Exhibit 4.1
This Document Constitutes Part of a
Prospectus Covering Securities That
Have Been Registered under The
Securities Act of 1933.
Dated: February 8, 1996
BOATRACS, INC.
1996 STOCK OPTION PLAN
(as amended March 24, 1997)
1. Purposes of the Plan.
The Boatracs, Inc. 1996 Stock Option Plan (the "Plan") is
intended to promote the interests of Boatracs, Inc., a California
corporation (the "Company"), by providing a method whereby (i)
employees of the Company (or its parent or subsidiary
corporations) responsible for the management, growth and
financial success of the Company (or its parent or subsidiary
corporations), and (ii) non-employees who provide valuable
services to the Company (or its parent or subsidiary
corporations), as determined by the Plan Administrator, may be
offered incentives and rewards which will encourage them to
acquire a proprietary interest, or otherwise increase their
proprietary interest, in the Company and continue to render
services to the Company (or its parent or subsidiary
corporations).
2. Administration of the Plan.
(a) The Plan shall be administered by the Company's Board of
Directors (the "Board") or, to the extent provided by the Board,
a committee (the "Committee") appointed by the Board, which shall
consist of not less than two non-employee directors (as such term
is defined in Rule 16b-3, or any successor rule, under the
Securities Exchange Act of 1934), who shall serve at the pleasure
of the Board; provided, however, that the Plan may be
administered by the Board. For purposes of the Plan, the
term "Plan Administrator" shall mean the Board, or if the
Board delegates responsibility for any matter to the Committee.
The Board may alter the Plan administration so that the
Plan administration is structured to comply with the rules
governing a discretionary plan under Rule 16b-3.
(b) Subject to the provisions of the Plan, the Plan
Administrator shall have full power and authority to select the
Optionees (as defined in Section 3) to be granted the options
under the Plan, and to determine (i) whether each granted option
is to be an incentive stock option ("Incentive Stock Option")
which satisfies the requirements of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Internal Revenue Code") or
a non-statutory Stock Option not intended to meet such
requirements, (ii) the number of shares to be subject to such
option; (iii) the exercise prices of such shares, (iv) the terms
of exercise, (v) the expiration dates and (vi) all other terms
and conditions upon which such option may be exercised. The Plan
Administrator shall have the full power and authority (subject to
the provisions of the Plan) to establish such rules and
regulations as it may deem appropriate for the proper
administration of the Plan and to make such determinations under,
and issue such interpretations of, the Plan and any outstanding
option as it may deem necessary or advisable. Decisions of the
Plan Administrator shall be final and binding on all parties who
have an interest in the Plan or any outstanding option. No
person acting under this subsection shall be held liable for any
action or determination made in good faith with respect to the
Plan or any option granted under the Plan.
(c) The Company shall indemnify and hold harmless each Committee
member and each director of the Company, and the estate and heirs
of such Committee member or director, against all claims,
liabilities, expenses, penalties, damages or other pecuniary
losses, including legal fees, which such Committee member or
director, his or her estate or heirs may suffer as a result of
his or her responsibilities, obligations or duties in connection
with the Plan, to the extent that insurance, if any, does not
cover the payment of such items.
3. Eligibility for Option Grants.
The persons eligible to receive option grants pursuant to
the Plan ("Optionees") are as follows:
(i) employees of the Company (or its parent or subsidiary
corporations) who render services which contribute to the success
and growth of the Company (or its parent or subsidiary
corporations) or which may reasonably be anticipated to
contribute to the future success and growth of the Company (or
its parent or subsidiary corporations); and
(ii) non-employees who provide valuable services to the
Company (or its parent or subsidiary corporations).
4. Stock Subject to the Plan.
(a) The stock issuable under the Plan shall be shares of
the Company's authorized but unissued or reacquired common stock
(the "Common Stock"). The aggregate number of shares which may be
issued under the Plan shall not exceed 1,000,000 shares of Common
Stock. The total number of shares issuable under the Plan shall
be subject to adjustment from time to time in accordance with the
provisions of this Section 4.
(b) Should an option be terminated for any reason without
being exercised or surrendered in whole or in part, the shares
subject to the portion of the option not so exercised or
surrendered shall be available for subsequent option grants under
the Plan.
(c) In the event that the outstanding shares of Common
Stock issuable under the Plan as a class are increased or
decreased, or changed into or exchanged for a different number or
kind of shares or securities, as a result of any Corporate
Transactions (as defined in Section 7), stock splits, stock
dividends, or the like affecting the outstanding Common Stock as
a class, then appropriate adjustments shall be made to the
aggregate number of shares issuable under the Plan and to the
number of shares and price per share of the Common Stock subject
to each outstanding option, in order to prevent the dilution or
enlargement of benefits under such outstanding options.
5. Terms and Conditions of Options.
Options granted pursuant to the Plan shall be authorized by
action of the Plan Administrator and may, at the Plan
Administrator's discretion, be either Incentive Stock Options or
non-statutory Stock Options. Individuals who are not employees of
the Company or its parent or subsidiary corporations may only be
granted non-statutory Stock Options. Each granted option shall be
evidenced by one or more written instruments in a form approved
by the Plan Administrator; provided, however, that each such
instrument shall comply with and incorporate the terms and
conditions specified in this Section 5.
(a) Option Price.
(1) The option price per share (the "Option Price"), (a)
with respect to a non-qualified Stock Option, shall be between
eighty-five percent (85%) and one hundred percent (100%) of the
fair market value of a share of Common Stock on the date of the
option grant, as determined by the Company on a case by case
basis and (b) with respect to an Incentive Stock Option, shall,
subject to subsection (a)(2) below, be one hundred percent (100%)
of the fair market value of a share of Common Stock on the date
of the option grant.
(2) 10% Shareholder. If any Optionee under the Plan is on
the date of grant of an Incentive Stock Option the owner of stock
(as determined under Section 424(d) of the Internal Revenue Code)
possessing ten percent (10%) or more of the total combined voting
power of all classes of stock of the Company or any one of its
parent or subsidiary corporations (a "10% Shareholder"), then the
option price per share acquired pursuant to exercise of an
Incentive Stock Option shall not be less than one hundred and ten
percent (110%) of the fair market value of a share of Common
Stock on the date of the option grant.
(3) The option price shall become immediately due upon
exercise of the option and shall, subject to the provisions of
the instrument evidencing the grant, be payable in one of the
alternative forms specified below:
(i) full payment in cash or cash equivalents; or
(ii) full payment in shares of Common Stock having a fair
market value on the Exercise Date (as defined below) in an amount
equal to the option price; or
(iii) a combination of shares of Common Stock valued at
fair market value on the Exercise Date and cash or cash
equivalents, equal in the aggregate to the option price; or
(iv) any other form of consideration as the Plan
Administrator may approve.
For purposes of this Section 5(a)(3), the Exercise Date shall be
the first date on which the Company shall have received both
written notice of the exercise of the option and payment of the
option price for the purchased shares of Common Stock.
(4) For all valuation purposes under the Plan, the fair
market value of a share of Common Stock shall be determined in
accordance with the following provisions:
(i) If the Common Stock is not at the time listed or
admitted to trading on any stock exchange but is traded in the
over-the-counter market, the fair market value shall be the mean
between the highest bid and lowest asked prices (or, if such
information is available, the closing selling price) of one share
of Common Stock in the over-the-counter market, as such prices
are reported by the National Association of Securities Dealers
through its NASDAQ system or any successor system, on the date of
the option grant or Exercise Date, as the case may be. If there
are no reported bid and asked prices (or closing selling price)
for the Common Stock on the date in question, then the mean
between the highest bid price and lowest asked price (or the
closing selling price) on the last preceding date for which such
quotations exist shall be determinative of fair market value.
(ii) If the Common Stock is at the time listed or admitted
to trading on any stock exchange, then the fair market value
shall be the closing selling price of one share of Common Stock
on the date in question on the stock exchange determined by the
Plan Administrator to be the primary market for the Common Stock,
as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no reported sale of
Common Stock on such exchange on the date in question, then the
fair market value shall be the closing selling price on the
exchange on the last preceding date for which such quotation
exists.
(iii) If the Common Stock at the time is neither listed nor
admitted to trading on any stock exchange nor traded in the over-
the-counter market, then the fair market value shall be
determined by the Plan Administrator in accordance with Section
260.140.50 of the California Code of Regulations or any successor
rule.
(b) Option Period. The term of each option shall commence
on the date of grant of the option and shall be seven (7) years,
except that if an Incentive Stock Option is granted to an
Optionee who, immediately before the grant of the Incentive Stock
Option, owns stock representing more than ten percent (10%) of
the total combined voting power of all classes of stock of the
Company or its parent or subsidiary corporations, the exercise
period specified in the option agreement for which the Incentive
Stock Option thereunder is granted, shall not exceed five years
from the date of grant. Subject to other provisions of the Plan,
(a) each Incentive Stock Option shall be exercisable during its
term as to twenty percent (20%) of the Incentive Stock Option
shares during the twelve (12) months beginning on the first
anniversary of the date of grant, and twenty percent (20%)
thereafter during each of the four (4) next successive twelve
(12) month periods, and (b) each non-qualified Stock Option shall
be exercisable over a five (5) year term, as determined by the
Company on a case by case basis, provided, however, that each non-
qualified Stock Option shall be exercisable at a rate of at least
twenty percent (20%) per year over five (5) years from the date
the non-qualified Stock Option is granted. Additionally, if an
Optionee shall not in any period purchase all of the option
shares which the Optionee is entitled to purchase in such period,
then the Optionee may purchase all or any part of such shares
subject to this Agreement at any time after the end of such
period and prior to the expiration of the option.
(c) Effect of Termination.
(1) Subject to the other provisions of the Plan, should an
Optionee cease to be a service provider to the Company ("Service
Provider"), or employee or director, for any reason (including
death or permanent disability as defined in Section 105(d)(4) of
the Internal Revenue Code), then any option or options granted
under the Plan to such Optionee and outstanding on the Cessation
Date (as defined below) shall remain exercisable for a period not
to exceed six (6) months from the date of such cessation of
Service Provider, employee or director, status (the "Cessation
Date"), the specific amount of time to be determined at the time
of granting the option; provided, however, that under no
circumstances shall such options be exercisable after the
expiration date of the option term specified in the instrument
evidencing the option grant. Notwithstanding the foregoing, such
shorter period of exercisability following the Cessation Date, as
determined by the Company at the time of original grant, shall in
no event be less than: (i) six (6) months in the event that
employment termination is due to the death or disability of the
Optionee and (ii) thirty (30) days in the event that employment
termination is due to any other reason. Each such option shall,
during such six (6) month or shorter period, be exercisable to
the extent of the number of shares (if any) for which the option
is exercisable on the Cessation Date (the "Vested Shares"), and
to the extent that on the Cessation Date the number of shares (if
any) for which the option is not exercisable will become
exercisable within the following year, the Optionee may exercise
the option for a percentage of such shares based on the following
fraction: the numerator shall be the number of days from the last
anniversary date of the grant of the option to the Cessation Date
and the denominator shall be the number of days from the last
anniversary date of the grant of the option to the next
anniversary date of the grant of the option. Upon the expiration
of such six (6) month or shorter period or (if earlier) upon the
expiration of the option term, the option shall terminate and
cease to be exercisable.
(2) Notwithstanding subsection (c)(1) above, the Plan
Administrator shall have complete discretion, exercisable either
at the time the option is granted or at the Cessation Date to
provide that options held by such Optionee may be exercised not
only with respect to Vested Shares as of the Cessation Date, but
also with respect to one or more subsequent installments of
shares for which the option would otherwise have become
exercisable had such cessation of Service Provider status not
occurred.
(3) For purposes of the Plan, the Optionee shall be deemed
to be a Service Provider of the Company for so long as the
Optionee renders periodic services to the Company or one or more
of its parent or subsidiary corporations.
(d) No Employment or Service Contract. Nothing in the Plan
shall confer upon the Optionee any right to continue in the
service of the Company (or any parent or subsidiary corporation
of the Company employing or retaining the Optionee) for any
period of specific duration or interfere with or otherwise
restrict in any way the rights of the Company (or any parent or
subsidiary corporation of the Company employing or retaining
Optionee) or the Optionee, to terminate the service provider
status of Optionee at any time for any reason or no reason
whatsoever, with or without cause.
(e) Stockholder Rights. An Optionee shall have none of the
rights of a stockholder with respect to any shares covered by the
option until such individual shall have duly exercised the option
and paid the option price.
6. Exercise of Options.
(a) Each Option may be exercised in whole or in part (but
not as to fractional shares) by delivering it for surrender or
endorsement to the Company, attention of the Corporate Secretary,
at the Company's principal office, together with payment of the
Exercise Price and an executed Notice and Agreement of Exercise
in the form prescribed by the Company.
(b) Exercise of each Option is conditioned upon the
agreement of the Optionee to the terms and conditions of this
Plan and of such Option as evidenced by the Optionee's execution
and delivery of a Notice and Agreement of Exercise in a form to
be determined by the Committee in its discretion. Such Notice and
Agreement of Exercise shall set forth the agreement of the
Optionee that: (a) no Option Shares will be sold or otherwise
distributed in violation of the Securities Act of 1933 (the
"Securities Act") or any other applicable federal or state
securities laws, (b) each Option Share certificate may be
imprinted with legends reflecting any applicable federal and
state securities law restrictions and conditions, (c) the Company
may comply with said securities law restrictions and issue "stop
transfer" instructions to its Transfer Agent and Registrar
without liability, (d) each Optionee will timely file all reports
required under federal securities laws, and (e) each Optionee
will report all sales of Option Shares to the Company in writing
on a form prescribed by the Company.
(c) No Option shall be exercisable unless and until any
applicable registration or qualification requirements of federal
and state securities laws, and all other legal requirements, have
been fully complied with. The Company will use reasonable efforts
to maintain the effectiveness of a Registration Statement under
the Securities Act for the issuance of Options and shares
acquired thereunder, but there may be times when no such
Registration Statement will be currently effective. The exercise
of Options may be temporarily suspended without liability to the
Company during times when no such Registration Statement is
currently effective, or during times when, in the reasonable
opinion of the Committee, such suspension is necessary to
preclude violation of any requirements of applicable law or
regulatory bodies having jurisdiction over the Company. If any
Option would expire for any reason except the end of its term
during such a suspension, then if exercise of such Option is duly
tendered before its expiration, such Option shall be exercisable
and exercised (unless the attempted exercise is withdrawn) as of
the first day after the end of such suspension. The Company
shall have no obligation to file any Registration Statement
covering resales of Option Shares.
(d) Withholding Taxes. The Company shall have the right at
the time of exercise of any Stock Option to make adequate
provision for any federal, state, local, or foreign taxes which
it believes are or may be required by law to be withheld with
respect to such exercise.
(e) Dollar Limitation. The aggregate fair market value
(determined as of the respective date or dates of grant) of the
Common Stock for which one or more options granted to any
Employee under the Plan (or any other option plan of the Company
or its parent or subsidiary corporations) may for the first time
become exercisable as Incentive Stock Options during any one
calendar year shall not exceed the sum of One Hundred Thousand
Dollars ($100,000). In the event that Section 422 of the
Internal Revenue Code is amended to alter the limitation set
forth therein so that following such amendment such limitation
shall differ from the $100,000 limitation set forth above, the
dollar limitation of this Section 6(e) shall be automatically
adjusted accordingly. To the extent the Employee holds two or
more such options which become exercisable for the first time in
the same calendar year, the foregoing limitation on the
exercisability thereof as Incentive Stock Options shall be
applied on the basis of the order in which such options are
granted, and any Incentive Stock Options subject to the
limitations of this Section 6(e) shall be treated as non-
qualified Stock Options subject to the applicable terms and
conditions of the Plan.
7. Corporate Transactions.
(a) In the event of any of the following transactions (a
"Corporate Transaction"):
(i) a merger or consolidation in which the Company is not
the surviving entity, except for a transaction the principal
purpose of which is to change the State of the Company's
incorporation,
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company, or (iii) any
reverse merger in which the Company is the surviving entity but
in which fifty percent (50%) or more of the Company's outstanding
voting stock is transferred to holders different from those who
held the stock immediately prior to such merger, then each
outstanding option which is not to be assumed by the successor
corporation or parent thereof (or to be replaced with a
comparable option to purchase shares of the capital stock of such
successor corporation or parent thereof) automatically shall be
accelerated so that each such option, immediately prior to the
specified effective date for such Corporate Transaction, shall
become fully exercisable with respect to the total number of
shares of Common Stock purchasable under such option. Any such
accelerated options not exercised as of the consummation of the
Corporate Transaction shall terminate and cease to be
exercisable, unless assumed by the successor corporation or
parent thereof (or replaced with a comparable option to purchase
shares of the capital stock of such successor corporation or
parent thereof).
(b) In connection with any Corporate Transaction, the
exercisability of any accelerated options under the Plan as an
Incentive Stock Option shall remain subject to the applicable
dollar limitation of Section 6(e).
(c) The Plan Administrator shall have the right and power
at any time to waive in whole or in part, absolutely or
conditionally, any right of the Company contained in any
instrument or option agreement evidencing any options granted
under the Plan.
(d) The grant of options under the Plan shall in no way
affect the right of the Company to adjust, reclassify, reorganize
or otherwise change its capital or business structure or to
merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets.
8. Amendment of the Plan.
(a) The Board shall have complete and exclusive power and
authority to amend or modify the Plan in any or all respects
whatsoever; provided, however, that no such amendment or
modification shall, without the consent of the holders, adversely
affect rights and obligations with respect to options at the time
outstanding under the Plan; and provided further, that the Board
shall not, without the approval of the stockholders of the
Company where required by law.
(b) The provisions of this Plan pertaining to Incentive
Stock Options are intended to comply with all requirements of the
Internal Revenue Code pertaining to qualification of such
incentive stock options as Incentive Stock Options under the
Internal Revenue Code and all provisions of the Plan with respect
thereto shall be construed in a manner consistent therewith.
9. Effective Date and Term of Plan.
(a) The Plan shall become effective when adopted by the Board,
but no option granted under the Plan shall become exercisable
unless and until the Plan shall have been approved by the
shareholders of the Company. If such shareholder approval is not
obtained within twelve (12) months after the date of the Board's
adoption of the Plan, then all options previously granted under
the Plan shall terminate and no further options shall be granted.
Subject to such limitation, the Plan Administrator may grant
options under the Plan at any time after the Plan effective date
and before the date fixed herein for termination of the Plan.
(b) Unless sooner terminated in accordance with the provisions
hereof, the Plan shall terminate upon the earlier of (i) the
expiration of the eight (8) year period measured from the date of
the Board's adoption of the Plan or (ii) the date on which all
shares available for issuance under the Plan shall have been
issued or canceled pursuant to the exercise or surrender of
options granted under the Plan.
10. Regulatory Approvals.
The implementation of the Plan, the granting of any option
under the Plan, and the issuance of Common Stock upon the
exercise or surrender of any such option, shall be subject to the
procurement by the Company of all approvals and permits required
by regulatory authorities having jurisdiction over the Plan, the
options granted under the Plan and the Common Stock issued
pursuant to the Plan.
11. Requests for Information.
For additional information about the Plan or the Plan
Administrator, please direct all such requests to the Chief
Financial Officer of Boatracs, Inc., 6440 Lusk Boulevard, Suite
D201, San Diego, CA 92121, telephone number (619) 587-1981.
12. Financial Reports.
The Company shall deliver financial and other information
regarding the Company, on an annual or other periodic basis, to
each individual holding an outstanding option under the Plan, to
the extent the Company is required to provide such information
pursuant to Section 260.140.46 (or any successor thereto) of the
Rules of the California Corporations Commissioner.
13. Successors in Interest.
The Company shall not assign or delegate to any other person
this Plan or any rights or obligations under this Plan. Subject
to any restriction on transferability contained in this Plan,
this Plan shall be binding upon and shall inure to the benefit of
the successors-in-interest and assigns of each party to this
Plan. Nothing in this Paragraph shall create any rights
enforceable by any person not a party to this Plan, except for
the rights of the successors-in- interest and assigns of each
party to this Plan, unless such rights are expressly granted in
this Plan to other specifically identified persons.
14. Governing Law.
This Plan shall be construed in accordance with, and
governed by, the laws of the State of California.
15. Attorney's Fees.
In the event any litigation, arbitration, mediation, or
other proceeding ("Proceeding") is initiated by any party(ies)
against any other party(ies) to enforce, interpret or otherwise
obtain judicial or quasi-judicial relief in connection with this
Plan the prevailing party(ies) in such Proceeding shall be
entitled to recover from the unsuccessful party(ies) all costs,
expenses, and actual attorney's and expert witness fees relating
to or arising out of (a) such Proceeding (whether or not such
Proceeding proceeds to judgment), and (b) any post- judgment or
post-award proceeding including without limitation one to enforce
any judgment or award resulting from any such Proceeding. Any
such judgment or award shall contain a specific provision for the
recovery of all such subsequently incurred costs, expenses, and
actual attorney's and expert witness fees.
16. Prior Understandings.
This Plan contains the entire agreement between the parties
with respect to the subject matter of the Plan, is intended as a
final expression with respect to such terms as are included in
the Plan, and supersedes all negotiations, stipulations,
understandings, agreements, representations and warranties, if
any, with respect to such subject matter, which precede or
accompany the execution of the Plan.
17. Arbitration.
All disputes pertaining to this Plan shall be resolved by
the American Arbitration Association pursuant to its rules in San
Diego, California.
18. Option Non-Transferable; Exceptions
This option shall be neither transferable nor assignable by
Optionee other than by will or by the laws of descent and
distribution and may be exercised, during Optionee's lifetime,
only by Optionee.