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EXHIBIT 10.1
MERCURY COMPUTER SYSTEMS, INC.
1998 STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
1. PURPOSE
The purpose of this Mercury Computer Systems, Inc. 1998 Stock Option
Plan for Non-Employee Directors (the "Plan") is to attract and retain the
services of experienced and knowledgeable independent directors who are not
employees (sometimes referred to herein collectively as "Participants") of
Mercury Computer Systems, Inc. ("Mercury") for the benefit of Mercury and its
stockholders and to provide additional incentive for such Participants to
continue to work in the best interests of Mercury and its stockholders through
continuing ownership of its common stock.
2. SHARES SUBJECT TO THE PLAN
The total number of shares of common stock, par value $.01 per share
("Shares"), of Mercury for which options may be granted under the Plan shall not
exceed 50,000 in the aggregate, subject to adjustment in accordance with Section
9 hereof.
3. ELIGIBILITY; GRANT OF OPTION
On September 30 of each of 1998, 1999, 2000, 2001 and 2002, each person
who is then a member of the Board of Directors of Mercury (the "Board") and who
is not then an employee of Mercury or any subsidiary shall be granted an option
to acquire the Formula Number of Shares under the Plan. Any options granted
prior to stockholder approval of this Plan shall become effective as of their
date of grant only upon stockholder approval of this Plan in accordance with
Section 13 hereof. The options shall be non-qualified options not intended to
meet the requirements of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").
The Formula Number shall be that number equal to one percent (1%) of the
net income of Mercury for the most recent fiscal year ending prior to the grant
date as shown on Mercury's audited financial statements divided by the fair
market value of a share of Mercury common stock, as determined under Section 5
hereof, on the first day of such most recent fiscal year,
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divided by the number of the non-employee Directors of Mercury granted options
hereunder on such grant date. No fractional shares shall be issued.
4. OPTION AGREEMENT
Each option granted under the Plan shall be evidenced by an option
agreement (the "Agreement") duly executed on behalf of Mercury and by the
director to whom such option is granted, which Agreements shall comply with and
be subject to the terms and conditions of the Plan.
5. OPTION EXERCISE PRICE
Subject to the provisions of Section 9 hereof, the option exercise price
for an option granted under the Plan shall be the fair market value of the
Shares of the common stock of Mercury covered by the option on the date of grant
of the option. For the purposes hereof, the fair market value of the Shares of
the common stock of Mercury shall be determined as follows. If such shares are
then listed on any national securities exchange, the fair market value shall be
the mean between the high and low sales prices, if any, on the largest such
exchange on the date of the grant of the option or, if none, shall be determined
by taking a weighted average of the means between the highest and lowest sales
prices on the nearest date before and the nearest date after the date of grant
in accordance with Treasury Regulations Section 25.2512-2. If the shares are not
then listed on any such exchange, the fair market value of such shares shall be
the mean between the high and low sales prices, if any, as reported in the
National Association of Securities Dealers Automated Quotation System National
Market System ("NASDAQ/NMS") for the date of the grant of the option, or, if
none, shall be determined by taking a weighted average of the means between the
highest and lowest sales on the nearest date before and the nearest date after
the date of grant in accordance with Treasury Regulations Section 25.2512-2. If
the shares are not then either listed on any such exchange or quoted in
NASDAQ/NMS, the fair market value shall be the mean between the average of the
"Bid" and the average of the "Ask" prices, if any, as reported in the National
Daily Quotation Service for the date of the grant of the option, or, if none,
shall be determined by taking a weighted average of the means between the
highest and lowest sales prices on the nearest date before and the nearest date
after the date of grant in accordance with Treasury Regulations Section
25.2512-2. If the fair market value cannot be determined under the preceding
three sentences, it shall be determined by the Company's independent auditors.
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6. TIME AND MANNER OF EXERCISE OF OPTION
(a) Options granted under the Plan shall, subject to the provisions of
Section 7, be exercisable as provided in this Section 6(a). The options granted
under this Plan shall vest 1/3 on each of the first, second, and third
anniversaries of the date of grant. Following the third anniversary of the date
of grant, all options granted pursuant to a particular grant shall be
exercisable in full.
(b) To the extent that the right to exercise an option has accrued and
is in effect, the option may be exercised in full at one time or in part from
time to time by giving written notice, signed by the person or persons
exercising the option, to Mercury, stating the number of Shares with respect to
which the option is being exercised, accompanied by payment in full for such
Shares, which payment must be in cash or certified check payable to the order of
the Company; provided, however, that there shall be no such exercise at any one
as to fewer than Two Hundred Fifty (250) Shares or all of the remaining Shares
then purchasable by the person or persons exercising the option, if fewer than
Two Hundred Fifty (250) Shares. Upon such exercise, delivery of a certificate
for paid-up non- assessable Shares shall be made at the principal Massachusetts
office of Mercury to the person or persons exercising the option at such time,
during ordinary business hours, not more than thirty (30) days from the date of
receipt of the notice by Mercury, as shall be designated in such notice, or at
such time, place and manner as may be agreed upon by Mercury and the person or
persons exercising the option.
7. TERM OF OPTIONS
(a) Each option shall expire ten (10) years from the date of the
granting thereof, but shall be subject to earlier termination as herein
provided.
(b) In the event of the death of an optionee, the option granted to such
optionee may be exercised, to the extent the optionee was entitled to do so on
the date of such
(c) optionee's death, by the estate of such optionee or by any person or
persons who acquired the right to exercise such
(d) option by bequest or inheritance or otherwise by reason of the death
of such optionee. Such option may be exercised at any time within one (1) year
after the date of death of such optionee, at which time the option shall
terminate, or prior to the date on which the option otherwise expires by its
terms, whichever is earlier.
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(c) In the event that an optionee ceases to be a director of Mercury,
the option granted to such optionee may be exercised by him, but only to the
extent that under Section 6 hereof the right to exercise the option has accrued
and is in effect. Such option may be exercised at any time within one (1) month
after the date such optionee ceases to be a director of Mercury, at which time
the option shall terminate, but in any event prior to the date on which the
option expires by its terms, whichever is earlier, unless termination as a
director (a) was by Mercury for cause, in which case the option shall terminate
immediately at the time the optionee ceases to be a director of Mercury, (b) was
because the optionee has become disabled (within the meaning of Section 22(e)(3)
of the Code), or (c) was by reason of the death of the optionee. In the case of
death, see Section 7(b) of the Plan. In the case of disability, the option may
be exercised, to the extent then exercisable under Section 6 hereof, at any time
within one (1) year after the date of termination of the optionee's directorship
with Mercury, at which time the option shall terminate, but in any event prior
to the date on which the option otherwise expires by its terms, whichever is
earlier.
8. OPTIONS NOT TRANSFERABLE
The right of any optionee to exercise an option granted to him under the
Plan shall not be assignable or transferable by such optionee otherwise than by
will or the laws of descent and distribution, or pursuant to a qualified
domestic relations order as defined by the Code or Title I of the Employee
Retirement Income Security Act, or the rules thereunder. Any option granted
under the Plan shall be exercisable during the lifetime of such optionee only by
him. Any option granted under the Plan shall be null and void and without effect
upon the bankruptcy of the optionee, or upon any attempted assignment or
transfer, except as herein provided, including without limitation any purported
assignment, whether voluntary or by operation of law, pledge, hypothecation or
other disposition, attachment, trustee process or similar process, whether legal
or equitable, upon such option.
9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event that the outstanding Shares of the common stock of Mercury
are changed into or exchanged for a different number or kind of shares or other
securities of Mercury or of another corporation by reason of any reorganization,
merger, consolidation, recapitalization, reclassification, stock split-up,
combination of shares or dividends payable in capital stock, appropriate
adjustment shall be made in the number and kind of shares as to which
outstanding options, or portions thereof then unexercised, shall be exercisable,
to the end that the
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proportionate interest of the optionee shall be maintained as before the
occurrence of such event, and such adjustment in outstanding options shall be
made without change in the total price applicable to the unexercised portion of
such options and with a corresponding adjustment in the option price per share.
10. RESTRICTIONS ON ISSUE OF SHARES
Notwithstanding the provisions of Section 6 hereof, Mercury may delay
the issuance of Shares covered by the exercise of any option and the delivery of
a certificate for such Shares until one of the following conditions shall be
satisfied:
(i) the Shares with respect to which an option has been
exercised are at the time of the issue of such Shares effectively registered
under applicable Federal and state securities acts now in force or hereafter
amended; or
(ii) counsel for Mercury shall have given an opinion, which
opinion shall not be unreasonably conditioned or withheld, that such Shares are
exempt from registration under applicable Federal and state securities acts now
in force or hereafter amended.
It is intended that all exercises of options shall be effective.
Accordingly, Mercury shall use its best efforts to bring about compliance with
the above conditions within a reasonable time, except that Mercury shall be
under no obligation to cause a registration statement or a post-effective
amendment to any registration statement to be prepared at its expense solely for
the purpose of covering the issue of Shares in respect of which any option may
be exercised, except as otherwise agreed to by Mercury in writing.
11. RIGHTS OF HOLDER ON PURCHASE FOR INVESTMENT; SUBSEQUENT REGISTRATION
Unless the Shares to be issued upon exercise of an option granted under
the Plan have been effectively registered under the Securities Act of 1933, as
now in force or hereafter amended, Mercury shall be under no obligation to issue
any Shares covered by any option unless the person who exercises such option, in
whole or in part, shall give a written representation and undertaking to Mercury
which is satisfactory in form and scope to counsel to Mercury and upon which, in
the opinion of such counsel, Mercury may reasonably rely, that he is acquiring
the Shares issued to him pursuant to such exercise of the option for his own
account as an investment and
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not with a view to, or for sale in connection with, the distribution of any such
Shares, and that he will make no transfer of the same except in compliance with
any rules and regulations in force at the time of such transfer under the
Securities Act of 1933, or any other applicable law, and that if Shares are
issued without such registration a legend to this effect may be endorsed upon
the securities so issued. In the event that Mercury shall, nevertheless, deem it
necessary or desirable to register under the Securities Act of 1933 or other
applicable statutes any Shares with respect to which an option shall have been
exercised, or to qualify any such Shares for exemption from the Securities Act
of 1933 or other applicable statutes, then Mercury shall take such action at its
own expense and may require from each optionee such information in writing for
use in any registration statement, prospectus, preliminary prospectus or
offering circular as is reasonably necessary for such purpose and may require
reasonable indemnity to Mercury and its officers and directors from such holder
against all losses, claims, damages and liabilities arising from such use of the
information so furnished and caused by any untrue statement of any material fact
therein or caused by the omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances under which they were made.
12. LOANS PROHIBITED
Mercury shall not, directly or indirectly, lend money to an optionee or to any
person or persons entitled to exercise an option by reason of the death of an
optionee for the purpose of assisting him or them in the acquisition of Shares
covered by an option granted under the Plan.
13. APPROVAL OF STOCKHOLDERS
The Plan shall be subject to approval by the vote of stockholders
holding at least a majority of the voting stock of Mercury voting in person or
by proxy at a duly held stockholders' meeting, or by written consent of all of
the stockholders, and shall take effect immediately as of its date of adoption
upon such approval.
14. EXPENSES OF THE PLAN
All costs and expenses of the adoption and administration of the Plan
shall be borne by Mercury, and none of such expenses shall be charged to any
optionee.
15. TERMINATION AND AMENDMENT OF PLAN
Unless sooner terminated as herein provided, the Plan shall terminate
ten (10) years from the date upon which the Plan was duly approved by the
stockholders. The Board may at any time terminate the Plan or make such
modification or amendment thereof as it deems advisable, provided however that,
except as provided in Section 9
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hereof, no modification or amendment to the provisions of the Plan may be made
more than once every six (6) months other than to comport with changes in the
Code, the Employee Retirement Income Security Act, or the rules thereunder, if
the effect of such amendment or modification would be to change (i) the
requirements for eligibility under the Plan, (ii) the timing of the grants of
options to be granted under the Plan or the exercise price or vesting schedule
thereof, or (iii) the number of Shares subject to options to be granted under
the Plan either in the aggregate or to one director. Any amendment to the
provisions of the Plan which (i) materially increases the number of Shares which
may be subject to options granted under the Plan, (ii) materially increases the
benefits accruing to Participants under the Plan, or (iii) materially modifies
the requirement for eligibility to participate in the Plan, shall be subject to
approval by the stockholders of Mercury obtained in the manner stated in Section
13 hereof. Termination or any modification or amendment of the Plan shall not,
without the consent of an optionee, affect his rights under an option previously
granted to him.
16. LIMITATION OF RIGHTS IN THE OPTION SHARES
An optionee shall not be deemed for any purpose to be a stockholder of
Mercury with respect to any of the options except to the extent that the option
shall have been exercised with respect thereto and, in addition, a certificate
shall have been issued theretofore and delivered to the optionee.
17. NOTICES
Any communication or notice required or permitted to be given under the
Plan shall be in writing, and mailed by registered or certified mail or
delivered by hand, if to Mercury, to its principal place of business, attention:
President, and, if to an optionee, to the address as appearing on the records of
Mercury.
18. COMPLIANCE WITH RULE 16b-3
It is the intention of Mercury that the Plan comply in all respects with
Rule 16b-3 promulgated under Section 16(b) of the Securities Exchange Act of
1934 (the "Act") and that Participants remain disinterested persons for purposes
of administering other employee benefit plans of Mercury and having transactions
under such other plans be exempt from Section 16(b) of the Act. Therefore, if
any Plan provision is found not to be in compliance with Rule 16b-3 or if any
Plan provisions would disqualify Participants from remaining disinterested
persons, that provisions shall be deemed null and void, and in all events the
Plan shall be construed in favor of its meeting the requirements of Rule 16b-3.
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