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EXHIBIT 23
DSP COMMUNICATIONS, INC.
1998 NON-QUALIFIED STOCK OPTION PLAN
1. PURPOSES OF THE PLAN. The purposes of this 1998 NON-QUALIFIED STOCK
OPTION PLAN (the "Plan") are to attract and retain the best available personnel
for positions of substantial responsibility, to provide additional incentive to
Employees and Consultants of the DSP COMMUNICATIONS, INC. (the "Company") and
its Subsidiaries, and to promote the success of the Company's business. Options
granted under the Plan shall be Non-Qualified Stock Options.
2. DEFINITIONS. As used herein, the following definitions shall apply:
a. "ADMINISTRATOR" means the Board or any of the Committees
appointed to administer the Plan.
b. "AFFILIATE" and "ASSOCIATE" shall have the respective
meanings ascribed to such terms in Rule 12b-2 promulgated under the Exchange
Act.
c. "APPLICABLE LAWS" means the legal requirements relating to
the administration of stock option plans, if any, under applicable provisions of
federal securities laws, state corporate and securities laws, the Code, the
rules of any applicable stock exchange or national market system, and the rules
of any foreign jurisdiction applicable to Options granted to residents therein.
d. "BOARD" means the Board of Directors of the Company.
e. "CODE" means the Internal Revenue Code of 1986, as amended.
f. "COMMITTEE" means any committee appointed by the Board to
administer the Plan.
g. "COMMON STOCK" means the common stock of the Company.
h. "COMPANY" means DSP COMMUNICATIONS, INC., a Delaware
corporation.
i. "CONSULTANT" means any person who is engaged by the Company
or any Parent or Subsidiary to render consulting or advisory services as an
independent contractor and is compensated for such services.
j. "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" means that
the employment, director or consulting relationship with the Company, any
Parent, or Subsidiary, is not interrupted or terminated. Continuous Status as an
Employee or Consultant shall not be considered interrupted in the case of (i)
any leave of absence approved by the Company, or (ii) transfers between
locations of the Company or between the Company, its Parent, any Subsidiary, or
any successor. A leave of absence approved by the Company shall include sick
leave, military leave, or any other personal leave approved by an authorized
representative of the Company.
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k. "CORPORATE TRANSACTION" means any of the following
stockholder-approved transactions to which the Company is a party:
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 in which the Company is incorporated;
ii. the sale, transfer or other disposition of all or
substantially all of the assets of the Company (including the capital stock of
the Company's subsidiary corporations) in connection with the complete
liquidation or dissolution of the Company; or
iii. any reverse merger in which the Company is the
surviving entity but in which securities possessing more than fifty percent
(50%) of the total combined voting power of the Company's outstanding securities
are transferred to a person or persons different from those who held such
securities immediately prior to such merger.
l. "COVERED EMPLOYEE" means an Employee who is a "covered
employee" under Section 162(m)(3) of the Code.
m. "DIRECTOR" means a member of the Board.
n. "EMPLOYEE" means any person, including an Officer or
Director, who is an employee of the Company or any Parent or Subsidiary of the
Company for purposes of Section 422 of the Code. Neither service as a Director
nor payment of a Director's fee by the Company shall be sufficient to constitute
"employment" by the Company.
o. "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
p. "FAIR MARKET VALUE" means, as of any date, the value of
Common Stock determined as follows:
i. Where there exists a public market for the Common
Stock, the Fair Market Value shall be (A) the closing sales price for a Share
for the last market trading day prior to the time of the determination (or, if
no sales were reported on that date, on the last trading date on which sales
were reported) on the stock exchange determined by the Administrator to be the
primary market for the Common Stock or the Nasdaq National Market, whichever is
applicable; or (B) if the Common Stock is not traded on any such exchange or
national market system, the average of the closing bid and asked prices of a
Share on the Nasdaq Small Cap Market for the day prior to the time of the
determination (or, if no such prices were reported on that date, on the last
date on which such prices were reported), in each case, as reported in The Wall
Street Journal or such other source as the Administrator deems reliable; or
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ii. In the absence of an established market of the
type described in (i), above, for the Common Stock, the Fair Market Value
thereof shall be determined by the Administrator in good faith.
q. "INCENTIVE STOCK OPTION" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.
r. "NON-QUALIFIED STOCK OPTION" means an Option not intended
to qualify as an Incentive Stock Option.
s. "OFFICER" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
t. "OPTION" means a stock option granted pursuant to the Plan.
u. "OPTION AGREEMENT" means the written agreement evidencing
the grant of an Option executed by the Company and the Optionee, including any
amendments thereto.
v. "OPTIONED STOCK" means the Common Stock subject to an
Option.
w. "OPTIONEE" means an Employee or Consultant who receives an
Option under the Plan.
x. "PARENT" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
y. "PERFORMANCE-BASED COMPENSATION" means compensation
qualifying as "performance-based compensation" under Section 162(m) of the Code.
z. "PLAN" means this 1998 Non-Qualified Stock Option Plan.
aa. "RULE 16b-3" means Rule 16b-3 promulgated under the
Exchange Act or any successor thereto.
bb. "SHARE" means a share of the Common Stock.
cc. "SUBSIDIARY" means a "subsidiary corporation", whether now
or hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN.
a. Subject to the provisions of Section 10 (below), the
maximum aggregate number of Shares which may be optioned and sold under the Plan
is five million (5,000,000) Shares. The Shares may be authorized, but unissued,
or reacquired Common Stock.
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b. If an Option expires or becomes unexercisable without
having been exercised in full, or is surrendered pursuant to an Option exchange
program, such unissued or retained Shares shall become available for future
grant under the Plan (unless the Plan has terminated). Shares that actually have
been issued under the Plan shall not be returned to the Plan and shall not
become available for future distribution under the Plan, except that if unvested
Shares are forfeited, or repurchased by the Company at their original purchase
price, such Shares shall become available for future grant under the Plan.
4. ADMINISTRATION OF THE PLAN.
a. PLAN ADMINISTRATOR.
i. ADMINISTRATION WITH RESPECT TO EMPLOYEES WHO ARE
ALSO DIRECTORS OR OFFICERS. With respect to grants of Options to Employees who
are also Officers or Directors of the Company, the Plan shall be administered by
(A) the Board, or (B) a Committee designated by the Board, which Committee shall
be constituted in such a manner as to satisfy the Applicable Laws and to permit
such grants and related transactions under the Plan to be exempt from
Section 16(b) of the Exchange Act in accordance with Rule 16b-3. Once appointed,
such Committee shall continue to serve in its designated capacity until
otherwise directed by the Board.
ii. ADMINISTRATION WITH RESPECT TO CONSULTANTS AND
OTHER EMPLOYEES. With respect to grants of Options to Employees or Consultants
who are neither Directors nor Officers of the Company, the Plan shall be
administered by (A) the Board, or (B) a Committee designated by the Board, which
Committee shall be constituted in such a manner as to satisfy the Applicable
Laws. Once appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. The Board may authorize one or
more Officers to grant such Options and may limit such authority by requiring
that such Options must be reported to and ratified by the Board or a Committee
within six (6) months of the grant date, and if so ratified, shall be effective
as of the grant date.
iii. ADMINISTRATION WITH RESPECT TO COVERED
EMPLOYEES. Notwithstanding the foregoing, grants of Options to any Covered
Employee intended to qualify as Performance-Based Compensation shall be made
only by a Committee (or subcommittee of a Committee) which is comprised solely
of two (2) or more Directors eligible to serve on a committee granting Options
qualifying as Performance-Based Compensation. In the case of such Options
granted to Covered Employees, references to the "Administrator" or to a
"Committee" shall be deemed to be references to such Committee or subcommittee.
iv. ADMINISTRATION ERRORS. In the event an Option is
granted in a manner inconsistent with the provisions of this subsection (a),
such Option shall be presumptively valid as of its grant date to the extent
permitted by the Applicable Laws.
b. POWERS OF THE ADMINISTRATOR. Subject to Applicable Laws and
the provisions of the Plan (including any other powers given to the
Administrator hereunder), and except as otherwise provided by the Board, the
Administrator shall have the authority, in its discretion:
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i. to select the Employees and Consultants to whom
Options may be granted from time to time hereunder;
ii. to determine whether and to what extent Options
are granted hereunder;
iii. to determine the number of Shares to be covered
by each Option granted hereunder;
iv. to approve forms of Option Agreement for use
under the Plan;
v. to determine the terms and conditions of any
Option granted hereunder;
vi. to establish additional terms, conditions, rules
or procedures to accommodate the rules or laws of applicable foreign
jurisdictions and to afford Optionees favorable treatment under such laws;
provided, however, that no Option shall be granted under any such additional
terms, conditions, rules or procedures with terms or conditions which are
inconsistent with the provisions of the Plan;
vii. to amend the terms of any outstanding Option
granted under the Plan, including a reduction in the exercise price of any
Option to reflect a reduction in the Fair Market Value of the Common Stock since
the grant date of the Option, provided that any amendment that would adversely
affect the Optionee's rights under an outstanding Option shall not be made
without the Optionee's written consent;
viii. to construe and interpret the terms of the Plan
and Options granted pursuant to the Plan; and
ix. to take such other action, not inconsistent with
the terms of the Plan, as the Administrator deems appropriate.
c. EFFECT OF ADMINISTRATOR'S DECISION. All decisions,
determinations and interpretations of the Administrator shall be conclusive and
binding on all persons.
5. ELIGIBILITY. Options may be granted to Employees and Consultants. An
Employee or Consultant who has been granted an Option may, if otherwise
eligible, be granted additional Options. Options may be granted to such
Employees of the Company and its subsidiaries who are residing in foreign
jurisdictions as the Administrator may determine from time to time.
6. TERMS AND CONDITIONS OF OPTIONS.
a. DESIGNATION OF OPTIONS. Each Option shall be designated in
the Option Agreement as a Non-Qualified Stock Option.
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b. CONDITIONS OF OPTION. Subject to the terms of the Plan, the
Administrator shall determine the provisions, terms, and conditions of each
Option including, but not limited to, the Option vesting schedule, repurchase
provisions, rights of first refusal, forfeiture provisions, and satisfaction of
any performance criteria. The performance criteria established by the
Administrator may be based on any one of, or combination of, increase in share
price, earnings per share, total stockholder return, return on equity, return on
assets, return on investment, net operating income, cash flow, revenue, economic
value added, personal management objectives, or other measure of performance
selected by the Administrator. Partial achievement of the specified criteria may
result in vesting corresponding to the degree of achievement as specified in the
Option Agreement.
c. INDIVIDUAL OPTION LIMIT. The maximum number of Shares with
respect to which Options may be granted under this Plan to any Employee in any
fiscal year of the Company shall be one million (1,000,000) Shares. The
foregoing limitation shall be adjusted proportionately in connection with any
change in the Company's capitalization pursuant to Section 10 (below). To the
extent required by Section 162(m) of the Code or the regulations thereunder, in
applying the foregoing limitation with respect to an Employee, if any Option is
canceled, the canceled Option shall continue to count against the maximum number
of Shares with respect to which Options may be granted to the Employee. For this
purpose, the repricing of an Option shall be treated as the cancellation of the
existing Option and the grant of a new Option.
d. TERM OF OPTION. The term of each Option shall be the term
stated in the Option Agreement.
e. TRANSFERABILITY OF OPTIONS. Options shall be transferable
only to the extent provided in the Option Agreement.
f. TIME OF GRANTING OPTIONS. The date of grant of an Option
shall for all purposes, be the date on which the Administrator makes the
determination to grant such Option, or such other date as is determined by the
Administrator. Notice of the grant determination shall be given to each Employee
or Consultant to whom an Option is so granted within a reasonable time after the
date of such grant.
7. OPTION EXERCISE PRICE, CONSIDERATION AND TAXES.
a. EXERCISE PRICE. The exercise price for an Option shall be
as follows:
i. In the case of Options intended to qualify as
Performance-Based Compensation, the per Share exercise price shall be not less
than one hundred percent (100%) of the Fair Market Value per Share on the date
of grant.
ii. In the case of all other Options, the per Share
exercise price shall be not less than eighty-five percent (85%) of the Fair
Market Value per Share on the date of grant.
b. CONSIDERATION. Subject to Applicable Laws, the
consideration to be paid for the Shares to be issued upon exercise of an Option
including the method of payment, shall be
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determined by the Administrator. In addition to any other types of consideration
the Administrator may determine, the Administrator is authorized to accept as
consideration for Shares issued under the Plan the following:
i. cash;
ii. check;
iii. delivery of Optionee's promissory note with such
recourse, interest, security, and redemption provisions as the Administrator
determines as appropriate;
iv. surrender of Shares (including withholding of
Shares otherwise deliverable upon exercise of the Option) which have a Fair
Market Value on the date of surrender equal to the aggregate exercise price of
the Shares as to which said Option shall be exercised (but only to the extent
that such exercise of the Option would not result in an accounting compensation
charge with respect to the Shares used to pay the exercise price unless
otherwise determined by the Administrator);
v. delivery of a properly executed exercise notice
together with such other documentation as the Administrator and the broker, if
applicable, shall require to effect an exercise of the Option and delivery to
the Company of the sale or loan proceeds required to pay the exercise price; or
vi. any combination of the foregoing methods of
payment.
c. TAXES. No Shares shall be delivered under the Plan to any
Optionee or other person until such Optionee or other person has made
arrangements acceptable to the Administrator for the satisfaction of any
foreign, federal, state, or local income and employment tax withholding
obligations, including, without limitation, obligations incident to the receipt
of Shares. Upon exercise of an Option, the Company shall withhold or collect
from Optionee an amount sufficient to satisfy such tax obligations.
8. EXERCISE OF OPTION.
a. PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER.
i. Any Option granted hereunder shall be exercisable
at such times and under such conditions as determined by the Administrator under
the terms of the Plan and specified in the Option Agreement.
ii. An Option shall be deemed to be exercised when
written notice of such exercise has been given to the Company 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 Company. Until the issuance (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company) of the
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stock certificate evidencing such Shares, no right to vote or receive dividends
or any other rights as a stockholder shall exist with respect to Optioned Stock,
notwithstanding the exercise of an Option. The Company shall issue (or cause to
be issued) such stock certificate promptly upon exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in the
Option Agreement or Section 10 (below).
b. EXERCISE OF OPTION FOLLOWING TERMINATION OF EMPLOYMENT OR
CONSULTING RELATIONSHIP.
i. Upon termination of an Optionee's Continuous
Status as an Employee or Consultant, other than upon the Optionee's death or
disability, the Optionee may exercise his or her Option within such period of
time as is specified in the Option Agreement to the extent that the Option is
vested on the date of termination (but in no event later than the expiration of
the term of such Option as set forth in the Option Agreement). In the absence of
a specified time in the Option Agreement, the Option shall remain exercisable
for three (3) months following the Optionee's termination. If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified by the Administrator, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.
ii. DISABILITY OF OPTIONEE. If an Optionee's
Continuous Status as an Employee or Consultant terminates as a result of the
Optionee's disability, the Optionee may exercise the Option to the extent the
Option is vested on the date of termination, but only within twelve (12) months
from the date of such termination (and in no event later than the expiration
date of the term of such Option as set forth in the Option Agreement). If, on
the date of termination, the Optionee is not vested as to the entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan.
If, after termination, the Option is not exercised within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.
iii. DEATH OF OPTIONEE. In the event of the death of
an Optionee, the Option may be exercised at any time within twelve (12) months
following the date of death (but in no event later than the expiration of the
term of such Option as set forth in the Option Agreement) to the extent vested
on the date of death. If, at the time of death, the Optionee is not vested as to
the entire Option, the Shares covered by the unvested portion of the Option
shall revert to the Plan. The Option may be exercised by the executor or
administrator of the Optionee's estate or, if none, by the person(s) entitled to
exercise the Option under the Optionee's will or the laws of descent or
distribution. If the Option is not so exercised within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.
c. BUYOUT PROVISIONS. The Administrator may at any time offer
to buy out for a payment in cash or Shares, an Option previously granted, based
on such terms and conditions as the Administrator shall establish and
communicate to the Optionee at the time that such offer is made.
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9. CONDITIONS UPON 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 Applicable Laws, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
b. As a condition to the exercise of an Option, the Company
may require the person exercising such Option to 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
if, in the opinion of counsel for the Company, such a representation is required
by any Applicable Laws.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Subject to any required
action by the stockholders of the Company, the number of Shares covered by each
outstanding Option, and the number of Shares 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, as well as the price per share of Common
Stock covered by each such outstanding Option, shall be proportionately adjusted
for any increase or decrease in the number of issued shares of Common Stock
resulting from a stock split, reverse stock split, stock dividend, combination
or reclassification of the Common Stock, or any other similar event resulting in
an increase or decrease in the number of issued shares of Common Stock. Except
as expressly provided herein, no issuance by the Company of shares of stock of
any class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason hereof shall be made with respect to, the
number or price of Shares subject to an Option.
11. CORPORATE TRANSACTIONS.
a. In the event of any Corporate Transaction, each Option
which is at the time outstanding under the Plan automatically shall become fully
vested and exercisable and be released from any restrictions on transfer and
repurchase or forfeiture rights, immediately prior to the specified effective
date of such Corporate Transaction, for all of the Shares at the time
represented by such Option. However, an outstanding Option under the Plan shall
not so fully vest and be exercisable and released from such limitations if and
to the extent: (i) such Option is, in connection with the Corporate Transaction,
either to be assumed by the successor corporation or Parent thereof or to be
replaced with a comparable Option with respect to shares of the capital stock of
the successor corporation or Parent thereof; (ii) such Option is to be replaced
with a cash incentive program of the successor corporation which preserves the
compensation element of such Option existing at the time of the Corporate
Transaction and provides for subsequent payout in accordance with the same
vesting schedule applicable to such Option; or (iii) the vesting, exercisability
and release from such limitations of such Option is subject to other limitations
imposed by the Administrator at the time of the grant of the Option. The
determination of Option comparability under clause (i) above shall be made by
the Administrator, and its determination shall be final, binding and conclusive.
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b. Effective upon the consummation of the Corporate
Transaction, all outstanding Options under the Plan shall terminate and cease to
remain outstanding, except to the extent assumed by the successor company or its
Parent.
12. TERM OF PLAN. The Plan shall become effective upon its adoption by
the Board. It shall continue in effect for a term of ten (10) years unless
sooner terminated.
13. AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN.
a. The Board may at any time amend, suspend or terminate the
Plan. To the extent necessary to comply with Applicable Laws, the Company shall
obtain stockholder approval of any Plan amendment in such a manner and to such a
degree as required.
b. No Option may be granted during any suspension of the Plan
or after termination of the Plan.
c. Any amendment, suspension or termination of the Plan shall
not affect Options already granted, and such Options shall remain in full force
and effect as if the Plan had not been amended, suspended or terminated, unless
mutually agreed otherwise between the Optionee and the Administrator, which
agreement must be in writing and signed by the Optionee and the Company.
14. RESERVATION OF SHARES.
a. The Company, during the term of the Plan, will at all times
reserve and keep available such number of Shares as shall be sufficient to
satisfy the requirements of the Plan.
b. The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares hereunder,
shall relieve the Company 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.
15. NO EFFECT ON TERMS OF EMPLOYMENT. The Plan shall not confer upon
any Optionee any right with respect to continuation of employment or consulting
relationship with the Company, nor shall it interfere in any way with his or her
right or the Company's right to terminate his or her employment or consulting
relationship at any time, with or without cause.
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