Exhibit No. 4.2
2005 INDUCEMENT STOCK OPTION AND RESTRICTED STOCK PLAN
OF
STANDARD MICROSYSTEMS CORPORATION
1. Purpose of the Plan
The purpose of this Standard Microsystems Corporation 2005 Inducement
Stock Option And Restricted Stock Plan (the "Plan") is to promote the interests
of Standard Microsystems Corporation, a Delaware corporation (together with its
subsidiaries, "SMSC" or the "Company") and its stockholders by providing
prospective employees of SMSC (including prospective employees who would join
SMSC in connection with any corporate transaction) with an appropriate and
material incentive to accept employment with SMSC. Accordingly, SMSC may, from
time to time, grant to such prospective employees as may be selected in the
manner hereinafter provided, options ("Options") to purchase shares of common
stock, $.10 par value, of Standard Microsystems Corporation ("Common Stock")
and/or awards of restricted Common Stock ("Awards"), subject to the conditions
hereinafter provided.
2. Administration of the Plan
(a) This Plan will be administered by the Compensation Committee (the
"Committee") of the Board of Directors (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
(the "Exchange Act") and "outside directors" within the meaning of Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code") and
Treasury Regulations promulgated thereunder. The Committee shall have and may
exercise all of the powers of the Board under the 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.
(b) The Committee shall have plenary authority in its discretion,
subject to and consistent with the express provisions of the Plan, to direct the
grants of Options or Awards; to determine the numbers of shares of Common Stock
covered by each Option or Award, the purchase price of the Common Stock covered
by each Option, the individuals to whom and the time or times at which Options
or Awards shall be granted or Options may be exercised; 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;
to determine the terms and provisions of, and to cause the Company to enter
into, agreements with Grantees (as defined below) in connection with Options or
Awards that may be granted under the Plan ("Agreements"), which Agreements may
vary from one another, as the Committee shall deem appropriate; to amend any
such Agreement from time to time, with the consent of the Grantee; and to make
all other determinations the Committee may deem necessary or advisable for the
administration of the Plan.
(c) Each Option or Award under this Plan shall be deemed to have been
granted when the determination of the Committee with respect to such Option or
Award is made or, if so determined by the Committee, at a specific future date.
Once an Option has been granted, all conditions and requirements of this Plan
with respect to such Option shall be deemed to be conditions upon the exercise
of the Option but not upon the grant thereof.
(d) Every action, decision, interpretation or determination by the
Committee or the Board with respect to the application or administration of this
Plan shall be final and binding upon the Company and each person holding or
claiming any right or interest pursuant to any Option or Award granted under
this Plan.
(e) 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 or Award. 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.
(f) In the event of a conflict between the terms of this Plan and the
terms of any Agreement, the terms of this Plan, as determined by the Committee
in its discretion, shall govern.
3. Stock Subject to this Plan
(a) The shares of Common Stock to be issued upon exercise of Options or
constituting Awards granted under this Plan shall be made available, at the
discretion of the Board, either from the authorized but unissued shares of
Common Stock or from shares of Common Stock reacquired by the Company, including
shares purchased in the open market. The aggregate number of shares of Common
Stock for which Options and Awards may be granted under this Plan shall not
exceed 1,350,000. The maximum number of shares that may be subject to Options
granted to any one individual within one fiscal year shall be 100,000. Such
aggregate numbers shall be subject to adjustment as provided in paragraph 12. If
any Option granted under this Plan shall expire or terminate for any reason
without having been exercised in full, or if any Common Stock subject to an
Award shall be forfeited, the unpurchased or forfeited shares shall (unless this
Plan shall have been terminated) become available for grant of Options or Awards
to other individuals.
(b) A Grantee to whom an Award has been made shall have, after delivery
to him of, or after notification that there is being held in custody for him, a
certificate or certificates for the number of shares of Common Stock awarded,
absolute ownership of such shares including the right to vote the same and to
receive dividends thereon, subject however, to the terms, conditions and
restrictions described in this Plan and in any Agreement relating to the Award.
4. Eligibility of Grantees
Options and Awards may be granted under this Plan only as a material
inducement to any individual who has neither been employed by SMSC nor served on
the Board to become an employee of SMSC, including individuals who may become
employees of SMSC in connection with a corporate transaction, provided, that an
individual who has been employed by SMSC or served on the Board may also receive
inducement grants of Options and/or Awards under this Plan following a bona fide
break in employment and Board service, as determined under NASD Rule 4350(c)
(each individual receiving an Option or Award, a "Grantee"). Options and Awards
shall not become effective unless and until the Grantee actually commences
employment with SMSC. Eligible individuals may receive grants of either or both
Options and Awards.
5. Option Price
The purchase 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
(as hereinafter defined) of a share of Common Stock on the date such Option is
granted.
6. Restrictions
(a) No Option granted under this Plan shall be transferable by the
Grantee, 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 Grantee, only by the Grantee, or by his or
her guardian or legal representative.
(b) Until the restrictions set forth in this paragraph 6(b) shall lapse
pursuant to paragraph 6(c) or 6(d), shares of Common Stock awarded to a Grantee
pursuant to an Award:
(i) shall not be sold, assigned, transferred, pledged, hypothecated
or otherwise disposed of, and
(ii) shall, if delivered to or to the order of the Grantee, be
returned to the Company forthwith, and all rights of the Grantee to such shares
shall immediately terminate without any payment of consideration by the Company,
if the Grantee's continuous employment with the Company or any of its
subsidiaries shall terminate for any reason, except as provided in paragraph
6(d); provided, however, that the Board shall have the right to waive such
forfeiture, in whole or in part, and in connection with such waiver to impose
any terms or restrictions on the continued ownership of such shares by the
Grantee under the Plan. If the Grantee's interests in the shares of Common Stock
granted pursuant to an Award shall be terminated pursuant to this clause (ii),
the Grantee shall forthwith deliver to the Secretary or any Assistant Secretary
of the Company the certificates for shares of Common Stock so terminated,
accompanied by such instrument of transfer as may be required by the Secretary
or any Assistant Secretary of the Company.
(c) Unless the Committee shall fix a different schedule in an Agreement
relating to an Award, except as set forth in paragraph 6(d), the restrictions
set forth in paragraph 6(b) hereof shall lapse to the extent of 25% of the
shares covered by the Award on each of the first and second anniversaries of the
date of grant of such Award and as to the remaining 50% on the third anniversary
of the date of grant.
(d) Any provision of paragraph 6(b) hereof to the contrary
notwithstanding, if a Grantee who has been in the continuous employment of the
Company or of any subsidiary since the date on which an Award was granted to him
shall, while in such employment, die, terminate employment by reason of
disability as defined in this paragraph 6(d), or attain age 65, and any of such
events shall occur more than one year after the date on which an Award shall
have been granted to him, then the restrictions set forth in paragraph 6(b)
hereof shall lapse, as to all shares of Common Stock awarded to such Grantee
pursuant to such Award, on the date of such event. As used in this paragraph
6(d) the term "disability" shall mean a condition that is within the meaning of
Section 22(e)(3) of the Code.
(e) Each Grantee granted an Award shall agree that, subject to the
provisions of paragraph 6(f):
(i) no later than the date of the lapse of the restrictions
mentioned in paragraph 6(b) hereof and in any Agreement respecting the Award,
the Grantee will pay to the Company, or make arrangements satisfactory to the
Committee regarding payment of, any federal, state or local withholding taxes of
any kind required by law to be paid by the Company or its subsidiaries with
respect to the shares of Common Stock subject to the Award, and
(ii) the Company and its subsidiaries shall, to the extent
permitted by law, have the right to deduct from any payment of any kind
otherwise due to the Grantee any federal, state or local taxes of any kind
required by law to be withheld with respect to the shares of Common Stock
subject to the Award.
(f) If a Grantee granted an Award properly files with the Internal
Revenue Service a written election within 30 days of the date of grant, to
include in gross income for federal income tax purposes an amount equal to the
fair market value of the shares of Common Stock awarded on the date of grant,
the Grantee shall make arrangements satisfactory to the Committee to pay in the
year of such grant any federal, state or local withholding taxes required to be
paid by the Company or its subsidiaries with respect to such shares. If the
Grantee shall fail to make such payments, the Company and its subsidiaries
shall, to the extent permitted by law, have the right to deduct from any payment
of any kind otherwise due to the Grantee any federal, state or local taxes of
any kind required by law to be withheld with respect to such shares of Common
Stock.
(g) Certificates evidencing shares of Common Stock subject to Awards
shall bear an appropriate legend referring to the terms, conditions, and
restrictions described in the Plan and in any Agreement relating to the Award.
Any attempt to dispose of any such shares of Common Stock in contravention of
the terms, conditions and restrictions described in the Plan or any related
Agreement shall be ineffective. The shares acquired, together with stock powers
(if required by the Company) or other instruments of transfer appropriately
endorsed in blank by the Grantee, shall be held by the Company, for the use and
benefit and subject to the rights of such Grantee as owner thereof. After the
lapse of all restrictions with respect to particular shares, the Company shall
deliver the certificates for such shares held by the Company to the Grantee
concerned.
7. Exercise of Option
(a) Each Option granted under this Plan shall by its terms expire not
later than ten years from the date on which it was granted.
(b) Unless the Committee shall fix a different schedule at the time a
particular Option is granted, each Option granted under this Plan shall vest and
become exercisable, as to 20% of the Common Stock subject to such Option on each
of the first five anniversaries of the Option grant date, provided that the
Grantee remains continuously employed by SMSC through each such vesting date.
Notwithstanding the foregoing, the Committee may declare any outstanding Option
immediately and fully vested and exercisable (but in no event prior to the first
anniversary of the date of grant).
(c) A Grantee 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 purchase price in cash; provided that, unless otherwise determined by the
Committee, the purchase price may be paid in whole or in part, by surrender or
delivery to the Company of Common Stock of the Company having a fair market
value on the date of exercise equal to the portion of the purchase price being
so paid. In addition, a Grantee shall, upon notification of the amount due and
prior to or concurrently with delivery to the Grantee of a certificate
representing such shares, pay, in cash, any amount necessary to satisfy federal,
state and local tax requirements.
(d) No Grantee shall have the rights of a stockholder with respect to
shares covered by an Option until such Grantee becomes the holder of record of
such shares.
(e) Except as provided in paragraph 8 or paragraph 9, no Option granted
to a Grantee may be exercised, unless, at the time of exercise, the Grantee is
an employee of the Company. Options granted under the Plan to a Grantee shall
not be affected by any change of duties or position so long as the Grantee
continues to be an employee of the Company.
(f) Notwithstanding any other provision of this Plan, the Company shall
not be required to issue or deliver any share of stock upon the exercise of an
Option prior to (a) the admission of such share to listing on any stock exchange
or automated quotation system on which the Company's Common Stock may then be
listed and (b) the completion of such registration or other qualification of
such share under any state or federal law, rule or regulation as the Company
shall determine to be necessary or advisable.
8. Termination of Grantee's Relationship to the Company
(a) In the case of an Option granted to a Grantee, if the Grantee shall
cease to be an employee of the Company, other than by reason of death or
permanent and total disability within the meaning of Section 22(e)(3) of the
Code, any Option held by such Grantee may be exercised (to the extent that the
Grantee was entitled to exercise such Option at the termination of such
employment) at any time within three months after such termination, but not
later than the expiration date of such Option; provided, however, that any
Option held by a Grantee whose employment shall be terminated by the Company for
cause shall, to the extent not theretofore exercised, forthwith terminate.
(b) Notwithstanding the provisions of paragraph 7 specifying the
installments in which an Option shall be vested and exercisable, in the case of
an Option granted to a Grantee, unless the Committee specifies otherwise at the
time a particular Option is granted, upon a Grantee's actual retirement at age
65 or thereafter, the Option shall be exercisable (within the time periods set
forth in paragraph 8(a)) as to all shares of Common Stock remaining subject to
the Option.
(c) Any Agreement may contain such provisions as the Board shall
approve with reference to the determination of the date employment terminates
for purposes of the Plan (which provisions may allow periods of consultancy to
be treated as periods of employment) and the effect of leaves of absence, which
provisions may vary from one another.
(d) In the case of an Option or Award granted to a Grantee whose
employment relationship terminates prior to the applicable vesting date of such
Option or Award but the Grantee continues to serve SMSC as a consultant, the
Grantee's consultancy shall be treated as employment for purposes of this Plan.
(e) Nothing in the Plan or in any Agreement shall confer upon any
Grantee any right to continue in the employ of the Company or affect the right
of the Company to terminate such employment relationship at any time for any
reason, or for no reason.
9. Death or Disability of Grantee
Notwithstanding the provisions of paragraph 7 specifying installments
in which an Option shall be vested and exercisable, unless the Committee
specifies otherwise at the time a particular Option is granted, if a Grantee
shall die or become permanently and totally disabled within the meaning of
Section 22(e)(3) of the Code, while he or she is employed by the Company or
within three months after the termination of his or her employment (other than
termination by the Company for cause), such Option may be exercised, as to all
shares of Common Stock remaining subject to the Option, within the later to
occur of (a) three months after the termination of the Grantee's employment or
(b) thirty days after the appointment of a legal representative or guardian, but
in no case more than one year after termination of employment and in no case
after the original expiration date of the Option.
10. Amendments to the Plan
The Board may at any time terminate or from time to time modify, amend
or suspend this Plan, including any amendment for the purpose of complying with
or securing the benefit of any change in the Exchange Act or the Code or any
regulation adopted under either. No suspension, termination, modification or
amendment of the Plan may, without the consent of the Grantee to whom an Option
or Award shall theretofore have been granted, materially and adversely affect
the rights of such Grantee under such Option or Award, provided, that SMSC shall
have the right, in connection with a corporate transaction or otherwise, to
terminate any or all Awards under this Plan at any time in exchange for cash or
other consideration equal to the then-current fair value of any such Award and,
with respect to each share underlying an Option, the excess, if any, of the fair
market value per share over the exercise price per share, as determined in the
sole discretion of the Committee, and no such termination shall constitute a
material and adverse affect on the rights of any Grantee.
11. Granting of Options and Awards
(a) The grant of any Option or Award pursuant to the Plan shall be
entirely in the discretion of the Committee, and nothing in the Plan shall be
construed to confer on any Grantee any right to receive any Option or Award
under the Plan.
(b) Subject to the terms, conditions and restrictions of the Plan, the
Committee shall, in its sole discretion, select the Grantees to whom Options or
Awards are to be granted without limiting the generality of Paragraph 2, the
Committee shall also have power to determine (i) whether Options or Awards are
to be made, (ii) the number of shares of Common Stock covered by each Option or
Award, (iii) the time or times when Options or Awards will be made, and (iv) in
accordance with paragraph 6, the restrictions applicable to shares of Common
Stock awarded pursuant to Awards.
(c) The grant of an Option or Award pursuant to the Plan shall not
constitute an agreement or an understanding, express or implied, to employ the
Grantee for any specified period.
12. Adjustments upon Changes in Capitalization
(a) The Board may at any time make such provision as it shall consider
appropriate for the adjustment of the number and class of shares covered by each
Option or Award and the price as to which an Option shall be exercisable, in the
event of changes in the outstanding Common Stock of the Company by reason of any
stock dividend, split-up, reorganization, liquidation, and the like. In the
event of any such change in the outstanding Common Stock of the Company, the
aggregate number of shares as to which Options and Awards may be granted under
the Plan shall be appropriately adjusted by the Board, whose determination shall
be conclusive. No adjustment shall be made in the requirements set forth in
paragraph 7 with respect to the minimum number of shares that must be purchased
upon any exercise of an Option.
(b) In the event (i) of a dissolution, liquidation, merger or
consolidation of the Company or (ii) of 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 a Grantee is then an employee, or (iii) a change
in control (as hereinafter defined) of the Company has occurred or is about to
occur, then, the Board may determine that each Option and/or Award under the
Plan, if such event shall occur with respect to the Company, or each Option
granted to an employee of such subsidiary, shall become immediately and fully
exercisable or that restrictions on shares subject to any Award shall
immediately lapse.
13. Effectiveness of the Plan and Options and Awards; Termination of the
Plan
This Plan shall be effective as of the date that it receives Board
approval, which shall be the date of the consummation of the transaction
described in the Share Purchase Agreement by and among Standard Microsystems
Corporation and the Shareholders of OASIS SiliconSystems Holding AG, dated as of
March 30, 2005 (the "Effective Date"). No Option or Award under this Plan shall
become effective until it has been approved by the Committee. No Options or
Awards shall be made on or after the tenth anniversary of the Effective Date,
provided, that any Options or Awards outstanding on the Effective Date shall
continue to be governed by this Plan until they are terminated.
14. Severability
In the event that any one or more provisions of the Plan or any
Agreement, or any action taken pursuant to the Plan or such 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 the Plan
or of such or any other Agreement, but in such particular jurisdiction and
instance the Plan and the affected 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.
15. Effect on Prior Option and Award Plans
The adoption of the 2005 Plan shall have no effect on outstanding
Options or Awards granted by the Company under any other plan or agreement.
16. 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 Grantee, to the Grantee'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.
17. 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.
18. Certain Definitions
(a) The terms "parent" and "subsidiary" shall have the meanings
respectively, of "parent corporation" and "subsidiary corporation" as set forth
in Sections 424(e) and (f) of the Code, respectively.
(b) The term "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.
(c) The term "termination of employment for cause" or words to like
effect shall mean termination by the Company of the employment of the Grantee by
reason of the Grantee's (i) willful refusal to perform his or her obligations to
the Company, (ii) willful 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.
(d) The term "Company" shall include SMSC and any parent or subsidiary
of SMSC.
(e) The term "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 Exchange Act. The determination
whether and when a change in control has occurred or is about to occur shall be
made by vote of a majority of the Non-Employee Directors who shall have
constituted the Board immediately prior to the occurrence of the event or series
of events constituting such change in control.
(f) The term "corporate transaction" shall mean any corporate event or
transaction (including, but not limited to, a change in the shares of SMSC or
the capitalization of SMSC) such as a merger, consolidation, reorganization,
recapitalization, separation, stock dividend, stock split, reverse stock split,
split up, spin-off, or other distribution of stock or property of SMSC,
combination or exchange of shares of Common Stock, dividend in kind,
extraordinary cash dividend or other change in capital structure or distribution
(other than normal cash dividends) to shareholders of SMSC, or any similar
corporate event.