Exhibit
4.2
ARS NETWORKS,
INCORPORATED
NON-EMPLOYEE DIRECTORS AND CONSULTANTS RETAINER STOCK PLAN FOR
THE
YEAR 2004 No. 2
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. 2," 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.
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"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 May 3, 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 at the deemed issuance
price of $0.0016 per Share.
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.
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.
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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 needed to fulfill its obligations under this Paragraph
8. However, Participants shall have no beneficial or other
interest in the Trust and the assets thereof, and their rights
under this Plan shall be as general creditors of the Company,
unaffected by the existence or nonexistence of the Trust, except
that deliveries of Stock Retainers to Participants from the Trust
shall, to the extent thereof, be treated as satisfying the
Company's obligations under this Paragraph 8.
9.
Share Certificates; Voting and
