EXHIBIT 4.1
AUDIOLOGIC, INC.
1992 STOCK OPTION PLAN
(AS AMENDED THROUGH AUGUST 10, 1993)
1. PURPOSE OF PLAN. This Stock Option Plan is
intended to encourage ownership of shares of AudioLogic, Inc.
(the "Corporation") by key Employees and Consultants of the
Corporation, thereby providing additional incentive for such
Employees and Consultants to promote the success of the
business. Options granted hereunder may be either Incentive
Stock Options or Nonstatutory Stock Options, at the discretion
of the Board and as reflected in the terms of the written
option agreement.
2. DEFINITIONS. As used herein, the following
definitions shall apply:
(a) "BOARD" shall mean the Committee, if one
has been appointed, or the Board of Directors of the
Corporation, if no Committee is appointed.
(b) "CODE" shall mean the Internal Revenue
Code of 1986, the rules and regulations promulgated thereunder
and the interpretations thereof, all as from time to time in
effect.
(c) "CORPORATION" shall mean AudioLogic, Inc.,
a Colorado corporation.
(d) "COMMITTEE" shall mean the Committee
appointed by the Board of Directors in accordance with Section
4(a) of the Plan, if one is appointed.
(e) "CONSULTANT" shall mean any person,
including directors, performing services for the benefit of
the Corporation or any Parent or Subsidiary of the Corporation
as an independent consultant or adviser.
(f) "CONTINUOUS STATUS AS AN EMPLOYEE OR A
CONSULTANT" shall mean the absence of any interruption or
termination of service as an Employee or a Consultant, as
applicable. Continuous Status as an Employee shall not be
considered interrupted in the case of sick leave, military
leave, or any other leave of absence approved by the Board,
provided that either such leave is for a period of not more
than ninety (90) days or reemployment upon the expiration of
such leave is provided or guaranteed by contract or statute.
(g) "EMPLOYEE" shall mean any person employed
by the Corporation or any Parent or Subsidiary of the
Corporation. The payment of a director's fee by the
Corporation shall not be sufficient to constitute "employment"
by the Corporation.
(h) "AFTER MARKET VALUE" shall mean the
average of the closing bid and asked prices of a share of
Common Stock, as reported by The Wall Street Journal (or, if
not reported, as otherwise quoted by the National Association
of Securities Dealers through NASDAQ), on the date of the
grant of the Option, or, if the Common Stock is listed on the
NASDAQ National Market System or is listed on a national stock
exchange, the closing price on such system or such exchange on
the date of the grant of the Option, as reported in The Wall
Street Journal. In the event the Common Stock is not traded
publicly, the Fair Market Value of a share of Common Stock on
the date of the grant of the Option shall be determined, in
good faith, by the Board or the Committee and such
determination shall be conclusive for all purposes. The Board
or Committee shall take into account such factors affecting
value as it, in its sole and absolute discretion, may deem
relevant.
(i) "INCENTIVE STOCK OPTION" shall mean an
Option intended to qualify as an incentive stock option within
the meaning of Section 422 of the Code.
(j) "NONSTATUTORY STOCK OPTION" shall mean an
Option not qualifying as an Incentive Stock Option.
(k) "OPTION" shall mean a stock option granted
pursuant to the Plan.
(l) "OPTIONED STOCK" shall mean the Stock
subject to an Option.
(m) "OPTIONEE" shall mean an Employee or
Consultant who receives an Option.
(n) "PARENT" shall mean a "parent
corporation," whether now or hereafter existing, as defined in
Section 425(e) of the Code.
(o) "PLAN" shall mean this Stock Option Plan.
(p) "SHARE" shall mean a share of the Stock,
as adjusted in accordance with Section 9 of the Plan.
(q) "STOCK" shall mean the Common Stock of the
Corporation.
(r) "STOCK OPTION AGREEMENT" shall mean the
written agreement setting forth the grant of an Option and
terms and conditions relating thereto (which need not be the
same for each Option), in the form attached hereto or such
other form as the Board in its discretion may approve.
(s) "SUBSIDIARY" shall mean a "subsidiary
corporation," whether now or hereafter existing, as defined in
Section 425(f) of the Code.
3. SHARES SUBJECT TO PLAN.
(a) AUTHORIZED SHARES. There will be reserved
for use from time to time under the Plan, an aggregate of
346,667 shares of Stock of $.01 par value of the Corporation,
subject to adjustment as provided in Section 9 below. As the
Board shall from time to time determine, the Shares may be in
whole or in part, authorized but unissued Shares or issued
Shares which shall have been reacquired by the Corporation.
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 become available for
future grant or sale under the Plan unless the Plan shall have
been terminated.
(b) RESERVATION OF SHARES. The Corporation,
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. The inability of the
Corporation to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the
Corporation's counsel to be necessary to the lawful issuance
and sale of any Shares hereunder, shall relieve the
Corporation of any liability in respect of the failure to
issue or sell such Shares as to which such requisite authority
shall not have been obtained.
4. ADMINISTRATION OF PLAN.
(a) GENERAL. The Plan shall be administered
by the Board of Directors or, if the Corporation has a class
of equity securities registered under Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), by a Committee, a majority of which shall be
"disinterested" as defined in Rule 16b-3 under the Exchange
Act. The Board and the Committee shall have full authority to
administer the Plan, including authority to interpret and
construe any provision of the Plan and to adopt such rules and
regulations for administering the Plan as it may deem
necessary in order to comply with the requirements of the
Plan, or in order that any Option that is intended to be an
Incentive Option will be classified as an incentive stock
option under the Code, or in order to conform to any
regulation or to any change in any law or regulation
applicable thereto. The Board may reserve to itself any of
the authority granted to the Committee as set forth herein,
and it may perform and discharge all of the functions and
responsibilities of the Committee at any time that a duly
constituted Committee is not appointed and serving.
(b) ACTIONS OF THE BOARD AND COMMITTEE. All
actions taken and all interpretations and determinations made
by the Board or by the Committee in good faith (including
determinations of Fair Market Value) shall be final and
binding on all Optionees, the Corporation and all other
interested persons. No member of the Committee shall be
personally liable for any action or determination made in good
faith in connection with this Plan, and all members of the
Board of the Committee shall, in addition to their rights as
directors, be fully protected by the Corporation with respect
to any such action, determination or interpretation.
(c) INTERESTED DIRECTORS. Members of the
Board who are either eligible for Options or have been granted
Options may vote on any matters affecting the administration
of the Plan or the grant of any Options pursuant to the Plan,
except that no such member shall act upon the granting of an
Option to himself or herself, but any such member may be
counted in determining the existence of a quorum at any
meeting of the Board or Committee during which action is taken
with respect to the granting of Options to said Board or
Committee member (unless such action would affect a committee
member's status as "disinterested" under Rule 16b-3 of the
Exchange Act).
(d) POWERS OF THE BOARD. Subject to the
provisions of the Plan, the Board shall have the authority, in
its discretion: (i) to grant Incentive Stock Options or
Nonstatutory Stock Options; (ii) to determine, upon review of
the relevant information, the Fair Market Value of the Stock;
(iii) to determine the exercise price per share of Options to
be granted, which exercise price shall be determined in
accordance with Section 6 of the Plan; (iv) to determine the
Employees and Consultants to whom, and the time or times at
which, Options shall be granted and the number of shares to be
represented by each Option; (v) to interpret the Plan; (vi) to
prescribe, amend, and rescind rules and regulations relating
to the Plan; (vii) to determine the terms and provisions of
each Option granted (which need not be the same for each
Option granted) and, with the consent of the holder thereof,
modify, terminate or amend each Option; (viii) to accelerate
or defer (with the consent of the Optionee) the exercise date
of any Option; (ix) to authorize any person to execute on
behalf of the Corporation any instrument required to
effectuate the grant of an Option previously granted by the
Board; and (x) to make all other determinations deemed
necessary or advisable for the administration of the Plan.
5. ELIGIBILITY.
(a) GENERALLY. Options may be granted to
Employees and Consultants, provided that Incentive Stock
Options may only be granted to Employees. An Employee or
Consultant who has been granted an Option may, if he is
otherwise eligible, be granted additional Options.
(b) CRITERIA. In making any determination as
to Employees and Consultants to whom Options shall be granted,
the Committee shall take into account such factors as it shall
deem relevant in accomplishing the purpose of the Plan,
including but not limited to the Employee's or Consultant's
loyalty, performance, and experience.
(c) ISO LIMITATIONS WITH RESPECT TO PRICE. In
no event shall an Incentive Stock Option be granted to any
person who, at the time such Option is granted, owns (as
defined in Section 422 of the Code) shares possessing more
than 10% of the total combined voting power of all classes of
shares of the Corporation or of its parent or subsidiary
corporation, unless the option price is at least 110% of the
Fair Market Value of the stock subject to the Option, and such
Option is by its terms not exercisable after the expiration of
five (5) years from the date such Option is granted.
(d) ISO LIMITATIONS WITH RESPECT TO SHARES.
The aggregate Fair Market Value (determined as of the time
that option is granted) of the Shares with respect to which
Incentive Stock Options are exercisable for the first time by
any individual Employee during any single Calendar Year under
this Plan and all the incentive stock option plans of the
Corporation (and its parent and subsidiary corporations, if
any), shall not exceed $100,000.
(e) NO EMPLOYEE CONTRACT. The Plan shall not
confer upon any Optionee any right with respect to
continuation of employment by or the rendition of consulting
services to the Corporation, nor shall it interfere in any way
with its right or the Corporation's right to terminate his or
her employment or services at any time.
6. PRICE.
(a) GENERALLY. The per share exercise price
for the Shares to be issued pursuant to exercise of an Option
shall be such price as is determined by the Board. However,
the exercise price of the Shares which shall be covered by
each Incentive Stock Option shall be at least 100% of the Fair
Market Value of the Shares at the time of granting the
Incentive Stock Option. The exercise price of a Nonstatutory
Stock Option shall not be less than 85% of the Fair Market
Value on the date of the grant of the Option. If an Incentive
Stock Option is granted to an Optionee who then owns stock
possessing more than 10% of the total combined voting power of
all classes of stock of the Corporation or its Parent or any
Subsidiary, the exercise price shall be as set forth in
Section 5(c) above.
(b) PAYMENT. The exercise price shall be paid
in full at the time of exercise of the Option in cash or in
such other form of lawful consideration as the Board of
Directors or the Committee may approve from time to time,
including, without limitation, the transfer of outstanding
shares of Stock as provided in Section 7(d).
7. OPTIONS.
(a) GENERALLY. Subject to the provisions of
the Plan, the Board shall determine for each Option (which
need not be identical) the number of shares for which the
Option shall be granted, the Option price of the Option, and
all other terms and conditions of the Option.
(b) TIME OF GRANTING OPTIONS. Neither
anything contained in the Plan or in any resolution adopted or
to be adopted by the Board of Directors or the shareholders of
the Corporation nor any action taken by the Committee shall
constitute the granting of any Option. The granting of an
Option shall take place only when a written Stock Option
Agreement shall have been duly executed and delivered by or on
behalf of the Corporation and the person to whom such Option
shall be granted.
(c) TERM OF OPTION. The term of each Option
may be up to ten (10) years from the date of grant thereof or
such shorter term as may be provided in the Stock Option
Agreement. However, in the case of an Incentive Stock Option
granted to an Employee who, at the time the Incentive Stock
Option is granted, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of
the Corporation or any Parent or Subsidiary, the term of the
Incentive Stock Option shall be five (5) years from the date
of grant thereof or such shorter time as may be provided in
the Stock Option Agreement.
(d)EXERCISE OF OPTION.
(i) Any Option granted hereunder shall be
exercisable at such times and under such conditions as
determined by the Board, including performance criteria
with respect to the Corporation or the Optionee, or both,
and as shall be permissible under the terms of the Plan.
(ii) An Option may not be exercised for a
fraction of a Share.
(iii) An Option shall be deemed to be
exercised when written notice of such exercise has been
given to the Corporation 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 Corporation.
If shares of Common Stock are permitted to be surrendered
in payment of the exercise price of any Option, such
surrendered shares shall be valued at their Fair Market
Value on the date of exercise of the Option. Until the
issuance 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.
(iv) 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.
(v) Except as otherwise specifically
provided herein, an Option may not be exercised at any
time unless the holder thereof shall have maintained
Continuous Status as an Employee or Consultant of the
Corporation or of one or more of its Subsidiaries, or its
Parent, from the date of the granting of the Option to
the date of its exercise.
(vi) The Board may condition the grant of
any Option upon the agreement by Optionee that all shares
issuable upon exercise of such Option shall be subject to a
right of first refusal by the Corporation.
(e) TERMINATION OF EMPLOYMENT.
(i) In the event that the employment of an
Employee or the engagement of a Consultant to whom an Option
shall have been granted shall be terminated other than by
reason of death or disability, such Option may be exercised
(to the extent that the Employee or Consultant shall have been
entitled to do so at the termination of his employment or
engagement) at any time within three months after such
termination, but in any event no later than the date of
expiration of the Option term; provided, however, that in its
discretion the Board may provide (at the time of grant, at the
time of termination or at such other time as it determines)
that all or part of an Option granted to a Consultant shall
remain outstanding after the termination of his or her
engagement by the Corporation for the period of time
determined by the Board (but not longer than permitted by
Section 7(c) hereof).
(ii) Notwithstanding the provisions of
sub-section e(i), above, if the holder of an Option is
terminated for "cause" (as hereinafter defined), the Board
shall have the authority, by notice to the holder of an
Option, to immediately terminate such Option, effective on the
date of termination of employment, and such Option shall no
longer be exercisable to any extent whatsoever. As used
herein, "cause" shall mean Optionee's termination by reason of
(i) a material failure by Optionee, as determined solely in
the discretion of the Board, to carry out the responsibilities
and requirements of Optionee's position with the Corporation,
(ii) the breach by Optionee of the terms of any non-disclosure
or non-compete agreement with the Corporation, or (iii) the
commission by Optionee, as determined solely in the discretion
of the Board of Directors, of any act performed other than
pursuant to Optionee's duties to the Corporation, which has a
material adverse effect on the business or reputation of the
Corporation.
(iii) So long as the holder of an Option
shall maintain Continuous Status as an Employee or Consultant
of the Corporation or one or more of its subsidiaries, his or
her Option shall not be affected by any change of duties or
position. To the extent that the holder of an Option was not
entitled to exercise his or her Option at the time of his or
her termination, or insofar as he or she does not exercise
such Option to the extent he or she was entitled within the
time specified herein, the Option shall itself terminate at
the time of such termination , unless otherwise provided by
the Board pursuant to this Section 7(e)(i) in the case of a
Consultant.
(f) Disability of Optionee. Notwithstanding
the provisions of Section 7(e) above, in the event an Employee
or Consultant is unable to continue his or her employment with
or to perform services for the benefit of the Corporation as a
result of his or her total and permanent disability (as
defined in Section 22(e)(3) of the Code), Optionee (or
Optionee's legal representative) may, but only within one year
after termination due to such disability, exercise his or her
Option to the extent Optionee was entitled to exercise it at
the date of such disability; provided that if the Board has
provided for different exercisability criteria for any
Consultant pursuant to Section 7(e), above, such terms shall
also affect the provisions of this Section 7(f). To the
extent that Optionee was not entitled to exercise the Option
at the date of disability, or insofar as he or she does not
exercise such Option to the extent entitled within the time
specified herein, the Option shall terminate.
(g) DEATH OF OPTIONEE. Unless otherwise
provided for by the Board pursuant to Section 7(e) with
respect to an Option granted to a Consultant, or unless
otherwise set forth in the Option Agreement, in the event of
the death of an Optionee:
(i) if Optionee dies during the term of
the Option and is at the time of his or her death an
Employee or Consultant of the Corporation who shall have
been in Continuous Status as an Employee or Consultant
since the date of grant of the Option, the Option may be
exercised, at any time within one year following the date
of death, by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or
inheritance, but only to the extent the right to exercise
had accrued at the date of death; or
(ii) if Optionee dies within three (3)
months after the termination of Continuous Status as an
Employee or Consultant, the Option may be exercised, at
any time within one year following the date of death, by
the Optionee's estate or by a person who acquired the
right to exercise the Option by bequest or inheritance,
but only to the extent of the right to exercise that had
accrued at the date of such termination.
8. NON-TRANSFERABILITY OF OPTIONS. The Options
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 distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee or Optionee's
legal representative.
9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
Subject to any required action by the shareholders of the
Corporation, the number of shares of Stock covered by each
outstanding Option and the number of shares of Stock 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 upon termination of employment, as well as the price
per share of Stock covered by each such outstanding Option,
shall be proportionately adjusted for any increase or decrease
in the number of issued shares of Stock resulting from a stock
split, the payment of a stock dividend with respect to the
Stock, or any other increase or decrease in the number of
issued shares of Stock effected without receipt of
consideration by the Corporation; provided, however, that
conversion of any convertible securities of the Corporation
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 Corporation 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 of Stock
subject to an Option.
10. LIQUIDATION OR MERGER OF THE CORPORATION.
(a) LIQUIDATION. In the event of a proposed
dissolution or liquidation of the Corporation, the Option
shall 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, give each Optionee the right to exercise his or her
Option as to Shares as to which the Option would not otherwise
be exercisable.
(b) SALE OF ASSETS, MERGER OR CONSOLIDATION.
In the event of a proposed sale of all or substantially all of
the assets of the Corporation, or the merger or consolidation
of the Corporation with or into another corporation in a
transaction in which the Corporation does not survive, the
Board, in its sole discretion, may provide for the
acceleration of the exercise date of some or all of the non-
exercisable portion of any outstanding Option, and/or may
provide for the termination of any Option immediately prior to
the consummation of the proposed transaction, and/or may
provide for the replacement of any Option with comparable
options to purchase stock of such other corporation. Any
Option (or portion thereof) not exercised or terminated prior
to the consummation of such transaction shall terminate
immediately upon consummation thereof.
11. WITHHOLDING TAXES: SATISFIED BY WITHHOLDING
OPTIONED SHARES.
(a) GENERAL. The Corporation, its Parent or
any Subsidiary may take such steps as it may deem necessary or
appropriate for the withholding of any taxes which the
Corporation, its Parent or any Subsidiary is required by law
or regulation of any governmental authority, whether federal,
state or local, domestic or foreign, to withhold in connection
with any option, including, but not limited to, requiring the
Optionee to pay such tax at the time of exercise or the
withholding of issuance of shares of Stock to be issued upon
the exercise of any Option until the Optionee reimburses the
Corporation for the amount the Corporation is required to
withhold with respect to such taxes, or, at the Corporation's
sole discretion, cancelling any portion of such issuance of
Stock in any amount sufficient to reimburse itself for the
amount it is required to so withhold.
(b) SATISFYING TAXES BY WITHHOLDING OPTIONED SHARES.
All federal and state taxes required to be withheld
or collected from an Optionee upon exercise of an Option may
be satisfied by the withholding of a sufficient number of
exercised Option Shares which, valued at Fair Market Value on
the date of exercise, would be equal to the total withholding
obligation of the Optionee for the exercise of such Option.
Such election shall be deemed made upon receipt of notice
thereof by an officer of the Corporation, by mail, personal
delivery or by facsimile message, and shall (unless notice to
the contrary is provided to the Corporation) be operative for
all Option exercises which occur during the twelve-month
period following election.
12. ISSUANCE OF SHARES.
(a) 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, 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 Corporation with
respect to such compliance.
(b) As a condition to the exercise of an
Option, the Corporation may impose various conditions,
including a requirement that the person exercising such Option
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, and a
requirement that the Shares be subject to a right of first
refusal as set forth in the Option Agreement between Optionee
and the Corporation.
13. EFFECTIVENESS OF PLAN. The Plan shall become
effective on August 4, 1992, but only if the shareholders of
the Corporation shall, by the affirmative vote of a majority
in interest of all the shares of the Corporation taken within
twelve months after such date, have approved the Plan.
14. TERMINATION AND AMENDMENT OF PLAN. The Plan
shall terminate on August 3, 2002, and no Option shall be
granted under the Plan after that date. The Board of
Directors may at any time and from time to time modify or
amend the Plan (including the form of Stock Option Agreement)
in such respects as it shall deem advisable, provided that
without approval by a majority in interest of all the shares
of the Corporation there shall be: (a) no increase in the
total number of shares covered by the Plan (except by
operation of Section 9 hereof), (b) no change in the formula
for determining the exercise price or the maximum term of
Options, (c) no change that would materially lessen the
requirements as to eligibility for participation in the Plan,
and (d) no change in the class of persons eligible to receive
options or rights under the Plan, including the definitions of
"Employee" and "Consultant.