Exhibit
4.1
ARS NETWORKS,
INCORPORATED
EMPLOYEE STOCK INCENTIVE PLAN FOR THE YEAR 2004 No.
2
1.
General Provisions .
1.1
Purpose . This Stock Incentive Plan (the "Plan") is
intended to allow designated officers and employees (all of whom
are sometimes collectively referred to herein as the "Employees,"
or individually as the "Employee") of ARS Networks, Incorporated, a
New Hampshire corporation (the "Company") and its Subsidiaries (as
that term is defined below) which they may have from time to time
(the Company and such Subsidiaries are referred to herein as the
"Company") to receive certain options (the "Stock Options") to
purchase common stock of the Company, par value $0.0001 per share
(the "Common Stock"), and to receive grants of the Common Stock
subject to certain restrictions (the "Awards"). As used in
this Plan, the term "Subsidiary" shall mean each corporation which
is a "subsidiary corporation" of the Company within the meaning of
Section 424(f) of the Internal Revenue Code of 1986, as amended
(the "Code"). The purpose of this Plan is to provide the
Employees, who make significant and extraordinary contributions to
the long-term growth and performance of the Company, with
equity-based compensation incentives, and to attract and retain the
Employees.
1.2
Administration .
1.2.1
The Plan shall be administered by the Compensation Committee (the
"Committee") of, or appointed by, the Board of Directors of the
Company (the "Board"). The Committee shall select one of its
members as Chairman and shall act by vote of a majority of a
quorum, or by unanimous written consent. A majority of its
members shall constitute a quorum. The Committee shall be
governed by the provisions of the Company's Bylaws and of New
Hampshire law applicable to the Board, except as otherwise provided
herein or determined by the Board.
1.2.2
The Committee shall have full and complete authority, in its
discretion, but subject to the express provisions of this Plan (a)
to approve the Employees nominated by the management of the Company
to be granted Awards or Stock Options; (b) to determine the number
of Awards or Stock Options to be granted to an Employee; (c) to
determine the time or times at which Awards or Stock Options shall
be granted; to establish the terms and conditions upon which Awards
or Stock Options may be exercised; (d) to remove or adjust any
restrictions and conditions upon Awards or Stock Options; (e) to
specify, at the time of grant, provisions relating to
exercisability of Stock Options and to accelerate or otherwise
modify the exercisability of any Stock Options; and (f) to adopt
such rules and regulations and to make all other determinations
deemed necessary or desirable for the administration of this
Plan. All interpretations and constructions of this Plan by
the Committee, and all of its actions hereunder, shall be binding
and conclusive on all persons for all purposes.
1.2.3
The Company hereby agrees to indemnify and hold harmless each
Committee member and each Employee, and the estate and heirs of
such Committee member or Employee, against all claims, liabilities,
expenses, penalties, damages or other pecuniary losses, including
legal fees, which such Committee member or Employee, his estate or
heirs may suffer as a result of his responsibilities, obligations
or duties in connection with this Plan, to the extent that
insurance, if any, does not cover the payment of such items.
No member of the Committee or the Board shall be liable for any
action or determination made in good faith with respect to this
Plan or any Award or Stock Option granted pursuant to this
Plan.
1.3
Eligibility and Participation . The Employees
eligible under this Plan shall be approved by the Committee from
those Employees who, in the opinion of the management of the
Company, are in positions which enable them to make significant
contributions to the long-term performance and growth of the
Company. In selecting the Employees to whom Award or Stock
Options may be granted, consideration shall be given to factors
such as employment position, duties and responsibilities, ability,
productivity, length of service, morale, interest in the Company
and recommendations of supervisors.
1
1.4
Shares Subject to this Plan . The maximum number of
shares of the Common Stock that may be issued pursuant to this Plan
shall be 350,000,000 subject to adjustment pursuant to the
provisions of Paragraph 4.1. If shares of the Common Stock
awarded or issued under this Plan are reacquired by the Company due
to a forfeiture or for any other reason, such shares shall be
cancelled and thereafter shall again be available for purposes of
this Plan. If a Stock Option expires, terminates or is
cancelled for any reason without having been exercised in full, the
shares of the Common Stock not purchased thereunder shall again be
available for purposes of this Plan. In the event that any
outstanding Stock Option or Award under this Plan for any reason
expires or is terminated, the shares of Common Stock allocable to
the unexercised portion of the Stock Option or Award shall be
available for issuance under the ARS Networks, Incorporated
Non-Employee Directors and Consultants Retainer Stock Plan for the
Year 2004 No. 2.
2.
Provisions Relating to Stock Options .
2.1
Grants of Stock Options . The Committee may grant
Stock Options in such amounts, at such times, and to the Employees
nominated by the management of the Company as the Committee, in its
discretion, may determine. Stock Options granted under this
Plan shall constitute "incentive stock options" within the meaning
of Section 422 of the Code, if so designated by the Committee on
the date of grant. The Committee shall also have the
discretion to grant Stock Options which do not constitute incentive
stock options, and any such Stock Options shall be designated
non-statutory stock options by the Committee on the date of
grant. The aggregate Fair Market Value (determined as of the
time an incentive stock option is granted) of the Common Stock with
respect to which incentive stock options are exercisable for the
first time by any Employee during any one calendar year (under all
plans of the Company and any parent or subsidiary of the Company)
may not exceed the maximum amount permitted under Section 422 of
the Code (currently, $100,000.00). Non-statutory stock
options shall not be subject to the limitations relating to
incentive stock options contained in the preceding sentence.
Each Stock Option shall be evidenced by a written agreement (the
"Option Agreement") in a form approved by the Committee, which
shall be executed on behalf of the Company and by the Employee to
whom the Stock Option is granted, and which shall be subject to the
terms and conditions of this Plan. In the discretion of the
Committee, Stock Options may include provisions (which need not be
uniform), authorized by the Committee in its discretion, that
accelerate an Employee's rights to exercise Stock Options following
a "Change in Control," upon termination of the Employee's
employment by the Company without "Cause" or by the Employee for
"Good Reason," as such terms are defined in Paragraph 3.1
hereof. The holder of a Stock Option shall not be entitled to
the privileges of stock ownership as to any shares of the Common
Stock not actually issued to such holder.
2.2
Purchase Price . The purchase price
(the "Exercise Price") of shares of the Common Stock subject to
each Stock Option (the "Option Shares") shall not be less than 85
percent of the Fair Market Value of the Common Stock on the date of
exercise. For an Employee holding greater than 10 percent of
the total voting power of all stock of the Company, either Common
or Preferred, the Exercise Price of an incentive stock option shall
be at least 110 percent of the Fair Market Value of the Common
Stock on the date of the grant of the option. As used herein,
"Fair Market Value" means the mean between the highest and lowest
reported sales prices of the Common Stock on the New York Stock
Exchange Composite Tape or, if not listed on such exchange, on any
other national securities exchange on which the Common Stock is
listed or on The Nasdaq Stock Market, or, if not so listed on any
other national securities exchange or The Nasdaq Stock Market, then
the average of the bid price of the Common Stock during the last
five trading days on the OTC Bulletin Board immediately preceding
the last trading day prior to the date with respect to which the
Fair Market Value is to be determined. If the Common Stock is
not then publicly traded, then the Fair Market Value of the Common
Stock shall be the book value of the Company per share as
determined on the last day of March, June, September, or December
in any year closest to the date when the determination is to be
made. For the purpose of determining book value hereunder,
book value shall be determined by adding as of the applicable date
called for herein the capital, surplus, and undivided profits of
the Company, and after having deducted any reserves theretofore
established; the sum of these items shall be divided by the number
of shares of the Common Stock outstanding as of said date, and the
quotient thus obtained shall represent the book value of each share
of the Common Stock of the Company.
2
2.3
Option Period . The Stock Option period (the "Term")
shall commence on the date of grant of the Stock Option and shall
be 10 years or such shorter period as is determined by the
Committee. Each Stock Option shall provide that it is
exercisable over its term in such periodic installments as the
Committee may determine, subject to the provisions of Paragraph
2.4.1. Section 16(b) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act") exempts persons normally subject to
the reporting requirements of Section 16(a) of the Exchange Act
(the "Section 16 Reporting Persons") pursuant to a qualified
employee stock option plan from the normal requirement of not
selling until at least six months and one day from the date the
Stock Option is granted.
2.4
Exercise of Options .
2.4.1
Each Stock Option may be exercised in whole or in part (but not as
to fractional shares) by delivering it for surrender or endorsement
to the Company, attention of the Corporate Secretary, at the
principal office of the Company, together with payment of the
Exercise Price and an executed Notice and Agreement of Exercise in
the form prescribed by Paragraph 2.4.2. Payment may be made
(a) in cash, (b) by cashier's or certified check, (c) by surrender
of previously owned shares of the Common Stock valued pursuant to
Paragraph 2.2 (if the Committee authorizes payment in stock in its
discretion), (d) by withholding from the Option Shares which would
otherwise be issuable upon the exercise of the Stock Option that
number of Option Shares equal to the exercise price of the Stock
Option, if such withholding is authorized by the Committee in its
discretion, or (e) in the discretion of the Committee, by the
delivery to the Company of the optionee's promissory note secured
by the Option Shares, bearing interest at a rate sufficient to
prevent the imputation of interest under Sections 483 or 1274 of
the Code, and having such other terms and conditions as may be
satisfactory to the Committee. Subject to the provisions of
this Paragraph 2.4 and Paragraph 2.5, the Employee has the right to
exercise his or her Stock Options at the rate of at least 20
percent per year over five years from the date the Stock Option is
granted.
2.4.2
Exercise of each Stock Option is conditioned upon the agreement of
the Employee to the terms and conditions of this Plan and of such
Stock Option as evidenced by the Employee's execution and delivery
of a Notice and Agreement of Exercise in a form to be determined by
the Committee in its discretion. Such Notice and Agreement of
Exercise shall set forth the agreement of the Employee that (a) no
Option Shares will be sold or otherwise distributed in violation of
the Securities Act of 1933, as amended (the "Securities Act") or
any other applicable federal or state securities laws, (b) each
Option Share certificate may be imprinted with legends reflecting
any applicable federal and state securities law restrictions and
conditions, (c) the Company may comply with said securities law
restrictions and issue "stop transfer" instructions to its Transfer
Agent and Registrar without liability, (d) if the Employee is a
Section 16 Reporting Person, the Employee will furnish to the
Company a copy of each Form 4 or Form 5 filed by said Employee and
will timely file all reports required under federal securities
laws, and (e) the Employee will report all sales of Option Shares
to the Company in writing on a form prescribed by the
Company.
2.4.3
No Stock Option shall be exercisable unless and until any
applicable registration or qualification requirements of federal
and state securities laws, and all other legal requirements, have
been fully complied with. At no time shall the total number
of securities issuable upon exercise of all outstanding options
under this Plan, and the total number of securities provided for
under any bonus or similar plan or agreement of the Company exceed
a number of securities which is equal to 30 percent of the then
outstanding securities of the Company, unless a percentage higher
than 30 percent is approved by at least two-thirds of the
outstanding securities entitled to vote. The Company will use
reasonable efforts to maintain the effectiveness of a Registration
Statement under the Securities Act for the issuance of Stock
Options and shares acquired thereunder, but there may be times when
no such Registration Statement will be currently effective.
The exercise of Stock Options may be temporarily suspended without
liability to the Company during times when no such Registration
Statement is currently effective, or during times when, in the
reasonable opinion of the Committee, such suspension is necessary
to preclude violation of any requirements of applicable law or
regulatory bodies having jurisdiction over the Company. If
any Stock Option would expire for any reason except the end of its
term during such a suspension, then if exercise of such Stock
Option is duly tendered before its expiration, such Stock Option
shall be exercisable and exercised (unless the attempted exercise
is withdrawn) as of the first day after the end of such
suspension. The Company shall have no obligation to file any
Registration Statement covering resales of Option
Shares.
3
2.5
Continuous Employment . Except as provided in
Paragraph 2.7 below, an Employee may not exercise a Stock Option
unless from the date of grant to the date of exercise the Employee
remains continuously in the employ of the Company. For
purposes of this Paragraph 2.5, the period of continuous employment
of an Employee with the Company shall be deemed to include (without
extending the term of the Stock Option) any period during which the
Employee is on leave of absence with the consent of the Company,
provided that such leave of absence shall not exceed three months
and that the Employee returns to the employ of the Company at the
expiration of such leave of absence. If the Employee fails to
return to the employ of the Company at the expiration of such leave
of absence, the Employee's employment with the Company shall be
deemed terminated as of the date such leave of absence
commenced. The continuous employment of an Employee with the
Company shall also be deemed to include any period during which the
Employee is a member of the Armed Forces of the United
State
