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EXHIBIT 4.1
INTRASERVER TECHNOLOGY, INC.
1998 STOCK OPTION PLAN
1. PURPOSE OF THE PLAN
The purpose of this Plan is to encourage and enable employees,
consultants, directors and others who are in a position to make significant
contributions to the successor of INTRASERVER TECHNOLOGY, INC. (the
"Corporation") and of its affiliated corporations, if any, upon whose judgment,
initiative and efforts the Corporation depends for the successful conduct of
its business, to acquire a closer identification of their interests with those
of the Corporation by providing them with opportunities to purchase stock in
the Corporation pursuant to options granted hereunder, thereby stimulating
their efforts on behalf of the Corporation and strengthening their desire to
remain involved with the Corporation. Any employee, consultant or advisor
designated to participate in the Plan is referred to as a "Participant."
2. DEFINITIONS
2.1. "Affiliated Corporation" means any stock corporation of which a majority of
the voting common or capital stock is owned directly or indirectly by the
Corporation.
2.2. "Award" means an Option granted under Section 5.
2.3. "Board" means the Board of Directors of the Corporation or, if one or more
has been appointed, a Committee of the Board of Directors of the Corporation.
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2.4. "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
2.5. "Committee" means a Committee of not less than two members of the Board
appointed by the Board to administer the Plan.
2.6. "Corporation" means INTRASERVER TECHNOLOGY, INC., a Massachusetts
corporation, or its successor.
2.7. "Employee" means any person who is a regular full-time or part-time
employee of the Corporation or an Affiliated Corporation on or after July 1,
1998.
2.8. "Incentive Stock Option" ("ISO") means an option which qualifies as an
incentive stock option as defined in Section 422 of the Code, as amended.
2.9. "Non-Qualified Option" means any option not intended to qualify as an
Incentive Stock Option.
2.10. "Option" means an Incentive Stock Option or Non-Qualified Option granted
by the Board under Section 5 of this Plan in the form of a right to purchase
Stock evidenced by an instrument containing such provisions as the Board may
establish. Except as otherwise expressly provided with respect to an Option
grant, no Option granted pursuant to the Plan shall be an Incentive Stock
Option.
2.11. "Participant" means a person selected by the Committee to receive an
award under the Plan.
2.12. "Plan" means this 1998 Stock Option Plan.
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2.13. "Reporting Person" means a person subject to Section 16 of the Securities
Exchange Act of 1934 or any successor provision.
2.14. "Restricted Period" means the period of time selected by the Committee
during which an award may be forfeited by the person.
2.15. "Stock" means the Common stock, no par value, of the Corporation or any
successor, including any adjustments in the event of changes in capital
structure of the type described in Section 11.
3. ADMINISTRATION OF THE PLAN
3.1. Administration by Board. This Plan shall be administered by the Board of
Directors of the Corporation. The Board may, from time to time, delegate any of
its functions under this plan to one or more Committees. All references in this
Plan to the Board shall also include the Committee or Committees, if one or
more have been appointed by the Board. From time to time the Board may increase
the size of the Committee or committees and appoint additional members thereto,
remove members (with or without cause) and appoint new members in substitution
therefor, fill vacancies however caused, or remove all members of the Committee
or committees and thereafter directly administer the Plan. No member of the
Board or a committee shall be liable for any action or determination made in
good faith with respect to the Plan or any options granted under it.
If a Committee is appointed by the Board, a majority of the members of
the Committee shall constitute a quorum, and all determinations of the
Committee under the Plan may be made
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without notice or meeting of the Committee by a writing signed by a majority of
Committee members. On or after registration of the Stock under the Securities
Exchange Act of 1934, 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 16-b-3 under that Act.
3.2. Powers. The Board of Directors and/or any committee appointed by the
Board shall have full and final authority to operate, manage and administer the
Plan on behalf of the Corporation. This authority includes, but it not limited
to:
(a) The power to grant Awards conditionally or unconditionally,
(b) The power to prescribe the form or forms of any instruments
evidencing Awards granted under this Plan,
(c) The power to interpret the Plan,
(d) The power to provide regulations for the operation of the incentive
features of the Plan, and otherwise to prescribe and rescind
regulations for interpretation, management and administration of
the Plan,
(e) The power to delegate responsibility for Plan operation, management
and administration on such terms, consistent with the Plan, as the
Board may establish,
(f) The power to delegate to other persons the responsibility of
performing ministerial acts in furtherance of the Plan's purpose,
and
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(g) The power to engage the services of persons, companies, or
organizations in furtherance of the Plan's purpose, including but
not limited to, banks, insurance companies, brokerage firms and
consultants.
3.3. Additional Powers. In addition, as to each Option to buy Stock of the
Corporation, the Board shall have full and final authority in its discretion:
(a) to determine the number of shares of Stock subject to each Option; (b) to
determine the time or times at which Options will be granted; (c) to determine
the option price of the shares of Stock subject to each Option, which price
shall be not less than the minimum price specified in Section 5 of this Plan;
(d) to determine the time or times when each Option shall become exercisable
and the duration of the exercise period (including the acceleration of any
exercise period), which shall not exceed the maximum period specified in
Section 5; (e) to determine whether each Option granted shall be an Incentive
Stock Option or a Non-qualified Option; and (f) to waive compliance by a
Participant with any obligation to be performed by him under an Option, to
waive any condition or provision of an Option, and to amend or cancel any
Option (and if an Option is cancelled, to grant a new Option on such terms as
the Board may specify), except that the Board may not take any action with
respect to an outstanding option that would adversely affect the rights of the
Participant under such Option 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 11.
In no event may the Company grant an Employee any Incentive Stock Option
that is first exercisable during any one calendar year to the extent the
aggregate fair market value of the Stock (determined at the time the options
are granted) exceeds $100,000 (under all stock option
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plans of the Corporation and any Affiliated Corporation); provided, however,
that this paragraph shall have no force and effect if its inclusion in the Plan
is not necessary for Incentive Stock Options issued under the Plan to qualify
as such pursuant to Section 422(d)(1) of the Code.
4. ELIGIBILITY
4.1. Eligible Employees. All Employees (including Directors who are Employees)
are eligible to be granted Incentive Stock Option and Non-Qualified Option
Awards under this Plan.
4.2. Consultants, Directors and other Non-Employees. Any Consultant, Director
(whether or not an Employee) and any other Non-Employee is eligible to be
granted Non-Qualified Option Awards under the Plan, provided the person has not
irrevocably elected to be ineligible to participate in the Plan.
4.3. Relevant Factors. In selecting individual Employees, Consultants,
Directors and other Non-Employees to whom Awards shall be granted, the Board
shall weigh such factors as are relevant to accomplish the purpose of the Plan
as stated in Section 1. An individual who has been granted an Award may be
granted one or more additional Awards, if the Board so determines. The granting
of an Award to any individual shall neither entitle that individual to, nor
disqualify him from, participation in any other grant of Awards.
5. STOCK OPTION AWARDS
5.1. Number of Shares. Subject to the provisions of Section 11 of this Plan,
the aggregate number of shares of Stock for which Options may be granted under
this Plan shall not exceed shares. The shares to be delivered upon exercise of
Options under this Plan shall be made
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available, at the discretion of the Board, either from authorized but unissued
shares or from previously issued and reacquired shares of Stock held by the
Corporation as treasury shares, including shares purchased in the open market.
Stock issuable upon exercise of an option granted under the Plan may be
subject to such restrictions on transfer, repurchase rights or other
restrictions as shall be determined by the Board of Directors.
5.2. Effect of Expiration, Termination or Surrender. If an Option under this
Plan shall expire or terminate unexercised as to any shares covered thereby, or
shall cease for any reason to be exercisable in whole or in part, or if the
Company shall reacquire any unvested shares issued pursuant to Options under
the Plan, such shares shall thereafter be available for the granting of other
Options under this Plan.
5.3 Term of Options. The full term of each Option granted hereunder shall be
for such period as the Board shall determine. In the case of Incentive Stock
Options granted hereunder, the term shall not exceed ten (10) years from the
date of granting thereof. Each Option shall be subject to earlier termination
as provided in Section 6.3 and 6.4. Notwithstanding the foregoing, the term of
options intended to qualify as "Incentive Stock Options" shall not exceed five
(5) years from the date of granting thereof if such option is granted to any
employee who at the time such option is granted owns more than ten percent
(10%) of the total combined voting power of all classes of stock of the
Corporation.
5.4 Option Price. The Option price shall be determined by the Board at the
time any Option is granted. In the case of Incentive Stock Options, the
exercise price shall not be less than 100%
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of the fair market value of the shares covered thereby at the time the
Incentive Stock Option is granted (but in no event less than par value),
provided that no Incentive Stock Option shall be granted hereunder to any
Employee if at the time of grant the Employee, directly or indirectly, owns
Stock possessing more than 10% of the combined voting power of all classes of
stock of the Corporation ad its Affiliated Corporations unless the Incentive
Option price equals not less than 110% of the fair market value of the shares
covered thereby at the time the Incentive Stock Option is granted. In the case
of Non-Qualified Stock Options, the exercise price shall not be less than par
value.
5.5. Fair Market Value. If, at the time an Option is granted under the Plan,
the Corporation's Stock is publicly traded, "fair market value" shall be
determined as of the last business day for which the prices or quotes discussed
in this sentence are available prior to the date such Option is granted and
shall mean (i) the average (on that date) of the high and low prices of the
Stock on the principal national securities exchange on which the Stock is
traded, if the Stock is then traded on a national securities exchange; or (ii)
the last reported sale price (on that date) of the Stock on the NASDAQ National
Market List, if the Stock is not then traded on a national securities exchange;
or (iii) the closing bid price (or average of bid prices) last quoted (on that
date) by an established quotation service for over-the-counter securities, if
the Stock is not reported on the NASDAQ National Market List. However, if the
Stock is not publicly traded at the time an Option is granted upon the Plan,
"fair market value" shall be deemed to be the fair value of the Stock as
determined by the Board after taking into consideration all factors which it
deems appropriate, including, without limitation, recent sale and offer prices
of the Stock in private
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transactions negotiated at arm's length.
5.6. Non-Transferability of Options. No Option granted under this Plan shall
be transferable by the grantee otherwise than by will or the laws of descent
and distribution, and such Option may be exercised during the grantee's
lifetime only by the grantee.
5.7. Foreign Nationals. Awards may be granted to Participants who are foreign
nationals or employed outside the United States on such terms and conditions
different from those specified in the Plan as the Committee considers necessary
or advisable to achieve the purposes of the Plan or comply with applicable laws.
6. EXERCISE OF OPTION
6.1. Exercise. Each Option granted under this Plan shall be exercisable on
such date or dates and during such period and for such number of shares as
shall be determined pursuant to the provisions of the instrument evidencing
such Option. The Board shall have the right to accelerate the date of exercise
of any option, provided that, the Board shall not accelerate the exercise date
of any Incentive Stock Option granted if such acceleration would violate the
annual vesting limitation contained in Section 422(d)(1) of the Code.
6.2. Notice of Exercise. A person electing to exercise an Option shall give
written notice to the Corporation of such election and of the number of shares
he or she has elected to purchase and shall at the time of exercise tender the
full purchase price of the shares he or she has elected to purchase. The
purchase price can be paid partly or completely in shares of the Corporation's
stock valued at Fair Market Value as defined in Section 5.5 hereof, or by any
such other lawful
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consideration as the Board may determine. Until such person has been issued a
certificate or certificates for the shares so purchased, he or she shall
possess no rights of a record holder with respect to any of such shares.
6.3. Option Unaffected by Change in Duties. No Incentive Stock Option (and,
unless otherwise determined by the Board of Directors, no Non-Qualified Option
granted to a person who is, on the date of the grant, an Employee of the
Corporation or an Affiliated Corporation) shall be affected by any change of
duties or position of the optionee (including transfer to or from an Affiliated
Corporation), so long as he or she continues to be an Employee. Employment
shall be considered as continuing uninterrupted during any bona fide leave of
absence (such as those attributable to illness, military obligations or
governmental service) provided that the period of such leave does not exceed 90
days or, if longer, any period during which such optionee's right to
reemployment is guaranteed by statute. A bona fide leave of absence with the
written approval of the Board shall not be considered an interruption of
employment under the Plan, provided that such written approval contractually
obligates the Corporation or any Affiliated Corporation to continue the
employment of the optionee after the approved period of absence.
If the optionee shall cease to be an Employee for any reason other than
death, such Option shall thereafter be exercisable only to the extent of the
purchase rights, if any, which have accrued as of the date of such cessation;
provided that (i) the Board may provide in the instrument evidencing any Option
that the Board may in its absolute discretion, upon any such cessation of
employment, determine (but be under no obligation to determine) that such
accrued
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purchase rights shall be deemed to include additional shares covered by such
Option; and (ii) unless the Board shall otherwise provide in the instrument
evidencing any Option, upon any such cessation of employment, such remaining
rights to purchase shall in any event terminate upon the earlier of (A) the
expiration of the original term of the Option; or (B) where such cessation of
employment is on account of disability, the expiration of one year from the
date of such cessation of employment and, otherwise, the expiration of three
months from such date. For purposes of the Plan, the term "disability" shall
mean "permanent and total disability" as defined in Section 22(e)(3) of the
Code.
In the case of a Participant who is not an employee, provisions relating
to the exercisability of an Option following termination of service shall be
specified in the award. If not so specified, all Options held by such
Participant shall terminate on termination of service to the Corporation.
6.4. Death of Optionee. Should an optionee die while in possession of the legal
right to exercise an Option or Options under this Plan, such persons as shall
have acquired, by will or by the laws of descent and distribution, the right to
exercise any Options theretofore granted, may, unless otherwise provided by the
Board in any instrument evidencing any Option, exercise such Options at any
time prior to one year from the date of death; provided, that such Option or
Options shall expire in all events no later than the last day of the original
term of such Option; provided, further, that any such exercise shall be limited
to the purchase rights which have accrued as of the date when the optionee
ceased to be an Employee, whether by death or otherwise, unless the Board
provides in the instrument evidencing such Option that, in the discretion of
the Board, additional shares covered by such Option may become subject to
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purchase immediately upon the death of the optionee.
7. REPORTING PERSON LIMITATIONS
7.1. To the extent required to qualify for the exemption provided by Rule 16b-3
under the Securities Exchange Act of 1934, and any successor provision, at
least six months must elapse from the date of acquisition of an Option by a
Reporting Person to the date of disposition of such Option (other than upon
exercise) or its underlying Common stock.
8. TERMS AND CONDITIONS OF OPTIONS
Options shall be evidenced by instruments (which need not be identical) in
such forms as the Board may from time to time approve. Such instruments shall
conform to the terms and conditions set forth in Section 5 and 6 hereof and may
contain such other provisions as the Board deems advisable which are not
inconsistent with the Plan, including restrictions applicable to shares of Stock
issuable upon exercise of Options. In granting any Non-Qualified Option, the
Board may specify that such Non-Qualified Option shall be subject to the
restrictions set forth herein with respect to Incentive Stock Options, or to
such other termination and cancellation provisions as the Board may determine.
The Board may from time to time confer authority and responsibility on one or
more of its own members and/or one or more officers of the Corporation to
execute and deliver such instruments. The proper officers of the Corporation are
authorized and directed to take any all action necessary or advisable from time
to time to carry out the terms of such instruments.
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9. BENEFIT PLANS
Awards under the Plan are discretionary and are not a part of regular
salary. Awards may not be used in determining the amount of compensation for
any purpose under the benefit plans of the Corporation, or an Affiliated
Corporation, except as the Board may from time to time expressly provide.
Neither the Plan, an Option or any instrument evidencing an Option confers upon
any Participant any right to continue as an employee of, or consultant or
advisor to, the Company or an Affiliated Corporation or affect the right of the
Corporation or any Affiliated Corporation to terminate them at any time. Except
as specifically provided by the Board in any particular case, the loss of
existing or potential profits 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
Corporation to the Participant by contract or otherwise.
10. AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN
The Board may suspend the Plan or any part thereof at any time or may
terminate the Plan in its entirety. Awards shall not be granted after Plan
termination. The Board may also amend the Plan from time to time, except that
amendments which affect the following subjects must be approved by stockholders
of the Corporation:
(a) Except as provided in Section 11 relative to capital changes, the
number of shares as to which Options may be granted pursuant to
Section 5;
(b) The maximum term of Options granted;
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FOLEY HOAG & ELIOT LLP
(c) The minimum price at which Options may be granted;
(d) The term of the Plan; and
(e) The requirements as to eligibility for participation in the Plan.
Awards granted prior to suspension or termination of the Plan may not
be cancelled solely because of such suspension or termination, except with the
consent of the grantee of the Award.
11. CHANGES IN CAPITAL STRUCTURE
The instruments evidencing Options granted hereunder shall be subject to
adjustment in the event of changes in the outstanding Stock of the Corporation
by reason of Stock dividends, Stock splits, recapitalizations, reorganizations,
mergers, consolidations, combinations, exchanges or other relevant changes in
capitalization occurring after the date of an Award to the same extent as would
affect an actual share of Stock issued and outstanding on the effective date of
such change. Such adjustment to outstanding Options shall be made without
change in the total price applicable to the unexercised portion of such
options, and a corresponding adjustment in the applicable option price per
share shall be made. In the event of any such change, the aggregate number and
classes of shares for which Options may thereafter be granted under Section 5.1
of this Plan may be appropriately adjusted as determined by the Board so as to
reflect such change.
Notwithstanding the foregoing, any adjustments made pursuant to this
Section 11 with respect to Incentive Stock Options shall be made only after the
Board, after consulting with counsel for the Corporation, determines whether
such adjustments would constitute a
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"modification" of such Incentive Stock Options (as that term is defined in
Section 424 of the Code) or would cause any adverse tax consequences for the
holders of such Incentive Stock Options. If the Board determines that such
adjustments made with respect to Incentive Stock Options would constitute a
modification of such Incentive Stock Options, it may refrain from making such
adjustments.
In the event of the proposed dissolution or liquidation of the
Corporation, each Option will terminate immediately prior to the consummation
of such proposed action or at such other time and subject to such other
conditions as shall be determined by the Board.
Except as expressly provided herein, no issuance by the Corporation of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares subject to Options. No adjustments
shall be made for dividends paid in cash or in property other than securities
of the Corporation.
No fractional shares shall be issued under the Plan and the optionee shall
receive from the Corporation cash in lieu of such fractional shares.
12. EFFECTIVE DATE AND TERM OF THE PLAN
The Plan shall become effective on July 1, 1998. The Plan shall continue
until such time as it may be terminated by action of the Board or the Committee;
provided, however, that no Options may be granted under this Plan on or after
the tenth anniversary of the effective date hereof.
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13. CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOs
The Board, at the written request of any optionee, may in its discretion
take such actions as may be necessary to convert such optionee's Incentive
Stock Options, that have not been exercised on the date of conversion, into
Non-Qualified Options at any time prior to the expiration of such Incentive
Stock Options, regardless of whether the optionee is an employee of the
Corporation or an Affiliated Corporation at the time of such conversion. Such
actions may include, but not be limited to, extending the exercise period or
reducing the exercise price of such Options. At the time of such conversion,
the Board or the Committee (with the consent of the optionee) may impose such
conditions on the exercise of the resulting Non-Qualified Options as the Board
or the Committee in its discretion may determine, provided that such conditions
shall not be inconsistent with the Plan. Nothing in the Plan shall be deemed to
give any optionee the right to have such optionee's Incentive Stock Options
converted into Non-Qualified Options, and no such conversion shall occur until
and unless the Board or the Committee takes appropriate action. The Board, with
the consent of the optionee, may also terminate any portion of any Incentive
Stock Option that has not been exercised at the time of such termination.
14. APPLICATION OF FUNDS
The proceeds received by the Corporation from the sale of shares pursuant
to Options granted under the Plan shall be used for general corporate purposes.
15. GOVERNMENTAL REGULATION
The Corporation's obligation to sell and deliver shares of Stock under
this Plan is subject
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to the approval of any governmental authority required in connection with the
authorization, issuance or sale of such shares.
16. WITHHOLDING OF ADDITIONAL INCOME TAXES
Upon the exercise of a Non-Qualified Option or the making of a
Disqualifying Disposition (as defined in Section 17) the Corporation, in
accordance with Section 3402(a) of the Code, may require the optionee to pay
additional withholding taxes in respect of the amount that is considered
compensation includible in such person's gross income. The Board in its
discretion may condition the exercise of an Option on the payment of such
additional withholding taxes.
17. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION
Each employee who receives an Incentive Stock Option must agree to notify
the Corporation in writing immediately after the employee makes a Disqualifying
Disposition of any Stock acquired pursuant to the exercise of an Incentive
Stock Option. A Disqualifying Disposition is any disposition (including any
sale) of such Stock before the later of (a) two years after the date the
employee was granted the Incentive Stock Option or (b) one year after the date
the employee acquired Stock by exercising the Incentive Stock Option. If the
employee has died before such stock is sold, these holding period requirements
do not apply and no Disqualifying Disposition can occur thereafter.
18. GOVERNING LAW; CONSTRUCTION
The validity and construction of the Plan and the instruments evidencing
Options shall be governed by the laws of the Commonwealth of Massachusetts
(without regard to the conflict of
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law principles thereof). In construing this Plan, the singular shall include
the plural and the masculine gender shall include the feminine and neuter,
unless the context otherwise requires.
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