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EXHIBIT 4.1
Bitstream Inc.
2000 STOCK PLAN
1. PURPOSE. This 2000 Stock Plan (the "Plan") is intended to provide
incentives to:
A. Directors, officers, employees and consultants of Bitstream Inc.
(the "Company"), its parent (if any) and any present or future subsidiaries and
any present or future subsidiaries of its parent (if any) (collectively,
"Related Corporations") by providing them with awards of stock in the Company
("Awards"); and
B. Officers and other employees of the Company and Related
Corporations by providing them with options granted hereunder that qualify as
"incentive stock options" under Section 422(b) of the Internal Revenue Code of
1986, as amended (the "Code") ("ISO" or "ISOs") substantially in the form
attached hereto as Exhibit 8A;
C. Directors, officers, employees and consultants of the Company and
Related Corporations by providing them with opportunities to purchase stock in
the Company pursuant to warrants granted hereunder which do not qualify as ISOs
("Warrant" or "Warrants"), substantially in the form attached hereto as Exhibit
8B;
D. Directors, officers, employees and consultants of the Company and
Related Corporations by providing them with opportunities to purchase stock in
the Company pursuant to Non-Qualified Options granted hereunder which do not
qualify as ISOs ("Non-Qualified Option" or "Non-Qualified Options"),
substantially in the form attached hereto as Exhibit 8C;
E. Directors, officers, employees and consultants of the Company and
Related Corporations by providing them with opportunities to make direct
purchases of stock in the Company ("Purchases").
ISOs, Warrants and Non-Qualified Options are referred to hereafter individually
as an "Option" and collectively as "Options". Options, Awards and authorizations
to make Purchases are referred to hereafter collectively as "Stock Rights". As
used herein, the terms "parent" and "subsidiary" mean " parent corporation" and
"subsidiary corporation", respectively, as those terms are defined in Section
424 of the Code.
2. ADMINISTRATION OF THE PLAN.
A. BOARD OR COMPENSATION COMMITTEE ADMINISTRATION. The Plan shall be
administered by the Board of Directors of the Company (the "Board"). The Board
may appoint a Compensation Committee of two or more of its members to administer
this Plan, as assisted by the officers of the Company. Subject to ratification
of the grant or authorization of each Stock Right by the Board (if so required
by applicable state law), and subject to the terms of the Plan, the Committee
shall have the authority to
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EXHIBIT 4.1
(i) determine the employees of the Company and Related Corporations
(from among the class of employees eligible under paragraph 3 to receive
ISOs) to whom ISOs may be granted, and to determine (from among the class
of individuals and entities eligible under paragraph 3 to receive Warrants,
Non-Qualified Options and Awards and to make Purchases) to whom Warrants,
Non-Qualified Options, Awards and authorizations to make Purchases may be
granted;
(ii) determine the time or times at which Options or Awards may be
granted or Purchases made;
(iii) determine the option price of shares subject to each Option,
which price shall not be less than the minimum price specified in paragraph
6, and the purchase price of shares subject to each Purchase;
(iv) determine whether each Option granted shall be an ISO, a Warrant
or Non-Qualified Option;
(v) determine (subject to paragraph 7) the time or times when each
Option shall become exercisable and the duration of the exercise period;
(vi) determine whether restrictions such as repurchase options are to
be imposed on shares subject to Options, Awards and Purchases and the
nature of such restrictions, if any, and
(vii) interpret the Plan and prescribe and rescind rules and
regulations relating to it.
If the Committee determines to issue a Warrant or Non-Qualified Option, it shall
take whatever actions it deems necessary, under Section 422 of the Code and the
regulations promulgated thereunder, to ensure that such Option is not treated as
an ISO. The interpretation and construction by the Committee of any provisions
of the Plan or of any Stock Right granted under it shall be final unless
otherwise determined by the Board. The Committee may from time to time adopt
such rules and regulations for carrying out the Plan as it may deem best. No
member of the Board or the Committee shall be held liable for any action or
determination made in good faith with respect to the Plan or any Stock Right
granted under it.
B. COMMITTEE ACTION. The Committee may select one of its members as
its chairman and shall hold meetings at such time and places as it may
determine. Acts by a majority of the Committee, or acts reduced to or approved
in writing by a majority of the members of the Committee, shall be the valid
acts of the Committee. All references in this Plan to the Committee shall mean
the Board if no Committee has been appointed. From time to time the Board may
increase the size of the Committee and appoint additional members thereof,
remove members (with or without cause) and appoint new members in substitution
therefor, fill vacancies however caused, or remove all members of the Committee
and thereafter directly administer the Plan.
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EXHIBIT 4.1
C. GRANT OF STOCK RIGHTS TO MEMBERS OF THE BOARD. Notwithstanding the
provisions of paragraph 2(A), no Stock Right shall be granted to any person who
serves as a member of the Board at the time of the proposed grant, unless such
grant has been approved by a majority vote of the disinterested members of the
Board and otherwise approved in accordance with the following paragraph 2(D), if
applicable. [For the purposes of the Plan, a member of the Board shall be deemed
to be "disinterested" only if such person qualifies as a "disinterested person"
within the meaning of paragraph (c)(2) of Rule 16(b)-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as such term
the Board is interpreted from time to time.]
All grants of Stock Rights to members of the Board shall in all other
respects be made in accordance with those provisions of this Plan that apply to
other eligible persons. Members of the Board who are either (i) eligible for
Stock Rights pursuant to the Plan or (ii) have been granted Stock Rights may
vote on any matters affecting the administration of the Plan or the grant of any
Stock Rights pursuant to the Plan, except that no such member shall act upon the
granting to himself of Stock Rights, but any such member may be counted in
determining the existence of a quorum at any meeting of the Board during which
action is taken with respect to the granting to him of Stock Rights. The
signatures of all the Board members on a unanimous consent of directors in lieu
of a meeting may constitute the majority vote required by the foregoing
paragraph.
D. COMPLIANCE WITH FEDERAL SECURITIES LAWS. The following shall apply
to any grant of Stock Rights to a member of the Board in the event the Company
registers any class of any equity security pursuant to the Exchange Act, if such
grant occurs at any time from the effective date of such registration until six
months after the termination of such registration: A majority vote of the other
members of the Board must approve such grant. If a majority of the Board is
eligible to participate in the Plan or in any other stock option or other stock
plan of the Company or any of its affiliates, or has been so eligible at any
time within the preceding year, any grant of Stock Rights to a member of the
Board must be made by, or only in accordance with the recommendation of, the
Compensation Committee or a committee consisting of three or more persons, who
may but need not be directors or employees of the Company, appointed by the
Board but having full authority to act in the matter, none of whom is eligible
to participate in this Plan or any other stock option or other stock plan of the
Company or any of its affiliates, or has been eligible at any time within the
preceding year. The requirements imposed by the preceding sentence shall also
apply with respect to grants to officers who are not also directors. Once
appointed, such committee shall continue to serve until otherwise directed by
the Board.
3. ELIGIBLE EMPLOYEES AND OTHERS. ISOs may be granted to any employee of
the Company or any Related Corporation. Those officers and directors of the
Company or any Related Corporation who are not employees may not be granted ISOs
under the Plan. Warrants, Non-Qualified Options, Awards and authorizations to
make Purchases may be granted to any director (whether or not an employee),
officer, employee or consultant of the Company or any Related Corporation. The
Compensation Committee may take into consideration a recipient's individual
circumstances in determining whether to grant an ISO, a Warrant, Non-Qualified
Option or an authorization to make a Purchase. Granting of any Stock Right to
any individual or entity shall neither entitle that individual or entity to, nor
disqualify him from, participation in any other grant of Stock Rights.
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EXHIBIT 4.1
4. STOCK SUBJECT TO OPTIONS, AWARDS AND PURCHASES. The stock subject to
Options, Awards and Purchases shall be authorized but unissued shares of Class A
Common Stock of the Company, par value $.01 per share (the "Common Stock"), or
shares of Common Stock reacquired by the Company in any manner. The aggregate
number of shares which may be issued pursuant to the Plan equals 1,000,000,
subject to adjustment from time to time by (i) a vote of stockholders or (ii)
otherwise pursuant to paragraph 13. Any such shares may be issued as ISOs,
Warrants, Non-Qualified Options or Awards, or to persons or entities making
Purchases, so long as the number of shares so issued does not exceed such
number, as adjusted or amended. If any Option granted under the Plan shall
expire or terminate for any reason without having been exercised in full 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 Awards or
Purchases, the unpurchased shares subject to such Options and any unvested
shares so reacquired by the Company shall again be available for grants of Stock
Rights under the Plan.
5. GRANTING OF STOCK RIGHTS. Stock Rights may be granted under the Plan any
time after February 11, 2000, and prior to February 11, 2010. The date of grant
of a Stock Right under the Plan will be the date specified by the Compensation
Committee at the time it grants the Stock Right; provided, however, that such
date shall not fall prior to the date on which the Compensation Committee acts
to approve the grant. The Compensation Committee shall enjoy the right, with the
consent of the optionee, to convert an ISO granted under the Plan to a
Non-Qualified Option pursuant to paragraph 16.
6. MINIMUM OPTION PRICE; ISO LIMITATIONS.
A. PRICE FOR WARRANTS OR NON-QUALIFIED OPTIONS. The exercise price per
share specified in the agreement relating to each Warrant or Non-Qualified
Option granted under the Plan shall be as determined by the Board or the
Compensation Committee.
B. PRICE FOR ISOS. The exercise price per share specified in the
agreement relating to each ISO granted under the Plan shall not be less than the
fair market value per share of Common Stock on the date of such grant. In the
case of an ISO to be granted to an employee owning stock possessing more than
ten percent (10%) of the total combined voting power of all classes of stock of
the Company or any Related Corporation, the price per share specified in the
agreement relating to such ISO shall not be less than one hundred ten percent
(110%) of the fair market value per share of Common Stock on the date of grant.
C. $100,000 ANNUAL LIMITATION FOR ISOS. Each eligible employee may be
granted ISOs only to the extent that, in the aggregate under this Plan and all
incentive stock option plans of the Company and any Related Corporation, such
ISOs do not become exercisable for the first time by such employee during any
calendar year in a manner which would entitle the employee to purchase more than
$100,000 in fair market value (determined at the time the ISOs were granted) of
Common Stock in that year. Any options granted to an employee in excess of such
amount will be granted as Warrants or Non-Qualified Options.
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EXHIBIT 4.1
D. DETERMINATION OF FAIR MARKET VALUE. If, at the time an Option is
granted under the Plan, the Company's Common Stock is publicly traded, "fair
market value" shall be determined as of the last business day for which the
prices or quotes discussed in this sentence are available prior to the date such
Option is granted and shall mean
(i) the average (on that date) of the high and low prices of the
Common Stock on the principal national securities exchange on which the
Common stock is traded, if the Common Stock is then traded on a national
securities exchange; or
(ii) the last reported sale price (on that date) of the Common Stock
on the NASDAQ National Market List, if the Common Stock is not then traded
on a national securities exchange; or
(iii) the average of the closing bid and asked prices last quoted (on
that date) by an established quotation service for over-the-counter
securities, if the Common Stock is not reported on the NASDAQ National
Market List.
However, if the Common Stock is not publicly traded at the time that
an Option is granted under the Plan, "fair market value" shall be deemed the
fair value of the Common Stock as determined by the Board or Compensation
Committee after taking into consideration all factors which it deems
appropriate, including, without limitation, recent sale and offer prices of the
Common Stock in private transactions negotiated at arm's length.
7. OPTION DURATION. Subject to earlier termination as provided in
paragraphs 9 and 10 or cancellation as provided in paragraph 16, each Option
shall expire on the date specified by the Board or Compensation Committee, but
not more than ten (10) years from the date of grant.
8. EXERCISE OF OPTION. Subject to the provisions of paragraphs 9 through
12, each Option granted under the Plan shall be exercisable as follows:
A. FULL VESTING OR PARTIAL VESTING. The Option shall either be fully
exercisable on the date of grant or shall become exercisable thereafter in such
installments as the Board or Compensation Committee may specify.
B. FULL VESTING OF INSTALLMENTS. Once an installment becomes
exercisable it shall remain exercisable until expiration or termination of the
Option, unless otherwise specified by the Board or Compensation Committee.
C. PARTIAL EXERCISE. Each Option or installment may be exercised at
any time or from time to time, in whole or in part, for up to the total number
of shares with respect to which it is then exercisable.
D. ACCELERATION OF VESTING. The Board or Compensation Committee shall
have the right to accelerate the date of exercise of any installment of any
Option; provided that the Board or Compensation Committee shall not accelerate
the exercise date of any installment of any Option granted to any employee as an
ISO (and not previously converted into a Non-Qualified Option pursuant to
paragraph 16) if such acceleration would violate the annual vesting limitation
contained in Section 422(d) of the Code, as described in paragraph 6(C).
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EXHIBIT 4.1
E. EMPLOYEES OWNING GREATER THAN TEN PERCENT OF VOTING STOCK. Any ISO
granted to an employee owning stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or any
Related Corporation shall not be exercisable after the expiration of five years
from the date of grant.
9. EMPLOYMENT.
A. TERMINATION OF EMPLOYMENT. If an ISO optionee ceases to be employed
by the Company and all Related Corporations other than by reason of death or
disability as defined in paragraph 10, no further installments of his ISOs shall
become exercisable, and his ISOs shall terminate after the passage of ninety
(90) days from the date of termination of his employment, but in no event later
than on their specified expiration dates, except to the extent that such ISOs
(or unexercised installments thereof) have been converted into Non-Qualified
Options pursuant to paragraph 16.
B. LEAVES OF ABSENCE. 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 ninety (90) days or, if longer, any period
during which such optionee's right to reemployment is guaranteed by statute. A
bona fide leave of absence with the written approval of the Board or
Compensation Committee shall not be considered an interruption of employment
under the Plan, provided that such written approval contractually obligates the
Company or any Related Corporation to continue the employment of the optionee
after the approved period of absence.
C. CHANGES OF EMPLOYMENT. ISOs granted under the Plan shall not be
affected by any change of employment within or among the Company and Related
Corporations, so long as the optionee continues to be an employee of the Company
or any Related Corporation. Nothing in the Plan shall be deemed to give any
grantee of any Stock Right the right to be retained in employment or other
service by the Company or any Related Corporation for any period of time.
10. DEATH; DISABILITY.
A. DEATH. If an ISO optionee ceases to be employed by the Company and
all Related Corporations by reason of his death, any ISO of his may be
exercised, to the extent of the number of shares with respect to which he could
have exercised it on the date of his death, by his estate, personal
representative or beneficiary who has acquired the ISO by will or by the laws of
descent and distribution, at any time prior to the earlier of the specified
expiration date of the ISO or ninety (90) days from the date of the optionee's
death.
B. DISABILITY. If an ISO optionee ceases to be employed by the Company
and all Related Corporations by reason of his disability, he shall have the
right to exercise any ISO held by him on the date of termination of employment,
to the extent of the number of shares with respect to which he could have
exercised it on that date, at any time prior to the earlier of the specified
expiration date of the ISO or 180 days from the date of the termination of the
optionee's employment. For the purposes of the Plan, the term "disability" shall
mean "permanent and total disability" as defined in Section 22(e)(3) of the
Code.
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EXHIBIT 4.1
11. ASSIGNABILITY. No Option shall be assignable or transferable by the
grantee except by will or by the laws of descent and distribution, and during
the lifetime of the grantee each Option shall be exercisable only by him.
12. TERMS AND CONDITIONS OF OPTIONS. Options shall be evidenced by
instruments (which need not be identical) in such forms as the Board or
Compensation Committee may from time to time approve. Such instruments shall
conform to the terms and conditions set forth in paragraphs 6 through 11 hereof
and may contain such other provisions as the Board or Compensation Committee
deems advisable which are not inconsistent with the Plan, including restrictions
applicable to shares of Common Stock issuable upon exercise of Options. In
granting any Warrant or Non-Qualified Option, the Board or Compensation
Committee may specify that such Warrant or Non-Qualified Option shall fall
subject to the restrictions set forth herein with respect to ISOs, or to such
other termination and cancellation provisions as the Board or Compensation
Committee may determine. The Board or Compensation Committee may from time to
time confer authority and responsibility on one or more of its own members
and/or one or more officers of the Company to execute and deliver such
instruments. The proper officers of the Company are authorized and directed to
take any and all action necessary or advisable from time to time to carry out
the terms of such instruments.
13. ADJUSTMENTS. Upon the occurrence of any of the following events, an
optionee's rights with respect to Options granted to him hereunder shall be
adjusted as hereinafter provided, unless otherwise specifically provided in the
written agreement between the optionee and the Company relating to such Option:
A. STOCK DIVIDENDS AND STOCK SPLITS. If the shares of Common Stock
shall be subdivided or combined into a greater or smaller number of shares or if
the Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, then, in each such case, the optionee, on exercise of
such Option at any time after the issuance or effective date of such dividend or
split, as the case may be, shall receive, in lieu of the Common Stock issuable
upon such exercise prior to such issuance or effective date, the stock and other
securities and property (including cash) to which such holder would have been
entitled upon such issuance or effective date, if such holder had exercised
Options granted hereunder immediately prior thereto.
B. CONSOLIDATIONS OR MERGERS. If the Company is to be consolidated
with or acquired by another entity in a merger, sale of all or substantially all
of the Company's assets or otherwise (an "Acquisition"), unless the Board shall
otherwise determine by resolution adopted at least ten (10) days prior to the
closing of the Acquisition, all outstanding Stock Rights shall become fully
vested and exercisable as of the closing of the Acquisition. In addition, the
Board or Compensation Committee or the board of directors of any entity assuming
the obligations of the Company hereunder (the "Successor Board") may take one or
more of the following actions:
(i) make appropriate provision for the continuation of such Stock
Rights by substituting on an equitable basis for the shares then subject to
such Stock Rights the consideration payable with respect to the outstanding
shares of Common Stock in connection with the Acquisition; or
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EXHIBIT 4.1
(ii) make appropriate provision for the continuation of such Stock
Rights by substituting on an equitable basis for the shares then subject to
such Stock Rights any equity securities of the successor corporation; or
(iii) upon written notice to the holders of the Stock Rights, provide
that all Stock Rights must be exercised, to the extent then exercisable,
within a specified number of days of the date of such notice, at the end of
which period the Stock Rights shall terminate; or
(iv) terminate all Stock Rights in exchange for a cash payment equal
to the excess of the fair market value of the shares subject to such Stock
Rights (to the extent then exercisable) over the exercise price thereof; or
(v) terminate all Stock Rights in exchange for the right to
participate in any stock option or other employee benefit plan of any
successor corporation.
C. RECAPITALIZATION OR REORGANIZATION. In the event of a
recapitalization or reorganization of the Company (other than a transaction
described in paragraph B above) pursuant to which securities of the Company or
of another corporation are issued with respect to the outstanding shares of
Common Stock, upon exercising a Stock Right, the holder thereof shall be
entitled to receive for the purchase price paid upon such exercise the
securities he would have received if he had exercised his Stock Right prior to
such recapitalization or reorganization.
D. MODIFICATION OF ISOS. Notwithstanding the foregoing, any
adjustments made pursuant to subparagraphs A, B or C with respect to ISOs shall
be made only after the Board or Compensation Committee, after consulting with
counsel for the Company, determines whether such adjustments would constitute a
"modification" of such ISOs (as that term is defined in Section 424 of the Code)
or would cause any adverse tax con sequences for the holders of such ISOs. If
the Board or Compensation Committee determines that such adjustments made with
respect to ISOs would constitute a modification of such ISOs, it may refrain
from making such adjustments.
E. DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, each Option will terminate
immediately prior to the consummation of such proposed action or at such other
time and subject to such other conditions as shall be determined by the Board or
Compensation Committee.
F. ISSUANCES OF SECURITIES. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
subject to Options. No adjustments shall be made for dividends paid in cash or
in property other than securities of the Company.
G. FRACTIONAL SHARES. No fractional shares shall be issued under the
Plan and the optionee shall receive from the Company cash in lieu of such
fractional shares.
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EXHIBIT 4.1
H. ADJUSTMENTS. Upon the happening of any of the foregoing events
described in subparagraphs A, B or C above, the class and aggregate number of
shares set forth in paragraph 4 hereof that are subject to Stock Rights which
previously have been or subsequently may be granted under the Plan shall also be
appropriately adjusted to reflect the events described in such subparagraphs.
The Board or Compensation Committee or a Successor Board shall determine the
specific adjustments to be made under this paragraph 13 and, subject to
paragraph 2, its determination shall be conclusive. If any person or entity
owning restricted Common Stock obtained by exercise of a Stock Right made
hereunder receives shares or securities or cash in connection with a corporate
transaction described in subparagraphs A, B or C above as a result of owning
such restricted Common Stock, such shares or securities or cash shall be subject
to all of the conditions and restrictions applicable to the restricted Common
Stock with respect to which such shares or securities or cash were issued,
unless otherwise determined by the Board or Compensation Committee or a
Successor Board.
14. MEANS OF EXERCISING STOCK RIGHTS. A Stock Right (or any part or
installment thereof) shall be exercised by giving written notice to the Company
at its principal office address. Such notice shall identify the Stock Right
being exercised and specify the number of shares as to which such Stock Right is
being exercised, accompanied by full payment of the purchase price therefore
either:
A. In United States dollars in cash or by check;
B. At the discretion of the Board or Compensation Committee, through
delivery of shares of Common Stock having a fair market value equal as of the
date of the exercise to the cash exercise price of the Stock Right;
C. At the discretion of the Board or Compensation Committee, by
delivery of the grantee's personal recourse note bearing interest payable not
less than annually at no less than 100% of the lowest applicable Federal rate,
as defined in Section 1274(d) of the Code, or
D. At the discretion of the Board or Compensation Committee, by any
combination of A, B or C above.
If the Board or Compensation Committee permits payment by means of the methods
set forth in clauses B, C, or D of the preceding sentence, such permission shall
be expressed in writing at the time of the grant of the ISO in question. The
holder of a Stock Right shall not have the rights of a shareholder with respect
to the shares covered until the date of issuance of a stock certificate to him
for such shares. Except as expressly provided above in paragraph 13 with respect
to changes in capitalization and stock dividends, no adjustment shall be made
for dividends or similar rights for which the record date falls prior to the
date such stock certificate is issued.
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EXHIBIT 4.1
15. TERM AND AMENDMENT OF PLAN. This Plan was adopted by the Board on
February 11, 2000, subject (with respect to the validation of ISOs granted under
the Plan only) to approval of the Plan by the stockholders of the Company at a
subsequent Meeting of Stockholders or, in lieu thereof, by unanimous written
consent. If the stockholders do not provide their approval by February 11, 2001,
any grants of ISOs under the Plan made prior to that date will be rescinded. The
Plan shall expire on February 11, 2010 (except as to Options outstanding on that
date). Subject to the provisions of paragraph 5 above, Stock Rights may be
granted under the Plan prior to the date of stockholder approval of the Plan.
The Board may at any time terminate the Plan or make such modification or
amendment thereof as it deems advisable; provided, however, (i) the Board may
not, without the approval of the stockholders of the Company obtained in the
manner stated in this Section 15, increase the maximum number of shares for
which Options may be granted or change the designation of the class of persons
eligible to receive Options under the Plan, and (ii) any such modification or
amendment of the Plan shall be approved by a majority of the stockholders of the
Company to the extent that such stockholder approval is necessary to comply with
applicable provisions of the Code, rules promulgated pursuant to Section 16 of
the Exchange Act, applicable state law, or applicable NASD or exchange listing
requirements. Termination or any modification or amendment of the Plan shall
not, without the consent of an optionee, affect his or her rights under an
Option theretofore granted to him or her.
16. CONVERSION OF ISOS INTO NON-QUALIFIED OPTIONS; CANCELLATION OF ISOS.
The Board or Compensation Committee, at the written request of any optionee, may
in its discretion take such actions as may be necessary to convert such
optionee's ISOs (or any installments or portions of installments thereof) that
have not been exercised on the date of conversion into Non-Qualified Options at
any time prior to the expiration of such ISOs, regardless of whether the
optionee serves as an employee of the Company or a Related 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 the appropriate
installments of such Options. At the time of such conversion, the Board or
Compensation Committee (with the consent of the Optionee) may impose such
conditions on the exercise of the resulting Non-Qualified Options as the Board
or Compensation Committee in its discretion may determine, provided that such
conditions shall not be inconsistent with this Plan. Nothing in the Plan shall
be deemed to give any optionee the right to have such optionee's ISOs converted
into Non-Qualified Options, and no such conversion shall occur until and unless
the Board or Compensation Committee takes appropriate action. The Board or
Compensation Committee, with the consent of the optionee, also may cancel any
portion of any ISO that has not been exercised at the time of such cancellation.
17. APPLICATION OF FUNDS. The proceeds received by the Company from the
sale of shares pursuant to Options granted and Purchases authorized under the
Plan shall be used for general corporate purposes.
18. GOVERNMENT REGULATION. The Company's obligation to sell and deliver
shares of the Common Stock under this Plan shall fall subject to the approval of
any governmental authority required in connection with the authorization,
issuance or sale of such shares.
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EXHIBIT 4.1
19. WITHHOLDING OF ADDITIONAL INCOME TAXES. Upon the exercise of a Warrant
or Non-Qualified Option, the grant of an Award, the making of a Purchase of
Common Stock for less than its fair market value, the making of a Disqualifying
Disposition (as defined in paragraph 20) or the vesting of restricted Common
Stock acquired on the exercise of a Stock Right hereunder, the Company, in
accordance with Section 3402(a) of the Code, may require the optionee, Award
recipient or purchaser to pay additional withholding taxes in respect of the
amount that is considered compensation includible in such person's gross income.
The Board or Compensation Committee in its discretion may condition
A. the exercise of an option,
B. the grant of an Award,
C. the making of a Purchase of Common Stock for less than its fair
market value, or
D. the vesting of restricted Common Stock acquired by exercising a
Stock Right, on the grantee's payment of such additional withholding taxes.
20. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION. Each employee who
receives an ISO must agree to notify the Company in writing immediately after
the employee makes a Disqualifying Disposition of any Common Stock acquired
pursuant to the exercise of an ISO. A Disqualifying Disposition means any
disposition (including any sale) of such Common Stock before the later of (a)
two years after the date the employee was granted the ISO, or (b) one year after
the date the employee acquired Common Stock by exercising the ISO. If the
employee has died before he sells such stock, these holding period requirements
do not apply and no Disqualifying Disposition can occur thereafter. If an
optionee is a person subject to Section 16(b) of the Exchange Act, delivery of
any withholding and employment taxes due may be deferred until ten (10) days
after the date any income on the disposition is recognized under Section 83 of
the Code. The Company may cause a legend to be affixed to certificates
representing shares of Common Stock issued upon exercise of incentive stock
options to ensure that the Board receives notice of a Disqualifying Disposition.
21. RESTRICTIONS ON EXERCISE OF OPTIONS AND ISSUANCE OF SHARES.
A. Notwithstanding anything in this Plan to the contrary, an Option
cannot be exercised, and the Company may delay the issuance of shares covered by
the exercise of an Option and the delivery of a certificate for such shares,
until one of the following conditions shall be satisfied:
(i) the shares with respect to which such Option has been exercised
are at the time of the issuance of such shares effectively registered or
qualified under applicable Federal and state securities acts now in force
or as hereafter amended; or
(ii) counsel for the Company shall have given an opinion, which
opinion shall not be unreasonably conditioned or withheld, that the
issuance of such shares is exempt from registration and qualification under
applicable Federal and state securities acts now in force or as hereafter
amended.
11
<PAGE>
EXHIBIT 4.1
B. The Company shall be under no obligation to qualify shares or to
cause a registration statement or a post-effective amendment to any registration
statement to be prepared for the purpose of covering the issuance of shares in
respect of which any Option may be exercised or to cause the issuance of such
shares to be exempt from registration and qualification under applicable Federal
and state securities acts now in force or as hereinafter amended, except as
otherwise agreed to by the Company in writing in its sole discretion.
22. PURCHASE FOR INVESTMENT; RIGHTS OF HOLDER ON SUBSEQUENT REGISTRATION.
Unless and until the shares to be issued upon exercise of an Option granted
under the Plan have been effectively registered under the Securities Act of
1933, as amended (the "1933 Act"), as now in force or hereafter amended, the
Company shall be under no obligation to issue any shares covered by any Option
unless the person who exercises such Option, in whole or in part, shall give a
written representation and undertaking to the Company which is satisfactory in
form and scope to counsel for the Company and upon which, in the opinion of such
counsel, the Company may reasonably rely, that he or she is acquiring the shares
issued pursuant to such exercise of the Option for his or her own account as an
investment and not with a view to, or for sale in connection with, the
distribution of any such shares, and that he or she will make no transfer of the
same except in compliance with any rules and regulations in force at the time of
such transfer under the 1933 Act, or any other applicable law, and that if
shares are issued without such registration, a legend to this effect may be
endorsed upon the securities so issued.
In the event that the Company shall, nevertheless, deem it necessary or
desirable to register under the 1933 Act or other applicable statutes any shares
with respect to which an Option shall have been exercised, or to qualify any
such shares for exemption from the 1933 Act or other applicable statutes, then
the Company may take such action and may require from each optionee such
information in writing for use in any registration statement, supplementary
registration statement, prospectus, preliminary prospectus, offering circular or
any other document that is reasonably necessary for such purpose and may require
reasonable indemnity to the Company and its officers and directors from such
holder against all losses, claims, damages and liabilities arising from such use
of the information so furnished and caused by any untrue statement of any
material fact therein or caused by the omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made.
23. DUTIES OF THE COMPANY. The Company shall at all times keep available
for issuance or delivery such number of shares of Common Stock as will be
sufficient to satisfy the requirements of the Plan.
24. NOTICES. Any communication or notice required or permitted to be given
under the Plan shall be in writing, and mailed by registered or certified mail
or delivered by hand, if to the Company, to the attention of the President at
the Company's principal place of business; and, if to an optionee, to his or her
address as it appears on the records of the Company.
25. GOVERNING LAW -- CONSTRUCTION. The validity and construction of the
Plan and the instruments evidencing Stock Rights shall be governed by the laws
of Delaware or the laws of any jurisdiction in which the Company or its
successors in interest may be organized from time to time. 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.
12
<PAGE>
EXHIBIT 4.1
Exhibit 8A
BITSTREAM INC.
INCENTIVE STOCK OPTION AGREEMENT
Under 2000 Stock Plan
IN CONSIDERATION FOR the waiver of any and all pre-existing options to
acquire its stock, Bitstream Inc., a Delaware business corporation (the
"Company"), hereby grants this ____ day of 199_ (the "Option Date") to [first
name] [last name] ("Employee"), an option to purchase a maximum of [no. shs]
shares (the "Option Shares") of Class A Common Stock, $.01 par value (the
"Common Stock"), at the price of $.__ per share, on the following terms and
conditions:
1. GRANT UNDER 2000 STOCK PLAN. This Option is granted pursuant to and is
governed by the Company's 2000 Stock Plan (the "Plan") and, unless the context
otherwise requires, terms used herein shall have the same meaning as in the
Plan. The Plan under which this option is granted was approved by the Company's
directors on February 11, 2000 and by the stockholders on July 25, 2000.
2. EXTENT OF OPTION IF EMPLOYMENT CONTINUES. On the following dates, the
Optionee may exercise this Option for the number of Option Shares set opposite
the applicable date so long as Employee continues to be employed by the Company
or any Related Corporation:
<TABLE>
<CAPTION>
<S> <C>
-----------------------------------------------------------------------------
Less than one year from [ISSUE DATE] -0- Option Shares
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
One year or more, but less than two __% of the total Option Shares
years from [ISSUE DATE]
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Two years or more, but less than three an additional __% of the total
years from [ISSUE DATE] Option Shares
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Three years or more, but less than four an additional __% of the total
from [ISSUE DATE] Option Shares
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Four years or more, but less than five an additional __% of the total
from [ISSUE DATE] Option Shares
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Five years or more, but less than six an additional __% of the total
years from [ISSUE DATE] Option Shares
-----------------------------------------------------------------------------
</TABLE>
The foregoing rights shall cumulate while the Optionee continues in the
employment of the Company, or any Related Corporation, and may be exercised up
to and including the date that falls ten (10) years from the Option Date. All of
the foregoing rights are subject to Sections 3 and 4, as appropriate, if
Employee ceases to be employed by the Company or a Related Corporation, or dies
or becomes disabled while in the employ of the Company or a Related Corporation.
13
<PAGE>
EXHIBIT 4.1
3. TERMINATION OF EMPLOYMENT. If Employee ceases to be employed by the
Company or an Related Corporation, other than by reason of death or disability
as defined in Section 4, no further installments of this Option shall become
exercisable and this Option shall terminate ninety (90) days after the date the
Employment ceases, but in no event later than the scheduled expiration date. In
such an event, Employee may only exercise this Option for the number of Option
Shares which have vested and become exercisable prior to the date of
termination, and this Option may only be exercised with respect to such number
of Option Shares which have become exercisable prior to termination at any time
prior to the end of the period of ninety (90) days after the date the employment
ceases, but not later than the scheduled expiration date.
4. DEATH; DISABILITY. If Employee is a natural person who dies while in the
employ of the Company or any Related Corporation, this Option may be exercised,
to the extent of the number of option Shares with respect to which Employee
could have exercised it on the date of his death, by his estate, personal
representative or beneficiary to whom this option has been assigned pursuant to
Section 9, at any time within ninety (90) days after the date of death, but no
later than the scheduled expiration date. If Employee is terminated by reason of
his disability (as defined in the Plan), this option may be exercised, to the
extent of the number of option Shares with respect to which Employee could have
exercised it on the date the employment was terminated, at any time within one
hundred and eighty (180) days after the date of such termination, but not later
than the scheduled expiration date. At the expiration of such one hundred and
eighty (180) day period or the scheduled expiration date, whichever is the
earlier, this Option shall terminate and the only rights hereunder shall be
those as to which the Option was properly exercised before such termination.
5. PARTIAL EXERCISE. Exercise of this Option up to the extent above stated
may be made in part at any time and from time to time within the above limits,
except that this Option may not be exercised for a fraction of a share unless
such exercise is with respect to the final installment of Option Shares subject
to this Option and a fractional share (or cash in lieu thereof) must be issued
to permit Employee to exercise completely such final installment. Any fractional
share with respect to which an installment of this Option cannot be exercised
because of the limitation contained in the preceding sentence shall remain
subject to this Option and available for later purchase by Employee in
accordance with the terms hereof.
6. PAYMENT OF PRICE. The Option price shall be in United States dollars and
may be paid as follows:
a) in cash or by check, or any combination of the foregoing, equal in
amount to the Option price; or
b) in the discretion of the Board, in cash, by check, by delivery of
shares of the Company's Common Stock having a fair market value (as
determined by the Board) equal as of the date of exercise to the Option
price, or by any combination of the foregoing, equal in amount to the
Option price.
14
<PAGE>
EXHIBIT 4.1
7. AGREEMENT TO PURCHASE FOR INVESTMENT. By acceptance of this Option,
Employee agrees that a purchase of Option Shares under this Option will not be
made with a view to their distribution, as that term is used in the 1933 Act
unless in the opinion of counsel to the Company such distribution is in
compliance with or exempt from the registration and prospectus requirements of
the 1933 Act and applicable state securities laws, and Employee agrees to sign a
certificate to such effect at the time of exercising this Option and agrees that
the certificate for the Option Shares so purchased may be inscribed with a
legend to ensure compliance with the 1933 Act and applicable state securities
laws.
In the event that for any reason the Option Shares to be issued upon exercise of
the Option shall not be effectively registered under the 1933 Act, upon any date
on which the Option is exercised in whole or in part, the person exercising the
Option shall give a written representation to the Company in the form reasonably
required by the Company and the Company shall place an "investment legend,"
so-called, upon any certificate for the Shares issued by reason of such
exercise.
8. METHOD OF EXERCISING OPTION. Subject to the terms and conditions of this
Agreement, this Option may be exercised by written notice to the Company, at the
principal executive office of the Company, or to such transfer agent as the
Company shall designate. Such notice shall state the election to exercise this
Option and the number of Option Shares in respect of which it is being exercised
and shall be signed by the person or persons so exercising this Option. Such
notice shall be accompanied by payment of the full purchase price of such Option
Shares, and the Company shall deliver a certificate or certificates representing
such Option Shares as soon as practicable after the notice shall be received.
The certificate or certificates for the Option Shares as to which this Option
shall have been so exercised shall be registered in the name of the person or
persons so exercising this Option (or, if this Option shall be exercised by
Employee and if Employee shall so request in the notice exercising this Option,
shall be registered in the name of Employee and another person jointly, with
right of survivorship) and shall be delivered as provided above to or upon the
written order of the person or persons exercising this Option. In the event this
Option shall be exercised, pursuant to Section 4 hereof, by any person or
persons other than Employee, such notice shall be accompanied by appropriate
proof of the right of such person or persons to exercise this Option. All Option
Shares that shall be purchased upon the exercise of this Option as provided
herein shall be fully paid and nonassessable.
9. OPTION NOT TRANSFERABLE. This Option is not transferable or assignable
except by will or by the laws of descent and distribution. During the Optionee's
lifetime only Employee can exercise this Option.
10. NO OBLIGATION TO EXERCISE OPTION. The grant and acceptance of this
Option imposes no obligation on Employee to exercise it.
11. NO OBLIGATION TO CONTINUE EMPLOYMENT. Neither the Plan nor this Option
shall obligate the Company or any Related Corporations in any manner to continue
Employee in his employment.
15
<PAGE>
EXHIBIT 4.1
12. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. Employee shall enjoy no rights
as a stockholder with respect to Option Shares subject to this Agreement until a
stock certificate therefor has been issued to Employee and it is fully paid for
by Employee. Except as expressly provided in the Plan for changes in the
capitalization of the Company, no adjustment shall be made for dividends or
similar rights for which the record date precedes the date upon which such stock
certificate is issued.
13. CAPITAL CHANGES AND BUSINESS SUCCESSIONS. This Option is intended to
encourage Employee to work for the best interests of the Company and its
stockholders. To protect Employee's interest in this Option, the provisions of
the Plan that preserve options at full value in a number of contingencies are
hereby made applicable hereunder and are incorporated herein by reference. Thus,
this Option and the Option price shall be equitably adjusted in the event of any
stock dividend, stock split, recapitalization or other change in the capital
structure of the Company. In lieu of issuing fractional shares upon exercise
thereof, this Option (and the corresponding Option Shares) shall be rounded
upward or downward to the nearest whole share (rounding upward for all amounts
equal to or in excess of .51). In particular, without affecting the generality
of the foregoing, it is understood that for the purposes of Sections 2 through 4
hereof, inclusive, maintaining or being in the employ of the Company includes
maintaining or being in the employ of a Related Corporation.
14. DISQUALIFYING DISPOSITION. Employee agrees to notify the Company in
writing immediately after Employee makes a Disqualifying Disposition of any
Option Shares received pursuant to the exercise of this Option. A Disqualifying
Disposition is any disposition (including any sale) of such Option Shares before
the later of (a) two years after the date Employee was granted this Option, or
(b) one year after the date Employee acquired Option Shares by exercising this
Option. If Employee has died before such Option Shares are sold, these holding
period requirements do not apply and no Disqualifying Disposition can occur
thereafter. Employee also agrees to provide the Company with any information
which it shall request concerning any such disposition. Employee acknowledges
that he or she will forfeit the favorable income tax treatment otherwise
available with respect to the exercise of an incentive so if he or she makes a
Disqualifying Disposition of the Option Shares received on exercise of the
Option.
15. WITHHOLDING TAXES. If the Company determines in its discretion that it
is obligated to withhold tax with respect to a Disqualifying Disposition (as
defined in the preceding Section) of Option Shares received by the Employee on
exercise of this Option, Employee hereby agrees that the Company may withhold
from Employee's wages or other remuneration the appropriate amount of federal,
state and local withholding taxes attributable to such Disqualifying
Disposition. If any portion of this Option is treated as a non-qualified option,
Employee hereby agrees that the Company may withhold from Employee's wages the
appropriate amount of federal, state and local withholding taxes attributable to
Employee's exercise of such nonqualified option. At the Company's discretion,
the amount required to be withheld may be withheld in cash from such wages or
other remuneration, or in Common Stock (with respect to compensation income
attributable to the exercise of this Option) from the Common Stock otherwise
deliverable to Employee on
16
<PAGE>
EXHIBIT 4.1
exercise of this Option; provided however, no such withholding may be made by an
optionee who is an "officer" or "director" within the meaning of the Exchange
Act, except pursuant to a standing election to so withhold Common Stock
purchased upon exercise of an Option, such election to be made in the form set
forth in Exhibit 1 hereto and to be made not less than six months prior to the
date of such exercise. Such election may be revoked by the optionee only upon
six months prior written notice to the Company. Employee further agrees that, if
the Company does not withhold an amount from Employee's wages or other
remuneration sufficient to satisfy the Company's withholding obligation,
Employee will reimburse the Company on demand, in cash, for the amount
underwithheld.
16. NO EXERCISE OF OPTION IF EMPLOYMENT TERMINATED FOR MISCONDUCT. If the
employment of Employee is terminated for "Misconduct," this Option shall
terminate on the date of such termination and this Option shall thereupon not be
exercisable to any extent whatsoever. "Misconduct" is conduct, as determined by
the Board, involving one or more of the following: (i) disloyalty, gross
negligence, dishonesty or breach of fiduciary duty to the Company or a Related
Corporation; or (ii) the commission of an act of embezzlement, fraud or
deliberate disregard of the rules or policies of the Company or a Related
Corporation which results in loss, damage or injury to the Company or a Related
Corporation; or (iii) the unauthorized disclosure of any trade secret or
confidential information of the Company or a Related Corporation; or (iv) the
commission of an act which constitutes unfair competition with the Company or a
Related Corporation or which induces any customer of the Company or a Related
Corporation to break a contract with the Company or a Related Corporation; or
(v) the substantial and continuing failure of Employee to render services to the
Company or a Related Corporation in accordance with his assigned duties. For
purposes of this Section, termination of employment shall be deemed to occur
when Employee receives notice that his employment is terminated.
17. GOVERNING LAW. This Agreement shall be governed by and interpreted in
accordance with the internal laws of the State of Delaware.
IN WITNESS WHEREOF the Company and Employee have caused this instrument to
be executed, and Employee whose signature appears below acknowledges receipt of
a copy of the Plan and acceptance of an original copy of this Agreement.
Signature of Employee: BITSTREAM INC.:
By:
----------------------------------- -------------------------------
[first name] [last name] Name:
Title:
17
<PAGE>
EXHIBIT 4.1
EXHIBIT 1
TO STOCK OPTION AGREEMENT
Gentlemen:
The undersigned Optionee hereby elects and agrees that, whenever the
undersigned exercises a stock option (including any options which now or may
hereafter be granted), the Company shall withhold from the shares issuable upon
such exercise, such number of shares as is equal in value to the federal and
state withholding taxes due upon such exercise. The undersigned further
acknowledges and agrees that this election may not be revoked without six months
prior written notice to the Company.
Optionee
Signature
Name:_______________
(Printed)
18
<PAGE>
EXHIBIT 4.1
Exhibit 8B
NEITHER THIS WARRANT NOR THE SHARES OF CLASS A COMMON STOCK ISSUABLE UPON
EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"). THIS WARRANT HAS BEEN ACQUIRED FOR INVESTMENT AND CANNOT
BE SOLD, TRANSFERRED, OR HYPOTHECATED UNLESS AND UNTIL A REGISTRATION STATEMENT
UNDER THE ACT IS IN EFFECT AS TO SUCH TRANSFER OR UNLESS AND UNTIL THE COMPANY
HAS RECEIVED AN OPINION OF COUNSEL ACCEPTABLE IN FORM AND SUBSTANCE TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED IN ORDER FOR SUCH TRANSFER TO
COMPLY WITH THE ACT.
Right to Purchase [[NO.SHS.]] Shares of Class A Common Stock
Warrant No. BB-[[WNT. NO.]]
BITSTREAM INC.
CLASS A COMMON STOCK PURCHASE WARRANT
BITSTREAM INC., a Delaware corporation (the "Company"), hereby certifies
that, for value received, [[first names]] [[last name]] (the "Purchaser"), or
assigns, is entitled, subject to the terms set forth below, to purchase from the
Company at any time or from time to time on or after [ISSUE DATE (MUST BE AFTER
________)] and before 5:00 p.m., Delaware time, [ISSUE DATE + 10 YEARS], UP TO
[[NO.SHS.]] fully paid and nonassessable shares of the Company's Class A Common
Stock at the purchase price per share of [PRICE] (such purchase price per share
as adjusted from time to time as herein provided is referred to herein as the
"Exercise Price"). The number and character of such shares of Class A Common
Stock and the Exercise Price are subject to adjustment as provided herein.
As used herein the following terms, unless the context otherwise requires,
have the following respective meanings:
(a) "Company" includes any corporation which shall succeed to or
assume the obligations of the Company hereunder.
(b) "Class A Common Stock" shall mean the Company's Class A Common
Stock, par value $.01 per share.
(c) "Person" shall mean any individual, corporation, partnership,
trust or unincorporated organization, or any government or any agency or
political subdivision thereof.
19
<PAGE>
EXHIBIT 4.1
1. EXERCISE OF WARRANT. This Warrant may be exercised in full or in part by
the holder hereof by surrender of this Warrant, with the form of subscription
attached as Annex A hereto duly executed by such holder, to the Company at its
principal office, accompanied by payment, in cash or by certified or official
bank check payable to the order of the Company, of the purchase price of the
shares of Class A Common Stock to be purchased hereunder. For any partial
exercise, the holder shall designate in the subscription the number of shares of
Class A Common Stock (without giving effect to any adjustment therein) that it
wishes to purchase. On any such partial exercise, the Company at its expense
will forthwith issue and deliver to or upon the order of the holder hereof a new
Warrant or warrants of like tenor in the name of the holder hereof or as such
holder (upon payment by such holder of any applicable transfer taxes) may
request, calling in the aggregate on the face or faces thereof for the number of
shares of Class A Common Stock equal (without giving effect to any adjustment
therein) to the number of such shares called for on the face of this Warrant
minus the number of such shares designated by the holder in the subscription.
2. DELIVERY OF STOCK CERTIFICATES, ETC. ON EXERCISE. As soon as practicable
after the exercise of this Warrant in full or in part, and in any event within
ten (10) days thereafter, the Company at its expense (including the payment by
it of any applicable issue taxes) will cause to be issued in the name of and
delivered to the holder hereof, or as such holder (upon payment by such holder
of any applicable transfer taxes) may direct, a certificate or certificates for
the number of fully paid and nonassessable shares (including fractional shares)
of Class A Common Stock to which such holder shall be entitled upon such
exercise, together with any other stock or securities or property to which such
holder is entitled.
3. STOCK SPLITS, SUBDIVISIONS AND COMBINATIONS. Appropriate adjustment
shall be made in the number of shares of Class A Common Stock subject to this
Warrant and in the number, kind and purchase price for shares covered by this
Warrant, to the extent it is outstanding, to give effect to any stock splits,
subdivisions, combinations, and other similar changes in the capital structure
of the Company after the issuance of this Warrant.
4. ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER, ETC. In case the
Company after the date hereof shall (a) effect a capital reorganization, (b)
consolidate with or merge with or into any other person, or (c) transfer all or
substantially all of its assets to any other person under any plan or
arrangement contemplating the dissolution of the Company within twenty-four (24)
months from the date of such transfer, then, in each such case, the holder of
this Warrant, on exercise hereof at any time after the consummation of such
reorganization, consolidation or merger or the effective date of such
dissolution, as the case may be, shall receive, in lieu of the Class A Common
Stock issuable upon such exercise prior to such consummation or such effective
date, the stock and other securities and property (including cash) to which such
holder would have been entitled upon such consummation or in connection with
such dissolution, as the case may be, if such holder had exercised this Warrant
immediately prior thereto. Upon any reorganization, consolidation, merger or
transfer (and any dissolution following any transfer) referred to in this
Section 4, this Warrant shall continue in full force and effect and the terms
hereof shall be applicable to the shares of stock and other securities and
property receivable on the exercise hereof after the consummation of such
reorganization, consolidation or merger or the effective date of dissolution
following any such transfer, as the case may be, and shall be binding upon the
issuer of any such stock or other securities or property, including, in the case
of any such transfer, the person acquiring all or substantially all of the
properties or assets of the Company.
20
<PAGE>
EXHIBIT 4.1
5. NOTICE OF RECORD DATE, ETC. In the event of:
(a) any taking by the Company of a record of the holders of any class
of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any
class or any other securities or property, or to receive any other right,
(b) any capital reorganization of the Company or any reclassification
or recapitalization of the capital stock of the Company after the date
hereof, or any transfer of all or substantially all the assets of the
Company to or consolidation or merger of the Company with or into any other
person,
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company, or
(d) any proposed issue or grant by the Company of any shares of stock
of any class or any other securities, or any right or option to subscribe
for, purchase or otherwise acquire any shares of stock of any class or any
other securities,
then, and in each such event, the Company will mail to the holder hereof a
notice specifying (i) the date on which any such record is to be taken for the
purpose of such dividend, distribution or right, and stating the amount and
character of such dividend, distribution or right, or (ii) the date on which any
such reorganization, reclassification, recapitalization, transfer,
consolidation, merger, dissolution, liquidation or winding-up is to take place,
and the time, of any is to be fixed, as of which the holders of record of Class
A Common Stock or other securities shall be entitled to exchange their shares of
Class A Common Stock or other securities for securities or other property
deliverable on such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or winding-up, or
(iii) the amount and character of any stock or other securities, or rights or
options with respect thereto, proposed to be issued or granted, the date of such
proposed issue or grant and the persons or class of persons to whom such
proposed issue or grant is to be offered or made. Such notice shall be mailed at
least ten (10) days prior to the date therein specified.
6. RESERVATION OF SHARES, ETC. The Company will at all times reserve and
keep available out of its authorized capital stock, solely for the purpose of
issuance upon exercise of this Warrant as herein provided, such number of shares
of Class A Common Stock as shall then be issuable upon exercise of this Warrant
in full. The Company covenants that all shares of Class A Common Stock that
shall be issuable upon exercise of this warrant shall be duly and validly issued
and fully paid and nonassessable and free from all taxes, liens and charges with
respect to the issue thereof.
7. EXCHANGE OF WARRANTS. On surrender for exchange of any Warrant, properly
endorsed, to the Company, the Company at its expense will issue and deliver to
or on the order of the holder thereof a new Warrant of like tenor, in the name
of such holder or as such holder (on payment by such holder of any applicable
transfer taxes) may direct, calling in the aggregate on the face or faces
thereof for the number of shares of Class A Common Stock called for on the face
or faces of the Warrant or Warrants so surrendered.
21
<PAGE>
EXHIBIT 4.1
8. REPLACEMENT OF WARRANTS. On receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of any Warrant and,
in the case of any such loss, theft or destruction of any Warrant, on delivery
of an indemnity agreement reasonably satisfactory in form and amount to the
Company or, in the case of any such mutilation, on surrender and cancellation of
such warrant, the Company at its expense will execute and deliver, in lieu
thereof, a new Warrant of like tenor.
9. MISCELLANEOUS. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought. This Warrant is being delivered in the State of Delaware and shall be
construed and enforced in accordance with and governed by its laws. The headings
in this Warrant are for purposes of reference only, and shall not limit or
otherwise affect any of the terms hereof.
10. EXPIRATION. The right to exercise this Warrant shall expire at 5:00
p.m., Delaware time, [ISSUE DATE + 10 YEARS].
Dated: [ISSUE DATE]
(Corporate Seal) BITSTREAM INC.
By: ______________________________
Name:
Title:
22
<PAGE>
EXHIBIT 4.1
BITSTREAM INC. Class A Common Stock Purchase Warrant [Issue Date]
To [[first name]] [[last name]] Annex A
FORM OF SUBSCRIPTION
To be signed only upon exercise of Warrant)
TO BITSTREAM INC.
The undersigned holder of the within Warrant hereby irrevocably elects to
exercise the purchase right represented by such Warrant for, and to purchase
thereunder, _______ shares of the Class A Common Stock of Bitstream Inc., and
herewith makes payment of $______________ therefor, and requests that the
certificates for such shares be issued in the name of, and delivered to
__________________ whose address is ________________________.
___________________________________________
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant or Assignment of Warrant)
Dated:
----------------------- --------------------------------------------
(Address)
Signed in the presence of:
-----------------------------
23
<PAGE>
EXHIBIT 4.1
BITSTREAM INC. Class A Common Stock Purchase Warrant [Issue Date]
To [[first name]] [[last name]] Annex B
FORM OF ASSIGNMENT
(To be signed only upon transfer of Warrant)
For value received, the undersigned hereby sells, assigns, and transfers
unto ____________________ the right represented by the within Warrant to
purchase __________ shares of Class A Common Stock of Bitstream Inc. to which
the within Warrant relates, and appoints ____________________ Attorney to
transfer such right on the books of Bitstream Inc. with full power of
substitution in the premises.
___________________________________________
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant or Assignment of Warrant)
Dated:
----------------------- --------------------------------------------
(Address)
Signed in the presence of:
-----------------------------
24
<PAGE>
EXHIBIT 4.1
Exhibit 8C
BITSTREAM INC.
Non-Qualified Stock Option Agreement
Under 2000 Stock Plan
Bitstream Inc., a Delaware business corporation (the "Company"), hereby
grants this ___ DAY OF 199_ (the "Option Date") to [[FIRST NAME]] [[LAST NAME]]
("Optionee"), an option to purchase a maximum of [[NO. SHS]] shares (the "Option
Shares") of Class A Common Stock, $.01 par value (the "Common Stock"), at the
price of $____ per share, on the following terms and conditions:
1. GRANT UNDER 2000 STOCK PLAN. This Option is granted pursuant to and is
governed by Company's 2000 Stock Plan approved by Company's directors on
February 11, 2000 (the "Plan"). Unless the context requires otherwise, terms
used herein shall have the same meaning as in the Plan.
2. GRANT AS NON-QUALIFIED OPTION, OTHER OPTIONS. This Option is intended to
be a Non-Qualified Option (rather than an incentive stock option), and the Board
intends to take appropriate action, if necessary, to achieve this result. This
Option is in addition to any other options heretofore or hereafter granted to
Optionee by Company, but a duplicate original of this instrument shall not
affect the grant of another option.
3. EXTENT OF OPTION IF BUSINESS RELATIONSHIP CONTINUES. If Optionee has
continued to serve Company or any Related Corporation in the capacity of an
employee, officer, director, agent, advisor, or consultant, including services
as a member of the Board of Advisors of Company or any Related Corporation (such
service is described herein as maintaining or being involved in a "Business
Relationship" with Company or any Related Corporation), on the following dates,
Optionee may exercise this Option for the number of Option Shares set opposite
the applicable date:
<TABLE>
<S> <C>
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One year or more, but less than two __% of the total Option Shares
years from [ISSUE DATE]
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Two years or more, but less than three an additional __% of the total
years from [ISSUE DATE] Option Shares
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Three years or more, but less than four an additional __% of the total
from [ISSUE DATE] Option Shares
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Four years or more, but less than five an additional __% of the total
from [ISSUE DATE] Option Shares
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Five years or more, but less than six an additional __% of the total
years from [ISSUE DATE] Option Shares
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</TABLE>
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EXHIBIT 4.1
The foregoing rights shall cumulate while Optionee continues to maintain a
Business Relationship with Company or any Related Corporation, and may be
exercised up to and including the date that falls ten (10) years from the date
this Option is granted. All of the foregoing rights fall subject to Sections 4
and 5, as appropriate, if Optionee ceases to maintain a Business Relationship
with Company or a Related Corporation, dies, becomes disabled or undergoes
dissolution while involved in a Business Relationship with Company or a Related
Corporation.
4. TERMINATION OF BUSINESS RELATIONSHIP. If Optionee ceases to maintain a
Business Relationship with Company or any Related Corporation, other than by
reason of death or disability as defined in Section 5, no further installments
of this Option shall vest or become exercisable from and after the date Optionee
no longer maintains a Business Relationship with the Company or any Related
Corporation and this option may only be exercised, to the extent of the number
of Option Shares with respect to which Optionee could have exercised it on the
date the Business Relationship ceased, at any time within [Insert Time Period]
after the date Optionee ceased to maintain a Business Relationship with the
Company or any Related Corporation, but in no event later than the scheduled
expiration date. At the expiration of such [Insert Time Period] or the scheduled
expiration date, whichever occurs earlier, this Option shall terminate and the
only rights hereunder shall be those as to which the Option was properly
exercised before such termination.
5. DEATH; DISABILITY. If Optionee is a natural person who dies while
involved in a Business Relationship with Company or any Related Corporation, no
further installments of this Option shall vest or become exercisable from and
after the date of death and this Option may only be exercised, to the extent of
the number of Option Shares with respect to which Optionee could have exercised
it on the date of his death, by his estate, personal representative or
beneficiary to whom this Option has been assigned pursuant to Section 10, at any
time within [Insert Time Period] after the date of death, but not later than the
scheduled expiration date. If Optionee is a natural person whose Business
Relationship with Company and all Related Corporations is terminated by reason
of his disability (as defined in the Plan), no further installments of this
Option shall vest or become exercisable from and after the date such Business
Relationship is terminated due to such disability and this Option may only be
exercised, to the extent of the number of option Shares with respect to which
Optionee could have exercised it on the date the Business Relationship of the
Optionee with the Company and all Related Corporations was terminated, at any
time within [Insert Time Period] after the date of such termination but not
later than the scheduled expiration date. At the expiration of such [Insert Time
Period] or the scheduled expiration date, whichever occurs earlier, this Option
shall terminate and the only rights hereunder shall be those as to which the
Option was properly exercised before such termination.
6. PARTIAL EXERCISE. Exercise of this Option up to the extent above stated
may be made in part at any time and from time to time within the above limits,
except that this Option may not be exercised for a fraction of a share unless
such exercise is for the final installment of stock subject to this Option and a
fractional share (or cash in lieu thereof) must be issued to permit Optionee to
exercise such final installment completely. Any fractional share for which an
installment of this Option cannot be exercised because of the preceding sentence
shall remain subject to this Option and available for later purchase by Optionee
in accordance with the terms hereof.
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EXHIBIT 4.1
7. PAYMENT OF PRICE. The option price shall be payable in United States
dollars and may be paid:
(a) in cash or by check, or any combination of the foregoing, equal in
amount to the option price; or
(b) in the discretion of the Board, in cash, by check, by delivery of
shares of Company's Common Stock having a fair market value (as determined
by the Board) equal as of the date of exercise to the option price, or by
any combination of the foregoing, equal in amount to the option price.
8. AGREEMENT TO PURCHASE FOR INVESTMENT. By acceptance of this Option
Optionee agrees that a purchase of Option Shares under this Option will not be
made with a view to their distribution as that term is used in the 1933 Act
unless in the opinion of counsel to Company such distribution complies with or
stands exempt from the registration and prospectus requirements of the 1933 Act
and applicable state securities laws, and Optionee agrees to sign a certificate
to such effect at the time of exercising this Option and agrees that the
certificate for the Option Shares so purchased may be inscribed with a legend to
ensure compliance with the 1933 Act and applicable state securities laws.
In the event that for any reason the Option Shares to be issued upon exercise of
the Option shall not be effectively registered under the 1933 Act, upon any date
on which the Option is exercised in whole or in part, the person exercising the
Option shall give a written representation to the Company in the form reasonably
required by the Company and the Company shall place an "investment legend,"
so-called, upon any certificate for the Shares issued by reason of such
exercise.
9. METHOD OF EXERCISING OPTION. Subject to the terms and conditions of this
Agreement, this Option may be exercised by written notice to Company, at the
principal executive office of Company, or to such transfer agent as Company
shall designate. Such notice shall state the election to exercise this Option
and the number of Option Shares in respect of which it is being exercised and
shall be signed by the person or persons so exercising this Option. Such notice
shall be accompanied by payment of the full purchase price of such Option
Shares, and Company shall deliver a certificate or certificates representing
such Option Shares as soon as practicable after the notice shall be received.
The certificate or certificates for the Option Shares as to which this Option
shall have been so exercised shall be registered in the name of the person or
persons so exercising this Option (or, if this Option shall be exercised by
Optionee and if Optionee shall so request in the notice exercising this Option,
shall be registered in the name of Optionee and another person jointly, with
right of survivorship) and shall be delivered as provided above to or upon the
written order of the person or persons exercising this Option. In the event this
Option shall be exercised, pursuant to Section 5 hereof, by any person or
persons other than Optionee, such notice shall be accompanied by appropriate
proof of the right of such person or persons to exercise this Option. All Option
Shares that shall be purchased upon the exercise of this Option as provided
herein shall be fully paid and nonassessable.
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EXHIBIT 4.1
10. OPTION NOT TRANSFERABLE. This Option shall not be transferred or
assigned except by will or by the laws of descent and distribution. During
Optionee's lifetime only Optionee can exercise this Option.
11. NO OBLIGATION TO EXERCISE OPTION. The grant and acceptance of this
Option imposes no obligation on Optionee to exercise it.
12. NO OBLIGATION TO CONTINUE BUSINESS RELATIONSHIP. Neither the Plan nor
this Option shall obligate Company or any Related Corporation in any manner to
continue to maintain a Business Relationship with Optionee.
13. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. Optionee shall enjoy no rights
as a stockholder with respect to Option Shares subject to this Agreement until a
stock certificate therefor has been issued to Optionee and it is fully paid for
by Optionee. Except as expressly provided in the Plan for changes in the
capitalization of Company, no adjustment shall be made for dividends or similar
rights for which the record date precedes the date upon which such stock
certificate is issued.
14. CAPITAL CHANGES AND BUSINESS SUCCESSIONS. This Option is intended to
encourage Optionee to work for the best interests of Company and its
stockholders. To protect Optionee's interest in this Option, the provisions of
the Plan that preserve options at full value in a number of contingencies are
hereby made applicable hereunder and are incorporated herein by reference. Thus,
this Option and the Option price shall be equitably adjusted in the event of any
stock dividend, stock split, recapitalization or other change in the capital
structure of Company. In the event of any stock dividend, stock split,
recapitalization or other change in the capital structure of Company, this
Option and the Option price shall be equitably adjusted and, in lieu of issuing
fractional shares upon exercise thereof, this Option (and the corresponding
Option Shares) shall be rounded upward or downward to the nearest whole share
(rounding upward for all amounts equal to or in excess of .51). In particular,
without affecting the generality of the foregoing, Optionee understands that for
the purposes of Sections 3 through 5 hereof, inclusive, maintaining or being
involved in a Business Relationship with Company includes maintaining or being
involved in a Business Relationship with a Related Corporation.
15. WITHHOLDING TAXES. Optionee hereby agrees that Company may withhold
from Optionee's wages or other remuneration the appropriate amount of federal,
state and local taxes attributable to Optionee's exercise of any installment of
this Option. At Company's discretion, the amount required to be withheld may be
withheld in cash from such wages or other remuneration, or in Common Stock from
the Common Stock otherwise deliverable to Optionee on exercise of this Option;
provided however, no such withholding may be made by an optionee who is an
"officer" or "director" within the meaning of the Exchange Act, except pursuant
to a standing election to so withhold Common Stock purchased upon exercise of an
Option, such election to be made in the form set forth in Exhibit 1 hereto and
to be made not less than six months prior to the date of such exercise. Such
election may be revoked by the optionee only upon six months prior written
notice to the Company. Optionee further agrees that, if Company does not
withhold an amount from Optionee's wages or other remuneration sufficient to
satisfy Company's withholding obligation, Optionee will reimburse Company on
demand, in cash, for the amount underwithheld.
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EXHIBIT 4.1
16. NO EXERCISE OF OPTION IF EMPLOYMENT TERMINATED FOR MISCONDUCT. If the
employment or engagement of Optionee is terminated for "Misconduct", this Option
shall terminate on the date of such termination and this Option shall thereupon
not be exercisable to any extent whatsoever. "Misconduct" is conduct, as
determined by the Board, involving one or more of the following: (i) disloyalty,
gross negligence, dishonesty or breach of fiduciary duty to Company or any
Related Corporation; or (ii) the commission of an act of embezzlement, fraud or
deliberate disregard of the rules or policies of Company which results in loss,
damage or injury to Company or any Related Corporation; or (iii) the
unauthorized disclosure of any trade secret or confidential information of
Company or any Related Corporation; or (iv) the commission of an act which
constitutes unfair competition with Company or any Related Corporation or which
induces any customer of Company or any Related Corporation to break a contract
with Company or any Related Corporation; or (v) the substantial and continuing
failure of Optionee to render services to Company or any Related Corporation in
accordance with his assigned duties.
17. GOVERNING LAW. This Agreement shall be governed by and interpreted in
accordance with the internal laws of the State of Delaware.
IN WITNESS WHEREOF Company and Optionee have caused this instrument to be
executed, and Optionee whose signature appears below acknowledges receipt of a
copy of the Plan and acceptance of an original copy of this Agreement.
Signature of Optionee: BITSTREAM INC.
By:
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[[first name]] [[last name]] Name:
Title:
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EXHIBIT 4.1
EXHIBIT 1
TO STOCK OPTION AGREEMENT
Gentlemen:
The undersigned Optionee hereby elects and agrees that, whenever the
undersigned exercises a stock option (including any options which now or may
hereafter be granted), the Company shall withhold from the shares issuable upon
such exercise, such number of shares as is equal in value to the federal and
state withholding taxes due upon such exercise. The undersigned further
acknowledges and agrees that this election may not be revoked without six months
prior written notice to the Company.
Optionee
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Signature
Name:
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(Printed)
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Social Security
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