EXHIBIT 4.1
MICRONETICS WIRELESS, INC.
1996 STOCK OPTION PLAN
1. General Plan Information;. The purpose of this Stock
Option Plan (the "Plan") is to advance the interests of Micronetics
Wireless, Inc. (the "Company") by enhancing the ability of the
Company to attract and retain selected employees, officers,
consultants, advisors to the Board of Directors and qualified
directors (collectively the "Participants") by creating for such
Participants incentives and rewards for their contributions to the
success of the Company, and by encouraging such Participants to
become owners of shares of the Company's common stock, par value
$0.01 per share, as the title or par value may be amended (the
"Shares").
Options granted pursuant to the Plan may be incentive stock
options ("Incentive Options") as defined in the Internal Revenue
Code of 1986, as amended (the "Code") or non-qualified options, or
both. The proceeds received from the sale of Shares pursuant to
the Plan shall be used for general corporate purposes.
2. Effective Date of Plan. The Plan will become effective
upon approval by the Board of Directors (the "Board"), and shall be
subject to the approval by the holders of at least a majority of
all Shares present in person and by proxy and entitled to vote
thereon at a meeting of stockholders of the Company prior thereto
or within 12 months thereafter.
3. Administration of the Plan. The Plan will be administered
by the Board of the Company. The Board will have authority, not
inconsistent with the express provisions of the Plan, to take all
action necessary or appropriate thereunder, to interpret its
provisions, and to decide all questions and resolve all disputes
which may arise in connection therewith. Such determinations of
the Board shall be conclusive and shall bind all parties.
The Board may, in its discretion, delegate its powers with
respect to the Plan to an employee benefit plan committee or any
other committee (the "Committee"), in which event all references to
the Board hereunder, including without limitation the references in
Section 10, shall be deemed to refer to the Committee. The
Committee shall consist of not fewer than three members. Each of
the members must be a "disinterested person" as that term is
defined in Rule 16b-3 adopted pursuant to the Securities Exchange
Act of 1934 (the "Exchange Act"). A majority of the members of the
Committee shall constitute a quorum, and all determinations of the
Committee shall be made by the majority of its members present at
a meeting. Any determination of the Committee under the Plan may
be made without notice or meeting of the Committee by a writing
signed by all of the Committee members.
The Board and the Committee, if any, shall have the authority
to determine eligibility, the number of options granted and the
exercise price of options.
4. Eligibility. The Participants in the Plan shall be all
employees, officers, consultants, advisors to the Board of
Directors and qualified directors of the Company or any of its
present or future subsidiaries (as defined in Section 9) whether or
not they are also officers of the Company. Members of the
Committee are eligible only if they do not exercise any discretion
in; (i) selecting Participants who
receive grants of options; (ii) determining the number of Shares to
be granted to any Participant; or (iii) determining the exercise
price of any options, or as counsel to the Company may otherwise
advise the Committee that the taking of any such action does not
impair the status of such eligible Committee members as
"disinterested persons" within the meaning of Exchange Act Rule
16b-3.
5. Grant of Options.
(a) The Board shall grant options to Participants that
it, in its sole discretion, selects. Options shall be granted on
such terms as the Board shall determine except that Incentive
Options shall be granted on terms that comply with the Code and
regulations thereunder.
(b) All directors and advisors to the Board of Directors
of the Company who are not employees of the Company or its
subsidiaries shall automatically receive grants of 10,000 fully-
vested non-qualified options (i) at the time this Plan is approved
by the Shareholders of the Company or (ii) upon election or
appointment to the Board, if not a member of the Board at the time
this Plan is adopted by the Board and the Company has a class of
equity securities registered under the Securities Act of 1933 (the
"Act"). The exercise price shall be 100% of fair market value on
the date of grant as defined by Section 9.
(c) No options shall be granted after January 18, 2006
but options previously granted may extend beyond that date.
6. Option Agreements.
(a) Each option under the Plan shall be evidenced by an
option agreement, which shall be signed by an officer of the
Company and by the optionee and which shall contain such provisions
as may be approved by the Board.
(b) The option agreements shall constitute binding
contracts between the Company and the optionee. Every optionee,
upon acceptance of such option agreement, shall be bound by the
terms and restrictions of this Plan and of the option agreement.
(c) The terms of the option agreement shall be in
accordance with this Plan, but may include additional provisions
and restrictions, provided that the same are not inconsistent with
the Plan.
7. Terms and Conditions of Options.
(a) Exercise Price. Except as provided in Section 5(b)
of this Plan, the purchase price per share for Shares issuable upon
exercise of options shall be a minimum of 100% of fair market value
on the date of grant and shall be determined by the Board. For
this purpose, "fair market value" will be determined as set forth
in Section 9. Notwithstanding the foregoing, if any person to whom
an option is to be granted owns in excess of ten percent of the
outstanding capital stock of the Company, then no option may be
granted to such person for less than 110% of the fair market value
on the date of grant as determined by the Board.
(b) Annual Limit on Grant and Exercise. Incentive
Options shall not be granted to any individual pursuant to this
Plan, the effect of which would be to permit such person to first
exercise options, in any calendar year, for the purchase of Shares
having a fair market value in excess of $100,000 (determined at the
time of the grant of the options). An optionee hereunder may
exercise options for the purchase of Shares valued in excess of
$100,000 (determined at the time of the grant of the options) in a
calendar year, but only if the right to exercise such options shall
have first become available in prior calendar years.
(c) Payment for Delivery of Shares. Shares which are
subject to options shall be issued only upon receipt by the Company
of full payment of the purchase price for the Shares as to which
the option is exercised. The purchase price shall be payable by
the Participant to the Company either (i) in cash, certified
check, bank draft or money order payable to the order of the
Company; or (ii) through the delivery of Shares owned by the
Participant for a period of not less than six months and for which
the Participant has good title (free and clear of any liens and
encumbrances) having a fair market value equal to the purchase
price; or (iii) by a combination of cash and Shares as provided in
(i) and (ii) above.
The Company shall not be obligated to deliver any Shares
unless and until, in the opinion of the Company's counsel, all
applicable federal and state laws and regulations have been
complied with, nor, if the outstanding common stock is at the time
not listed on any securities exchange, unless and until the Shares
to be delivered have been listed (or authorized to be added to the
list upon official notice of issuance) upon such exchange, nor
unless or until all other legal matters in connection with the
issuance and delivery of Shares have been approved by the Company's
counsel. Without limiting the generality of the foregoing, the
Company may require from the person exercising an option such
investment representation or such agreement, if any, as counsel for
the Company may consider necessary in order to comply with the
Securities Act of 1933, as amended and applicable state securities
laws.
A Participant shall have the rights of a shareholder only as
to Shares actually acquired by him under the Plan.
(d) Vesting. Except for options granted pursuant to
Section 5(b) of this Plan, the Board may impose such vesting
restrictions as it sees fit at the time of grant.
(e) Non-Transferability of Options. Except as permitted
by law options may not be sold, assigned or otherwise transferred
or disposed of in any manner whatsoever except as provided in
Section 7(g).
(f) Forfeiture of Options upon Termination of
Relationship. All options which have not vested shall terminate
and be forfeited automatically upon the termination for any reasons
whatsoever of a Participant's status as an employee, consultant or
advisor to the Board. Unexercised options shall terminate and be
forfeited upon (i) the Participants voluntary termination of his
employment or (ii) the expiration of three months after the
Participant's employment is terminated by the Company. Except as
provided in Section 7(g) below, unexercised options granted to
directors shall not terminate or be forfeited in the event such
person is no longer a director of the Company.
(g) Death. If a Participant dies at a time when he is
entitled to exercise an option, then at any time or times within
one year after his death (or such further period as the Board may
allow) such options may be exercised, as to all or any of the
Shares which the Participant was entitled to purchase immediately
prior to his death, by his personal representative or the person or
persons to whom the options are transferred by the will or the
applicable laws of descent and distribution, and except as so
exercised such options will expire at the end of such period.
(h) Loans to Exercise Options. If requested by any
Participant to whom a grant of non-qualified options has been made,
the Company or any subsidiary may loan such person the amount of
money necessary to pay the federal income taxes incurred as a
result of the exercise of any options (or guarantee a bank loan for
such purpose), assuming that the Participant is in the maximum
federal income tax bracket six months from the time of exercise and
assuming that the Participant has no deductions which would reduce
the amount of such tax owed. The loan shall be made on or after
April 15th of the year following the year in which the amount of
tax is determined as may be requested by the Participant and shall
be made on such terms as the Company or lending bank determines.
(i) Withholding Taxes. To the extent that the Company
is required to withhold taxes for federal income tax purposes in
connection with the exercise of any options, the Company shall have
the right to assist the Participant to satisfy such withholding
requirement by (i) the Participant paying the amount of the
required withholding tax to the Company, (ii) the Participant
delivering to the Company Shares of its common stock previously
owned by the Participant or (iii) the Participant having the
Company retain a portion of the Shares covered by the option
exercise. The number of Shares to be delivered to or withheld by
the Company times the fair market value as defined by Section 8 of
this Plan shall equal the cash required to be withheld. To the
extent that the Company elects to allow the Participant either to
deliver or have withheld Shares of the Company's common stock, the
Board or the Committee may require him to make such election only
during certain periods of time as may be necessary to comply with
appropriate exemptive procedures regarding the "short-swing" profit
provisions of Section 16(b) of the Exchange Act or to meet certain
Code requirements.
8. Shares Subject to Plan.
(a) Number of Shares and Stock to be Delivered. Shares
delivered pursuant to this Plan shall, in the discretion of the
Board, be authorized but unissued Shares of common stock or
previously issued Shares acquired by the Company. Subject to
adjustments as described below, the aggregate number of Shares
which may be delivered under this Plan shall not exceed 300,000
Shares of common stock of the Company.
(b) Changes in Stock. In the event of a stock dividend,
stock split or combination of Shares, recapitalization, merger in
which the Company is the surviving corporation or other change in
the Company's capital stock, the number and kind of Shares of stock
or securities of the Company to be subject to the Plan and to
options then outstanding or to be granted thereunder, the maximum
number of Shares or securities which may be delivered under the
Plan, the option price and other relevant provisions, shall be
appropriately adjusted by the Board whose determination shall be
binding on all persons. In the event of a consolidation or merger
in which the Company is not the surviving corporation or which
results in the acquisition of substantially all the Company's
outstanding stock by a single person or entity, or in the event of
the sale or transfer of substantially all the Company's assets, all
outstanding options shall thereupon terminate.
The Board may also adjust the number of Shares subject to
outstanding options, the exercise price of outstanding options and
the terms of outstanding options to take into consideration
material changes in accounting practices or principles,
consolidations or mergers (except those in which the Company is not
the surviving Corporation as described in the immediately preceding
paragraph), acquisitions or dispositions of stock or property or
any other event if it is determined by the Board that such
adjustment is appropriate to avoid distortion in the operation of
the Plan.
9. Definitions.
(a) For purposes of the Plan, a subsidiary is any
corporation (i) in which the Company owns, directly or indirectly,
stock possessing 50 percent or more of the total combined voting
power of all classes of stock or (ii) over which the Company has
effective operating control.
(b) The fair market value of the Shares of common stock
shall be deemed to be:
(i) the closing price of the Company's common stock
appearing on a national securities exchange if the Company's common
stock is listed on such an exchange, or if not listed, the average
closing bid price appearing on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ");
(ii) if the Shares of common stock are not listed
on NASDAQ, then the average bid price for the Company's stock as
listed in the National Quotation Bureau's pink sheets;
(iii) if there are no listed bid prices published
in the pink sheets, then the market value shall be based upon the
average closing bid price as determined following a polling of all
dealers making a market in the Company's Shares.
10. Indemnification of Board. In addition to and without
affecting such other rights of indemnification as they may have as
members of the Board or otherwise, each member of the Board shall
be indemnified by the Company to the extent legally possible
against reasonable expenses, including attorney's fees, actually
and reasonably incurred in connection with any appeal therein, to
which he may be a party by reason of any action taken or failure to
act under or in connection with the Plan, or any option granted
thereunder, and against all judgments, fines and amounts paid by
him in settlement thereof; provided that such payment of amounts so
indemnified is first approved by a majority of the members of the
Board who are not parties to such action, suit or proceeding, or by
independent legal counsel selected by the Company, in either case
on the basis of a determination that such member acted in good
faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company; and except that no
indemnification shall be made in relation to matters as to which it
shall be adjudged in such action, suit or proceeding that such
Board member is liable for a breach of the duty of loyalty, bad
faith or intentional misconduct in his duties; and provided
further, that the Board member shall, in writing, offer the Company
the opportunity, at its own expense, to handle and defend same.
11. Amendments. The Board may at any time discontinue
granting options under the Plan. The Board may at any time or
times amend the Plan or amend any outstanding option or options for
the purpose of satisfying the requirements of any changes in
applicable laws or regulations or for any other purpose which may
at the time be permitted by law, provided that (except to the
extent explicitly required or permitted herein above) no such
amendment will, without the approval of the stockholders of the
Company, (a) increase the maximum number of Shares available under
the Plan, (b) reduce the option price of outstanding options or
reduce the price at which options may be granted, (c) extend the
time within which options may be granted, (d) amend the provisions
of this Section 11 of the Plan, (e) adversely affect the rights of
any Participant (without his consent) under any options theretofore
granted or (f) be effective if stockholder approval is required by
applicable statute, rule or regulation.
Date Approved by Board of Directors: January 18, 1996
Date Approved by Shareholders: September 17, 1996