EXHIBIT 10.41
DSP COMMUNICATIONS, INC.
1996 NONSTATUTORY EMPLOYEE AND CONSULTANT STOCK OPTION PLAN
1. PURPOSES OF THE PLAN. The purposes of this Stock Option Plan are:
a. To attract and retain the best available personnel for positions
of substantial responsibility;
b. To provide additional incentive to Employees and Consultants to
remain with the Company; and
c. To promote the success of the Company's business.
Options granted under the Plan shall be Nonstatutory Stock Options.
2. DEFINITIONS. As used herein, the following definitions shall apply:
a. "ADMINISTRATOR" means the Board or any of its Committees as shall
be administering the Plan, in accordance with Section 4 of the Plan.
b. "APPLICABLE LAWS" means the legal requirements relating to the
administration of stock option plans under state corporate and securities
laws.
c. "BOARD" means the Board of Directors of the Company.
d. "CODE" means the Internal Revenue Code of 1986, as amended.
e. "COMMITTEE" means a Committee appointed by the Board in
accordance with Section 4 of the Plan.
f. "COMMON STOCK" means the Common Stock of the Company.
g. "COMPANY" means DSP COMMUNICATIONS, INC., a Delaware corporation.
h. "CONSULTANT" means any person, including an advisor, engaged by
the Company or a Parent or Subsidiary to render services, and who is
compensated for such services, provided that the term "Consultant" shall not
include Directors who are paid only a director's fee by the Company, or who
are not compensated by the Company for their services as Directors.
i. "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" means that the
employment or consulting relationship is not interrupted or terminated by the
Company, any parent or Subsidiary. 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, including sick leave, military leave or
any other personal leave; or (ii) transfers between locations of the Company
or between the Company, its Parent, its Subsidiaries or its successor.
j. "DIRECTOR" means a member of the Board.
k. "DISABILITY" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
l. "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. Neither
service as a Director not payment of a Director's fee by the Company shall be
sufficient to constitute "employment" by the Company.
m. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
n. "FAIR MARKET VALUE" means, as of any date, the value of Common
Stock determined as follows:
i. If the Common Stock is listed on any established stock
exchange or a national market system, including, without limitation, the
National Market System of the National Association of Securities Dealers,
Inc. Automated Quotation ("Nasdaq") System, the Fair Market Value of a Share
of Common Stock shall be the closing sales price for such stock (or the
closing bid, if not shares were reported) as quoted on such system or
exchange (or the exchange with the greatest volume of trading in Common
Stock) on the last market trading day prior to the date of determination, as
reported in THE WALL STREET JOURNAL, or such other source as the
Administrator deems reliable;
ii. If the Common Stock is quoted on the Nasdaq System (but not
on the National Market System thereof), or is regularly quoted by a
recognized securities dealer, but selling prices are not reported, the Fair
Market Value of a Share of Common Stock shall be the mean between the high
bid and low asked prices for the Common Stock on the last market trading day
prior to the day of determination, as reported in THE WALL STREET JOURNAL, or
such other source as the Administrator deems reliable;
iii. In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
o. "INCENTIVE STOCK OPTION" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code and
the regulations promulgated thereunder.
p. "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option.
q. "NOTICE OF GRANT" means a written notice evidencing certain terms
and conditions of an individual Option grant. The Notice of Grant is part of
the Option Agreement.
r. "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.
s. "OPTION" means a stock option granted pursuant to the Plan.
-2-
t. "OPTION AGREEMENT" means a written agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant. The Option Agreement is subject to the terms and conditions of the
Plan.
u. "OPTION EXCHANGE PROGRAM" means a program whereby outstanding
options are surrendered in exchange for options with a lower exercise price.
v. "OPTIONED STOCK" means the Common Stock subject to an Option.
w. "OPTIONEE" means an Employee or Consultant who holds an
outstanding Option.
x. "PARENT" shall mean a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the Code.
y. "PLAN" shall mean this 1996 Nonstatutory Employee and Consultant
Stock Option Plan.
z. "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 12 of the Plan.
aa. "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. Subject to the provisions of Section 12
of the Plan, the maximum aggregate number of Shares which may be optioned and
sold under the Plan is 500,000 Shares. The Shares may be authorized, but
unissued, or reacquired Common Stock. However, should the Company reacquire
Shares which were issued pursuant to the exercise of an Option, such Shares
shall not become available for future grant under the Plan.
If an Option expires or becomes unexercisable without having been
exercised in full, or is surrendered pursuant to an Option Exchange Program,
the unpurchased Shares which were subject thereto shall become available for
future grant or sale under the Plan (unless the Plan has been terminated);
PROVIDED, HOWEVER, that Shares that have actually been issued under the Plan
shall not be returned to the Plan and shall not become available for future
distribution under the Plan.
4. ADMINISTRATION OF THE PLAN. The Plan shall be administered by (i)
the Board; or (ii) a committee designated by the Board, which committee shall
be constituted to satisfy Applicable Laws and shall consist of at least two
Directors who are not Employees or Consultants. Once appointed, such
Committee shall serve in its designated capacity and otherwise directed by
the Board. The Board may increase the size of the new Committee and appoint
additional members, remove members (with or without cause), and substitute
new members, fill vacancies (however caused) and remove all members of the
Committee and thereafter directly administer the Plan, all to the extent
permitted by Applicable Laws.
a. POWERS OF THE ADMINISTRATOR. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties
delegated by the Board to such Committee, the Administrator shall have the
authority, in its discretion:
-3-
i. to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(n) of the Plan;
ii. to select the Consultants and Employees to whom Options may
be granted hereunder;
iii. to determine whether and to what extent Options are granted
hereunder;
iv. to determine the number of shares of Common Stock to be
covered by each Option granted hereunder;
v. to approve forms of agreement for use under the Plan;
vi. to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any award granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the time or
times when Options may be exercised (which may be based on performance
criteria), any vesting acceleration or waiver of forfeiture restrictions and
any restriction or limitation regarding any Option or the shares of Common
Stock relating thereto based in each case on such factors as the
Administrator, in its sole discretion, shall determine;
vii. to reduce the exercise price of any Option to the
then-current Fair Market Value, if the Fair Market Value of the Common Stock
covered by such Option shall have declined since the date the Option was
granted;
viii. to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan;
ix. to prescribe, amend and rescind rules and regulations
relating to the Plan;
x. to modify or amend each Option (subject to Section 16 of
the Plan);
xi. to authorize any person to execute on behalf of the Company
any instrument required to effect the grant of an Option previously granted
by the Administrator;
xii. to institute an Option Exchange Program;
xiii. to determine the terms and restrictions applicable to
Options; and
xiv. to make all other determinations deemed necessary or
advisable for administering the Plan.
b. EFFECT OF ADMINISTRATOR'S DECISION. The Administrator's
decisions, determinations and interpretations shall be final and binding on
all Optionees and any other holders of Options.
-4-
5. ELIGIBILITY. Options may be granted to Employees and Consultants.
If otherwise eligible, an Employee or Consultant who has been granted an
Option may be granted additional Options.
6. LIMITATIONS.
a. Each Option shall be designated in the Notice of Grant as a
Nonstatutory Stock Option.
b. Neither the Plan nor any Option shall confer upon an Optionee any
right with respect to continuing the Optionee's employment or consulting
relationship with the Company, nor shall they interfere in any way with the
Optionee's right or the Company's right to terminate such employment or
consulting relationship at any time, with or without cause.
c. The following limitation shall apply to grants of Options under
the Plan:
No Employee shall be granted, in any fiscal year of the Company,
Options to purchase more than 200,000 Shares.
The foregoing limitation shall be adjusted proportionately in
connection with any change in the Company's capitalization as described in
Section 12.
The limitation set forth in this Section 6.c. is intended to satisfy
the requirements applicable to Options intended to qualify as
"performance-based compensation" (within the meaning of Section 162(m) of the
Code). In the event that the Administrator determines such limitations are
not required to qualify Options as performance-based compensation, the
Administrator may modify or eliminate such limitations.
7. TERM OF PLAN. Subject to Section 16 of the 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 terminated earlier) under Section 14 of
the Plan.
8. TERM OF OPTION. The term of each Option shall be stated in the
Notice of Grant.
9. OPTION EXERCISE PRICE AND CONSIDERATION.
a. EXERCISE PRICE. The per Share exercise price for the Shares to
be issued pursuant to exercise of an Option shall be determined by the
Administrator.
b. WAITING PERIOD AND EXERCISE DATES. At the time an Option is
granted, the Administrator shall fix the period within which the Option may
be exercised and shall determine any conditions which must be satisfied
before the Option may be exercised. In so doing, the Administrator may
specify that an Option may not be exercised until the completion of a service
period.
-5-
c. FORM OF CONSIDERATION. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the
method of payment. Such consideration may consist of:
i. cash;
ii. check;
iii. promissory note;
iv. other Shares which (i) in the case of Shares acquired upon
exercise of an Option, have been owned by the Optionee for more than six (6)
months on the date of surrender; and (ii) 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;
v. a reduction in the amount of any Company liability to the
Optionee, including any liability attributable to the Optionee's
participation in any Company-sponsored deferred compensation program or
arrangement;
vi. any combination of the foregoing methods of payment; or
vii. such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.
10. EXERCISE OF OPTION.
a. PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any Option
granted hereunder shall be exercisable according to the terms of the Plan,
and at such times and under such conditions as determined by the
Administrator and set forth in the Option Agreement.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when the Company receives:
(i) written notice of exercise, together with such other documentation as the
Administrator and the broker, if applicable, shall require to effect an
exercise of the Option (all in accordance with the Option Agreement) from the
person entitled to exercise the Option, and (ii) full payment for the Shares
with respect to which the Option is exercised. Full payment may consist of
any consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement and the Plan. Shares issued upon exercise
of an Option shall be issued in the name of the Optionee, or, if requested by
the Optionee, in the name of the Optionee and his or her spouse. Until the
stock certificate evidencing such Shares is issued (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a Stockholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or
cause to be issued) such stock certificate promptly after the Option is
exercised. 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 Section 12 of the Plan.
-6-
Exercising an Option in any manner shall decrease the number of
Shares thereafter 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.
b. TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP. 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, but only within such period of time as is determined by
the Administrator, and only to the extent that the Optionee was entitled to
exercise it at the date of such termination (but in no event later than the
expiration of the term of such Option as set forth in the Notice of Grant).
If, at the date of termination, the Optionee is not entitled to exercise his
or her entire Option, the Shares covered by the unexercisable 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.
c. DISABILITY OF OPTIONEE. Except as otherwise determined by the
Administrator, in the event that an Optionee's Continuous Status as an
Employee or Consultant terminates as a result of Optionee's Disability, the
Optionee may exercise his or her Option at any time within twelve (12) months
from the date of such termination, but only to the extent that the Optionee
was entitled to exercise it at the date of such termination (but in no event
later than the expiration of the term of such Option as set forth in the
Notice of Grant). If, at the date of termination, the Optionee is not
entitled to exercise his or her entire Option, the Shares covered by the
unexercisable 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 herein, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.
d. DEATH OF OPTIONEE. Except as otherwise determined by the
Administrator, 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 Notice of Grant), 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 that the Optionee was entitled to exercise the Option at the
date of death. If, at the time of death, the Optionee was not entitled to
exercise his or her entire Option, the Shares covered by the unexercisable
portion of the Option shall immediately revert to the Plan. If, after death,
the Optionee's estate or a person who acquired the right to exercise the
Option by bequest or inheritance does not exercise the Option within the time
specified herein, the Option shall terminate and the Shares covered by such
Option shall revert to the Plan.
11. NONTRANSFERABILITY OF OPTIONS. An Option 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.
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER,
ASSET SALE OR CHANGE OF CONTROL.
a. CHANGES IN CAPITALIZATION. Subject to any required action by the
Stockholders of the Company, the number of Shares of Common Stock covered by
each outstanding Option, and the number of Shares of Common Stock which have
been authorized for
-7-
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, 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 increase or decrease in
the number of issued Shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company 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 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 thereof shall
be made with respect to, the number or price of Shares of Common Stock
subject to an Option.
b. DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option has
not been previously exercised, it will terminate immediately prior to the
consummation of such proposed action. The Board may, in the exercise of its
sole discretion in such instances, declare that any Option shall terminate as
of a date fixed by the Board and give each Optionee the right to exercise his
or her Option as to all or any part of the Optioned Stock, including Shares
as to which the Option would not otherwise be exercisable.
c. MERGER OR ASSET SALE. Subject to the provisions of paragraph (d)
hereof, in the event of a merger of the Company with or into another
corporation, or the sale of substantially all of the assets of the Company,
each outstanding Option shall be assumed or an equivalent option or right
shall be substituted by the successor corporation or a Parent or Subsidiary
of the successor corporation. In the event that the successor corporation
does not agree to assume the Option or to substitute an equivalent option,
the Administrator shall, in lieu of such assumption or substitution, provide
for the Optionee to have the right to exercise the Option as to all or a
portion of the Optioned Stock, including Shares as to which it would not
otherwise be exercisable. If the Administrator makes an Option exercisable
in lieu of assumption or substitution in the event of a merger or sale of
assets, the Administrator shall notify the Optionee that the Option shall be
fully exercisable for a period of fifteen (15) days from the date of such
notice, and the Option will terminate upon the expiration of such period.
For the purposes of this paragraph, the Option shall be considered assumed
if, following the merger or sale of assets, the option confers the right to
purchase, for each Share of Optioned Stock subject to the Option immediately
prior to the merger or sale of assets, the consideration (whether stock, cash
or other securities or property) received in the merger or sale of assets by
holders of Common Stock for each Share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding
Shares); PROVIDED, HOWEVER, that if such consideration received in the merger
or sale of assets not solely common stock of the successor corporation or its
Parent, the Administrator may, with the consent of the successor corporation,
provide for the consideration to be received upon the exercise of the Option,
for each Share of Optioned Stock subject to the Option, to be solely common
stock of the successor corporation or its Parent equal in fair market value
to the per-share consideration received by holders of Common Stock in the
merger or sale of assets.
-8-
d. CHANGE IN CONTROL. In the event of a "Change of Control" of the
Company, as defined in paragraph (e) below, then the following acceleration
and valuation provisions shall apply:
i. Except as otherwise determined by the Board, in its
discretion, in the event of an anticipated Change in Control, any Options
outstanding on the date such Change in Control is determined to have occurred
that are not yet exercisable and vested on such date shall become fully
exercisable and vested;
ii. Except as otherwise determined by the Board, in its
discretion, in the event of an anticipated Change in Control, all outstanding
Options, to the extent they are exercisable and vested (including Options
that shall become exercisable and vested pursuant to subparagraph i. above),
shall be terminated in exchange for a cash payment equal to the Change in
Control Price (reduced by the exercise price applicable to such Options).
These cash proceeds shall be paid to the Optionee or, in the event of death
of an Optionee, prior to payment, to the estate of the Optionee or a person
who acquired the right to exercise the Option by bequest or inheritance.
iii. Any payment made pursuant to this paragraph (d) shall not
exceed the maximum amount which could be paid to an Optionee without having
the payment treated as an "excess parachute payment" within the meaning of
Section 280G of the Code.
e. DEFINITION OF "CHANGE IN CONTROL". For purposes of this Section
12, a "Change in Control" means the happening of any of the following:
i. When any "person", as such term is used in Sections 13(d) and
14(d) of the Exchange Act (other than the Company, a Subsidiary or a Company
employee benefit plan, including any trustee of such plan acting as trustee),
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing more than twenty-five percent (25%) of the combined voting power
of the Company's then-outstanding securities entitled to vote generally in
the election of directors; or
ii. A merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least
seventy-five percent (75%) of the total voting power represented by the
voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or the Stockholders of the
Company approve an agreement for the sale or disposition by the Company of
all or substantially all the Company's assets; or
iii. A change in the composition of the Board of Directors of the
Company occurring within a two (2) year period, as a result of which fewer
than a majority of the directors are Incumbent Directors. "Incumbent
Directors" shall mean directors who either (i) are directors of the Company
as of the date the Plan is approved by the Stockholders; or (ii) are elected,
or nominated for election to the Board of Directors of the Company with the
affirmative votes of at least a majority of the Incumbent Directors at the
time of such election or nomination (but shall not include an individual
whose election or nomination is in connection with an actual or threatened
proxy contest relating to the election of directors to the Company).
-9-
f. CHANGE IN CONTROL PRICE. For purposes of this Section 12,
"Change in Control Price" shall be, as determined by the Board: (i) the
highest Fair Market Value of a Share within the 60-day period immediately
preceding the date of determination of the Change of Control Price by the
Board (the "60-Day Period"); or (ii) the highest price paid or offered per
Share, as determined by the Board, in any bona fide transaction or bona fide
offer related to the Change in Control of the Company, at any time within the
60-Day Period; or (iii) some lower price as the Board, in its discretion,
determines to be a reasonable estimate of the fair market value of a Share.
13. DATE OF GRANT. The date of grant of an Option shall be, for all
purposes, the date on which the Administrator makes the determination
granting such Option, or such other later date as is determined by the
Administrator. Notice of the determination shall be provided to each
Optionee within a reasonable time after the date of such grant.
14. AMENDMENT AND TERMINATION OF THE PLAN.
a. AMENDMENT AND TERMINATION. The Board may at any time amend,
alter, suspend or terminate the Plan.
b. EFFECT OF AMENDMENT OR TERMINATION. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any
Optionee, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the Optionee
and the Company.
15. CONDITIONS UPON ISSUANCE OF SHARES.
a. LEGAL COMPLIANCE. 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 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, Applicable
Laws, and the requirements of any stock exchange or quotation system upon
which the Shares may then be listed or quoted, and shall be further subject
to the approval of counsel for the Company with respect to such compliance.
b. INVESTMENT REPRESENTATION. 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.
16. LIABILITY OF COMPANY; INABILITY TO OBTAIN AUTHORITY. The inability
of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company 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.
17. RESERVATION OF SHARES. The Company, 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.
-10-