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EXHIBIT 4.1
BROOKTROUT, INC.
1999 STOCK INCENTIVE PLAN
SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS.
The name of the plan is the Brooktrout, Inc. 1999 Stock Incentive Plan
(the "Plan"). The purpose of the Plan is to encourage and enable the employees
of Brooktrout, Inc. (the "Company") and its Subsidiaries who are not officers or
directors and upon whose judgment, initiative and efforts the Company largely
depends for the successful conduct of its business to acquire a proprietary
interest in the Company. It is anticipated that providing such persons with a
direct stake in the Company's welfare will assure a closer identification of
their interests with those of the Company, thereby stimulating their efforts on
the Company's behalf and strengthening their desire to remain with the Company.
The following terms shall be defined as set forth below:
"Act" means the Securities Exchange Act of 1934, as amended.
"Award" or "Awards", except where referring to a particular
category of grant under the Plan, shall include Incentive Stock
Options, Non-Qualified Stock Options, Restricted Stock Awards,
Unrestricted Stock Awards and Performance Share Awards.
"Board" means the Board of Directors of the Company.
"Cause" means and shall be limited to a determination by the
Company's Chief Executive Officer in good faith that the participant
should be dismissed as a result of (i) any material breach by the
participant of any agreement to which the participant and the Company
are parties, (ii) any act (other than retirement) or omission to act by
the participant which may have a material and adverse effect on the
business of the Company or any Subsidiary or on the participant's
ability to perform services for the Company or any Subsidiary,
including, without limitation, the commission of any crime (other than
ordinary traffic violations), or (iii) any material misconduct or
neglect of duties by the participant in connection with the business or
affairs of the Company or any Subsidiary.
"Code" means the Internal Revenue Code of 1986, as amended,
and any successor Code, and related rules, regulations and
interpretations.
"Committee" means any Committee of the Board referred to in
Section 2.
"Disability" means disability as set forth in Section 22(e)(3)
of the Code.
"Fair Market Value" on any given date means the last reported
sale price at which Stock is traded on such date or, if no Stock is
traded on such date, the most recent date on which Stock was traded, as
reflected on the NASDAQ National Market System or, if applicable, any
other national stock exchange on which the Stock is traded.
"Option" or "Stock Option" means any option to purchase shares
of Stock granted pursuant to Section 5.
"Restricted Stock Award" mean Awards granted pursuant to
Section 6.
"Stock" means the Common Stock, $.01 par value per share, of
the Company, subject to adjustments pursuant to Section 3.
"Subsidiary" means any corporation or other entity (other than
the Company) in any unbroken chain of corporations or other entities,
beginning with the Company if each of the corporations or entities
(other than the last corporation or entity in the unbroken chain) owns
stock or other interests possessing 50% or more of the total combined
voting power of all classes of stock or other interests in one of the
other corporations or entities in the chain.
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SECTION 2. Administration of Plan; Committee Authority to Select
Participants and DETERMINE AWARDS.
(a) COMMITTEE. The Plan shall be administered by the Board, or
any committee thereof (the "Committee").
(b) POWERS OF COMMITTEE. 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 the employees of the Company and its
Subsidiaries who are not officers or directors 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 Stock Options and Restricted Stock, 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 and modify 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, and to approve the form of written
instruments evidencing the Awards;
(v) to accelerate the exercisability or vesting of
all or any portion of any Option;
(vi) to extend the period in which Stock Options may
be exercised;
(vii) to determine whether, to what extent, and under
what circumstances Stock 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
(viii) 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 written
instruments); 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.
(c) DELEGATION OF AUTHORITY TO GRANT AWARDS. The Committee, in
its discretion, may delegate to the Chief Executive Officer of the Company all
or part of the Committee's authority and duties with respect to Awards,
including the granting thereof. The Committee may revoke or amend the terms of a
delegation at any time but such action shall not invalidate any prior actions of
the Committee's delegate or delegates that were consistent with the terms of the
Plan.
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 250,000. For
purposes of this limitation, the shares of Stock underlying any Awards which are
forfeited, canceled, reacquired by the Company, satisfied without the issuance
of Stock or otherwise terminated (other than by exercise) shall be added back to
the shares of Stock available for issuance under the Plan so long as the
participants to whom such Awards had been previously granted received no
benefits of ownership of the underlying shares of Stock to which the Award
related. Subject to such overall limitation, shares may be issued up to such
maximum number pursuant to any type or types of Award. Shares issued under the
Plan may be authorized but unissued shares or shares reacquired by the Company.
(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
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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 and as may be
permitted by the terms of such transaction, 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).
(c) SUBSTITUTE AWARDS. The Committee may grant Awards under
the Plan in substitution for stock and stock-based awards held by employees of
another corporation who concurrently become employees of 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. Any substitute Awards
granted under the Plan shall not count against the share limitation set forth in
Section 3(a).
SECTION 4. ELIGIBILITY.
Participants in the Plan will be such full or part-time employees of
the Company and its Subsidiaries who are not officers or directors and 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, in its sole discretion.
SECTION 5. STOCK OPTIONS.
Any Stock Option granted under the Plan shall be in such form as the
Committee may from time to time approve. All Stock Options granted under the
Plan are not "incentive stock options" as defined in Section 422 of the Code.
(a) STOCK OPTIONS GRANTED TO EMPLOYEES. The Committee in its
discretion may grant Stock Options to employees of the Company or any
Subsidiary; provided, however, that such employees are neither an officer nor a
director of the Company or any Subsidiary. Stock Options granted to employees
pursuant to this Section 5(a) 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:
(i) EXERCISE PRICE. The exercise price per share for
the Stock covered by a Stock Option granted pursuant to this Section
5(a) shall be determined by the Committee at the time of grant but
shall be not less than 85% of Fair Market Value on the date of grant.
(ii) OPTION TERM. The term of each Stock Option shall
be fixed by the Committee, but shall never exceed ten years.
(iii) EXERCISABILITY; RIGHTS OF A STOCKHOLDER. Stock
Options shall become vested and exercisable at such time or times,
whether or not in installments, as shall be determined by the Committee
at or after the grant date. The Committee may at any time accelerate
the exercisability of all or any portion of any Stock Option. An
optionee shall have the rights of a stockholder only as to shares
acquired upon the exercise of a Stock Option and not as to unexercised
Stock Options.
(iv) METHOD 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. Payment
of the purchase price may be made by one or more of the following
methods:
(A) In cash, by certified or bank check or
by other instrument acceptable to the Committee;
(B) Through the delivery (or attestation to
the ownership) of shares of Stock that have been purchased by
the optionee on the open market or that have been beneficially
owned by the optionee for at least six months and are not then
subject to restrictions under any Company plan. Such
surrendered shares shall be valued at Fair Market Value on the
exercise date;
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(C) By the optionee delivering to the
Company a properly executed exercise notice together with
irrevocable instructions to a broker to promptly deliver to
the Company cash or a check payable and acceptable to the
Company to pay the purchase price; provided that in the event
the optionee chooses to pay the purchase price as so provided,
the optionee and the broker shall comply with such procedures
and enter into such agreements of indemnity and other
agreements as the Committee shall prescribe as a condition of
such payment procedure; or
(D) By the optionee delivering to the
Company a promissory note if the Board has expressly
authorized the loan of funds to the optionee for the purpose
of enabling or assisting the optionee to effect the exercise
of his Stock Option; provided that at least so much of the
exercise price as represents the par value of the Stock shall
be paid other than with a promissory note.
Payment instruments will be received subject to collection. The delivery of
certificates representing shares of Stock to be purchased pursuant to the
exercise of a Stock Option shall be contingent upon receipt from the Optionee
(or a purchaser acting in his stead in accordance with the provisions of the
Stock Option) by the Company of the full purchase price for such shares and the
fulfillment of any other requirements contained in the Stock Option or
applicable provisions of law. In the event an optionee chooses to pay the
purchase price by previously-owned shares of Stock through the attestation
method, the number of shares of Stock transferred to the optionee upon the
exercise of the Stock Option shall be net of the number of shares attested to.
(v) 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, or
by the optionee's legal representative or guardian in the event of the
optionee's incapacity.
(vi) TERMINATION BY DEATH. If any optionee's
employment by the Company and its Subsidiaries terminates by reason of
death, the Stock Option may thereafter be exercised, to the extent
exercisable at the date of death, by the legal representative or
legatee of the optionee, for a period of 180 days (or such longer
period as the Committee shall specify at any time) from the date of
death, or until the expiration of the stated term of the Option, if
earlier.
(vii) TERMINATION BY REASON OF DISABILITY.
(A) Any Stock Option held by an optionee
whose employment by the Company and its Subsidiaries has
terminated by reason of Disability may thereafter be
exercised, to the extent it was exercisable at the time of
such termination, for a period of twelve months (or such
longer period as the Committee shall specify at any time) from
the date of such termination of employment, or until the
expiration of the stated term of the Option, if earlier.
(B) The Committee shall have sole authority
and discretion to determine whether a participant's employment
has been terminated by reason of Disability.
(C) Except as otherwise provided by the
Committee at the time of grant, the death of an optionee
during a period provided in this Section 5(a)(vii) for the
exercise of a Stock Option, shall extend such period for 180
days from the date of death, subject to termination on the
expiration of the stated term of the Option, if earlier.
(viii) TERMINATION FOR CAUSE. If any optionee's
employment by the Company and its Subsidiaries has been terminated for
Cause, any Stock Option held by such optionee shall immediately
terminate and be of no further force and effect; provided, however,
that the Committee may, in its sole discretion, provide that such stock
option can be exercised for a period of up to 30 days from the date of
termination of employment or until the expiration of the stated term of
the Option, if earlier.
(ix) OTHER TERMINATION. Unless otherwise determined
by the Committee, if an optionee's employment by the Company and its
Subsidiaries terminates for any reason other than death, Disability, or
for Cause, any Stock Option held by such optionee may thereafter be
exercised, to the extent it was exercisable on the date of
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termination of employment, for three months (or such longer period as the
Committee shall specify at any time) from the date of termination of employment
or until the expiration of the stated term of the Option, if earlier.
(x) FORM OF SETTLEMENT. Shares of Stock issued upon
exercise of a Stock Option shall be free of all restrictions under the
Plan, except as otherwise provided in this Plan.
(b) RELOAD OPTIONS. At the discretion of the Committee,
Options granted under this Section 5(a) may include a so-called "reload" feature
pursuant to which an optionee exercising an option by the delivery of a number
of shares of Stock in accordance with Section 5(a)(iv)(B) hereof would
automatically be granted an additional Option (with an exercise price equal to
the Fair Market Value of the Stock on the date the additional Option is granted
and with the same expiration date as the original Option being exercised, and
with such other terms as the Committee may provide) to purchase that number of
shares of Stock equal to the number delivered to exercise the original Option.
SECTION 6. RESTRICTED STOCK AWARDS.
(a) NATURE OF RESTRICTED STOCK AWARD. The Committee may grant
Restricted Stock Awards to any employees of the Company or any Subsidiary. A
Restricted Stock Award is an Award entitling the recipient to acquire, at no
cost or for a purchase price determined by the Committee, shares of Stock
subject to such restrictions and conditions as the Committee may determine at
the time of grant ("Restricted Stock"). Conditions may be based on continuing
employment and/or achievement of pre-established performance goals and
objectives. In addition, a Restricted Stock Award may be granted to an employee
by the Committee in lieu of a cash bonus due to such employee pursuant to any
other plan of the Company.
(b) ACCEPTANCE OF AWARD. 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, if required, by certified or bank check or other instrument or form
of payment 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 written instrument that sets forth the terms and
conditions of the Restricted Stock in such form as the Committee shall
determine.
(c) RIGHTS AS A STOCKHOLDER. Upon complying with Section 6(b)
above, a participant shall have all the rights of a stockholder with respect to
the Restricted Stock including voting and dividend rights, subject to
non-transferability restrictions and Company repurchase or forfeiture rights
described in this Section 6 and subject to such other conditions contained in
the written instrument evidencing the Restricted Stock Award. Unless the
Committee shall otherwise determine, certificates evidencing shares of
Restricted Stock shall remain in the possession of the Company until such shares
are vested as provided in Section 6(e) below.
(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 termination of employment by the
Company and its Subsidiaries for any reason (including death, Disability, and
for Cause), the Company shall have the right, at the discretion of the
Committee, to repurchase shares of Restricted Stock with respect to which
conditions have not lapsed at their purchase price, or to require forfeiture of
such shares to the Company if acquired at no cost, from the participant or the
participant's legal representative. The Company must exercise such right of
repurchase or forfeiture not later than the 90th day following such termination
of employment (unless otherwise specified in the written instrument evidencing
the Restricted Stock Award).
(e) VESTING OF RESTRICTED STOCK. The Committee at the time of
grant shall specify the date or dates and/or the attainment of pre-established
performance goals, objectives and other conditions on which the
non-transferability of the Restricted Stock and the Company's right of
repurchase or forfeiture shall lapse. Subsequent to such date or dates and/or
the attainment of such pre-established performance goals, objectives and other
conditions, the shares on which all restrictions have lapsed shall no longer be
Restricted Stock and shall be deemed "vested."
(f) WAIVER, DEFERRAL AND REINVESTMENT OF DIVIDENDS. The
written instrument evidencing the Restricted Stock Award may require or permit
the immediate payment, waiver, deferral or investment of dividends paid on the
Restricted Stock.
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SECTION 7. TAX WITHHOLDING.
(a) PAYMENT BY PARTICIPANT. 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 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.
(b) PAYMENT IN SHARES. A participant may elect to have the
minimum tax withholding obligation satisfied, in whole or in part, by (i)
authorizing the Company to withhold from shares of Stock to be issued pursuant
to any Award a number of shares with an aggregate Fair Market Value (as of the
date the withholding is effected) that would satisfy the withholding amount due,
or (ii) transferring to the Company shares of Stock owned by the participant
with an aggregate Fair Market Value (as of the date the withholding is effected)
that would satisfy the minimum withholding amount due.
SECTION 8. 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 re-employment 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.
SECTION 9. 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.
SECTION 10. STATUS OF PLAN.
With respect to the portion of any Award which has not been exercised
and any payments in Stock 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 11. GENERAL PROVISIONS.
(a) NO DISTRIBUTION; COMPLIANCE WITH LEGAL REQUIREMENTS. 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 law 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) DELIVERY OF STOCK CERTIFICATES. Delivery of stock
certificates to participants under this Plan shall be deemed effected for all
purposes when the Company or a stock transfer agent of the Company shall have
delivered such
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certificates in the United States mail, addressed to the participant, at the
participant's last known address on file with the Company.
(c) OTHER COMPENSATION ARRANGEMENTS; NO EMPLOYMENT RIGHTS.
Nothing contained in this Plan shall prevent the Board from adopting other or
additional compensation arrangements, including trusts, 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 and the grant of Awards do not confer upon any employee any right to
continued employment with the Company or any Subsidiary.
(d) PAYMENT BY PROMISSORY NOTE. Any payment to be made by a
participant in the Plan to the Company for any reason under the Plan may be
satisfied by the delivery by such participant to the Company of a promissory
note if the Board has expressly authorized the loan of funds to the participant
for such purpose; provided that to the extent any such payment represents the
par value of Stock, such amount shall be paid other than with a promissory note.
SECTION 12. EFFECTIVE DATE OF PLAN.
The Plan was adopted by the Board of Directors on December 8, 1999.
SECTION 13. GOVERNING LAW.
This Plan and all Awards and actions thereunder shall be governed by,
and construed in accordance with, the laws of the Commonwealth of Massachusetts,
applied without regard to conflict of law principles.
