Exhibit 10.26
FSC SEMICONDUCTOR CORPORATION
STOCK OPTION PLAN
1. TITLE OF PLAN
The title of this Plan is the FSC Semiconductor Corporation Stock Option
Plan, hereinafter referred to as the "Plan".
2. PURPOSE
The Plan is intended to align the interests of eligible key employees of
FSC Semiconductor Corporation (hereinafter called the "Corporation") and its
subsidiaries (as hereinafter defined) with the interests of the stockholders
of the Corporation and to provide incentives for such employees to exert
maximum efforts for the success of the Corporation. By extending to key
employees the opportunity to acquire proprietary interests in the Corporation
and to participate in its success, the Plan may be expected to benefit the
Corporation and its stockholders by making it possible for the Corporation to
attract and retain the best available talent and by rewarding key management
and technical personnel for their part in increasing the value of the
Corporation's shares. It is further intended that options granted pursuant to
this Plan may be incentive stock options under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), or may be options which are
not incentive stock options (hereafter called "non-qualified stock options").
3. STOCK SUBJECT TO THE PLAN
There will be reserved for issue upon the exercise of options granted
under the Plan 821,000 shares of the Corporation's Class A Common Stock, par
value $.01 per share, subject to adjustment as provided in Paragraph 8, which
may be unissued shares, reacquired shares, or shares bought on the market.
If any option which shall have been granted shall expire or terminate for any
reason without having been exercised in full, the unpurchased shares shall
again become available for the purposes of the Plan (unless the Plan shall
have been terminated).
4. ADMINISTRATION
(a) The Plan shall be administered by a committee of the Board of
Directors of the Corporation (the "Committee"), consisting of two or more
members of the Board of Directors. The Committee shall be constituted to
permit the Plan to comply with (i) Rule 16b-3 promulgated under the
Securities Exchange Act of 1934 ("Exchange Act") and any successor rule and
(ii) IRS regulations issued under Section 162(m) of the Code.
(b) The Committee shall have the plenary power, subject to and within
the limits of the express provisions of the Plan:
(i) To determine from time to time which of the eligible persons
shall be granted options under the Plan; the time or times (during the term
of the option) within which all
or portions of each option may be exercised and the number of shares for
which an option or options shall be granted to each of them.
(ii) To construe and interpret the Plan and options granted under
it, and to establish, amend, and revoke rules and regulations for its
administration. The Committee, in the exercise of this power, shall
generally determine all questions of policy and expediency that may arise,
may correct any defect, or supply any omission or reconcile any inconsistency
in the Plan or in any option agreement in a manner and to the extent it shall
deem necessary or expedient to make the Plan fully effective.
(iii) To prescribe the terms and provisions of each option
granted (which need not be identical).
(iv) To determine whether options granted shall be incentive stock
options or non-qualified stock options.
(v) To determine whether options granted shall be transferable
without consideration to immediate family members or family trusts for the
benefit of optionee's immediate family members. As used herein, "immediate
family" means parents, spouses and children.
(c) The Committee shall not have the authority to grant new options in
exchange for the cancellation of stock options previously granted under the
Plan or under any other stock option plan of the Corporation.
5. ELIGIBILITY
Options may be granted only to regular salaried officers and key
employees of the Corporation and its subsidiaries. The term "subsidiary"
corporation shall mean any corporation in which the Corporation controls,
directly or indirectly, fifty percent (50%) or more of the combined voting
power of all classes of stock. A director of the Corporation shall not be
eligible for the benefits of the Plan unless such person also is a regular
salaried employee of the Corporation and/or of any subsidiary.
6. TERMS OF OPTION AND OPTION AGREEMENTS
Each option shall be evidenced by a written Stock Option Agreement which
shall expressly identify the options as incentive stock options or as
non-qualified stock options, and be in such form and contain such provisions
as the Committee shall from time to time deem appropriate; provided, however,
that the grant of a non-qualified option pursuant to this Plan shall in no
way be construed to be an alternative to the right of an employee to purchase
stock pursuant to any incentive stock option heretofore or hereafter granted
to an employee pursuant to any stock option plans now in existence or
hereafter adopted by the Corporation. The terms of the option agreements
need not be identical, but each option agreement shall include, by
appropriate language, or be subject to, the substance of all of the
applicable following provisions:
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(a) The purchase price under each option granted shall be as determined
by the Committee but shall in no instance be less than 100% of fair market
value on the date of grant. The fair market value on the date of grant shall
be determined by the Committee; provided, however, that (i) if the Common
Stock is admitted to quotation on the National Association of Securities
Dealers Automated Quotation System on the date the option is granted, fair
market value shall not be less than the average of the highest bid and lowest
asked prices of the Common Stock on such System on such date or the last date
preceding such date on which a sale was reported, or (ii) if the Common Stock
is admitted to trading on a national securities exchange on the date the
option is granted, fair market value shall not be less than the last sale
price reported for the Common Stock on such exchange on such date or, if
there was no sale on such date, the last date preceding such date on which a
sale was reported.
(b) The maximum term of any incentive stock option shall be ten years
from the date it was granted.
(c) The maximum term of any non-qualified stock option shall be ten
years and one day from the date it was granted.
(d) An option may not be exercised to any extent, either by the person
to whom it was granted or by the grantee's transferee, or by any person after
the grantee's death, unless the person to whom the option was granted has
remained in the continuous employ of the Corporation, or of a subsidiary, for
not less than six months from the date when the option was granted.
Otherwise, each option shall be exercisable as determined by the Committee.
(e) The Corporation, during the terms of options granted under the Plan,
at all times will keep available the number of shares of stock required to
satisfy such options.
(f) The Corporation will seek to obtain from each regulatory commission
or agency having jurisdiction such authority as may be required to issue and
sell shares of stock to satisfy such options. Inability of the Corporation
to obtain from any such regulatory commission or agency authority which
counsel for the Corporation deems necessary for the lawful issuance and sale
of its stock to satisfy such options shall relieve the Corporation from any
liability for failure to issue and sell stock to satisfy such options pending
the time when such authority is obtained or is obtainable.
(g) Neither a person to whom an option is granted nor his or her
transferee, legal representative, heir, legatee, or distributee, shall be
deemed to be the holder of, or to have any of the rights of a holder with
respect to, any shares subject to such option unless and until he or she has
exercised his or her option pursuant to the terms thereof.
(h) In order to be exempt under Section 16 of the Exchange Act and
qualify as an incentive stock option, the option may not be transferable
except by will or by the laws of descent or distribution, and during the
lifetime of the person to whom the option is granted he or she alone may
exercise it.
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(i) An option shall terminate and may not be exercised if the person to
whom it is granted ceases to be continuously employed by the Corporation, or
by a subsidiary of the Corporation, except (subject nevertheless to the last
sentence of this subparagraph (i)): (1) if the grantee's continuous
employment is terminated for any reason other than (i) retirement, (ii)
permanent disability, or (iii) death, the grantee or the grantee's transferee
may exercise the option to the extent that the grantee was entitled to
exercise such option at the date of such termination at any time within a
period of three (3) months following the date of such termination, or if the
grantee shall die within the period of three (3) months following the date of
such termination without having exercised such option, the option may be
exercised within a period of one year following the grantee's death by the
grantee's transferee or the person or persons to whom the grantee's rights
under the option pass by will or by the laws of descent or distribution but
only to the extent exercisable at the date of such termination; (2) if the
grantee's continuous employment is terminated by (i) retirement, (ii)
permanent disability, or (iii) death, the option may be exercised in
accordance with its terms and conditions at any time within a period of five
(5) years following the date of such termination by the grantee or the
grantee's transferee, or in the event of the grantee's death, by the persons
to whom the grantee's rights under the option shall pass by will or by the
laws of descent or distribution; (3) if the grantee's continuous employment
is terminated and within a period of ninety (90) days thereafter the grantee
is recalled to the active payroll, the Committee may reinstate any portion of
the option previously granted but not exercised. Nothing contained in this
subparagraph (i) is intended to extend the stated term of the option and in
no event may an option be exercised by anyone after the expiration of its
stated term.
(j) Option agreements evidencing incentive stock options shall contain
such terms and provisions as may be necessary to render them incentive stock
options pursuant to Section 422 of the Code and the income tax regulations
thereunder, as the same or any successor statute or regulations may at the
time be in effect.
(k) No employee shall receive during any one (1) year period options to
purchase more than 50,000 shares of Common Stock.
(l) Nothing in this Plan or in any option granted hereunder shall confer
on any optionee any right to continue in the employ of the Corporation or any
of its subsidiaries, or to interfere in any way with the right of the
Corporation or any of its subsidiaries to terminate his or her employment at
any time.
7. TIME OF GRANTING OPTION
The Committee shall determine the date on which options are granted under
the Plan. All options granted must be approved at a meeting of the Committee
by a majority of the members of the Committee. If an option agreement is not
executed by an employee and returned to the Corporation on or prior to ninety
(90) days after the date the option is granted (or such earlier date as the
Committee may specify), such option shall terminate.
8. ADJUSTMENT IN NUMBER OF SHARES AND IN OPTION PRICE
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In the event there is any change in the shares of the Corporation through
the declaration of stock dividends or a stock split-up, or through
recapitalization resulting in share split-ups, or combinations or exchanges
of shares, or otherwise, the number of shares available for option, as well
as the shares subject to any option and the option price thereof, shall be
appropriately adjusted by the Committee.
9. PAYMENT OF PURCHASE PRICE AND WITHHOLDING TAXES
(a) The purchase price for all shares purchased pursuant to options
exercised must be either paid in full in cash, or paid in full, with the
consent of the Committee, in Common Stock of the Corporation valued at fair
market value on the date of exercise or a combination of cash and Common
Stock. Fair market value on the date of exercise shall be determined in the
same manner as provided in Section 6(a) hereof.
(b) The Committee may permit the payment of all or part of the
applicable withholding taxes due upon exercise of an option, up to the
highest marginal rates then in effect, by the withholding of shares otherwise
issuable upon exercise of the option. Option shares withheld in payment of
such taxes shall be valued at the fair market value of the Corporation's
Common Stock on the date of exercise as provided in Section 6(a) hereof.
10. CHANGE IN CONTROL
In the event the Corporation is merged into or acquired by another entity
in a transaction involving a change in control, the Committee shall have the
complete authority and discretion, but not the obligation, to accelerate the
vesting of any outstanding options granted hereunder. The Committee may also
ask the Board of Directors to negotiate, as part of any agreement involving a
sale or merger of the Corporation, a sale of substantially all the
Corporation's assets or similar transaction, terms providing protection for
employees holding options under the Plan.
11. AMENDMENT, SUSPENSION, OR TERMINATION OF THE PLAN
(a) The Board may amend, modify, suspend or terminate the Plan for the
purpose of meeting or addressing any changes in legal requirements or for any
other purpose permitted by law. The Board will seek stockholder approval of
an amendment if determined to be required by or advisable under regulations
of the Securities and Exchange Commission or the Internal Revenue Service,
the rules of any stock exchange on which the Corporation's stock is listed,
or other applicable law or regulation.
(b) The Plan shall continue in effect until all shares available for
issuance under the Plan have been issued. An option may not be granted while
the Plan is suspended or after it is terminated.
(c) The rights and obligations under any options granted while the Plan
is in effect shall not be altered or impaired by amendment, suspension or
termination of the Plan, except with the consent of the person to whom the
option was granted or the grantee's transferee or the
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person to whom rights under an option shall have passed by will or by the
laws of descent and distribution.
12. EFFECTIVE DATE
The Plan shall become effective on March 10, 1997, subject to approval by
the stockholders of the Corporation within twelve (12) months after said date.
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