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                                                                     EXHIBIT 4.1

                                 ORTHOVITA, INC.
                          1997 EQUITY COMPENSATION PLAN

                     As Amended and Restated on May 27, 1998
                        and amended through May 24, 2002

     The purpose of the Orthovita, Inc. 1997 Equity Compensation Plan (the
"Plan") is to provide (i) designated key employees of Orthovita, Inc. (the
"Company") and its subsidiaries, (ii) consultants who perform valuable services
for the Company or its subsidiaries and (iii) non-employee members of the Board
of Directors of the Company (the "Board") with the opportunity to receive grants
of incentive stock options, nonqualified stock options, stock appreciation
rights and restricted stock. The Company believes that the Plan will cause the
participants to contribute materially to the growth of the Company, thereby
benefitting the Company's shareholders, and will align the economic interests of
the participants with those of the shareholders.

     1.   Administration

     (a)  The Plan shall be administered and interpreted by the Board or by a
committee consisting of two or more persons appointed by the Board. However, the
Board must approve all grants made to members of the Board who are not employees
of the Company. Except as provided in the preceding sentence, if the Company has
a public offering of Company stock as described in Section 19(b) ("Public
Offering"), the Plan shall be administered by a committee appointed by the
Board, which may consist of "outside directors" as defined under section 162(m)
of the Internal Revenue Code of 1986, as amended (the "Code") and related
Treasury regulations, and "non-employee directors" as defined in Rule 16b-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
references in the Plan to the "Board," as they relate to administration of the
Plan, shall be deemed to refer to the committee.

     (b)  The Board shall have the sole authority to (i) determine the
individuals to whom grants shall be made under the Plan, (ii) determine the
type, size and terms of the grants to be made to each such individual, (iii)
determine the time when the grants will be made and the duration of any
applicable exercise or restriction period, including the criteria for vesting
and the acceleration of vesting, (iv) establish the terms of any non-compete
provisions applicable to grants and the terms of any applicable shareholder's
agreement, and (v) deal with any other matters arising under the Plan.

     (c)  The Board shall have full power and authority to administer and
interpret the Plan, to make factual determinations and to adopt or amend such
rules, regulations, agreements and instruments for implementing the Plan and for
the conduct of its business as it deems

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necessary or advisable, in its sole discretion. The Board's interpretations of
the Plan and all determinations made by the Board pursuant to the powers vested
in it hereunder shall be conclusive and binding on all persons having any
interest in the Plan or in any awards granted hereunder. All powers of the Board
shall be executed in its sole discretion, in the best interest of the Company
and in keeping with the objectives of the Plan and need not be uniform as to
similarly situated individuals.

     (d)  Delegation of Authority. Notwithstanding the foregoing, the Board may
delegate to the Chief Executive Officer, in his capacity as a Board member of
the Company, the authority to make grants under the Plan, which grants shall not
exceed 20,000 option shares to any person per year, to employees of the Company
and its subsidiaries who are not subject to the restrictions of section 16(b) of
the Exchange Act and who are not expected to be subject to the limitations of
section 162(m) of the Code. The grant of authority under this subsection 1(d)
shall be subject to such conditions and limitations as may be determined by the
Board.

     2.   Grants

     Awards under the Plan shall consist of grants of Incentive Stock Options
and Nonqualified Stock Options as described in Section 5 (Incentive Stock
Options and Nonqualified Stock Options are collectively referred to as
"Options"), restricted stock as described in Section 6 ("Restricted Stock") and
stock appreciation rights as described in Section 7 ("SARs") (hereinafter
collectively referred to as "Grants"). All Grants shall be subject to the terms
and conditions set forth herein and to those other terms and conditions
consistent with this Plan as the Board deems appropriate and as are specified in
writing by the Board to the individual in a grant instrument (the "Grant
Instrument") or in an amendment to the Grant Instrument. The Board shall approve
the form and provisions of each Grant Instrument. Grants under a particular
Section of the Plan need not be uniform as among the grantees.

     3.   Shares Subject to the Plan

     (a)  Subject to the adjustment specified below, the aggregate number of
shares of common stock of the Company ("Company Stock") that may be issued under
the Plan is 3,850,000 shares. After the effective date of a Public Offering, the
maximum aggregate number of shares of Company Stock that shall be subject to
Grants made under the Plan to any individual during any calendar year shall be
300,000 shares. The shares may be authorized but unissued shares of Company
Stock or reacquired shares of Company Stock, including shares purchased by the
Company on the open market for purposes of the Plan. If and to the extent
Options or SARs granted under the Plan terminate, expire, or are canceled,
forfeited, exchanged or surrendered without having been exercised, or if any
shares of Restricted Stock are forfeited, the shares subject to such Grants
shall again be available for purposes of the Plan.

     (b)  If there is any change in the number or kind of shares of Company
Stock outstanding (i) by reason of a stock dividend, spinoff, recapitalization,
stock split, or combination or exchange of shares, (ii) by reason of a merger,
reorganization or consolidation in

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which the Company is the surviving corporation, (iii) by reason of a
reclassification or change in par value, or (iv) by reason of any other
extraordinary or unusual event affecting the outstanding Company Stock as a
class without the Company's receipt of consideration, or if the value of
outstanding shares of Company Stock is substantially reduced as a result of a
spinoff or the Company's payment of an extraordinary dividend or distribution,
the maximum number of shares of Company Stock available for Grants, the maximum
number of shares of Company Stock that any individual participating in the Plan
may be granted in any year, the number of shares covered by outstanding Grants,
the kind of shares issued under the Plan, and the price per share or the
applicable market value of such Grants may be proportionately adjusted by the
Board to reflect any increase or decrease in the number or kind of issued shares
of Company Stock to preclude the enlargement or dilution of rights and benefits
under such Grants; provided, however, that any fractional shares resulting from
such adjustment shall be eliminated. The adjustments determined by the Board
shall be final, binding and conclusive.

     4.   Eligibility for Participation

     (a)  All key employees of the Company and its subsidiaries ("Employees"),
including Employees who are officers or members of the Board, shall be eligible
to participate in the Plan. Any consultants who perform valuable services to the
Company or any of its subsidiaries ("Consultants") and members of the Board who
are not Employees ("Non-Employee Directors") shall be eligible to participate in
the Plan, but shall not be eligible to receive Incentive Stock Options.
Consultants who perform services to the Company or any of its subsidiaries shall
be eligible to participate in the Plan if the Consultants refer bona fide
services and such services are not in connection with the offer or sale of
securities in a capital-raising transaction.

     (b)  The Board shall select the Employees, Consultants and Non-Employee
Directors to receive Grants and shall determine the number of shares of Company
Stock subject to a particular Grant in such manner as the Board determines.
Employees, Consultants and Non-Employee Directors who receive Grants under this
Plan shall hereinafter be referred to as "Grantees". If a committee is appointed
to administer the Plan, the Board shall nevertheless approve all Grants to
Non-Employee Directors.

     (c)  Nothing contained in this Plan shall be construed to (i) limit the
right of the Board to make Grants under this Plan in connection with the
acquisition, by purchase, lease, merger, consolidation or otherwise, of the
business or assets of any corporation, firm or association, including options
granted to employees thereof who become Employees of the Company, or for other
proper corporate purpose, or (ii) limit the right of the Company to grant stock
options or make other awards outside of this Plan.

     5.   Stock Options

     (a)  Number of Shares. The Board shall determine the number of shares of
Company Stock that will be subject to each Grant of Options to Employees,
Consultants and Non-Employee Directors.

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     (b)  Type of Option and Price.

          (i)   The Board may grant Options intended to qualify as "incentive
stock options" within the meaning of section 422 of the Code ("Incentive Stock
Options") or options that are not intended so to qualify ("Nonqualified Stock
Options") or any combination of Incentive Stock Options and Nonqualified Stock
Options, all in accordance with the terms and conditions set forth herein.

          (ii)  The purchase price (the "Exercise Price") of Company Stock
subject to an Option shall be determined by the Board and may be equal to,
greater than, or less than the Fair Market Value (as defined below) of a share
of Company Stock on the date the Option is granted; provided, however, that (x)
the Exercise Price of an Incentive Stock Option shall be equal to, or greater
than, the Fair Market Value of a share of Company Stock on the date the
Incentive Stock Option is granted and (y) an Incentive Stock Option may not be
granted to an Employee who, at the time of grant, owns stock possessing more
than 10 percent of the total combined voting power of all classes of stock of
the Company or any parent or subsidiary of the Company, unless the Exercise
Price per share is not less than 110% of the Fair Market Value of Company Stock
on the date of grant.

          (iii) If the Company Stock is traded in a public market, then the Fair
Market Value per share shall be determined as follows: (x) if the principal
trading market for the Company Stock is a national securities exchange or the
National Market segment of the Nasdaq Stock Market, the last reported sale price
thereof on the relevant date or (if there were no trades on that date) the
latest preceding date upon which a sale was reported, or (y) if the Company
Stock is not principally traded on such exchange or market, the mean between the
last reported "bid" and "asked" prices of Company Stock on the relevant date, as
reported on Nasdaq or, if not so reported, as reported by the National Daily
Quotation Bureau, Inc. or as reported in a customary financial reporting
service, as applicable and as the Board determines. If the Company Stock is not
traded in a public market or subject to reported transactions or "bid" or
"asked" quotations as set forth above, the Fair Market Value per share shall be
as determined by the Board.

     (c)  Option Term. The Board shall determine the term of each Option, which
shall not exceed ten years from the date of grant. However, an Incentive Stock
Option may not be granted to an Employee who, at the time of grant, owns stock
possessing more than 10 percent of the total combined voting power of all
classes of stock of the Company or any parent or subsidiary of the Company,
unless the Option term does not exceed five years from the date of grant.

     (d)  Exercisability of Options. Options shall become exercisable in
accordance with the terms and conditions determined by the Board and specified
in the Grant Instrument. The Board may accelerate the exercisability of any or
all outstanding Options at any time for any reason.

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     (e)  Termination of Employment, Disability or Death.

          (i)   Except as provided below, an Option may only be exercised while
the Grantee is employed by the Company as an Employee, Consultant or member of
the Board. In the event that a Grantee ceases to be employed by the Company for
any reason other than a "disability", death, or "termination for cause", any
Option which is otherwise exercisable by the Grantee shall terminate unless
exercised within 90 days of the date on which the Grantee ceases to be employed
by the Company (or within such other period of time as may be specified in the
Grant Instrument), but in any event no later than the date of expiration of the
Option term. Any of the Grantee's Options that are not otherwise exercisable as
of the date on which the Grantee ceases to be employed by the Company shall
terminate as of such date.

          (ii)  In the event the Grantee ceases to be employed by the Company on
account of a "termination for cause" by the Company, any Option held by the
Grantee shall terminate as of the date the Grantee ceases to be employed by the
Company.

          (iii) In the event the Grantee ceases to be employed by the Company
because the Grantee is "disabled", any Option which is otherwise exercisable by
the Grantee shall terminate unless exercised within one year after the date on
which the Grantee ceases to be employed by the Company (or within such other
period of time as may be specified in the Grant Instrument), but in any event no
later than the date of expiration of the Option term. Any of the Grantee's
Options which are not otherwise exercisable as of the date on which the Grantee
ceases to be employed by the Company shall terminate as of such date.

          (iv)  If the Grantee dies while employed by the Company or within 90
days after the date on which the Grantee ceases to be employed on account of a
termination of employment specified in Section 5(e)(i) above (or within such
other period of time as may be specified in the Grant Instrument), any Option
that is otherwise exercisable by the Grantee shall terminate unless exercised
within one year after the date on which the Grantee ceases to be employed by the
Company (or within such other period of time as may be specified in the Grant
Instrument), but in any event no later than the date of expiration of the Option
term. Any of the Grantee's Options that are not otherwise exercisable as of the
date on which the Grantee ceases to be employed by the Company shall terminate
as of such date.

          (v)   For purposes of this Section 5(e) and Sections 6 and 7:

                (A)  The term "Company" shall mean the Company and its
     subsidiaries.

                (B)  "Employed by the Company" shall mean employment as an
     Employee, Consultant or member of the Board (so that, for purposes of
     exercising Options and SARs and satisfying conditions with respect to
     Restricted Stock, a Grantee shall not be considered to have terminated
     employment until the Grantee ceases to be an Employee, Consultant and
     member of the Board), unless the Board determines otherwise in the Grant
     Instrument.

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                (C)  "Disability" shall mean a Grantee's becoming disabled
     within the meaning of section 22(e)(3) of the Code.

                (D)  "Termination for cause" shall mean, except to the extent
     otherwise provided in a Grantee's Grant Instrument, a finding by the Board,
     after full consideration of the facts presented on behalf of both the
     Company and the Grantee, that the Grantee has breached his or her
     employment or service contract with the Company, or has been engaged in
     disloyalty to the Company, including, without limitation, fraud,
     embezzlement, theft, commission of a felony or proven dishonesty in the
     course of his or her employment or service, or has disclosed trade secrets
     or confidential information of the Company to persons not entitled to
     receive such information. In the event a Grantee's employment is terminated
     for cause, in addition to the immediate termination of all Grants, the
     Grantee shall automatically forfeit all Option shares for any exercised
     portion of an Option for which the Company has not yet delivered the share
     certificates, upon refund by the Company of the Exercise Price paid by the
     Grantee for such shares.

     (f)  Exercise of Options.

          (i)   The Grantee shall pay the Exercise Price for an Option as
specified in the Grant Instrument (x) in cash, (y) with the approval of the
Board, by delivering shares of Company Stock owned by the Grantee (including
Company Stock acquired in connection with the exercise of an Option, subject to
such restrictions as the Board deems appropriate) and having a Fair Market Value
on the date of exercise equal to the Exercise Price or (z) through any
combination of (x) and (y). The Grantee shall pay the Exercise Price and the
amount of any withholding tax due (pursuant to Section 8) at the time of
exercise. Shares of Company Stock shall not be issued upon exercise of an Option
until the Exercise Price is fully paid and any required withholding is made.

          (ii)  After the effective date of a Public Offering, a Grantee may
exercise an Option by delivering to the Company, with payment of the Exercise
Price in accordance with Subsection (i) above, a notice of exercise instructing
the Company to deliver shares of Company Stock due upon the exercise of the
Option to any registered broker or dealer designated by the Board in lieu of
delivery to the Grantee. Such instructions shall designate the account into
which the shares are to be deposited.

     (g)  Limit on Incentive Stock Options. Each Incentive Stock Option shall
provide that, if the aggregate Fair Market Value of the stock on the date of the
grant with respect to which Incentive Stock Options are exercisable for the
first time by a Grantee during any calendar year, under the Plan or any other
stock option plan of the Company or a parent or subsidiary, exceeds $100,000,
then the option, as to the excess, shall be treated as a Nonqualified Stock
Option. An Incentive Stock Option shall not be granted to any person who is not
an Employee of the Company or a parent or subsidiary (within the meaning of
section 424(f) of the Code).

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     6.   Restricted Stock Grants

     The Board may issue shares of Company Stock to an Employee, Consultant or
Non-Employee Director under a Grant of Restricted Stock, upon such terms as the
Board deems appropriate. The following provisions are applicable to Restricted
Stock:

     (a)  General Requirements. Shares of Company Stock issued pursuant to
Restricted Stock Grants may be issued for consideration or for no consideration,
as determined by the Board. The Board shall establish conditions under which
restrictions on shares of Restricted Stock shall lapse over a period of time or
according to such other criteria as the Board deems appropriate. The period of
time during which the Restricted Stock will remain subject to restrictions will
be designated in the Grant Instrument as the "Restriction Period".

     (b)  Number of Shares. The Board shall determine the number of shares of
Company Stock to be issued pursuant to a Restricted Stock Grant and the
restrictions applicable to such shares.

     (c)  Requirement of Employment. If the Grantee ceases to be employed by the
Company (as defined in Section 5(e)) during a period designated in the Grant
Instrument as the Restriction Period, or if other specified conditions are not
met, the Restricted Stock Grant shall terminate as to all shares covered by the
Grant as to which the restrictions have not lapsed, and those shares of Company
Stock must be immediately returned to the Company. The Board may, however,
provide for complete or partial exceptions to this requirement as it deems
appropriate.

     (d)  Restrictions on Transfer and Legend on Stock Certificate. During the
Restriction Period, a Grantee may not sell, assign, transfer, pledge or
otherwise dispose of the shares of Restricted Stock except to a Successor
Grantee under Section 9(a). Each certificate for a share of Restricted Stock
shall contain a legend giving appropriate notice of the restrictions in the
Grant. The Grantee shall be entitled to have the legend removed from the stock
certificate covering the shares when all restrictions on such shares have
lapsed. The Board may determine that the Company will not issue certificates for
shares of Restricted Stock until all restrictions on such shares have lapsed, or
that the Company will retain possession of certificates for shares of Restricted
Stock until all restrictions on such shares have lapsed.

     (e)  Right to Vote and to Receive Dividends. Unless the Board determines
otherwise, during the Restriction Period, the Grantee shall have the right to
vote shares of Restricted Stock and to receive any dividends or other
distributions paid on such shares, subject to any restrictions deemed
appropriate by the Board.

     (f)  Lapse of Restrictions. All restrictions imposed on Restricted Stock
shall lapse upon the expiration of the applicable Restriction Period and the
satisfaction of all conditions

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imposed by the Board. The Board may determine, as to any or all Restricted Stock
Grants, that the restrictions shall lapse without regard to any Restriction
Period.

     7.   Stock Appreciation Rights

     (a)  General Requirements. The Board may grant SARs to an Employee,
Consultant or Non-Employee Director separately or in tandem with any Option (for
all or a portion of the applicable Option). Tandem SARs may be granted either at
the time the Option is granted or at any time thereafter while the Option
remains outstanding; provided, however, that, in the case of an Incentive Stock
Option, SARs may be granted only at the time of the Grant of the Incentive Stock
Option. The Board shall establish the base amount of the SAR at the time the SAR
is granted. Unless the Board determines otherwise, the base amount of each SAR
shall be equal to the per share Exercise Price of the related Option or, if
there is no related Option, the Fair Market Value of a share of Company Stock as
of the date of Grant of the SAR.

     (b)  Tandem SARs. In the case of tandem SARs, the number of SARs granted to
a Grantee that shall be exercisable during a specified period shall not exceed
the number of shares of Company Stock that the Grantee may purchase upon the
exercise of the related Option during such period. Upon the exercise of an
Option, the SARs relating to the Company Stock covered by such Option shall
terminate. Upon the exercise of SARs, the related Option shall terminate to the
extent of an equal number of shares of Company Stock.

     (c)  Exercisability. An SAR shall be exercisable during the period
specified by the Board in the Grant Instrument and shall be subject to such
vesting and other restrictions as may be specified in the Grant Instrument. The
Board may accelerate the exercisability of any or all outstanding SARs at any
time for any reason. SARs may only be exercised while the Grantee is employed by
the Company or during the applicable period after termination of employment as
described in Section 5(e). A tandem SAR shall be exercisable only during the
period when the Option to which it is related is also exercisable.

     (d)  Value of SARs. When a Grantee exercises SARs, the Grantee shall
receive in settlement of such SARs an amount equal to the value of the stock
appreciation for the number of SARs exercised, payable in cash, Company Stock or
a combination thereof. The stock appreciation for an SAR is the amount by which
the Fair Market Value of the underlying Company Stock on the date of exercise of
the SAR exceeds the base amount of the SAR as described in Subsection (a).

     (e)  Form of Payment. The Board shall determine whether the appreciation in
an SAR shall be paid in the form of cash, shares of Company Stock, or a
combination of the two, in such proportion as the Board deems appropriate. For
purposes of calculating the number of shares of Company Stock to be received,
shares of Company Stock shall be valued at their Fair Market Value on the date
of exercise of the SAR. If shares of Company Stock are to be received upon
exercise of an SAR, cash shall be delivered in lieu of any fractional share.

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     8.   Withholding of Taxes

     (a)  All Grants under the Plan shall be subject to applicable federal
(including FICA), state and local tax withholding requirements. The Company
shall have the right to deduct from all Grants paid in cash, or from other wages
paid to the Grantee, any federal, state or local taxes required by law to be
withheld with respect to such Grants. In the case of Options and other Grants
paid in Company Stock, the Company may require the Grantee or other person
receiving such shares to pay to the Company the amount of any such taxes that
the Company is required to withhold with respect to such Grants, or the Company
may deduct from other wages paid by the Company the amount of any withholding
taxes due with respect to such Grants.

     (b)  If the Grant Instrument (or an amendment) so provides, a Grantee may
elect to satisfy the Company's income tax withholding obligation with respect to
an Option, SAR or Restricted Stock by having shares withheld up to an amount
that does not exceed the Grantee's minimum applicable withholding tax rate for
federal (including FICA), state and local tax liabilities. The election must be
in a form and manner prescribed by the Board and may be subject to the prior
approval of the Board.

     9.   Transferability of Grants

     (a)  Only the Grantee may exercise rights under a Grant during the
Grantee's lifetime. The Grantee may not transfer those rights except by will or
by the laws of descent and distribution or, with respect to Grants other than
Incentive Stock Options, if permitted in any specific case by the Board pursuant
to a domestic relations order (as defined under the Code or Title I of the
Employee Retirement Income Security Act of 1974, as amended, or the regulations
thereunder). When a Grantee dies, the representative or other person entitled to
succeed to the rights of the Grantee ("Successor Grantee") may exercise such
rights. A Successor Grantee must furnish proof satisfactory to the Company of
his or her right to receive the Grant under the Grantee's will or under the
applicable laws of descent and distribution.

     (b)  Notwithstanding the foregoing, the Board may provide, in a Grant
Instrument, that a Grantee may transfer Nonqualified Stock Options to family
members or other persons or entities according to such terms as the Board may
determine, provided that the Grantee receives no consideration for the transfer
of an Option and the transferred Option continues to be subject to the same
terms and conditions as were applicable to the Option immediately before the
transfer.

     10.  Change of Control of the Company

     As used herein, a "Change of Control" shall be deemed to have occurred if:

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     (a)  Any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) (other than a person who is a shareholder of the Company as of the
effective date of this Plan) becomes a "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing more than 50% of the voting power of the then outstanding
securities of the Company; or

     (b)  The shareholders of the Company approve (or, if shareholder approval
is not required, the Board approves) an agreement providing for (i) the merger
or consolidation of the Company with another corporation where the shareholders
of the Company, immediately prior to the merger or consolidation, will not
beneficially own, immediately after the merger or consolidation, shares
entitling such shareholders to more than 50% of all votes to which all
shareholders of the surviving corporation would be entitled in the election of
directors (without consideration of the rights of any class of stock to elect
directors by a separate class vote), or where the members of the Board,
immediately prior to the merger or consolidation, would not, immediately after
the merger or consolidation, constitute a majority of the board of directors of
the surviving corporation, (ii) the sale or other disposition of all or
substantially all of the assets of the Company, or (iii) a liquidation,
dissolution or statutory exchange of the Company.

     11   Consequences of a Change of Control

     (a)  Upon a Change of Control, unless the Board determines otherwise, (i)
the Company shall provide each Grantee who holds outstanding Grants written
notice of such Change of Control, (ii) all outstanding Options and SARs shall
automatically accelerate and become fully exercisable and (iii) the restrictions
and conditions on all outstanding Restricted Stock shall immediately lapse.

     (b)  Unless the Board determines otherwise, upon a Change of Control where
the Company is not the surviving corporation (or survives only as a subsidiary
of another corporation), all outstanding Grants shall be assumed by, or replaced
with comparable options, rights or stock by, the surviving corporation.

     (c)  Notwithstanding the foregoing, subject to subsection (d) below, in the
event of a Change of Control, the Board may take one or both of the following
actions: the Board may (i) require that Grantees surrender their outstanding
Options and SARs in exchange for a payment by the Company, in cash or Company
Stock as determined by the Board, in an amount equal to the amount by which the
then Fair Market Value of the shares of Company Stock subject to the Grantee's
outstanding Options and SARs exceeds the Exercise Price of the Options or the
base amount of the SARs, as applicable, or (ii) after giving Grantees an
opportunity to exercise their outstanding Options and SARs, terminate any or all
unexercised Options and SARs at such time as the Board deems appropriate. Such
surrender or termination shall take place as of the date of the Change of
Control or such other date as the Board may specify.

     (d)  Notwithstanding anything in the Plan to the contrary, in the event of
a Change of Control, the Board shall not have the right to take actions
described in the Plan (including

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without limitation actions described in Subsection (c) above) that would make
the Change of Control ineligible for pooling of interests accounting treatment
or that would make the Change of Control ineligible for desired tax treatment
if, in the absence of such right, the Change of Control would qualify for such
treatment and the Company intends to use such treatment with respect to the
Change of Control.

     12   Requirements for Issuance of Shares

     (a)  The Board may require that a Grantee execute a shareholder's
agreement, with such terms as the Board deems appropriate, with respect to any
Company Stock distributed pursuant to this Plan.

     (b)  No Company Stock shall be issued or transferred in connection with any
Grant hereunder unless and until all legal requirements applicable to the
issuance or transfer of such Company Stock have been complied with to the
satisfaction of the Board. The Board shall have the right to condition any Grant
made to any Grantee hereunder on such Grantee's undertaking in writing to comply
with such restrictions on his or her subsequent disposition of such shares of
Company Stock as the Board shall deem necessary or advisable as a result of any
applicable law, regulation or official interpretation thereof and certificates
representing such shares may be legended to reflect any such restrictions.
Certificates representing shares of Company Stock issued under the Plan will be
subject to such stop-transfer orders and other restrictions as may be applicable
under such laws, regulations and other obligations of the Company, including any
requirement that a legend or legends be placed thereon.

     13   Amendment and Termination of the Plan

     (a)  Amendment. The Board may amend or terminate the Plan at any time;
provided, however, that any amendment that increases the aggregate number of
shares of Company Stock that may be issued under the Plan (other than by
operation of Section 3(b)) shall be subject to approval by the shareholders of
the Company, and provided, further, that, after the effective date of a Public
Offering, the Board shall not amend the Plan without shareholder approval if
such approval is required by Section 162(m) of the Code.

     (b)  Termination of Plan. The Plan shall terminate on the day immediately
preceding the tenth anniversary of its effective date, unless the Plan is
terminated earlier by the Board or unless it is extended by the Board with the
approval of the shareholders.

     (c)  Termination and Amendment of Outstanding Grants. A termination or
amendment of the Plan that occurs after a Grant is made shall not materially
impair the rights of a Grantee unless the Grantee consents or unless the Board
acts under Section 19(b). The termination of the Plan shall not impair the power
and authority of the Board with respect to an outstanding Grant. Whether or not
the Plan has terminated, an outstanding Grant may be terminated or amended under
Section 19(b) or may be amended by agreement of the Company and the Grantee
consistent with the Plan.

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     (d)  Governing Document. The Plan shall be the controlling document. No
other statements, representations, explanatory materials or examples, oral or
written, may amend the Plan in any manner. The Plan shall be binding upon and
enforceable against the Company and its successors and assigns.

     14   Funding of the Plan

     This Plan shall be unfunded. The Company shall not be required to establish
any special or separate fund or to make any other segregation of assets to
assure the payment of any Grants under this Plan. In no event shall interest be
paid or accrued on any Grant, including unpaid installments of Grants.

     15   Rights of Participants

     Nothing in this Plan shall entitle any Employee, Consultant, Non-Employee
Director or other person to any claim or right to be granted a Grant under this
Plan. Neither this Plan nor any action taken hereunder shall be construed as
giving any individual any rights to be retained by or in the employ of the
Company or any other employment rights.

     16   No Fractional Shares

     No fractional shares of Company Stock shall be issued or delivered pursuant
to the Plan or any Grant. The Board shall determine whether cash, other awards
or other property shall be issued or paid in lieu of such fractional shares or
whether such fractional shares or any rights thereto shall be forfeited or
otherwise eliminated.

     17   Headings

     Section headings are for reference only. In the event of a conflict between
a title and the content of a Section, the content of the Section shall control.

     18   Effective Date of the Plan.

     (a)  Subject to the approval of the Company's shareholders, this Plan shall
be effective as of January 21, 1997. The amended Plan is effective as of May 27,
1998.

     (b)  The provisions of the Plan that are applicable after a Public Offering
of Company stock shall be effective, if at all, upon the initial registration of
the Company stock under Section 12(g) of the Exchange Act, and shall remain
effective thereafter for so long as such stock is so registered.

                                       -12-

<PAGE>

     19   Miscellaneous

     (a)  Substitute Grants. The Board may make a Grant to an employee of
another corporation who becomes an Employee by reason of a corporate merger,
consolidation, acquisition of stock or property, reorganization or liquidation
involving the Company or any of its subsidiaries in substitution for a stock
option or restricted stock grant made by such corporation. The terms and
conditions of the substitute grant may vary from the terms and conditions
required by the Plan and from those of the substituted stock incentives. The
Board shall prescribe the provisions of the substitute grants.

     (b)  Compliance with Law. The Plan, the exercise of Options and SARs and
the obligations of the Company to issue or transfer shares of Company Stock
under Grants shall be subject to all applicable laws and to approvals by any
governmental or regulatory agency as may be required. With respect to persons
subject to Section 16 of the Exchange Act, after a Public Offering, it is the
intent of the Company that the Plan and all transactions under the Plan comply
with all applicable provisions of Rule 16b-3 or its successors under such Act.
The Board may revoke any Grant if it is contrary to law or modify a Grant to
bring it into compliance with any valid and mandatory government regulation. The
Board may also adopt rules regarding the withholding of taxes on payments to
Grantees. The Board may, in its sole discretion, agree to limit its authority
under this Section.

     (c)  Ownership of Stock. A Grantee or Successor Grantee shall have no
rights as a shareholder with respect to any shares of Company Stock covered by a
Grant until the shares are issued or transferred to the Grantee or Successor
Grantee on the stock transfer records of the Company.

     (d)  Governing Law. The validity, construction, interpretation and effect
of the Plan and Grant Instruments issued under the Plan shall exclusively be
governed by and determined in accordance with the law of the Commonwealth of
Pennsylvania.

                                       -13-Second Supplemental Indenture

 

EXHIBIT 4.6

AMERITRADE HOLDING CORPORATION,

ARROW STOCK HOLDING CORPORATION

and

THE BANK OF NEW YORK

as Trustee

SECOND SUPPLEMENTAL INDENTURE

Dated as of August 30, 2002

Supplement to Indenture dated as of August 4, 1999

$200,000,000

5.75% Convertible Subordinated Notes due August 1, 2004

 

     SECOND SUPPLEMENTAL INDENTURE, dated as of August 30, 2002 by and between
AMERITRADE HOLDING CORPORATION, a Delaware corporation (“Ameritrade”), ARROW
STOCK HOLDING CORPORATION, a Delaware corporation and a wholly-owned subsidiary
of Ameritrade (“Arrow”), and THE BANK OF NEW YORK, a New York banking
corporation, as Trustee under the Indenture (as hereinafter defined) (the
“Trustee”).

RECITALS

     WHEREAS, Ameritrade and the Trustee have as of August 4, 1999 entered into
an Indenture (the “Indenture”, all capitalized terms used and not otherwise
defined herein shall have the meanings set forth in the Indenture) providing
for the issuance by Ameritrade from time to time of its Securities to be issued
in one or more Series as may from time to time be authorized by supplemental
indenture.

     WHEREAS, 5.75% Convertible Subordinated Notes due August 1, 2004 (the
“Notes”) have been issued pursuant to a First Supplemental Indenture, dated as
of August 4, 1999, by and between Ameritrade and the Trustee (the “First
Supplemental Indenture”);

     WHEREAS, Ameritrade, Arrow, Arrow Merger Corp., a Delaware corporation and
a wholly-owned subsidiary of Arrow (“Ameritrade Merger Sub”), Dart Merger
Corp., a Delaware corporation and a wholly-owned subsidiary of Arrow (“Datek
Merger Sub”), and Datek Online Holdings Corp., a Delaware corporation
(“Datek”), have entered into a Second Amended and Restated Agreement and Plan
of Merger, dated as of July 26, 2002 (the “Merger Agreement”);

     WHEREAS, pursuant to the Merger Agreement Ameritrade will merge with and
into Ameritrade Merger Sub, after which Ameritrade will be the surviving entity
and a wholly owned subsidiary of Arrow (the “Ameritrade Merger”), and Datek
will merge with and into Datek Merger Sub after which Datek will be the
surviving entity and a wholly owned subsidiary of Arrow;

     WHEREAS, Ameritrade stockholders will receive, as consideration under the
Ameritrade Merger, one share of Arrow common stock, $0.01 par value per share
(“Arrow Common Stock”), in exchange for each share of Class A common stock of
Ameritrade, $0.01 par value per share (“Ameritrade Common Stock”), held by
Ameritrade stockholders prior to the Ameritrade Merger;

     WHEREAS, Arrow, Ameritrade and the Trustee deem it advisable to enter into
this Second Supplemental Indenture, pursuant to Section 5.1 of the Indenture
and Section 2.12 of the First Supplemental Indenture, for the purpose of Arrow
assuming all of the obligations of Ameritrade under the Indenture and the First
Supplemental Indenture and substituting the Arrow Common Stock for the
Ameritrade Common Stock issuable upon conversion of the Notes;

     WHEREAS, the execution and delivery of this Second Supplemental Indenture
has been authorized by a Board Resolution;

 

     WHEREAS, concurrent with the execution hereof, Ameritrade has delivered an
Officers’ Certificate and has caused its counsel to deliver to the Trustee an
Opinion of Counsel; and

     WHEREAS, all things necessary to make this Second Supplemental Indenture a
valid agreement of Arrow in accordance with its terms have been done, and the
execution and delivery thereof have been in all respects duly authorized by the
parties hereto.

     NOW, THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE WITNESSETH:

     It is mutually agreed, for the equal and proportionate benefit of all
Holders of the Notes, as follows:

ARTICLE 1 – EFFECT OF THE AMERITRADE MERGER

     1.1 Assumption of Ameritrade Obligations

     Arrow hereby assumes all of the obligations of Ameritrade under the Notes,
the Indenture and the First Supplemental Indenture as of the effective time of
the Ameritrade merger.

     1.2 Conversion Rights

     The Holder of each Note outstanding at the effective time of the
Ameritrade Merger shall have the right thereafter, during the period such Note
shall be convertible as specified in Section 2.2 of the First Supplemental
Indenture, to convert such Note only into the kind and amount of securities,
cash and other property receivable upon the Ameritrade Merger by a holder of
the number of shares of Ameritrade Common Stock into which such Note might have
been converted immediately prior to the Ameritrade Merger, assuming such holder
of Ameritrade Common Stock is not a Person with which Ameritrade consolidated
or into which Ameritrade merged or which merged into Ameritrade (a “Constituent
Person”), or an Affiliate of a Constituent Person.

ARTICLE 2 – MISCELLANEOUS

     2.1 Continuance in Force.

     The Indenture and First Supplemental Indenture shall remain in full force
and effect and are hereby ratified and confirmed, except as specifically
amended and supplemented by, or to the extent inconsistent with, this Second
Supplemental Indenture.

     2.2 Benefits of Second Supplemental Indenture.

     Nothing contained in this Second Supplemental Indenture shall or shall be
construed to confer upon any person other than a Holder of the Notes, Arrow,
Ameritrade and the Trustee any

 

right or interest to avail itself or himself, as
the case may be, of any benefit under any provision of the Indenture, the First
Supplemental Indenture or this Second Supplemental Indenture, except for
Holders of Senior Indebtedness as provided in Article 7 of the First
Supplemental Indenture.

     2.3 Effective Date.

     This Second Supplemental Indenture shall be effective as of the date first
above written and upon the execution and delivery hereof by each of the parties
hereto.

     2.4 Counterparts.

     This Second Supplemental Indenture may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same
instrument.

     2.5 Trustee

     The Trustee makes no representations as to the validity or sufficiency of
this Second Supplemental Indenture, and the recitals and statements herein are
deemed to be those of Ameritrade and Arrow and not of the Trustee.

 

     IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed by their respective officers
hereunto duly authorized, all as of the day and year first above written.

	 	 	 	 	 	 
	 	 	 	 	AMERITRADE HOLDING CORPORATION
	 
	 	 	 	 	By:  /s/ JOHN R.
MACDONALD
	 	 	 	 	 	Name: John R. MacDonald

Title: Executive Vice President,

Chief Financial Officer and

Treasurer

	 	 	 	 	ARROW STOCK
HOLDING CORPORATION
	 
	 	 	 	 	By:  /s/ JOHN R.
MACDONALD
	 	 	 	 	 	Name: John R. MacDonald

Title: Treasurer

	 	 	 	 	THE BANK OF NEW
YORK
	 
	 	 	 	 	By:  /s/ VAN
K. BROWN
	 	 	 	 	 	Name: Van K. Brown

Title: Vice President

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