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EXHIBIT 10-5
ANALOG DEVICES, INC.
1989 DIRECTOR STOCK OPTION PLAN
1. Purpose.
The purpose of this 1989 Director Stock Option Plan (the "Plan") of Analog
Devices, Inc. (the "Company") is to encourage ownership in the Company by
outside directors of the Company whose continued services are considered
essential to the Company's future progress and to provide them with a further
incentive to remain as directors of the Company.
2. Administration.
The Board of Directors shall supervise and administer the Plan. Grants of
stock options under the Plan and the amount and nature of the awards to be
granted shall be automatic in accordance with Section 5. However, all questions
of interpretation of the Plan or of any options issued under it shall be
determined by the Board of Directors and such determination shall be final and
binding upon all persons having an interest in the Plan.
3. Participation in the Plan.
Directors of the Company who are not employees of the Company or any
subsidiary of the Company shall be eligible to participate in the Plan.
4. Stock Subject to the Plan.
(a) The maximum number of shares which may be issued under the Plan shall
be sixty thousand (60,000) shares of the Company's Common Stock, par value $.16
2/3 per share ("Common Stock"), subject to adjustment as provided in Section 10
of the Plan.
(b) If any outstanding option under the Plan for any reason expires or is
terminated without having been exercised in full, the shares allocable to the
unexercised portion of such option shall again become available for grant
pursuant to the Plan.
(c) All options granted under the Plan shall be non-statutory options not
entitled to special tax treatment under Section 422A of the Internal Revenue
Code of 1986, as amended to date and as may be amended from time to time (the
"Code").
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5. Terms, Conditions and Form of Options.
Each option granted under the Plan shall be evidenced by a written
agreement in such form as the Board of Directors shall from time to time
approve, which agreements shall comply with and be subject to the following
terms and conditions:
(a) Option Grant Date. Options shall be granted automatically to all
eligible directors at the close of business on the date the Plan is approved by
the stockholders of the Company. Thereafter, options shall be granted
automatically to persons who subsequently become eligible directors on the close
of business on the date of his or her initial election to the Board of
Directors.
(b) Shares Subject to Option. Each option granted under the Plan shall be
exercisable for up to 5,000 shares of Common Stock.
(c) Option Exercise Price. The option exercise price per share for each
option granted under the Plan shall equal the closing price per share of the
Company's Common Stock on the New York Stock Exchange consolidated transaction
reporting system on the date of grant (or if no such price is reported on such
date such price as reported on the nearest preceding day).
(d) Options Non-Transferable. Each option granted under the Plan by its
terms shall not be transferable by the optionee otherwise than by will, or by
the laws of descent and distribution, and shall be exercised during the lifetime
of the optionee only by him. No option or interest therein may be transferred,
assigned, pledged or hypothecated by the optionee during his lifetime, whether
by operation of law or otherwise, or be made subject to execution, attachment or
similar process.
(e) Exercise Period. Except as otherwise provided in this Plan, no option
may be exercised prior to the third anniversary of the date of grant of such
option. Each option may be exercised on a cumulative basis as to one-third of
the shares subject to the option on the third, fourth and fifth anniversary of
the date of grant of such option, provided that, subject to the provisions of
Section 5(f), no option may be exercised more than 90 days after the optionee
ceases to serve as a director of the Company. No option shall be exercisable
after the expiration of ten (10) years from the date of grant.
(f) Exercise Period Upon Death, Disability or Mandatory Retirement.
Notwithstanding the provisions of Section 5(e), any option granted under the
Plan may be exercised in full by an optionee who becomes disabled (within the
meaning of Section 22(e) (3) of the Code or any successor provision thereto)
while acting as a director of the Company or who retires pursuant to the terms
of any retirement policy adopted by the Company, or may be exercised in full
upon the death of such optionee while a director of the Company or within three
months after he ceases to serve as a director of the Company by the person to
whom it is transferred by will, by the laws of descent and
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distribution, or by written notice filed pursuant to Section 5(h), in each case
within the period of one year after the date the optionee ceases to be such a
director by reason of such death, disability or retirement; provided, that no
option shall be exercisable after the expiration often (10) years from the date
of grant.
(g) Exercise Procedure. Options may be exercised only by written notice to
the Company at its principal office accompanied by payment in cash of the full
consideration for the shares as to which they are exercised.
(h) Exercise by Representative Following Death of Director. A director, by
written notice to the Company, may designate one or more persons (and from time
to time change such designation) including his legal representative, who, by
reason of the director's death, shall acquire the right to exercise all or a
portion of the option. If the person or persons so designated wish to exercise
any portion of the option, they must do so within the term of the option as
provided herein. Any exercise by a representative shall be subject to the
provisions of the Plan.
6. Modification, Extension and Renewal of Options.
The Board of Directors shall have the power to modify, extend or renew
outstanding options and authorize the grant of new options in substitution
therefor, provided that any such action may not have the effect of altering or
impairing any rights or obligations of any option previously granted without the
consent of the optionee.
7. Assignments.
The rights and benefits under the Plan may not be assigned except for the
designation of a beneficiary as provided in Section 5.
8. Time for Granting Options.
All options for shares subject to the Plan shall be granted, if at all, not
later than five (5) years after the approval of the Plan by the Company's
stockholders.
9. Limitation of Rights.
(a) No Right to Continue as a Director. Neither the Plan, nor the granting
of an option nor any other action taken pursuant to the Plan, shall constitute
or be evidence of any agreement or understanding, express or implied, that the
Company will retain a director for any period of time.
(b) No Stockholders' Rights for Options. An optionee shall have no rights
as a stockholder with respect to the shares covered by his options until the
date of the issuance to him of a stock certificate therefor, and no adjustment
will be made for
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dividends or other rights (except as provided in Section 10) for which the
record date is prior to the date such certificate is issued.
10. Changes in Common Stock.
(a) If the outstanding shares of Common Stock are increased, decreased or
exchanged for a different number or kind of shares or other securities, or if
additional shares or new or different shares or other securities are distributed
with respect to such shares of Common Stock or other securities, through merger,
consolidation, sale of all or substantially all of the assets of the Company,
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other distribution with respect to such shares of Common
Stock, or other securities, an appropriate and proportionate adjustment may be
made in (i) the maximum number and kind of shares reserved for issuance under
the Plan, (ii) the number and kind of shares or other securities subject to then
outstanding options under the Plan and (iii) the price for each share subject to
any then outstanding options under the Plan, without changing the aggregate
purchase price as to which such options remain exercisable. No fractional shares
will be issued under the Plan on account of any such adjustments.
(b) In the event that the Company is merged or consolidated into or with
another corporation (in which consolidation or merger the stockholders of the
Company receive distributions of cash or securities of another issuer as a
result thereof), or in the event that all or substantially all of the assets of
the Company are acquired by any other person or entity, or in the event of a
reorganization or liquidation of the Company, the Board of Directors of the
Company, or the board of directors of any corporation assuming the obligations
of the Company, shall, as to outstanding options, either (i) provide that such
options shall be assumed, or equivalent options shall be substituted. by the
acquiring or successor corporation (or an affiliate thereof), or (ii) upon
written notice to the optionees, provide that all unexercised options will
terminate immediately prior to the consummation of such merger, consolidation,
acquisition, reorganization or liquidation unless exercised by the optionee
within a specified number of days following the date of such notice.
11. Change in Control.
Notwithstanding any other provision to the contrary in this Plan, in the
event of a Change of Control (as defined below), all options outstanding as of
the date such Change in Control occurs shall become exercisable in full, whether
or not exercisable in accordance with their terms. A "Change in Control" shall
occur or be deemed to have occurred only if any of the following events occur:
(i) any "person," as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (other than
the Company, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or any corporation owned directly or indirectly by
the stockholders of the Company in substantially the same
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proportion as their ownership of stock of the Company) 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 50% or more of the
combined voting power of the Company's then outstanding securities; (ii)
individuals who, as of January 1, 1989, constitute the Board of Directors of the
Company (as of the date thereof, the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board, provided that any person becoming a
director subsequent to the date thereof whose election, or nomination for
election by the Company's stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board (other than an
election or nomination of an individual whose initial assumption of office is in
connection with an actual or threatened election contest relating to the
election of the directors of the Company, as such terms are used in Rule 14a-11
of Regulation 14A under the Exchange Act) shall be, for purposes of this
Agreement, considered as though such person were a member of the Incumbent
Board; (iii) the stockholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than (A) 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) more than 80% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation or (B) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than 30% of the combined voting
power of the Company's then outstanding securities; or (iv) the stockholders of
the Company approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially all
of the Company's assets.
12. Amendment of the Plan.
The Board of Directors may suspend or discontinue the Plan or review or
amend it in any respect whatsoever; provided, however, that without approval of
the stockholders of the Company no revision or amendment shall change the number
of shares subject to the Plan (except as provided in Section 10), change the
designation of the class of directors eligible to receive options, or materially
increase the benefits accruing to participants under the Plan.
13. Notice.
Any written notice to the Company required by any of the provisions of the
Plan shall be addressed to the Treasurer of the Company and shall become
effective when it is received.
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14. Governing Law.
The Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of the Commonwealth of Massachusetts.
Approved by the Board of Directors on December 14, 1988 Approved by the
Stockholders on March 14, 1989.
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