SYMMETRICOM, INC.
1990 DIRECTOR OPTION PLAN
(as amended through October 25, 1995)
1. Purposes of the Plan. The purposes of this 1990 Director
Option Plan are to attract and retain the best available personnel
for service as Directors of the Company, to provide additional
incentive to the Outside Directors of the Company to serve as
Directors, and to encourage their continued service on the Board.
All options granted hereunder shall be "non-statutory
stock options".
2. Definitions. As used herein, the following definitions
shall apply:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as
amended.
(c) "Common Stock" means the Common Stock of the Company.
(d) "Company" means Symmetricom, Inc., a California
corporation.
(e) "Continuous Status as a Director" means the absence
of any interruption or termination of service as a Director.
(f) "Director" means a member of the Board.
(g) "Employee" means any person, including officers and
Directors, employed by the Company or any Parent or Subsidiary of
the Company. The payment of a Director's fee by the Company shall
not be sufficient in and of itself to constitute "employment" by the
Company.
(h) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(i) "Fair Market Value" means, as of any date, the value
of Common Stock determined as follows:
(i) If the Common Stock is listed on any established
stock exchange or a national market system, including without
limitation the National Market System of the National Association of
Securities Dealers, Inc. Automated Quotation ("NASDAQ") System, the
Fair Market Value of a Share of Common Stock shall be the closing
sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such system or exchange (or the exchange with
the greatest volume of trading in Common Stock) on the last market
trading day prior to the day of determination, as reported in the
Wall Street Journal or such other source as the Board deems
reliable;
(ii)If the Common Stock is quoted on the NASDAQ
System (but not on the National Market System thereof) or regularly
quoted by a recognized securities dealer but selling prices are not
reported, the Fair Market Value of a Share of Common Stock shall be
the mean between the high and low asked prices for the Common Stock
on the last market trading day prior to the day of determination, as
reported in the Wall Street Journal or such other source as the
Board deems reliable, or;
(iii)In the absence of an established market for
the Common Stock, the Fair Market Value thereof shall be determined
in good faith by the Board.
(j) "Option" means a stock option granted pursuant to the
Plan.
(k) "Optioned Stock" means the Common Stock subject to an
Option.
(l) "Optionee" means an Outside Director who receives an
Option.
(m) "Outside Director" means a Director who is not an
Employee.
(n) "Parent" means a "parent corporation", whether now or
hereafter existing, as defined in Section 425(e) of the Internal
Revenue Code of 1986.
(o) "Plan" means this 1990 Director Option Plan.
(p) "Share" means a share of the Common Stock, as
adjusted in accordance with Section 10 of the Plan.
(q) "Subsidiary" means a "subsidiary corporation",
whether now or hereafter existing, as defined in Section 425(f) of
the Internal Revenue Code of 1986.
3. Stock Subject to the Plan. Subject to the provisions of
Section 10 of the Plan, the maximum aggregate number of Shares which
may be optioned and sold under the Plan is three hundred thousand
(300,000) Shares (the "Pool") of Common Stock. The Shares may be
authorized but unissued, or reacquired Common Stock.
If an Option should expire or become unexercisable for any
reason without having been exercised in full, the unpurchased Shares
which were subject thereto shall, unless the Plan shall have been
terminated, become available for future grant under the Plan.
4. Administration of and Grants of Options under the Plan.
(a) Administrator. Except as otherwise required herein,
the Plan shall be administered by the Board. No discretion con-
cerning decisions regarding the Plan shall be afforded to any person
who is not a "disinterested person" (as defined in Rule 16b-3 under
the Exchange Act).
(b) Procedure for Grants. All grants of Options
hereunder shall be automatic and non-discretionary and shall be made
strictly in accordance with the following provisions:
(i) No person shall have any discretion to select
which Outside Directors shall be granted Options or to determine the
number of Shares to be covered by Options granted to Outside
Directors.
(ii)Each Outside Director shall be automa-
tically granted an Option to purchase 10,000 Shares (the "First
Option") on the date on which such person first becomes an Outside
Director, whether through election by the shareholders of the
Company or appointment by the Board to fill a vacancy; provided,
however, that no First Option shall be granted to an Outside
Director who, immediately prior to becoming an Outside Director, was
a Director. After the First Option has been granted to an Outside
Director, such Outside Director shall thereafter be automatically
granted an Option to purchase 10,000 Shares on January 1 of each
year, if on such date, he or she shall have served on the Board for
at least six (6) months.
(iii)The terms of each Option granted hereunder
shall be as follows:
(A) the term of the Option shall be ten
(10) years.
(B) the Option shall be exercisable only while
the Outside Director remains a Director of the Company, except as
set forth in Section 8 hereof.
(C) the exercise price per Share shall be 100%
of the Fair Market Value per Share on the date of grant of the
Option.
(D) the Option shall become exercisable in
installments cumulatively as to twenty-five percent (25%) of the
Optioned Stock one year after the date of grant and as to an addi-
tional twenty-five percent (25%) of the Optioned Stock two years
after the date of grant and as to an additional fifty percent (50%)
of the Optioned Stock three years after the date of grant, so that
100% of the Optioned Stock granted under an individual Option shall
be exercisable three years after the date of grant of the Option.
(iv)In the event that any Option granted under
the Plan would cause the number of Shares subject to outstanding
Options plus the number of Shares previously purchased upon exercise
of Options to exceed the Pool, then each such automatic grant shall
be for that number of Shares determined by dividing the total number
of Shares remaining available for grant by the number of Outside
Directors on the automatic grant date. No further grants shall be
made until such time, if any, as additional Shares become available
for grant under the Plan through action of the shareholders to
increase the number of Shares which may be issued under the Plan or
through cancellation or expiration of Options previously granted
hereunder.
(c) Powers of the Board. Subject to the provisions and
restrictions of the Plan, the Board shall have the authority, in its
discretion: (i) to determine, upon review of relevant information
and in accordance with Section 2(i) of the Plan, the Fair Market
Value of the Common Stock; (ii) to interpret the Plan; (iii) to
prescribe, amend and rescind rules and regulations relating to the
Plan; (iv) to authorize any person to execute on behalf of the
Company any instrument required to effectuate the grant of an Option
previously granted hereunder; and (v) to make all other
determinations deemed necessary or advisable for the administration
of the Plan.
(d) Effect of Board's Decision. All decisions, deter-
minations and interpretations of the Board shall be final.
5. Eligibility. Options may be granted only to Outside
Directors. All Options shall be automatically granted in accordance
with the terms set forth in Section 4(b) hereof. An Outside
Director who has been granted an Option may, if he is otherwise
eligible, be granted an additional Option or Options in accordance
with such provisions.
The Plan shall not confer upon any Optionee any right with
respect to continuation of service as a Director or nomination to
serve as a Director, nor shall it interfere in any way with any
rights which the Director or the Company may have to terminate his
directorship at any time.
6. Term of Plan. The Plan shall become effective upon the
earlier to occur of its adoption by the Board or its approval by the
shareholders of the Company as described in Section 16 of the Plan.
It shall continue in effect for a term of ten (10) years unless
sooner terminated under Section 11 of the Plan.
7. Exercise Price and Consideration.
(a) Exercise Price. The per Share exercise price for
Optioned Stock shall be 100% of the Fair Market Value per Share on
the date of grant of the Option.
(b) Form of Consideration. The consideration to be paid
for the Shares to be issued upon exercise of an Option, including
the method of payment, shall be determined by the Board and may
consist entirely of (i) cash, (ii) check, (iii) promissory note,
(iv) other shares which (x) in the case of Shares acquired upon
exercise of an Option either have been owned by the Optionee for
more than six (6) months on the date of surrender or were not
acquired, directly or indirectly, from the Company, and (y) have a
Fair Market Value on the date of surrender equal to the aggregate
exercise price of the Shares as to which said Option shall be
exercised, (v) delivery of a properly executed exercise notice
together with irrevocable instructions to a broker to promptly
deliver to the Company the amount of sale or loan proceeds required
to pay the exercise price, (vi) delivery of an irrevocable subscrip-
tion agreement for the Shares which irrevocably obligates the
Optionee to take and pay for the Shares not more than twelve (12)
months after the date of delivery of the subscription agreement,
(vii) any combination of the foregoing methods of payment, or
(viii) such other consideration and method of payment for the
issuance of Shares to the extent permitted under applicable law.
8. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any
Option granted hereunder shall be exercisable at such times as are
set forth in Section 4(b) hereof; provided, however, that no Options
shall be exercisable until shareholder approval of the Plan in
accordance with Section 16 hereof has been obtained.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written
notice of such exercise has been given to the Company in accordance
with the terms of the Option by the person entitled to exercise the
Option and full payment for the Shares with respect to which the
Option is exercised has been received by the Company. Full payment
may consist of any consideration and method of payment allowable
under Section 7(b) of the Plan. Until the issuance (as evidenced by
the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate
evidencing such Shares, no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the
Optioned Stock, notwithstanding the exercise of the Option. A share
certificate for the number of Shares so acquired shall be issued to
the Optionee as soon as practicable after exercise of the Option. No
adjustment will be made for a dividend or other right for which the
record date is prior to the date the stock certificate is issued,
except as provided in Section 10 of the Plan.
Exercise of an Option in any manner shall result in a
decrease in the number of Shares which thereafter may be available,
both for purposes of the Plan and for sale under the Option, by the
number of Shares as to which the Option is exercised.
(b) Rule 16b-3. Options granted to Outside Directors
must comply with the applicable provisions of Rule 16b-3 promulgated
under the Exchange Act or any successor thereto and shall contain
such additional conditions or restrictions as may be required
thereunder to qualify for the maximum exemption from Section 16 of
the Exchange Act with respect to Plan transactions.
(c) Termination of Continuous Status as a Director. In
the event an Optionee's Continuous Status as a Director terminates
(other than upon the Optionee's death or total and permanent dis-
ability (as defined in Section 22(e)(3) of the Code)), the Optionee
may exercise his or her Option, but only within three (3) months
from the date of such termination, and only to the extent that the
Optionee was entitled to exercise it at the date of such termination
(but in no event later than the expiration of its ten (10) year
term). To the extent that the Optionee was not entitled to exercise
an Option at the date of such termination, and to the extent that
the Optionee does not exercise such Option (to the extent otherwise
so entitled) within the time specified herein, the Option shall
terminate.
(d) Disability of Optionee. In the event Optionee's
Continuous Status as a Director terminates as a result of total and
permanent disability (as defined in Section 22(e)(3) of the Code),
the Optionee may exercise his or her Option, but only within six (6)
months from the date of such termination, and only to the extent
that the Optionee was entitled to exercise it at the date of such
termination (but in no event later than the expiration of its ten
(10) year term). To the extent that the Optionee was not entitled
to exercise an Option at the date of termination, or if he or she
does not exercise such Option (to the extent otherwise so entitled)
within the time specified herein, the Option shall terminate.
(e) Death of Optionee. In the event of an Optionee's
death, the Optionee's estate or a person who acquired the right to
exercise the Option by bequest or inheritance may exercise the
Option, but only within six (6) months following the date of death,
and only to the extent that the Optionee was entitled to exercise it
at the date of death (but in no event later than the expiration of
its ten (10) year term). To the extent that the Optionee was not
entitled to exercise an Option at the date of death, and to the
extent that the Optionee's estate or a person who acquired the right
to exercise such Option does not exercise such Option (to the extent
otherwise so entitled) within the time specified herein, the Option
shall terminate.
9. Non-Transferability of Options. The Option may not be
sold, pledged, assigned, hypothecated, transferred, or disposed of
in any manner other than by will or by the laws of descent or dis-
tribution and may be exercised, during the lifetime of the Optionee,
only by the Optionee.
10. Adjustments Upon Changes in Capitalization or Merger.
(a) Subject to any required action by the shareholders of
the Company, the number of Shares covered by each outstanding
Option, and the number of Shares which have been authorized for
issuance under the Plan but as to which no Options have yet been
granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per Share covered by
each such outstanding Option, shall be proportionately adjusted for
any increase or decrease in the number of issued Shares resulting
from a stock split, reverse stock split, stock dividend, combination
or reclassification of the Common Stock, or any other increase or
decrease in the aggregate number of issued Shares effected without
receipt of consideration by the Company; provided, however, that
conversion of any convertible securities of the Company shall not be
deemed to have been "effected without receipt of consideration."
Such adjustment shall be made by the Board, whose determination in
that respect shall be final, binding and conclusive. 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 an Option.
In the event of the proposed dissolution or liquidation of
the Company, all outstanding Options will terminate immediately
prior to the consummation of such proposed action, unless otherwise
provided by the Board. The Board may, in the exercise of its sole
discretion in such instances, declare that any Option shall termi-
nate as of a date fixed by the Board and give each Optionee the
right to exercise his Option as to all or any part of the Optioned
Stock, including Shares as to which the Option would not otherwise
be exercisable.
Subject to the provisions of paragraph (b) hereof, in the
event of a proposed sale of all or substantially all of the assets
of the Company, or the merger of the Company with or into another
corporation, each outstanding Option shall be assumed or an equiv-
alent option shall be substituted by such successor corporation or a
parent or subsidiary of such successor corporation. In the event
that the successor corporation does not agree to assume the Option
or to substitute an equivalent option, each outstanding Option shall
become fully vested and exercisable, including as to Shares as to
which it would not otherwise be exercisable. If an Option becomes
fully vested and exercisable in the event of a merger or sale of
assets, the Company shall notify the Optionee that the Option shall
be fully exercisable for a period of fifteen (15) days from the date
of such notice, and the Option shall terminate upon the expiration
of such period. For purposes of this paragraph, an Option granted
under the Plan shall be deemed to be assumed if, following the sale
of assets or merger, the Option confers the right to purchase, for
each Share of Optioned Stock subject to the Option immediately prior
to the sale of assets or merger, the consideration (whether stock,
cash or other securities or property) received in the sale of assets
or merger by holders of Common Stock for each Share held on the
effective date of the transaction (and if such holders were offered
a choice of consideration, the type of consideration chosen by the
holders if a majority of the outstanding Shares).
(b) In the event of a "Change in Control" of the Company,
as defined in paragraph (c) below, any Options outstanding as of the
date such Change in Control is determined to have occurred that are
not yet exercisable and vested on such date shall become fully
exercisable and vested.
(c) Definition of "Change in Control". For purposes of
this Section 10, a "Change in Control" means when any "person," as
such term is used in Sections 13(d) and 14(d) of the Exchange Act
(other than the Company, a Subsidiary or a Company employee benefit
plan, including any trustee of such plan acting as trustee) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the combined voting
power of the Company's then outstanding securities.
11. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time
amend, alter, suspend, or discontinue the Plan, but no amendment,
alteration, suspension, or discontinuation shall be made which would
impair the rights of any Optionee under any grant theretofore made,
without his or her consent. In addition, to the extent necessary
and desirable to comply with Rule 16b-3 under the Exchange Act (or
any other applicable law or regulation), the Company shall obtain
shareholder approval of any Plan amendment in such a manner and to
such a degree as required.
(b) Effect of Amendment or Termination. Any such amend-
ment or termination of the Plan shall not affect Options already
granted and such Options shall remain in full force and effect as if
this Plan had not been amended or terminated.
12. Time of Granting Options. The date of grant of an Option
shall, for all purposes, be the date determined in accordance with
Section 4(b) hereof. Notice of the determination shall be given to
each Outside Director to whom an Option is so granted within a
reasonable time after the date of such grant.
13. Conditions Upon Issuance of Shares. Shares shall not be
issued pursuant to the exercise of an Option unless the exercise of
such Option and the issuance and delivery of such Shares pursuant
thereto shall comply with all relevant provisions of law, including,
without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder,
state securities laws, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further
subject to the approval of counsel for the Company with respect to
such compliance.
As a condition to the exercise of an Option, the Company
may require the person exercising such Option to represent and
warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to
sell or distribute such Shares, if, in the opinion of counsel for
the Company, such a representation is required by any of the afore-
mentioned relevant provisions of law.
Inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by
the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any lia-
bility in respect of the failure to issue or sell such Shares as to
which such requisite authority shall not have been obtained.
14. Reservation of Shares. The Company, during the term of
this Plan, will at all times reserve and keep available such number
of Shares as shall be sufficient to satisfy the requirements of the
Plan.
15. Option Agreement. Options shall be evidenced by written
option agreements in such form as the Board shall approve.
16. Shareholder Approval. Continuance of the Plan shall be
subject to approval by the shareholders of the Company at or prior
to the first annual meeting of shareholders held subsequent to the
granting of an Option hereunder. Such shareholder approval shall be
obtained in the degree and manner required under applicable state
and federal law.