Exhibit No. 4.1
STANDARD MICROSYSTEMS CORPORATION
2004 INDUCEMENT STOCK OPTION PLAN
Effective as of July 14, 2004, As Amended
1. Purpose of the Plan
The purpose of this Standard Microsystems Corporation 2004 Inducement
Stock Option Plan is to promote the interests of the Company and its
stockholders by providing new employees of the Company or any of its
subsidiaries (including employees who join the Company as a result of a
corporate transaction) with an appropriate and material incentive to accept
employment with the Company or any of its subsidiaries.
2. Definitions
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Cause" shall mean the termination by the Company of a
Participant's employment by reason of the Participant's (i) willful refusal to
perform the Participant's obligations to the Company, (ii) misconduct, contrary
to the interests of the Company, or (iii) commission of a serious criminal act,
whether denominated a felony, misdemeanor or otherwise. In the event of any
dispute whether a termination for Cause has occurred, the Board may by
resolution resolve such dispute and such resolution shall be final and
conclusive on all parties.
(c) "Change in Control" shall mean an event or series of events that
would be required to be described as a change in control of the Company on Form
8-K promulgated under the Securities Exchange Act of 1934, as amended. The
determination whether and when a Change in Control has occurred or is about to
occur shall be made by a vote of a majority of the non-employee members of the
Board who shall have constituted the Board immediately prior to the occurrence
of the event or series of events constituting such Change in Control.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(e) "Committee" shall mean a committee consisting of not fewer than two
members of the Board duly elected by the Board to administer this Plan in
accordance with Section 3(a) hereof.
(f) "Common Stock" shall mean the shares of common stock of the
Company, $0.10 par value per share.
(g) "Company" shall mean Standard Microsystems Corporation and any
successor.
(h) "Disability" shall mean permanent and total disability within the
meaning of Section 22(e) of the Internal Revenue Code of 1986, as amended. In
the event of any dispute whether a termination due to Disability has occurred,
the Board may by resolution resolve such dispute and such resolution shall be
final and conclusive on all parties.
(i) "Exercise Price" shall mean the price that the Participant must pay
under the Option for each share of Common Stock as determined by the Committee
for each grant and specified in the Stock Option Agreement.
(j) "Fair Market Value" of a share of Common Stock shall mean, as of
the date on which such fair market value is to be determined, the closing price
(or the average of the latest bid and asked prices) of a share of Common Stock
as reported in The Wall Street Journal (or a publication or reporting service
deemed equivalent to The Wall Street Journal for such purpose by the Board or
the Committee) for the over-the-counter market or any national securities
exchanges and other securities markets which at the time are included in the
stock price quotations of such publication. In the event that the Board or the
Committee shall determine such stock price quotation is not representative of
fair market value, the Board or the Committee may determine Fair Market Value in
such a manner as it shall deem appropriate under the circumstances.
(k) "Grant Date" shall mean the date of grant of an Option as defined
in Section 6(c) herein.
(l) Non-Qualified Stock Option" shall mean an Option that is not an
"incentive stock option" within the meaning of Section 422 of the Code.
(m) "Option" shall mean the option to purchase Common Stock granted to
any Participant under the Plan. Each Option granted hereunder shall be a
Non-Qualified Stock Option and shall be identified as such in the Stock Option
Grant Agreement by which it is evidenced.
(n) "Option Spread" shall mean, with respect to an Option, the excess
if any, of the Fair Market Value of a share of Common Stock as of the applicable
Valuation Date over the Exercise Price.
(o) "Participant" shall mean a new employee of the Company or any of
its subsidiaries to whom a grant of an Option under this Plan has been made.
(p) "Plan" shall mean this Standard Microsystems Corporation 2004
Inducement Stock Option Plan, as may be amended from time to time.
(q) "Stock Option Agreement" shall mean the separate written agreement
evidencing the grant of each Option pursuant to this Plan.
(r) "Valuation Date" shall mean the trading date immediately preceding
the date of the relevant transaction.
3. Administration of the Plan
(a) Composition of the Committee. This Plan will be administered by a
Committee, which shall consist of not fewer than two directors of the Company,
who shall be appointed and serve at the pleasure of the Board. All members of
the Committee shall be both "Non-Employee Directors" within the meaning of
paragraph (b)(3)(i) of Rule 16b-3 promulgated under the Securities Exchange Act
of 1934 and "independent directors" within the meaning of NASDAQ Rules applying
to compensation committee independence. The Committee shall have and may
exercise all of the powers of the Board under this Plan, other than the power to
appoint a director to committee membership. A majority of the Committee shall
constitute a quorum, and acts of the majority of members present at any meeting
at which a quorum is present shall be deemed the acts of the Committee. The
Committee may also act by instrument signed by all members of the Committee. In
the absence of a Committee, the Board shall function as the Committee for all
purposes under this Plan, and to the extent that the Board so acts, references
in this Plan to the Committee shall refer to the Board as applicable, provided
that the grant of an Option under this Plan shall be approved by a majority of
the "independent directors" of the Board.
(b) Powers of the Committee. In addition to the other powers granted to
the Committee under this Plan, the Committee shall have discretionary authority,
subject to and consistent with the express provisions of this Plan, (i) to
direct the grants of options; (ii) to determine the numbers of shares of Common
Stock covered by each option, the exercise price of the Common Stock covered by
each option, the individuals to whom and the time or times at which, options
shall be granted or options may be exercised; (iii) to prescribe, amend and
rescind rules and regulations relating to the Plan, including, without
limitation, such rules and regulations as it shall deem advisable so that
transactions involving options or awards may qualify for exemption under such
rules and regulations as the Securities and Exchange Commission may promulgate
from time to time exempting transactions from Section 16(b) of the Exchange Act;
(iv) to determine the terms and provisions of, and to cause the Company to enter
into, Stock Option Agreements, which Stock Option Agreements may vary from one
another, as the Committee shall deem appropriate; (v) to amend any such Stock
Option Agreement from time to time, with the consent of the Participant; (vi) to
construe and interpret this Plan, such rules and regulations and the Stock
Option Agreements; and (viii) to make all other determinations necessary or
advisable for the administration of, and to make all other determinations the
Committee may deem necessary or advisable for the administration of, the Plan.
(c) Determinations of the Committee. Every action, decision,
interpretation or determination by the Committee or the Board with respect to
the application or administration of this Plan or any Stock Option Agreement
shall be final and binding upon all persons.
(d) Indemnification of the Committee. 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 Option. To the full extent permitted by law, the
Company shall indemnify and hold harmless each person made or threatened to be
made a party to any civil or criminal action or proceeding by reason of the fact
that such person, or such person's testator or intestate, is or was a member of
the Committee.
(e) Inconsistent Terms. In the event of a conflict between the terms of
this Plan and the terms of any Stock Option Agreement, the terms of this Plan
shall govern.
(f) Plan Term. The Committee shall not grant any Options under this
Plan on or after July 14, 2014. All Options that remain outstanding as of such
date shall continue to be governed by this Plan.
4. Participation in this Plan
Options may be granted only to individuals who have not been previously
employed by the Company or served as a member of the Board, or following a bona
fide period of non-employment, and who become employees of the Company or any of
its subsidiaries, including individuals who become employees in connection with
a merger or acquisition. The Options may be granted to any such individual as a
material inducement to such individual accepting employment with the Company or
any of its subsidiaries, provided, however, that any such grant of an Option
shall not become effective unless and until such individual actually commences
employment with the Company or any of its subsidiaries.
5. Shares Subject to this Plan
Subject to adjustment as provided in this Section 5 and Section 7
hereof, the maximum number of shares of Common Stock available for grant under
this Plan shall be 700,000. Such shares of Common Stock may, as the Committee
shall from time to time determine, be either authorized and unissued shares of
Common Stock or issued shares of Common Stock that have been reacquired by the
Company. To the extent that any Option granted under this Plan terminates,
expires or is canceled without having been exercised, the shares covered by such
Option shall again be available for grant under this Plan.
6. Options
(a) Form of Options. Each Option granted under this Plan shall be
evidenced by a Stock Option Agreement in such form as the Committee shall from
time to time approve, which agreement shall comply with and be subject to the
terms and conditions set forth in this Plan. The Options granted under this Plan
shall be clearly identified in the Stock Option Agreement as Non-Qualified Stock
Options.
(b) Exercise Price. The Exercise Price per share of Common Stock under
each Option shall be established by the Committee, but shall not be less than
the Fair Market Value of a share of Common Stock on the date such Option is
granted.
(c) Grant Date. The Grant Date of the Options shall be the date
designated by the Committee and specified in the Stock Option Agreement as the
date the Option is granted.
(d) Vesting of Options. Unless otherwise determined by the Committee
and set forth in the Stock Option Agreement, each Option granted under this Plan
shall become exercisable, to the extent of one-quarter of the aggregate number
of shares optioned thereby, two years after the Grant Date and, cumulatively, to
the extent of an additional one-quarter, at the expiration of each year
thereafter, so that, five years after the Grant Date, each Option shall be fully
exercisable, subject to the provisions set forth elsewhere in this Plan.
Notwithstanding the foregoing, the Committee may declare any outstanding Option
immediately and fully exercisable (but in no event prior to the first
anniversary of the Grant Date). Notwithstanding the foregoing, if the
Participant's employment with the Company is terminated by reason of the
Participant's death, Disability or actual retirement at age 65 or thereafter or
the Participant dies or suffers a Disability within the three month period
following any termination of the Participant's employment by the Company other
than a termination by the Company for Cause (as defined below) or voluntary
resignation by the Participant, one hundred percent (100%) of the Option shall
become vested and exercisable immediately upon the date of the Participant's
death, Disability or retirement.
(e) Limitations on Transfer. No Options granted under this Plan shall
be transferable by the Participants either voluntarily or by operation of law,
otherwise than by last will and testament or by laws of descent and
distribution, and such Option shall be exercised during the lifetime of the
Participant, only by the Participant, or by his or her guardian or legal
representative. In the event of any purported transfer in violation of the
provisions of this Plan, such purported transfer shall, to the extent permitted
by applicable law, be void and of no effect.
(f) Exercise of Options. A Participant electing to exercise an Option
shall give written notice to the Company of such election and of the number of
shares he or she has elected to purchase; provided that no Option may be
exercised as to fewer than 100 shares unless it is then exercised as to all of
the shares then purchasable thereunder. Such notice shall be accompanied by
payment to the Company of the full Exercise Price in cash; provided that, unless
otherwise determined by the Committee, the Exercise Price may be paid in whole
or in part, by surrender or delivery to the Company of shares of Common Stock of
the Company which have been owned by the Participant for more than six months
before the exercise date having a Fair Market Value on the date of exercise
equal to the portion of the Exercise Price being so paid. In addition, a
Participant shall, upon notification of the amount due and prior to or
concurrently with issuance or delivery to the Participant of such shares, pay,
in cash, any amount necessary to satisfy federal, state and local tax
requirements.
(g) Issuance or Delivery of Shares. As soon as practicable after
receipt of the notice and payment referred to in Section 6(f) above, the Company
shall issue or deliver such shares to the Participant at the office of the
Secretary of the Company, 80 Arkay Drive, Hauppauge, New York 11788, or at such
other place as may be mutually acceptable to the Company and the Participant;
provided, however, that the time of such delivery may be postponed by the
Company for such period of time as the Company may require to comply with any
law or regulation applicable to the issuance or transfer of shares. If the
Participant fails for any reason to accept delivery of all or any part of the
number of shares specified in such notice upon tender of delivery thereof, the
Participant's right to purchase such undelivered shares may be terminated by the
Company by notice to the Participant and refund to the Participant of the
Participant's payment. Notwithstanding anything herein to the contrary, the
Company shall not be required to issue or deliver any shares of Common Stock
pursuant to the exercise of any Options, unless and until the Company has
determined, with advice of counsel, that the issuance and delivery of such
shares are in compliance with all applicable laws, regulations of governmental
authorities and, if applicable, the requirements of any exchange on which the
shares of Common Stock are listed or traded. The Company shall use its
reasonable efforts to comply with any such law, regulation or requirement with
respect to the issuance and delivery of such certificates. In addition to the
terms and conditions provided herein, the Company may require that a Participant
make such reasonable covenants, agreements and representations as the Committee,
in its sole discretion, deems advisable in order to comply with any such laws,
regulations or requirements.
(h) Withholding Taxes; Participant Representations. Prior to or
concurrently with issuance or delivery by the Company to the Participant of such
shares, the Participant shall (i) upon notification of the amount due, pay
promptly, in cash, any amount necessary to satisfy applicable federal, state and
local tax requirements, and (ii) if such shares are not then registered under
the Securities Act of 1933, give assurance satisfactory to the Company that such
shares are being purchased for investment and not with a view to the
distribution thereof, and the Participant shall give such other assurance and
take such other action as the Company shall require to secure compliance with
any federal or state securities law applicable to the issuance of shares;
provided that the out-of-pocket expense of such registration or compliance shall
be borne by the Company. (i) Rights as Stockholder. No Participant shall have
the rights of a stockholder with respect to shares covered by an Option until
such Participant becomes the holder of record of such shares.
(j) Expiration of the Options. Except as provided in this Section 6(j),
no Option granted to a Participant may be exercised, unless, at the time of
exercise, the Participant is an employee of the Company or any of its
subsidiaries. Options granted under this Plan to a Participant shall not be
affected by any change of duties or position so long as the Participant
continues to be an employee of the Company. With respect to the Option or any
portion thereof which has not become vested and exercisable, the Option shall
expire on the date the Participant's employment is terminated for any reason.
With respect to any Option or any portion thereof which has become exercisable
(including any Option that becomes exercisable as a result of the Participant's
death, Disability or retirement as provided in Section 6(d)), the Option shall
expire on the earlier of: (i) three months after the Participant's termination
of employment other than for Cause, death or Disability; (ii) the later to occur
of (x) three months after the termination of the Participant's employment by
reason of death or Disability or (y) thirty days after the appointment of a
legal representative or guardian, but in no event more than one year after
termination of employment by reason of death or Disability, (iii) the
commencement of business on the date the Participant's employment is, or is
deemed to have been, terminated for Cause; or (iv) the tenth anniversary of the
Grant Date.
7. Adjustments Upon Changes in Capitalization
(a) In the event of any change in the Company's Common Stock subject to
the Option, by reason of any stock dividend, split-up, reorganization,
liquidation and the like, such adjustment shall be made in the number of shares
subject to the Option and the Exercise Price per share as the Board shall, in
its sole judgment, deem appropriate to give proper effect to such event. No
adjustment shall be made in the requirements set forth in Section 6(f) with
respect to the minimum number of shares that must be purchased upon any exercise
of an Option.
(b) In the event of (i) a dissolution, liquidation, merger or
consolidation of the Company or (ii) a sale of all or substantially all of the
assets of the Company or the sale of substantially all of the assets or stock of
a subsidiary of which the Participant is then an employee, or (iii) a Change in
Control has occurred or is about to occur with respect to the Company, then, the
Board may determine that the Option shall become immediately and fully
exercisable.
8. No Special Employment Rights
Nothing contained in this Plan shall confer upon the Participants any
right with respect to the continuation of their employment or interfere in any
way with the right of the Company or any of its subsidiaries, subject to the
terms of any separate employment agreements to the contrary, at any time to
terminate such employment or to increase or decrease the compensation of the
Participants from the rate in existence at the time of the grant of any Option.
9. Amendments to this Plan; Termination of this Plan
The Committee may, in its absolute discretion, from time to time revise
or amend this Plan; provided, however, that any such amendment shall not impair
or adversely affect a Participant's rights under this Plan or any outstanding
Option without such Participant's written consent. The Committee may at any
time, in its absolute discretion, suspend or terminate this Plan. No Options may
be granted during any suspension of this Plan or after this Plan has been
terminated. The termination of this Plan shall not affect ant Options previously
granted. After this Plan terminates, the function of the Committee under this
Plan will be limited to supervising the administration of Options previously
granted.
10. Miscellaneous
(a) Severability. In the event that any one or more provisions of this
Plan or any Stock Option Agreement, or any action taken pursuant to this Plan or
such Stock Option Agreement, should, for any reason, be unenforceable or invalid
in any respect under the laws of the United States, any state of the United
States or any other government, such unenforceability or invalidity shall not
affect any other provision of this Plan or of such or any other Stock Option
Agreement, but in such particular jurisdiction and instance this Plan and the
affected Stock Option Agreement shall be construed as if such unenforceable or
invalid provision had not been contained therein or as if the action in question
had not been taken thereunder.
(b) Effect on Prior Option Plans. The adoption of this Plan shall have
no effect on outstanding options or awards granted by the Company under any
other plan.
(c) No Obligation to Exercise an Option. The grant to the Participants
of the Options shall impose no obligation upon the Participants to exercise such
Options.
(d) Notices. All notices and other communications hereunder shall be in
writing and shall be given and shall be deemed to have been duly given if
delivered in person, by cable, telegram, telex or facsimile transmission, to the
parties as follows:
If to the Participant, to the Participant's last known address.
If to the Company:
Standard Microsystems Corporation
Attention: Secretary
80 Arkay Drive
Hauppauge, New York 11788
or to such other address as any party may have furnished to the other
in writing in accordance herewith, except that notices of change of address
shall only be effective upon receipt.
(e) Descriptive Headings. The headings in this Plan are for convenience
of reference only and shall not limit or otherwise affect the meaning of the
terms contained herein.
(f) Gender. All references herein to the masculine gender shall include
the feminine.
(g) Governing Law. This Plan shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York, without regard
to the provisions governing conflict of laws.