange Act of 1934 (the "1934 Act"), the
Board shall delegate the power to select directors and officers to
receive awards under the Plan and the timing, pricing, and amount of
such awards to a Committee, all members of which shall be
disinterested persons within the meaning of Rule 16b-3 under the 1934
Act and "outside directors" within the meaning of section
162(m)(4)(c)(i) of the Code.
3. EFFECTIVE DATE AND TERM OF PLAN
_______________________________
The Plan shall become effective on the date on which it is
approved by the shareholders of the Company. Grants of awards under
the Plan may be made prior to that date (but after Board adoption of
the Plan), subject to approval of the Plan by the shareholders.
No awards shall be granted under the Plan after the completion of
ten years from the date on which the Plan was adopted by the Board,
but awards previously granted may extend beyond that date.
4. SHARES SUBJECT TO THE PLAN
__________________________
(a) NUMBER OF SHARES. Subject to adjustment as provided in
Section 4(c), the aggregate number of shares of Stock that may be
delivered upon the exercise of award granted under the Plan shall be
1,200,000. If any award granted under the Plan terminates without
having been exercised in full, or upon exercise is satisfied other
than by delivery of Stock, the number of shares of Stock as to which
such award was not exercised shall be available for future grants
within the limits set forth in this Section 4(a).
(b) SHARES TO BE DELIVERED. Shares delivered under the Plan
shall be authorized but unissued Stock or, if the Board so decides in
its sole discretion, previously issued Stock acquired by the Company
and held in its treasury. No fractional shares of Stock shall be
delivered under the Plan.
(c) CHANGES IN STOCK. In the event of a stock dividend, stock
split, or combination of shares, recapitalization, or other change in
the Company's capital stock, the number and kind of shares of stock or
securities of the Company subject to awards then outstanding or
subsequently granted under the Plan, the exercise price of such
awards, the maximum number of shares or securities that may be
delivered under the Plan, and other relevant provisions shall be
appropriately adjusted by the Board, whose determination shall be
binding on all persons.
The Board may also adjust the number of shares subject to
outstanding awards, the exercise price of outstanding awards, and the
terms of outstanding awards, to take into consideration material
changes in accounting practices or principles, extraordinary
dividends, consolidations or mergers (except as described in Section
6(j)), acquisitions or dispositions of stock or property, or any other<PAGE>
<PAGE>
event if it is determined by the Board that such adjustment is
appropriate to avoid distortion in the operation of the Plan, provided
that no such adjustment shall be made in the case of an incentive
option, without the consent of the participant, if it would constitute
a modification, extension, or renewal of the option within the meaning
of section 424(h) of the Code.
5. ELIGIBILITY FOR AWARDS
______________________
Persons eligible to receive awards under the Plan shall be those
employees of the Company, its parent, or subsidiaries, or consultants,
or advisors to any of them, who in the opinion of the Board are in a
position to make a contribution to the Company. Participants shall be
selected by the Board. A parent for purposes of the Plan shall be a
corporation which owns, directly or indirectly, 50% or more of the
total combined voting power of all classes of the Company's stock. A
subsidiary for purposes of the Plan shall be (i) a corporation in
which the Company owns, directly or indirectly, stock possessing 50%
or more of the total combined voting power of all classes of stock, or
(ii) a corporation in which the Company's parent owns, directly or
indirectly, stock possessing 50% or more of the total combined voting
power of all classes of stock. The Board may grant awards covering up
to the entire number of shares available for issuance under the Plan
(as determined under Section 4(a)) to any one participant or to
several participants, in the sole discretion of the Board.
Incentive options shall be granted only to "employees" as defined
in the provisions of the Code or regulations thereunder applicable to
incentive stock options.
6. TERMS AND CONDITIONS OF OPTIONS AND SARs
________________________________________
(a) EXERCISE PRICE OF OPTIONS. The exercise price of each
option shall be determined by the Board but in the case of an
incentive option shall not be less than 100% (110%, in the case of an
incentive option granted to a ten-percent shareholder) of the fair
market value of the Stock at the time the option is granted; nor shall
the exercise price be less, in the case of an original issue of
authorized stock, than par value. For this purpose, "fair market
value" in the case of incentive options shall have the same meaning as
it does in the provisions of the Code and the regulations thereunder
applicable to incentive options; and "ten-percent shareholder" shall
mean any participant who at the time of grant owns directly, or by
reason of the attribution rules set forth in section 424(d) of the
Code is deemed to own, stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or of any
of its parent or subsidiary corporations.
(b) DURATION OF OPTIONS. An option shall be exercisable during
such period or periods as the Board may specify. The latest date on
which an option may be exercised (the "Final Exercise Date") shall be
the date which is ten years (five years, in the case of an incentive
option granted to a "ten-percent shareholder" as defined in (a) above)
from the date the option was granted or such earlier date as may be
specified by the Board at the time the option is granted.
(c) EXERCISE OF OPTIONS.
(1) An option shall become exercisable at such time or times and
upon such conditions as the Board shall specify. In the case of an
option not immediately exercisable in full, the Board may at any time<PAGE>
<PAGE>
accelerate the time at which all or any part of the option may be
exercised.
(2) Any exercise of an option shall be in writing, signed by the
proper person and furnished to the Company, accompanied by (i) such
documents, representations, agreements, and certifications as may be
required by the Board and (ii) payment in full as specified below in
Section 6(d) for the number of shares for which the option is
exercised.
(3) In the case of an option that is not an incentive option, the
Board shall have the right to require that the participant exercising
the option remit to the Company an amount sufficient to satisfy any
federal, state, or local withholding tax requirements (or make other
arrangements satisfactory to the Company with regard to such taxes)
prior to the delivery of any Stock pursuant to the exercise of the
option. If permitted by the Board either at the time of the grant of
the option or the time of exercise, the participant may elect, at such
time and in such manner as the Board may prescribe, to satisfy such
withholding obligation by (i) delivering to the Company Stock owned by
such individual having a fair market value equal to such withholding
obligation, or (ii) requesting that the Company withhold from the
shares of Stock to be delivered upon the exercise a number of shares
of Stock having a fair market value equal to such withholding
obligation.
In the case of an incentive option, the Board may require as a
condition of exercise that the participant exercising the option agree
to inform the Company promptly of any disposition (within the meaning
of section 424(c) of the Code and the regulations thereunder) of Stock
received upon exercise. In addition, if at the time the option is
exercised the Board determines that under applicable law and
regulations the Company could be liable for the withholding of any
federal or state tax with respect to a disposition of the Stock
received upon exercise, the Board may require as a condition of
exercise that the participant exercising the option agree to give such
security as the Board deems adequate to meet the potential liability
of the Company for the withholding of tax, and to augment such
security from time to time in any amount reasonably deemed necessary
by the Board to preserve the adequacy of such security.
(4) If an option is exercised by the executor or administrator of a
deceased participant, or by the person or persons to whom the option
has been transferred by the participant's will or the applicable laws
of descent and distribution, the Company shall be under no obligation
to deliver Stock pursuant to such exercise until the Company is
satisfied as to the authority of the person or persons exercising the
option.
(d) PAYMENT FOR STOCK. Stock purchased upon exercise of an
option under the Plan shall be paid for as follows: (i) in cash,
check acceptable to the Company (determined in accordance with such
guidelines as the Board may prescribe), or money order payable to the
order of the Company, or (ii) if so permitted by the Board (which, in
the case of an incentive option, shall specify such method of payment
at the time of grant), (A) through the delivery of shares of Stock
(which, in the case of Stock acquired from the Company, shall have
been held for at least six months unless the Board specifies a shorter
period) having a fair market value on the date of exercise equal to
the purchase price, or (B) by delivery of a promissory note of the
participant to the Company, such note to be payable on such terms as
are specified by the Board, or (C) by delivery of an unconditional and
irrevocable undertaking by a broker to deliver promptly to the Company<PAGE>
<PAGE>
sufficient funds to pay the exercise price, or (D) by any combination
of the permissible forms of payment; provided, that if the Stock
delivered upon exercise of the option is an original issue of
authorized Stock, at least so much of the exercise price as represents
the par value of such Stock shall be paid other than with a personal
check or promissory note of the person exercising the option.
(e) STOCK APPRECIATION RIGHTS. The Board in its discretion may
grant SARs either in tandem with or independent of options awarded
under the Plan. Except as hereinafter provided, each SAR will entitle
the participant to receive upon exercise, with respect to each share
of Stock to which the SAR relates, the excess of (i) the share's value
on the date of exercise, over (ii) the share's fair market value on
the date it was granted. For purposes of clause (i), "value" shall
mean fair market value; provided, that the Board may adjust such value
to take into account dividends on the Stock and may also grant SARs
that provide, in such limited circumstances following a change in
control of the Company (as determined by the Board) as the Board may
specify, that "value" for purposes of clause (i) is to be determined
by reference to an average value for the Stock during a period
immediately preceding the change in control, all as determined by the
Board. The amount payable to a participant upon exercise of an SAR
shall be paid either in cash or in shares of Stock, as the Board
determines. Each SAR shall be exercisable during such period or
periods and on such terms as the Board may specify. No SAR shall be
exercisable after the date which is ten years from the date of grant.
(f) DELIVERY OF STOCK. A participant shall not have the rights
of a shareholder with regard to awards under the Plan except as to
Stock actually received by such participant under the Plan.
The Company shall not be obligated to deliver any shares of Stock
(i) until, in the opinion of the Company's counsel, all applicable
federal and state laws and regulations have been complied with, (ii)
if the outstanding Stock is at the time listed on any stock exchange,
until the shares to be delivered have been listed or authorized to be
listed on such exchange upon official notice of issuance, and (iii)
until all other legal matters in connection with the issuance and
delivery of such shares have been approved by the Company's counsel.
If the sale of Stock has not been registered under the Securities Act
of 1933, as amended, the Company may require, as a condition to
exercise of the award, such representations or agreements as counsel
for the Company may consider appropriate to avoid violation of such
Act and may require that the certificates evidencing such Stock bear
an appropriate legend restricting transfer.
(g) NONTRANSFERABILITY OF AWARDS. No award may be transferred
other than by will or by the laws of descent and distribution, and
during a participant's lifetime an award may be exercised only by him
or her.
(h) DEATH. Except as otherwise provided in an award, if a
participant dies, each award held by the participant immediately prior
to death may be exercised, to the extent it was exercisable
immediately prior to death, by his executor or administrator, or by
the person or persons to whom the award is transferred by will or the
applicable laws of descent and distribution, at any time within the
period ending (i) 180 days after the participant's death (in the event
the participant's employment or other service relationship with the
Company shall terminate by reason of death), or (ii) 120 days after
the participant's death (in the event the participant dies within the
60-day period following termination of the participant's employment or
other service relationship with the Company), or such longer period as<PAGE>
<PAGE>
the Committee may determine. In no event shall an award be exercised
beyond the Final Exercise Date. Except as otherwise provided in an
award, all awards held by a participant immediately prior to death
that are not then exercisable shall terminate on the date of death.
(i) OTHER TERMINATION OF SERVICE. Except as otherwise provided
in an award, if a participant's employment or other service
relationship with the Company terminates for any reason other than
death, all awards held by the participant shall terminate to the
extent not exercisable immediately prior to such event. To the extent
exercisable immediately prior to termination of employment or other
service relationship, the award shall continue to be exercisable
thereafter for a period of 60 days (or such longer period as the Board
may determine, but in no event beyond the Final Exercise Date), unless
the participant's employment or other service relationship is
terminated for "cause" as a result of the participant's misconduct
which, in the judgment of the Board, casts discredit on him or her, or
is otherwise harmful to the business, interests, or reputation of the
Company, its parent, or a subsidiary, in which case all awards shall
terminate immediately. The Board may in any award provide for post-
termination exercise provisions different from those expressly set
forth in the preceding two sentences or in (h) above, including
without limitation terms allowing a later exercise by a former
employee, consultant, or advisor (or, in the case of a former
employee, consultant, or advisor who is deceased, the person or
persons to whom the award is transferred by will or the laws of
descent and distribution) as to all or any portion of the award not
exercisable immediately prior to termination or employment or other
service relationship, but in no case may an award be exercised after
the Final Exercise Date. Except as otherwise provided in an award,
after completion of that 60-day or longer period, such awards shall
terminate to the extent not previously exercised, expired, or
terminated. For purposes of this Plan, the service relationship shall
not be considered terminated (i) in the case of sick leave or other
bona fide leave of absence approved for purposes of the Plan by the
Board, so long as the participant's right to reemployment or continued
service is guaranteed either by statute or by contract, or (ii) in the
case of a transfer of employment or service relationship between the
Company and a subsidiary or parent, or between subsidiaries of the
Company or parent (provided the participant's direct or indirect
service to the Company continues), or to the service of a corporation
(or a parent or subsidiary corporation of such corporation) issuing or
assuming an award in a transaction to which section 424(a) of the Code
applies.
(j) MERGERS, ETC. In the event of any merger, consolidation,
dissolution, or liquidation of the Company, the Board in its sole
discretion may, as to any outstanding awards, make such substitution
or adjustment in the aggregate number of shares reserved for issuance
under the Plan and in the number and purchase price (if any) of shares
subject to such awards as it may determine, or accelerate, amend, or
terminate such awards upon such terms and conditions as it shall
provide (which, in the case of the termination of the vested portion
of any award, shall require payment or other consideration which the
Board deems equitable in the circumstances).
The Board may grant awards under the Plan in substitution for
awards held by employees, consultants, or advisors of another
corporation who concurrently become employees, consultants, or
advisors of the Company, its parent, or a subsidiary as the result of
a merger or consolidation of that corporation with the Company, its
parent, or a subsidiary, or as the result of the acquisition by the
Company, its parent, or a subsidiary of property or stock of that<PAGE>
<PAGE>
corporation. The Company may direct that substitute awards be granted
on such terms and conditions as the Board considers appropriate in the
circumstances.
(k) CANCELLATION OF AWARDS. The Board may provide in any award
that the award shall be cancelled or rescinded and any associated
shares forfeited, and the participant shall be obligated to pay to the
Company any gain received upon exercise, in the event that the
participant competes with the Company, discloses confidential
information of the Company, or otherwise is not in compliance with
applicable provisions of any award, in each case on such terms and
conditions as the Board considers appropriate in the circumstances.
7. EMPLOYMENT RIGHTS
_________________
Neither the adoption of the Plan nor the grant of awards shall
confer upon any participant any right to continue as an employee of,
or consultant or advisor to, the Company, its parent, or any
subsidiary of either or affect in any way the right of the Company,
its parent, or a subsidiary of either to terminate the participant's
relationship at any time. Except as specifically provided by the
Board in any particular case, the loss of existing or potential profit
in awards granted under this Plan shall not constitute an element of
damages in the event of termination of the relationship of a
participant even if the termination is in violation of an obligation
of the Company, its parent, or a subsidiary of either to the
participant by contract or otherwise.
8. EFFECT, DISCONTINUANCE, CANCELLATION, AMENDMENT, AND TERMINATION
________________________________________________________________
Neither adoption of the Plan nor the grant of awards to a
participant shall affect the Company's right to make awards to such
participant that are not subject to the Plan, to issue to such
participant Stock as a bonus or otherwise, or to adopt other plans or
arrangements under which Stock may be issued, and shall in no way
affect the Company's right to operate its business at its sole
discretion.
The exercise of certain awards granted under the Plan may be made
contingent upon the closing of an initial public offering of the
Company's Stock. The grant of such awards under the Plan shall in no
way obligate the Company to consummate or consider a public offering
of Stock, and the failure of the Company to close a public offering of
Stock shall not entitle a participant granted such an award to any
substitute award or other benefit, or to any damages.
The Board may at any time discontinue granting awards under the
Plan. With the consent of the participant, the Board may at any time
cancel an existing award in whole or in part and grant another award
for such number of shares as the Board specifies. The Board may at
any time or times amend the Plan or any outstanding award for the
purpose of satisfying the requirements of section 422 of the Code or
of any changes in applicable laws or regulations or for any other
purpose that may at the time be permitted by law, or may at any time
terminate the Plan as to any further grants of awards; except that no
such amendment shall adversely affect the rights of any participant
(without his or her consent) under any award previously granted.<PAGE>
<PAGE>
<PAGE>
<PAGE>
BBN SOFTWARE PRODUCTS CORPORATION
EXHIBIT 10.4
1993 STOCK OPTION PLAN
1. PURPOSE
_______
The purpose of this 1993 Stock Option Plan (the "Plan") is to
advance the interests of BBN Software Products Corporation (the
"Company") by enhancing the ability of the Company and its parent and
subsidiaries to attract and retain able employees, consultants or
advisors to the Company; to reward such individuals for their
contributions; and to encourage such individuals to take into account
the long-term interests of the Company through interests in shares of
the Company's common stock, $.01 par value (the "Stock"). Any
employee, consultant, or advisor selected to receive an award under
the Plan is referred to as a "participant".
Options granted pursuant to the Plan may be incentive stock
options as defined in section 422 of the Internal Revenue Code of 1986
(as from time to time amended, the "Code") (any option that is
intended so to qualify as an incentive stock option being referred to
herein as an "incentive option"), or options that are not incentive
options, or both. Except as otherwise expressly provided with respect
to an option grant, no option granted pursuant to the Plan shall be an
incentive option.
2. ADMINISTRATION
______________
The Plan shall be administered by the Board of Directors (the
"Board") of the Company. The Board shall have authority, not
inconsistent with the express provisions of the Plan: (a) to grant
awards consisting of options or stock appreciation rights ("SARs"), or
both, to such participants as the Board may select; (b) to determine
the time or times when awards shall be granted and the number of
shares of Stock subject to each award; (c) to determine which options
are, and which options are not, intended to be incentive options; (d)
to determine the terms and conditions of each award; (e) to prescribe
the form or forms of any instruments evidencing awards and any other
instruments required under the Plan and to change such forms from time
to time; (f) to adopt, amend, and rescind rules and regulations for
the administration of the Plan; and (g) to interpret the Plan and to
decide any questions and settle all controversies and disputes that
may arise in connection with the Plan. Such determinations of the
Board shall be conclusive and shall bind all parties. Subject to
Section 8, the Board shall also have the authority, both generally and
in particular instances, to waive compliance by a participant with any
obligation to be performed by the participant under an award, to waive
any condition or provision of an award, and to amend or cancel any
award (and if an award is cancelled, to grant a new award on such
terms as the Board shall specify) except that the Board may not take
any action with respect to an outstanding award that would adversely
affect the rights of the participant under such award without such
participant's consent. Nothing in the preceding sentence shall be
construed as limiting the power of the Board to make adjustments
required by Section 4(c) and Section 6(j).<PAGE>
<PAGE>
The Board may, in its discretion, delegate some or all of its
powers with respect to the Plan to a committee (the "Committee"), in
which event all references (as appropriate) to the Board hereunder
shall be deemed to refer to the Committee. The Committee, if one is
appointed, shall consist of at least two directors. A majority of the
members of the Committee shall constitute a quorum, and all
determinations of the Committee shall be made by a majority of its
members. Any determination of the Committee under the Plan may be
made without notice or meeting of the Committee by a writing signed by
a majority of the Committee members. On and after registration of the
Stock under the Securities Exchange Act of 1934 (the "1934 Act"), the
Board shall delegate the power to select directors and officers to
receive awards under the Plan and the timing, pricing, and amount of
such awards to a Committee, all members of which shall be
disinterested persons within the meaning of Rule 16b-3 under the 1934
Act and "outside directors" within the meaning of section
162(m)(4)(c)(i) of the Code.
3. EFFECTIVE DATE AND TERM OF PLAN
_______________________________
The Plan shall become effective on the date on which it is
approved by the shareholders of the Company. Grants of awards under
the Plan may be made prior to that date (but after Board adoption of
the Plan), subject to approval of the Plan by the shareholders.
No awards shall be granted under the Plan after the completion of
ten years from the date on which the Plan was adopted by the Board,
but awards previously granted may extend beyond that date.
4. SHARES SUBJECT TO THE PLAN
__________________________
(a) NUMBER OF SHARES. Subject to adjustment as provided in
Section 4(c), the aggregate number of shares of Stock that may be
delivered upon the exercise of award granted under the Plan shall be
1,200,000. If any award granted under the Plan terminates without
having been exercised in full, or upon exercise is satisfied other
than by delivery of Stock, the number of shares of Stock as to which
such award was not exercised shall be available for future grants
within the limits set forth in this Section 4(a).
(b) SHARES TO BE DELIVERED. Shares delivered under the Plan
shall be authorized but unissued Stock or, if the Board so decides in
its sole discretion, previously issued Stock acquired by the Company
and held in its treasury. No fractional shares of Stock shall be
delivered under the Plan.
(c) CHANGES IN STOCK. In the event of a stock dividend, stock
split, or combination of shares, recapitalization, or other change in
the Company's capital stock, the number and kind of shares of stock or
securities of the Company subject to awards then outstanding or
subsequently granted under the Plan, the exercise price of such
awards, the maximum number of shares or securities that may be
delivered under the Plan, and other relevant provisions shall be
appropriately adjusted by the Board, whose determination shall be
binding on all persons.
The Board may also adjust the number of shares subject to
outstanding awards, the exercise price of outstanding awards, and the<PAGE>
<PAGE>
terms of outstanding awards, to take into consideration material
changes in accounting practices or principles, extraordinary
dividends, consolidations or mergers (except as described in Section
6(j)), acquisitions or dispositions of stock or property, or any other
event if it is determined by the Board that such adjustment is
appropriate to avoid distortion in the operation of the Plan, provided
that no such adjustment shall be made in the case of an incentive
option, without the consent of the participant, if it would constitute
a modification, extension, or renewal of the option within the meaning
of section 424(h) of the Code.
5. ELIGIBILITY FOR AWARDS
______________________
Persons eligible to receive awards under the Plan shall be those
employees of the Company, its parent, or subsidiaries, or consultants,
or advisors to any of them, who in the opinion of the Board are in a
position to make a contribution to the Company. Participants shall be
selected by the Board. A parent for purposes of the Plan shall be a
corporation which owns, directly or indirectly, 50% or more of the
total combined voting power of all classes of the Company's stock. A
subsidiary for purposes of the Plan shall be (i) a corporation in
which the Company owns, directly or indirectly, stock possessing 50%
or more of the total combined voting power of all classes of stock, or
(ii) a corporation in which the Company's parent owns, directly or
indirectly, stock possessing 50% or more of the total combined voting
power of all classes of stock. The Board may grant awards covering up
to the entire number of shares available for issuance under the Plan
(as determined under Section 4(a)) to any one participant or to
several participants, in the sole discretion of the Board.
Incentive options shall be granted only to "employees" as defined
in the provisions of the Code or regulations thereunder applicable to
incentive stock options.
6. TERMS AND CONDITIONS OF OPTIONS AND SARs
________________________________________
(a) EXERCISE PRICE OF OPTIONS. The exercise price of each
option shall be determined by the Board but in the case of an
incentive option shall not be less than 100% (110%, in the case of an
incentive option granted to a ten-percent shareholder) of the fair
market value of the Stock at the time the option is granted; nor shall
the exercise price be less, in the case of an original issue of
authorized stock, than par value. For this purpose, "fair market
value" in the case of incentive options shall have the same meaning as
it does in the provisions of the Code and the regulations thereunder
applicable to incentive options; and "ten-percent shareholder" shall
mean any participant who at the time of grant owns directly, or by
reason of the attribution rules set forth in section 424(d) of the
Code is deemed to own, stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or of any
of its parent or subsidiary corporations.
(b) DURATION OF OPTIONS. An option shall be exercisable during
such period or periods as the Board may specify. The latest date on
which an option may be exercised (the "Final Exercise Date") shall be
the date which is ten years (five years, in the case of an incentive
option granted to a "ten-percent shareholder" as defined in (a) above)<PAGE>
<PAGE>
from the date the option was granted or such earlier date as may be
specified by the Board at the time the option is granted.
(c) EXERCISE OF OPTIONS.
(1) An option shall become exercisable at such time or times
and upon such conditions as the Board shall specify. In the
case of an option not immediately exercisable in full, the
Board may at any time accelerate the time at which all or
any part of the option may be exercised.
(2) Any exercise of an option shall be in writing, signed by
the proper person and furnished to the Company, accompanied
by (i) such documents, representations, agreements, and
certifications as may be required by the Board and (ii)
payment in full as specified below in Section 6(d) for the
number of shares for which the option is exercised.
(3) In the case of an option that is not an incentive option,
the Board shall have the right to require that the
participant exercising the option remit to the Company an
amount sufficient to satisfy any federal, state, or local
withholding tax requirements (or make other arrangements
satisfactory to the Company with regard to such taxes) prior
to the delivery of any Stock pursuant to the exercise of the
option. If permitted by the Board either at the time of the
grant of the option or the time of exercise, the participant
may elect, at such time and in such manner as the Board may
prescribe, to satisfy such withholding obligation by (i)
delivering to the Company Stock owned by such individual
having a fair market value equal to such withholding
obligation, or (ii) requesting that the Company withhold
from the shares of Stock to be delivered upon the exercise a
number of shares of Stock having a fair market value equal
to such withholding obligation.
In the case of an incentive option, the Board may require as
a condition of exercise that the participant exercising the
option agree to inform the Company promptly of any
disposition (within the meaning of section 424(c) of the
Code and the regulations thereunder) of Stock received upon
exercise. In addition, if at the time the option is
exercised the Board determines that under applicable law and
regulations the Company could be liable for the withholding
of any federal or state tax with respect to a disposition of
the Stock received upon exercise, the Board may require as a
condition of exercise that the participant exercising the
option agree to give such security as the Board deems
adequate to meet the potential liability of the Company for
the withholding of tax, and to augment such security from
time to time in any amount reasonably deemed necessary by
the Board to preserve the adequacy of such security.<PAGE>
<PAGE>
(4) If an option is exercised by the executor or administrator
of a deceased participant, or by the person or persons to
whom the option has been transferred by the participant's
will or the applicable laws of descent and distribution, the
Company shall be under no obligation to deliver Stock
pursuant to such exercise until the Company is satisfied as
to the authority of the person or persons exercising the
option.
(d) PAYMENT FOR STOCK. Stock purchased upon exercise of an
option under the Plan shall be paid for as follows: (i) in cash,
check acceptable to the Company (determined in accordance with such
guidelines as the Board may prescribe), or money order payable to the
order of the Company, or (ii) if so permitted by the Board (which, in
the case of an incentive option, shall specify such method of payment
at the time of grant), (A) through the delivery of shares of Stock
(which, in the case of Stock acquired from the Company, shall have
been held for at least six months unless the Board specifies a shorter
period) having a fair market value on the date of exercise equal to
the purchase price, or (B) by delivery of a promissory note of the
participant to the Company, such note to be payable on such terms as
are specified by the Board, or (C) by delivery of an unconditional and
irrevocable undertaking by a broker to deliver promptly to the Company
sufficient funds to pay the exercise price, or (D) by any combination
of the permissible forms of payment; provided, that if the Stock
delivered upon exercise of the option is an original issue of
authorized Stock, at least so much of the exercise price as represents
the par value of such Stock shall be paid other than with a personal
check or promissory note of the person exercising the option.
(e) STOCK APPRECIATION RIGHTS. The Board in its discretion may
grant SARs either in tandem with or independent of options awarded
under the Plan. Except as hereinafter provided, each SAR will entitle
the participant to receive upon exercise, with respect to each share
of Stock to which the SAR relates, the excess of (i) the share's value
on the date of exercise, over (ii) the share's fair market value on
the date it was granted. For purposes of clause (i), "value" shall
mean fair market value; provided, that the Board may adjust such value
to take into account dividends on the Stock and may also grant SARs
that provide, in such limited circumstances following a change in
control of the Company (as determined by the Board) as the Board may
specify, that "value" for purposes of clause (i) is to be determined
by reference to an average value for the Stock during a period
immediately preceding the change in control, all as determined by the
Board. The amount payable to a participant upon exercise of an SAR
shall be paid either in cash or in shares of Stock, as the Board
determines. Each SAR shall be exercisable during such period or
periods and on such terms as the Board may specify. No SAR shall be
exercisable after the date which is ten years from the date of grant.<PAGE>
<PAGE>
(f) DELIVERY OF STOCK. A participant shall not have the rights
of a shareholder with regard to awards under the Plan except as to
Stock actually received by such participant under the Plan.
The Company shall not be obligated to deliver any shares of Stock
(i) until, in the opinion of the Company's counsel, all applicable
federal and state laws and regulations have been complied with, (ii)
if the outstanding Stock is at the time listed on any stock exchange,
until the shares to be delivered have been listed or authorized to be
listed on such exchange upon official notice of issuance, and (iii)
until all other legal matters in connection with the issuance and
delivery of such shares have been approved by the Company's counsel.
If the sale of Stock has not been registered under the Securities Act
of 1933, as amended, the Company may require, as a condition to
exercise of the award, such representations or agreements as counsel
for the Company may consider appropriate to avoid violation of such
Act and may require that the certificates evidencing such Stock bear
an appropriate legend restricting transfer.
(g) NONTRANSFERABILITY OF AWARDS. No award may be transferred
other than by will or by the laws of descent and distribution, and
during a participant's lifetime an award may be exercised only by him
or her.
(h) DEATH. Except as otherwise provided in an award, if a
participant dies, each award held by the participant immediately prior
to death may be exercised, to the extent it was exercisable
immediately prior to death, by his executor or administrator, or by
the person or persons to whom the award is transferred by will or the
applicable laws of descent and distribution, at any time within the
period ending (i) 180 days after the participant's death (in the event
the participant's employment or other service relationship with the
Company shall terminate by reason of death), or (ii) 120 days after
the participant's death (in the event the participant dies within the
60-day period following termination of the participant's employment or
other service relationship with the Company), or such longer period as
the Committee may determine. In no event shall an award be exercised
beyond the Final Exercise Date. Except as otherwise provided in an
award, all awards held by a participant immediately prior to death
that are not then exercisable shall terminate on the date of death.
(i) OTHER TERMINATION OF SERVICE. Except as otherwise provided
in an award, if a participant's employment or other service
relationship with the Company terminates for any reason other than
death, all awards held by the participant shall terminate to the
extent not exercisable immediately prior to such event. To the extent
exercisable immediately prior to termination of employment or other
service relationship, the award shall continue to be exercisable
thereafter for a period of 60 days (or such longer period as the Board
may determine, but in no event beyond the Final Exercise Date), unless
the participant's employment or other service relationship is
terminated for "cause" as a result of the participant's misconduct
which, in the judgment of the Board, casts discredit on him or her, or
is otherwise harmful to the business, interests, or reputation of the
Company, its parent, or a subsidiary, in which case all awards shall
terminate immediately. The Board may in any award provide for post-
termination exercise provisions different from those expressly set
forth in the preceding two sentences or in (h) above, including<PAGE>
<PAGE>
without limitation terms allowing a later exercise by a former
employee, consultant, or advisor (or, in the case of a former
employee, consultant, or advisor who is deceased, the person or
persons to whom the award is transferred by will or the laws of
descent and distribution) as to all or any portion of the award not
exercisable immediately prior to termination of employment or other
service relationship, but in no case may an award be exercised after
the Final Exercise Date. Except as otherwise provided in an award,
after completion of that 60-day or longer period, such awards shall
terminate to the extent not previously exercised, expired, or
terminated. For purposes of this Plan, the service relationship shall
not be considered terminated (i) in the case of sick leave or other
bona fide leave of absence approved for purposes of the Plan by the
Board, so long as the participant's right to reemployment or continued
service is guaranteed either by statute or by contract, or (ii) in the
case of a transfer of employment or service relationship between the
Company and a subsidiary or parent, or between subsidiaries of the
Company or parent (provided the participant's direct or indirect
service to the Company continues), or to the service of a corporation
(or a parent or subsidiary corporation of such corporation) issuing or
assuming an award in a transaction to which section 424(a) of the Code
applies.
(j) MERGERS, ETC. In the event of any merger, consolidation,
dissolution, or liquidation of the Company, the Board in its sole
discretion may, as to any outstanding awards, make such substitution
or adjustment in the aggregate number of shares reserved for issuance
under the Plan and in the number and purchase price (if any) of shares
subject to such awards as it may determine, or accelerate, amend, or
terminate such awards upon such terms and conditions as it shall
provide (which, in the case of the termination of the vested portion
of any award, shall require payment or other consideration which the
Board deems equitable in the circumstances).
The Board may grant awards under the Plan in substitution for
awards held by employees, consultants, or advisors of another
corporation who concurrently become employees, consultants, or
advisors of the Company, its parent, or a subsidiary as the result of
a merger or consolidation of that corporation with the Company, its
parent, or a subsidiary, or as the result of the acquisition by the
Company, its parent, or a subsidiary of property or stock of that
corporation. The Company may direct that substitute awards be granted
on such terms and conditions as the Board considers appropriate in the
circumstances.
(k) CANCELLATION OF AWARDS. The Board may provide in any award
that the award shall be cancelled or rescinded and any associated
shares forfeited, and the participant shall be obligated to pay to the
Company any gain received upon exercise, in the event that the
participant competes with the Company, discloses confidential
information of the Company, or otherwise is not in compliance with
applicable provisions of any award, in each case on such terms and
conditions as the Board considers appropriate in the circumstances.
<PAGE>
<PAGE>
7. EMPLOYMENT RIGHTS
-----------------
Neither the adoption of the Plan nor the grant of awards shall
confer upon any participant any right to continue as an employee of,
or consultant or advisor to, the Company, its parent, or any
subsidiary of either or affect in any way the right of the Company,
its parent, or a subsidiary of either to terminate the participant's
relationship at any time. Except as specifically provided by the
Board in any particular case, the loss of existing or potential profit
in awards granted under this Plan shall not constitute an element of
damages in the event of termination of the relationship of a
participant even if the termination is in violation of an obligation
of the Company, its parent, or a subsidiary of either to the
participant by contract or otherwise.
8. EFFECT, DISCONTINUANCE, CANCELLATION, AMENDMENT, AND TERMINATION
________________________________________________________________
Neither adoption of the Plan nor the grant of awards to a
participant shall affect the Company's right to make awards to such
participant that are not subject to the Plan, to issue to such
participant Stock as a bonus or otherwise, or to adopt other plans or
arrangements under which Stock may be issued, and shall in no way
affect the Company's right to operate its business at its sole
discretion.
The exercise of certain awards granted under the Plan may be made
contingent upon the closing of an initial public offering of the
Company's Stock. The grant of such awards under the Plan shall in no
way obligate the Company to consummate or consider a public offering
of Stock, and the failure of the Company to close a public offering of
Stock shall not entitle a participant granted such an award to any
substitute award or other benefit, or to any damages.
The Board may at any time discontinue granting awards under the
Plan. With the consent of the participant, the Board may at any time
cancel an existing award in whole or in part and grant another award
for such number of shares as the Board specifies. The Board may at
any time or times amend the Plan or any outstanding award for the
purpose of satisfying the requirements of section 422 of the Code or
of any changes in applicable laws or regulations or for any other
purpose that may at the time be permitted by law, or may at any time
terminate the Plan as to any further grants of awards; except that no
such amendment shall adversely affect the rights of any participant
(without his or her consent) under any award previously granted.<PAGE>
<PAGE>
<PAGE>
BOLT BERANEK AND NEWMAN INC.
EXHIBIT 11.1
COMPUTATION OF NET LOSS PER SHARE
(000's except per-share data)
Three Months Ended
-------------------------------------------------
December 31, 1994 December 31, 1993
------------------------ ----------------------
Fully Fully
Primary Diluted Primary Diluted
----------- ----------- ----------- ---------
Weighted average
shares outstanding 16,819 16,819 16,079 16,079
Incremental shares from use
of treasury stock method
for stock options (a) (a) (a) (a)
----------- ----------- ----------- ---------
Shares used in per-share
calculations 16,819 16,819 16,079 16,079
=========== =========== =========== =========
Net loss $ (1,925) $ (1,925) $ (1,666) $ (1,666)
=========== =========== =========== =========
Net loss per share $ (.11) $ (.11) $ (.10) $ (.10)
=========== =========== =========== =========
Six Months Ended
-------------------------------------------------
December 31, 1994 December 31, 1993
------------------------ ----------------------
Fully Fully
Primary Diluted Primary Diluted
----------- ----------- ----------- ---------
Weighted average
shares outstanding 16,717 16,717 16,029 16,029
Incremental shares from use
of treasury stock method
for stock options (a) (a) (a) (a)
----------- ----------- ----------- ---------
Shares used in per-share
calculations 16,717 16,717 16,029 16,029
=========== =========== =========== =========
Net loss $ (3,733) $ (3,733) $ (3,613) $ (3,613)
=========== =========== =========== =========
Net loss per share $ (.22) $ (.22) $ (.23) $ (.23)
=========== =========== =========== =========
(a) Incremental shares were not used as their effect would be antidilutive.<PAGE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED STATEMENTS OF OPERATIONS AND BALANCE SHEETS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000013021
<NAME> BOLT BERANEK AND NEWMAN, INC.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> DEC-31-1994
<CASH> 56,572
<SECURITIES> 0
<RECEIVABLES> 50,619
<ALLOWANCES> 8,318
<INVENTORY> 985
<CURRENT-ASSETS> 105,479
<PP&E> 113,214
<DEPRECIATION> 91,067
<TOTAL-ASSETS> 135,273
<CURRENT-LIABILITIES> 52,234
<BONDS> 73,510
<COMMON> 21,559
0
0
<OTHER-SE> (13,509)
<TOTAL-LIABILITY-AND-EQUITY> 135,273
<SALES> 102,915
<TOTAL-REVENUES> 102,915
<CGS> 63,268
<TOTAL-COSTS> 63,268
<OTHER-EXPENSES> 46,246
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,220
<INCOME-PRETAX> (3,333)
<INCOME-TAX> 400
<INCOME-CONTINUING> (3,733)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,733)
<EPS-PRIMARY> (.22)
<EPS-DILUTED> 0
</TABLE>
