Exhibit 4.2
ARS NETWORKS,
INCORPORATED
NON-EMPLOYEE DIRECTORS AND CONSULTANTS RETAINER STOCK PLAN FOR
THE
YEAR 2004 No. 4
1.
Introduction . This Plan shall be known as the "ARS
Networks, Incorporated Non-Employee Directors and Consultants
Retainer Stock Plan for the Year 2004 No. 4," and is hereinafter
referred to as the "Plan." The purposes of this Plan are to
enable ARS Networks, Incorporated, a New Hampshire corporation (the
"Company"), to promote the interests of the Company and its
stockholders by attracting and retaining non-employee Directors and
Consultants capable of furthering the future success of the Company
and by aligning their economic interests more closely with those of
the Company's stockholders, by paying their retainer or fees in the
form of shares of the Company's common stock, par value $0.0001 per
share (the "Common Stock").
2.
Definitions . The following terms shall have the
meanings set forth below:
"Board" means the Board of Directors
of the Company.
"Change of Control" has the meaning
set forth in Paragraph 12(d) hereof.
"Code" means the Internal Revenue
Code of 1986, as amended, and the rules and regulations thereunder.
References to any provision of the Code or rule or regulation
thereunder shall be deemed to include any amended or successor
provision, rule or regulation.
"Committee" means the committee that
administers this Plan, as more fully defined in Paragraph 13
hereof.
"Common Stock" has the meaning set
forth in Paragraph 1 hereof.
"Company" has the meaning set forth
in Paragraph 1 hereof.
"Consultants" means Company's
consultants and advisors only if: (i) they are natural persons;
(ii) they provide bona fide services to the Company; and (iii) the
services are not in connection with the offer or sale of securities
in a capital-raising transaction, and do not directly or indirectly
promote or maintain a market for the Company's securities.
"Deferral Election" has the meaning
set forth in Paragraph 6 hereof.
"Deferred Stock Account" means a
bookkeeping account maintained by the Company for a Participant
representing the Participant's interest in the shares credited to
such Deferred Stock Account pursuant to Paragraph 7 hereof.
"Delivery Date" has the meaning set
forth in Paragraph 6 hereof.
"Director" means an individual who is
a member of the Board of Directors of the Company.
"Dividend Equivalent" for a given
dividend or other distribution means a number of shares of the
Common Stock having a Fair Market Value, as of the record date for
such dividend or distribution, equal to the amount of cash, plus
the Fair Market Value on the date of distribution of any property,
that is distributed with respect to one share of the Common Stock
pursuant to such dividend or distribution; such Fair Market Value
to be determined by the Committee in good faith.
"Effective Date" has the meaning set
forth in Paragraph 3 hereof.
"Exchange Act" has the meaning set
forth in Paragraph 12(d) hereof.
1
"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.
"Participant" has the meaning set
forth in Paragraph 4 hereof.
"Payment Time" means the time when a
Stock Retainer is payable to a Participant pursuant to Paragraph 5
hereof (without regard to the effect of any Deferral Election).
"Stock Retainer" has the meaning set
forth in Paragraph 5 hereof.
"Third Anniversary" has the meaning
set forth in Paragraph 6 hereof.
3.
Effective Date of the Plan . This Plan was adopted by
the Board effective September 17, 2004 (the "Effective Date").
4.
Eligibility . Each individual who is a Director or
Consultant on the Effective Date and each individual who becomes a
Director or Consultant thereafter during the term of this Plan,
shall be a participant (the "Participant") in this Plan, in each
case during such period as such individual remains a Director or
Consultant and is not an employee of the Company or any of its
subsidiaries. Each credit of shares of the Common Stock
pursuant to this Plan shall be evidenced by a written agreement
duly executed and delivered by or on behalf of the Company and a
Participant, if such an agreement is required by the Company to
assure compliance with all applicable laws and regulations.
5.
Grants of Shares . Commencing on the Effective Date,
the amount of compensation for service to directors or consultants
shall be payable in shares of the Common Stock (the "Stock
Retainer") pursuant to this Plan. The deemed issuance price
of shares of the Common Stock subject to each Stock Retainer shall
not be less than 85 percent of the Fair Market Value of the Common
Stock on the date of the grant. In the case of any person who
owns securities possessing more than ten percent of the combined
voting power of all classes of securities of the issuer or its
parent or subsidiaries possessing voting power, the deemed issuance
price of shares of the Common Stock subject to each Stock Retainer
shall be at least 100 percent of the Fair Market Value of the
Common Stock on the date of the grant.
6.
Deferral Option . From and after the Effective Date, a
Participant may make an election (a "Deferral Election") on an
annual basis to defer delivery of the Stock Retainer specifying
which one of the following ways the Stock Retainer is to be
delivered (a) on the date which is three years after the Effective
Date for which it was originally payable (the "Third Anniversary"),
(b) on the date upon which the Participant ceases to be a Director
or Consultant for any reason (the "Departure Date") or (c) in five
equal annual installments commencing on the Departure Date (the
"Third Anniversary" and "Departure Date" each being referred to
herein as a "Delivery Date"). Such Deferral Election shall
remain in effect for each Subsequent Year unless changed, provided
that, any Deferral Election with respect to a particular Year may
not be changed less than six months prior to the beginning of such
Year, and provided, further, that no more than one Deferral
Election or change thereof may be made in any Year.
2
Any Deferral Election and any change
or revocation thereof shall be made by delivering written notice
thereof to the Committee no later than six months prior to the
beginning of the Year in which it is to be effected; provided that,
with respect to the Year beginning on the Effective Date, any
Deferral Election or revocation thereof must be delivered no later
than the close of business on the 30th day after the Effective
Date.
7.
Deferred Stock Accounts . The Company shall maintain a
Deferred Stock Account for each Participant who makes a Deferral
Election to which shall be credited, as of the applicable Payment
Time, the number of shares of the Common Stock payable pursuant to
the Stock Retainer to which the Deferral Election relates. So
long as any amounts in such Deferred Stock Account have not been
delivered to the Participant under Paragraph 8 hereof, each
Deferred Stock Account shall be credited as of the payment date for
any dividend paid or other distribution made with respect to the
Common Stock, with a number of shares of the Common Stock equal to
(a) the number of shares of the Common Stock shown in such Deferred
Stock Account on the record date for such dividend or distribution
multiplied by (b) the Dividend Equivalent for such dividend or
distribution.
8.
Delivery of Shares .
(a) The
shares of the Common Stock in a Participant's Deferred Stock
Account with respect to any Stock Retainer for which a Deferral
Election has been made (together with dividends attributable to
such shares credited to such Deferred Stock Account) shall be
delivered in accordance with this Paragraph 8 as soon as
practicable after the applicable Delivery Date. Except with
respect to a Deferral Election pursuant to Paragraph 6 hereof, or
other agreement between the parties, such shares shall be delivered
at one time; provided that, if the number of shares so delivered
includes a fractional share, such number shall be rounded to the
nearest whole number of shares. If the Participant has in
effect a Deferral Election pursuant to Paragraph 6 hereof, then
such shares shall be delivered in five equal annual installments
(together with dividends attributable to such shares credited to
such Deferred Stock Account), with the first such installment being
delivered on the first anniversary of the Delivery Date; provided
that, if in order to equalize such installments, fractional shares
would have to be delivered, such installments shall be adjusted by
rounding to the nearest whole share. If any such shares are
to be delivered after the Participant has died or become legally
incompetent, they shall be delivered to the Participant's estate or
legal guardian, as the case may be, in accordance with the
foregoing; provided that, if the Participant dies with a Deferral
Election pursuant to Paragraph 6 hereof in effect, the Committee
shall deliver all remaining undelivered shares to the Participant's
estate immediately. References to a Participant in this Plan
shall be deemed to refer to the Participant's estate or legal
guardian, where appropriate.
(b) The
Company may, but shall not be required to, create a grantor trust
or utilize an existing grantor trust (in either case, "Trust") to
assist it in accumulating the shares of the Common Stock n
