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EXHIBIT 10.4
1997 KEY EMPLOYEES' STOCK OPTION PLAN
OF
RF MICRO DEVICES, INC.
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1997 KEY EMPLOYEES' STOCK OPTION PLAN
OF
RF MICRO DEVICES, INC.
1. PURPOSE
The purpose of the 1997 Key Employees' Stock Option Plan of RF Micro
Devices, Inc. (the "Plan") is to encourage and enable selected key employees and
independent contractors in the service of RF Micro Devices, Inc. (the
"Corporation") or its related corporations to acquire or to increase their
holdings of common stock of the Corporation (the "Common Stock") in order to
promote a closer identification of their interests with those of the Corporation
and its shareholders, thereby further stimulating their efforts to enhance the
efficiency, soundness, profitability, growth and shareholder value of the
Corporation. This purpose will be carried out through the granting of incentive
stock options ("Incentive Options") intended to qualify under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), and nonqualified stock
options ("Nonqualified Options"). Incentive Options and Nonqualified Options
shall be referred to herein collectively as "Options." To the extent that any
Option is designated as an Incentive Option and such option does not qualify as
an Incentive Option, it shall constitute a Nonqualified Option.
2. ADMINISTRATION OF THE PLAN
(a) The Plan shall be administered by a committee (the
"Committee") appointed by the Board of Directors of the Corporation (the
"Board") and comprised solely of members of the Board. The Committee
shall include no fewer than the minimum number of "non-employee
directors," as such term is defined in Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as may
be required by Rule 16b-3 or any successor rule.
(b) Any action of the Committee may be taken by a written
instrument signed by all of the members of the Committee and any action
so taken by written consent shall be as fully effective as if it had
been taken by a majority of the members at a meeting duly held and
called. Subject to the provisions of the Plan, the Committee shall have
full and final authority, in its discretion, to take any action with
respect to the Plan including, without limitation, the following: (i) to
determine the individuals to receive Options, the nature of each Option
as an Incentive Option or a Nonqualified Option, the times when Options
shall be granted, the number of shares to be subject to each Option, the
Option price (determined in accordance with Section 6), the Option
period, the time or times when each Option shall be exercisable and the
other terms, conditions, restrictions and limitations of an Option; (ii)
to prescribe the form or forms of the agreements evidencing any Options
granted under the Plan; (iii) to establish, amend and rescind rules and
regulations for the administration of the Plan; and (iv) to construe and
interpret the Plan, the rules and regulations, and the agreements
evidencing Options granted under the Plan, and to make all other
determinations deemed necessary or advisable for administering the Plan.
In addition, the Committee shall have complete authority, in its
discretion, to accelerate the date that any Option which is not
otherwise exercisable shall become exercisable in whole
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or in part, without any obligation to accelerate such date with respect
to any other Option granted to any person.
(c) Notwithstanding Section 2(b), and subject to the terms of
the Plan herein, the Committee may delegate from time to time to the
Chief Executive Officer of the Corporation the authority to grant
Options, and to make any or all of the determinations reserved for the
Committee in the Plan and summarized in Section 2(b) with respect to
Options that have been granted, to any individual who, at the time of
such grant or other determination, (i) is not an officer or director of
the Corporation subject to Section 16 of the Exchange Act and (ii) is
otherwise eligible to participate in the Plan under Section 5. The Chief
Executive Officer of the Corporation shall report to the Committee, not
less than quarterly, the material terms of all Options granted since the
time of any such immediately preceding report pursuant to authority
delegated pursuant to this Section 2(c).
3. EFFECTIVE DATE
The effective date of the Plan shall be the date of consummation of an
initial public offering (the "Public Offering Date"). Options may be granted
under the Plan on and after the effective date, but not after the tenth
anniversary of the Public Offering Date. For the purposes herein, the phrase
"consummation of an initial public offering" shall mean the closing of a firm
commitment underwritten public offering of the Corporation's Common Stock
pursuant to a registration statement on Form S-1 filed under the Securities Act
of 1933, as amended (the "Securities Act").
4. OPTIONS; SHARES OF STOCK SUBJECT TO THE PLAN
Both Incentive Options and Nonqualified Options, as designated by the
Committee, may be granted under the Plan. The shares of Common Stock that may be
issued and sold pursuant to Options shall not exceed in the aggregate 1,300,000
shares of authorized but unissued shares of the Common Stock of the Corporation.
The Corporation hereby reserves sufficient authorized shares of Common Stock to
provide for the exercise of Options granted hereunder. Any shares of Common
Stock subject to an Option which, for any reason, expires or is terminated
unexercised as to such shares may again be subject to an Option granted under
the Plan. No Optionee may be granted Options in any calendar year for more than
500,000 shares of Common Stock.
5. ELIGIBILITY
An Option may be granted only to an individual who satisfies the
following eligibility requirements on the date the Option is granted:
(a) The individual is either (i) a key employee of the
Corporation or a related corporation or (ii) an independent contractor
providing services to the Corporation or a related corporation. For this
purpose, an individual shall be considered to be an "employee" only if
there exists between the individual and the Corporation or a related
corporation the legal and bona fide relationship of employer and
employee. In determining whether such a relationship exists, the
regulations of the United States Treasury Department relating to the
determination
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of the employment relationship for the purpose of collection of income
tax on wages at the source shall be applied.
Also, for this purpose, a "key employee" is an employee
of the Corporation or a related corporation whom the Committee
determines qualifies as a key employee based on the nature and extent of
such employee's duties, responsibilities, personal capabilities,
performance and potential, or any combination of such factors.
(b) With respect to the grant of an Incentive Option, the
individual is an employee who does not own, immediately before the time
that the Incentive Option is granted, stock possessing more than ten
percent of the total combined voting power of all classes of stock of
the Corporation or a related corporation; provided, that an individual
owning more than ten percent of the total combined voting power of all
classes of stock of the Corporation or a related corporation may be
granted an Incentive Option if the price at which such Option may be
exercised is greater than or equal to 110% of the fair market value of
the shares on the date the Option is granted and the Option period does
not exceed five years. For this purpose, an individual will be deemed to
own stock which is attributed to him under Section 424(d) of the Code.
(c) The individual, being otherwise eligible under this Section
5, is selected by the Committee as an individual to whom an Option shall
be granted (an "Optionee").
6. OPTION PRICE
The price per share at which an Option may be exercised (the "Option
price") shall be established by the Committee at the time the Option is granted
and shall be set forth in the terms of the agreement evidencing the grant of the
Option; provided, that in the case of an Incentive Option, the Option price
shall be equal to or greater than the fair market value per share of the Common
Stock on the date the Option is granted. In addition, the following rules shall
apply:
(a) An Incentive Option shall be considered to be granted on the
date that the Committee acts to grant the Option, or on any later date
specified by the Committee as the date of grant of the Option. A
Nonqualified Option shall be considered to be granted on the date the
Committee acts to grant the Option or any other date specified by the
Committee as the date of grant of the Option.
(b) The fair market value of the shares shall be determined in
good faith by the Committee in accordance with the following provisions:
(i) if the shares of Common Stock are listed for trading on the New York
Stock Exchange or the American Stock Exchange or included in The Nasdaq
National Market, the fair market value shall be the closing sales price
of the shares on the New York Stock Exchange or the American Stock
Exchange or as reported in The Nasdaq National Market (as applicable) on
the date immediately preceding the date the Option is granted, or, if
there is no transaction on such date, then on the trading date nearest
preceding the date the Option is granted for which closing price
information is available, and, provided further, if the shares are
quoted on The Nasdaq System but are not included in The Nasdaq
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National Market, the fair market value shall be the mean between the
high bid and low asked quotations in The Nasdaq System on the date
immediately preceding the date the Option is granted for which such
information is available; or (ii) if the shares of Common Stock are not
listed or reported in any of the foregoing, then fair market value shall
be determined by the Committee in accordance with the applicable
provisions of Section 20.2031-2 of the Federal Estate Tax Regulations,
or in any other manner consistent with the Code and accompanying
regulations.
(c) In no event shall there first become exercisable by the
Optionee in any one calendar year incentive stock Options granted by the
Corporation or any related corporation with respect to shares having an
aggregate fair market value (determined at the time an Option is
granted) greater than $100,000.
7. OPTION PERIOD AND LIMITATIONS ON THE RIGHT TO
EXERCISE OPTIONS
(a) The period during which an Option may be exercised (the
"Option period") shall be determined by the Committee when the Option is
granted and shall not extend more than ten years from the date on which
the Option is granted. An Option shall be exercisable on such date or
dates, during such period, for such number of shares, and subject to
such conditions as shall be determined by the Committee and set forth in
the agreement evidencing such Option, subject to the rights granted
herein to the Committee to accelerate the time when Options may be
exercised. Any Option or portion thereof not exercised before the
expiration of the Option period shall terminate.
(b) An Option may be exercised by giving written notice of at
least ten days to the Committee or its designee at such place as the
Committee shall direct. Such notice shall specify the number of shares
to be purchased pursuant to an Option and the aggregate purchase price
to be paid therefor, and shall be accompanied by the payment of such
purchase price. Such payment shall be in the form of (i) cash; (ii)
shares of Common Stock owned by the Optionee at the time of exercise;
(iii) shares of Common Stock withheld upon exercise; (iv) delivery of a
properly executed written notice of exercise to the Corporation and
delivery to a broker of written notice of exercise and irrevocable
instructions to promptly deliver to the Corporation the amount of sale
or loan proceeds to pay the Option price; or (v) any combination of the
foregoing methods. Shares tendered or withheld in payment upon the
exercise of an Option shall be valued at their fair market value on the
date of exercise, as determined by the Committee by applying the
provisions of Section 6(b).
(c) No Option granted to an Optionee who was an employee at the
time of grant shall be exercised unless the Optionee is, at the time of
exercise, an employee as described in Section 5(a), and has been an
employee continuously since the date the Option was granted, subject to
the following:
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(i) An Option shall not be affected by any change in the
terms, conditions or status of the Optionee's employment,
provided that the Optionee continues to be an employee of the
Corporation or a related corporation.
(ii) The employment relationship of an Optionee shall be
treated as continuing intact for any period that the Optionee is
on military or sick leave or other bona fide leave of absence,
provided that the period of such leave does not exceed ninety
days, or, if longer, as long as the Optionee's right to
reemployment is guaranteed either by statute or by contract. The
employment relationship of an Optionee shall also be treated as
continuing intact while the Optionee is not in active service
because of disability. For purposes of this Section 7(c)(ii),
"disability" shall mean the inability of the Optionee to engage
in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected
to result in death, or which has lasted or can be expected to
last for a continuous period of not less than twelve months. The
Committee shall determine whether an Optionee is disabled within
the meaning of this paragraph.
(iii) If the employment of an Optionee is terminated
because of disability within the meaning of subparagraph (ii),
or if the Optionee dies while he is an employee or dies after
the termination of his employment because of disability, the
Option may be exercised only to the extent exercisable on the
date of the Optionee's termination of employment or death while
employed (the "termination date"), except that the Committee may
in its discretion accelerate the date for exercising all or any
part of the Option which was not otherwise exercisable on the
termination date. The Option must be exercised, if at all, prior
to the first to occur of the following, whichever shall be
applicable: (A) the close of the period of twelve months next
succeeding the termination date; or (B) the close of the Option
period. In the event of the Optionee's death, such Option shall
be exercisable by such person or persons as shall have acquired
the right to exercise the Option by will or by the laws of
intestate succession.
(iv) If the employment of the Optionee is terminated for
any reason other than disability (as defined in subparagraph
(ii)) or death or for "cause," his Option may be exercised to
the extent exercisable on the date of such termination of
employment, except that the Committee may in its discretion
accelerate the date for exercising all or any part of the Option
which was not otherwise exercisable on the date of such
termination of employment. The Option must be exercised, if at
all, prior to the first to occur of the following, whichever
shall be applicable: (A) the close of the period of 90 days next
succeeding the termination date; or (B) the close of the Option
period. If the Optionee dies following such termination of
employment and prior to the earlier of the dates specified in
(A) or (B) of this subparagraph (iv), the Optionee shall be
treated as having died while employed under subparagraph (iii)
immediately preceding (treating for this purpose the Optionee's
date of termination of employment as the termination date). In
the event of the Optionee's death, such Option shall be
exercisable by such person or persons as shall have acquired the
right to exercise the Option by will or by the laws of intestate
succession.
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(v) If the employment of the Optionee is terminated for
"cause," his Option shall lapse and no longer be exercisable as
of the effective time of his termination of employment, as
determined by the Committee. For purposes of this subparagraph
(v) and subparagraph (iv), the Optionee's termination shall be
for "cause" if such termination results from the Optionee's (A)
dishonesty; (B) refusal to perform his duties for the
Corporation; or (C) engaging in conduct that could be materially
damaging to the Corporation without a reasonable good faith
belief that such conduct was in the best interest of the
Corporation. The determination of "cause" shall be made by the
Committee and its determination shall be final and conclusive.
(d) An Option granted to an Optionee who was an independent
contractor of the Corporation or a related corporation at the time of
grant (and who does not thereafter become an employee, in which case he
shall be subject to the provisions of Section 7(c) herein) may be
exercised only to the extent exercisable on the date of the Optionee's
termination of service to the Corporation or a related corporation
(unless the termination was for cause), and must be exercised, if at
all, prior to the first to occur of the following, as applicable: (A)
the close of the period of 90 days next succeeding the termination date;
or (B) the close of the Option period. If the services of such an
Optionee are terminated for cause (as defined in Section 7(c)(v)
herein), his Option shall lapse and no longer be exercisable as of the
effective time of his termination of services, as determined by the
Committee. Notwithstanding the foregoing, the Committee may in its
discretion accelerate the date for exercising all or any part of an
Option which was not otherwise exercisable on the termination date or
extend the Option period, or both.
(e) An Optionee or his legal representative, legatees or
distributees shall not be deemed to be the holder of any shares subject
to an Option unless and until certificates for such shares are issued to
him or them under the Plan.
(f) Nothing in the Plan shall confer upon the Optionee any right
to continue in the service of the Corporation or a related corporation
as an employee or independent contractor, as the case may be, or to
interfere in any way with the right of the Corporation or a related
corporation to terminate the Optionee's service at any time.
8. NONTRANSFERABILITY OF OPTIONS AND SHARES
Incentive Options granted pursuant to the Plan shall not be transferable
(including by pledge or hypothecation) other than by will or the laws of
intestate succession or pursuant to a qualified domestic relations order, as
defined by the Code or Title I of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or the rules thereunder. Nonqualified Options
granted pursuant to the Plan shall not be transferable (including by pledge or
hypothecation) other than by will or the laws of intestate succession or
pursuant to a qualified domestic relations order, as defined by the Code or
Title I of ERISA or the rules thereunder, except as may be permitted by the
Committee in a manner consistent with the registration provisions of the
Securities Act. An Option shall be exercisable during the Optionee's lifetime
only by him. To the extent required by Section 16 of the Exchange Act, shares
acquired upon the exercise of an Option shall not, without the consent of the
Committee, be transferable
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(including by pledge or hypothecation) until the expiration of six months after
the date the Option was granted.
9. DILUTION OR OTHER ADJUSTMENTS
If there is any change in the outstanding shares of Common Stock of the
Corporation as a result of a merger, consolidation, reorganization, stock
dividend, stock split distributable in shares, or other change in the capital
stock structure of the Corporation, the Committee shall make such adjustments to
Options, to the number of shares reserved for issuance under the Plan, and to
any provisions of this Plan as the Committee deems equitable to prevent dilution
or enlargement of Options or otherwise advisable to reflect such change.
10. WITHHOLDING
The Corporation shall require any recipient of shares pursuant to the
exercise of a Nonqualified Option to pay to the Corporation in cash the amount
of any tax or other amount required by any governmental authority to be withheld
and paid over by the Corporation to such authority for the account of such
Optionee. Notwithstanding the foregoing, the Optionee may satisfy such
obligation in whole or in part, and any other local, state or federal income tax
obligations relating to the exercise of a Nonqualified Option, by electing (the
"Election") to have the Corporation withhold shares of Common Stock from the
shares to which the Optionee is entitled. The number of shares to be withheld
shall have a fair market value (determined in accordance with Section 6(b)) as
of the date that the amount of tax to be withheld is determined (the "Tax Date")
as nearly equal as possible to (but not exceeding) the amount of such
obligations being satisfied. Each Election must be made in writing to the
Committee prior to the Tax Date.
11. CERTAIN DEFINITIONS
For purposes of the Plan, the following terms shall have the meaning
indicated:
(a) "Related corporation" means any parent, subsidiary or
predecessor of the Corporation.
(b) "Parent" or "parent corporation" shall mean any corporation
(other than the Corporation) in an unbroken chain of corporations ending
with the Corporation if, at the time that the Option is granted, each
corporation other than the Corporation owns stock possessing fifty
percent or more of the total combined voting power of all classes of
stock in another corporation in the chain.
(c) "Subsidiary" or "subsidiary corporation" means any
corporation (other than the Corporation) in an unbroken chain of
corporations beginning with the Corporation if, at the time that the
Option is granted, each corporation other than the last corporation in
the unbroken chain owns stock possessing fifty percent or more of the
total combined voting power of all classes of stock in another
corporation in the chain.
(d) "Predecessor" or "predecessor corporation" means a
corporation which was a party to a transaction described in Section
424(a) of the Code (or which would be so described
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if a substitution or assumption under that section had occurred) with
the Corporation, or a corporation which is a parent or subsidiary of the
Corporation, or a predecessor of any such corporation.
(e) In general, terms used in the Plan shall, where appropriate,
be given the meaning ascribed to them under the provisions of the Code
applicable to incentive stock Options.
12. STOCK OPTION AGREEMENT
The grant of any Option under the Plan shall be evidenced by the
execution of an agreement (the "Agreement") between the Corporation and the
Optionee. Such Agreement shall set forth the date of grant of the Option, the
Option price, the Option period, the designation of the Option as an Incentive
Option or a Nonqualified Option, and the time or times when and the conditions
upon the happening of which the Option shall become exercisable. Such Agreement
shall also set forth the restrictions, if any, with respect to which the shares
to be purchased thereunder shall be subject, and such other terms and conditions
as the Committee shall determine which are consistent with the provisions of the
Plan and applicable law and regulations.
13. RESTRICTIONS ON SHARES
The Corporation may impose such restrictions on any shares acquired upon
exercise of Options granted under the Plan as it may deem advisable, including,
without limitation, restrictions necessary to ensure compliance with the
Securities Act of 1933, as amended, under the requirements of any applicable
self-regulatory organization and under any blue sky or securities laws
applicable to such shares. The Corporation may cause a restrictive legend to be
placed on any certificate issued pursuant to the exercise of an Option in such
form as may be prescribed from time to time by applicable laws and regulations
or as may be advised by legal counsel.
14. AMENDMENT OR TERMINATION
The Plan may be amended or terminated by action of the Board; provided,
that:
(a) Any amendment which would (i) materially increase the
aggregate number of shares which may be issued under the Plan (other
than changes as described in Section 9), or (ii) materially change the
requirements for eligibility to receive Options under the Plan shall be
made only with the approval of the shareholders of the Corporation.
(b) No outstanding Option shall be amended or terminated (i)
without the consent of the Optionee if such amendment or termination
would adversely affect the Optionee's rights with respect to such
Option; and (ii) if the Option is an Incentive Option, without the
opinion of legal counsel to the Corporation that such amendment or
termination will not constitute a "modification" within the meaning of
Section 424 of the Code if the Committee determines such an opinion is
necessary.
15. APPLICABLE LAW
Except as otherwise provided herein, the Plan shall be construed and
enforced according to the laws of the State of North Carolina.
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16. SECTION 16(b) COMPLIANCE
To the extent that participants in the Plan are subject to Section 16(b)
of the Exchange Act, it is the intention of the Corporation that transactions
under the Plan shall comply with Rule 16b-3 under the Exchange Act and, if any
Plan provision is later found not to be in compliance with Section 16 of the
Exchange Act, the provision shall be deemed null and void, and in all events the
Plan shall be construed in favor of Plan transactions meeting the requirements
of Rule 16b-3 or successor rules applicable to the Plan.
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2000 DECLARATION OF AMENDMENT TO
1997 KEY EMPLOYEES' STOCK OPTION PLAN
OF
RF MICRO DEVICES, INC.
THIS 2000 DECLARATION OF AMENDMENT, is made this 3rd day of January,
2000, by RF MICRO DEVICES, INC. (the "Corporation"), to the Corporation's 1997
Key Employees' Stock Option Plan (the "1997 Plan").
R E C I T A L S:
WHEREAS, the Board of Directors of the Corporation has deemed it
advisable to adopt an amendment to the 1997 Plan providing for the automatic
acceleration of outstanding options granted under the 1997 Plan in the event of
certain transactions or actions constituting a change of control of the
Corporation; and
WHEREAS, the Corporation desires to evidence such amendment by this
Declaration of Amendment.
NOW, THEREFORE, IT IS DECLARED that, effective January 3, 2000, the 1997
Plan shall be and hereby is amended as follows:
1. Adoption of New Section 17. The Plan is hereby amended by adding new
Section 17 ("Change of Control") as follows:
"SECTION 17. CHANGE OF CONTROL
(a) Notwithstanding any other provision of the Plan to the
contrary, in the event of a change of control (as defined in Section
17(c) herein), all Options outstanding as of the date of such change of
control shall become fully exercisable, whether or not then otherwise
exercisable.
(b) Notwithstanding the foregoing, in the event of a merger,
share exchange, reorganization or other business combination affecting
the Corporation or a related corporation, the Committee may, in its sole
and absolute discretion, determine that any or all Options granted
pursuant to the Plan shall not become exercisable on an accelerated
basis, if the Corporation or the board of directors of the surviving or
acquiring corporation, as the case may be, shall have taken such action,
including but not limited to the assumption of Options granted under the
Plan or the grant of substitute awards (in either case, with
substantially similar terms as Options granted under the Plan), as in
the opinion of the Committee is equitable or appropriate to protect the
rights and interests of Optionees under the Plan. For the purposes of
making the determinations provided for in this Section 17(b), the
Committee shall be appointed by the Board of Directors, two-thirds of
the members of which shall have been directors of the Corporation prior
to the merger, share exchange, reorganization or other business
combinations affecting the Corporation or a related corporation.
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(c) For the purposes herein, a "change of control" shall be
deemed to have occurred on the earliest of the following dates:
(d) The date any entity or person shall have become the
beneficial owner of, or shall have obtained voting control over,
fifty-one percent (51%) or more of the outstanding Common Stock of the
Corporation;
(e) The date the shareholders of the Corporation approve a
definitive agreement (A) to merge or consolidate the Corporation with
or into another corporation, in which the Corporation is not the
continuing or surviving corporation or pursuant to which any shares of
Common Stock of the Corporation would be converted into cash,
securities or other property of another corporation, other than a
merger or consolidation of the Corporation in which holders of Common
Stock immediately prior to the merger or consolidation have the same
proportionate ownership of Common Stock of the surviving corporation
immediately after the merger as immediately before, or (B) to sell or
otherwise dispose of all or substantially all the assets of the
Corporation; or
(f) The date there shall have been a change in a majority of the
Board of Directors of the Corporation within a 12-month period unless
the nomination for election by the Corporation's shareholders of each
new director was approved by the vote of two-thirds of the directors
then still in office who were in office at the beginning of the 12-month
period.
(For purposes herein, the term "person" shall mean any individual,
corporation, partnership, group, association or other person, as such
term is defined in Section 13(d)(3) or Section 14(d)(2) of the Exchange
Act, other than the Corporation, a subsidiary of the Corporation or any
employee benefit plan(s) sponsored or maintained by the Corporation or
any subsidiary thereof, and the term "beneficial owner" shall have the
meaning given the term in Rule 13d-3 under the Exchange Act.)"
2. Continued Effect. Except as set forth herein, the 1997 Plan shall
remain in full force and effect.
IN WITNESS WHEREOF, this Declaration of Amendment is executed on behalf
of RF Micro Devices, Inc. as of the day and year first above written.
RF MICRO DEVICES, INC.
By:
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David A. Norbury, President and
Chief Executive Officer
ATTEST:
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Powell T. Seymour, Secretary
[Corporate Seal]
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