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Exhibit 10.1
DENSE-PAC MICROSYSTEMS, INC.
1996 STOCK OPTION PLAN
1. PURPOSE
The purpose of the Dense-Pac Microsystems, Inc. 1996 Stock Option Plan
(the "Plan") is to further the interests of Dense-Pac Microsystems, Inc. (the
"Company") and its Subsidiaries by strengthening the desire of Employees to
continue their relationship with the Company and its Subsidiaries and by
inducing individuals to become Employees of the Company and its Subsidiaries
through stock options to be granted hereunder. Options granted under the Plan
are either options intending to qualify as "incentive stock options" within the
meaning of Section 422 of the Code or non-qualified stock options.
2. DEFINITIONS
Whenever used herein the following terms shall have the following
meanings, respectively:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "Committee" shall mean a Committee of at least two directors
appointed by the Board, or if no such committee has been appointed reference to
"Committee" shall be deemed to refer to the Board.
(d) "Common Stock" shall mean the Company's Common Stock, no par
value per share, as described in the Company's Articles of Incorporation, as
amended.
(e) "Company" shall mean Dense-Pac Microsystems, Inc., a
California corporation.
(f) "Employee" shall mean in connection with Non-Qualified
Options, any officer, employee, consultant or advisor of the Company or any
Subsidiary or Parent Corporation of the Company, and any director of the
Company who is not an employee of the Company or any Subsidiary or Parent
Corporation of the Company, it being understood that the Committee may in its
discretion also grant Options to induce individuals to become and remain as
Employees and that such persons, for purposes of receiving Non-Qualified
Options hereunder, shall be deemed "Employees." In connection with Incentive
Options under this Plan, the term Employee shall mean any individual who is
employed, within the meaning of Section 3401 of the Code, by the Company or any
Subsidiary or Parent Corporation of the Company.
(g) "Fair Market Value Per Share" of the Company's Common Stock
shall mean if the Company's Common Stock is publicly traded the mean between
the highest and lowest quoted selling prices of the Common Stock on the date of
the grant of the Option or, if not available, the mean between the bona fide
bid and asked prices of the Common Stock on the date of the grant of the
Option. In any situation not covered above or if there were no sales on the
date of the grant of an Option, the Fair Market Value Per Share shall be
determined by the Committee in good faith based on uniform principles
consistently applied.
(h) "Incentive Option" shall mean an Option granted under the Plan
which is designated as and qualifies as an incentive stock option within the
meaning of Section 422 of the Code.
(i) "Non-Qualified Option" shall mean an Option granted under the
Plan which is designated as a non-qualified stock option or which does not
qualify as an incentive stock option within the meaning of Section 422 of the
Code.
(j) "Option" shall mean an Incentive Option or a Non-Qualified
Option. Each Option shall be evidenced by a written agreement executed by the
Company which shall set forth the terms and conditions of such Option.
(k) "Optionee" shall mean any Employee who has been granted an
Option under the Plan.
(l) "Parent Corporation" shall have the meaning set forth in
Section 425(e) of the Code.
(m) "Permanent Disability" shall mean termination of employment
with the Company or any Subsidiary or Parent Corporation of the Company with
the consent of the Company or such Subsidiary by reason of permanent and total
disability within the meaning of Section 22(e)(3) of the Code.
(n) "Plan" shall mean the Dense-Pac Microsystems, Inc. 1996 Stock
Option Plan, as from time to time amended.
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(o) "Subsidiary" shall have the meaning set forth in Section
425(f) of the Code.
3. ADMINISTRATION
(a) The Plan shall be administered either by the Board or, in the
discretion of the Board, by a Committee. The Board may from time to time
appoint members of the Committee in substitution for or in addition to members
previously appointed and may fill vacancies.
(b) Any action of the Committee with respect to the administration
of the Plan shall be taken by majority vote or by unanimous written consent of
its members.
(c) Subject to the provisions of the Plan, the Committee shall
have the authority to construe and interpret the Plan, to define the terms used
herein, to determine the Optionees, the time or times an Option may be
exercised and the number of shares which may be exercised at any one time, to
prescribe, amend and rescind rules and regulations relating to the Plan, to
approve and determine the duration of leaves of absence which may be granted to
participants without constituting a termination of their employment for
purposes of the Plan, and to make all other determinations necessary or
advisable for the administration of the Plan. The Committee's authority shall
include, without limitation, the right, in its discretion, to accelerate the
exercisability of Options or re-price or exchange Options with the consent of
the Optionee. All determinations and interpretations made by the Committee
shall be conclusive and binding on all Employees and on their guardians, legal
representatives and beneficiaries.
(d) The Company will indemnify and hold harmless the members of
the Board and the Committee from and against any and all liabilities, costs and
expenses incurred by such persons as a result of any act, or omission to act,
in connection with the performance of such persons' duties, responsibilities
and obligations under the Plan, other than such liabilities, costs and expenses
as may result from the gross negligence, bad faith, willful misconduct and/or
criminal acts of such persons.
4. NUMBER OF SHARES SUBJECT TO PLAN
The stock to be offered under the Plan shall consist of up to
2,000,000 shares of the Company's Common Stock. If any Option granted
hereunder shall expire or terminate for any reason without having been
exercised in full, the unpurchased shares subject thereto shall again be
available for purposes of this Plan.
5. ELIGIBILITY AND PARTICIPATION
(a) The Committee shall determine the Employees to whom Options
shall be granted, the time or times at which such Options shall be granted and
the number of shares to be subject to each Option. An Employee who has been
granted an Option may, if he is otherwise eligible, be granted an additional
Option or Options if the Committee shall so determine. An Employee may be
granted Incentive Options or Non-Qualified Options or both under the Plan.
(b) In no event shall the aggregate fair market value (determined
as of the time an Incentive Option is granted) of shares subject to Incentive
Options held by an Optionee (granted under the Plan or under any other plan of
the Company) that first become exercisable in any calendar year exceed
$100,000. The portion of any purported Incentive Option which exceeds such
limitation shall be deemed to be a Non- Qualified Option.
6. PURCHASE PRICE
The purchase price of each share covered by an Option shall be
determined by the Committee on the date of grant; provided, however, that the
purchase price of each share covered by each Incentive Option shall not be less
than 100% of the Fair Market Value Per Share of the Common Stock of the Company
on the date the Incentive Option is granted; and provided, further, that if at
the time an Incentive Option is granted the Optionee owns or would be
considered to own by reason of Section 424(d) of the Code more than 10% of the
total combined voting power of all classes of stock of the Company or any
Subsidiary or Parent Corporation of the Company, the purchase price of the
shares covered by such Incentive Option shall not be less than 110% of the Fair
Market Value Per Share of the Common Stock on the date the Incentive Option is
granted.
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7. DURATION OF OPTIONS
The expiration date of an Option shall not exceed 10 years from the
date on which the Option was granted, and shall be subject to earlier
termination as provided herein; provided, however, that if at the time an
Incentive Option is granted the Optionee owns or would be considered to own by
reason of Section 424(d) of the Code more than 10% of the total combined voting
power of all classes of stock of the Company or any Subsidiary or Parent
Corporation of the Company, such Incentive Option shall expire not more than 5
years from the date the Incentive Option is granted.
8. EXERCISE OF OPTIONS
An Option shall be exercisable in installments or otherwise upon such
terms as the Committee shall in its discretion determine. An Optionee may
purchase less than the total number of shares for which the Option is
exercisable, provided that the exercise of an Option shall not include any
fractional shares. As a condition to the exercise, in whole or in part, of any
Option, the Committee may in its sole discretion require the Optionee to pay,
in addition to the purchase price of the shares covered by the Option, an
amount equal to any federal, state and local taxes that the Committee has
determined are required to be paid in connection with the exercise of such
Option in order to enable the Company to claim a deduction or otherwise.
Furthermore, if any Optionee disposes of any shares of stock acquired by
exercise of an Incentive Option prior to the expiration of either of the
holding periods specified in Section 422(a)(1) of the Code, the Optionee shall
pay to the Company, or the Company shall have the right to withhold from any
payments to be made to the Optionee, an amount equal to any federal, state and
local taxes that the Committee has determined are required to be paid in
connection with the exercise of such Option in order to enable the Company to
claim a deduction or otherwise.
9. METHOD OF EXERCISE
(a) To the extent that the right to purchase shares has accrued,
Options may be exercised from time to time by giving written notice to the
Company stating the number of shares with respect to which the Option is being
exercised, accompanied by payment in full of the purchase price for the number
of shares being purchased and, if applicable, any federal, state or local taxes
required to be paid in accordance with the provisions of Section 0 hereof.
(b) Payment of the purchase price for any shares pursuant to the
exercise of an Option may be made in cash or by check or, where expressly
approved for the Optionee by the Committee, in its discretion, and where
permitted by law:
(i) by cancellation of indebtedness of the Company to the
Optionee;
(ii) by surrender of shares of Common Stock that are owned by
the Optionee;
(iii) by tender of a full recourse promissory note, which
note shall be secured by the shares being purchased, contain such
terms as may be approved by the Committee and bear interest at a rate
sufficient to avoid imputation of income under Sections 483 and 1274
of the Code;
(iv) by waiver of compensation due or accrued to the Optionee
for services rendered;
(v) provided that a public market for the Company's Common
Stock exists:
(1) through a "same day sale" commitment from the
Optionee and a broker-dealer that is a member of the National
Association of Securities Dealers (an "NASD Dealer") whereby
the Optionee irrevocably elects to exercise the Option and to
sell a portion of the shares so purchased to pay for the
purchase price, and whereby the NASD Dealer irrevocably
commits to forward the purchase price directly to the Company;
or
(2) through a "margin" commitment from the
Optionee and a NASD Dealer whereby the Optionee irrevocably
elects to exercise the Option and to pledge the shares so
purchased to the NASD Dealer in a margin account as security
for a loan from the NASD Dealer in the amount of the purchase
price, and whereby the NASD Dealer irrevocably commits to
forward the purchase price directly to the Company; or
(vi) by any combination of the foregoing.
If payment is made with shares of Common Stock, the Optionee, or other
person entitled to exercise
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the Option, shall deliver to the Company certificates representing the number
of shares of Common Stock in payment for the shares being purchased, duly
endorsed for transfer to the Company and, if requested by the Committee, a
representation and warranty in writing that he has good and marketable title to
the shares represented by the certificate(s), free and clear of all liens and
encumbrances. The value of the shares of Common Stock tendered in payment for
the shares being purchased shall be their Fair Market Value Per Share on the
date of the Optionee's exercise.
(c) Notwithstanding the foregoing, the Company shall have the
right to postpone the time of delivery of the shares for such period as may be
required for it to comply, with reasonable diligence, with any applicable
listing requirements of any national securities exchange or any federal, state
or local law. If an Optionee, or other person entitled to exercise an Option,
fails to accept delivery of or fails to pay for all or any portion of the
shares requested in the notice of exercise, upon tender of delivery thereof,
the Committee shall have the right to terminate his Option with respect to such
shares.
10. NON-TRANSFERABILITY OF OPTIONS
No Option granted under the Plan shall be assignable or transferable
by the Optionee, either voluntarily or by operation of law, otherwise than by
will or the laws of descent and distribution, and shall be exercisable during
his lifetime only by the Optionee.
11. CONTINUANCE OF EMPLOYMENT
Nothing contained in the Plan or in any Option granted under the Plan
shall confer upon any Optionee any rights with respect to the continuation of
his status as an Employee of the Company or any Subsidiary or Parent
Corporation of the Company or interfere in any way with the right of the
Company or any Subsidiary or Parent Corporation of the Company at any time to
terminate such relationship or to increase or decrease the compensation of the
Optionee from the rate in existence at the time of the grant of an Option.
12. TERMINATION OF EMPLOYEE STATUS OTHER THAN BY DEATH OR PERMANENT
DISABILITY
Except as the Committee may determine otherwise with respect to any
Non-Qualified Options granted hereunder, if an Optionee ceases to be an
Employee for any reason other than his death or Permanent Disability, any
Options granted to him under the Plan shall terminate not later than three
months from the date on which such Optionee ceases to be an Employee unless
such Optionee has been rehired by the Company and is an Employee on such date.
Until the termination of the Option, the Optionee may exercise any Option
granted to him but only to the extent such Option was exercisable on the date
he ceased to be an Employee and provided that such Option has not expired or
otherwise terminated as provided herein. A leave of absence approved in
writing by the Committee shall not be deemed a termination for purposes of this
Section, but no Option may be exercised during any such leave of absence,
except during the first 90 days thereof. The fact that the Optionee may
receive payment from the Company or any Subsidiary of the Company after
termination of Employee status for vacation pay, for services rendered prior to
termination, for salary in lieu of notice, or for other benefits shall not
affect the termination date.
13. DEATH OR PERMANENT DISABILITY OF OPTIONEE
Except as the Committee may determine otherwise with respect to any
Non-Qualified Options granted hereunder, if an Optionee shall die at a time
when he is an Employee or if the Optionee shall cease to be an Employee by
reason of Permanent Disability, any Options granted to him under this Plan
shall terminate not later than one year after the date of his death or
termination of Employee status due to Permanent Disability unless by its terms
it shall expire before such date or otherwise terminate as provided herein, and
shall only be exercisable to the extent that it would have been exercisable on
the date of his death or termination due to Permanent Disability. In the case
of death, the Option may be exercised by the person or persons to whom the
Optionee's rights under the Option shall pass by will or by the laws of descent
and distribution.
14. STOCK PURCHASE NOT FOR DISTRIBUTION
Each Optionee shall, by accepting the grant of an Option under the
Plan, represent and agree, for himself and his transferees by will or the laws
of descent and distribution, that all shares of stock purchased upon exercise
of the Option will be received and held without a view to distribution except
as may be permitted by the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder. After each notice of exercise of any
portion of an Option, if requested by the Committee, the person entitled to
exercise the Option must agree in writing that the shares of stock are being
acquired in good faith without a view to distribution.
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15. PRIVILEGES OF STOCK OWNERSHIP
No person entitled to exercise any Option granted under the Plan shall
have any of the rights or privileges of a shareholder of the Company with
respect to any shares of Common Stock issuable upon exercise of such Option
until such person has become the holder of record of such shares. No
adjustment shall be made for dividends or distributions of rights in respect of
such shares if the record date is prior to the date on which such person
becomes the holder of record, except as provided in Section 0 hereof.
16. ADJUSTMENTS
(a) If the number of outstanding shares of Common Stock of the
Company are increased or decreased, or if such shares are exchanged for a
different number or kind of shares or securities of the Company through
reorganization, merger, recapitalization, reclassification, stock dividend,
stock split, combination of shares, or other similar transaction, the aggregate
number of shares of Common Stock subject to the Plan as provided in Section 0
hereof and the shares of Common Stock subject to issued and outstanding Options
under the Plan shall be appropriately and proportionately adjusted by the
Committee. Any such adjustment in the outstanding Options shall be made
without change in the aggregate purchase price applicable to the unexercised
portion of the Option but with an appropriate adjustment in the price for each
share or other unit of any security covered by the Option.
(b) Notwithstanding the provisions of subsection (a) of this
Section, the Plan and each outstanding Option shall terminate on the effective
date of the dissolution or liquidation of the Company or any reorganization,
merger or consolidation with one or more corporations or entities as a result
of which the Company is not the surviving corporation, or any sale of all or
substantially all the assets of the Company, or the sale of more than 80% of
the then outstanding Common Stock, unless the surviving or acquiring
corporation or other entity agrees to assume all outstanding Options; provided
that the Committee may, in its sole discretion, accelerate the vesting of any
outstanding Option or give notice of such event to Optionees prior to the
effective date of such event.
(c) Adjustments under this Section shall be made by the Committee,
whose determination as to what adjustments shall be made, and the extent
thereof, shall be final, binding and conclusive. No fractional shares of stock
shall be issued under the Plan or in connection with any such adjustment.
17. AMENDMENT AND TERMINATION OF PLAN
(a) The Board of Directors of the Company may from time to time,
with respect to any shares at the time not subject to Options, suspend or
terminate the Plan or amend or revise the terms of the Plan; provided that any
amendment of the Plan shall be approved by the shareholders of the Company if
the amendment would (i) increase the number of shares of Common Stock which may
be issued under the Plan, except as permitted under the provisions of Section 0
hereof, or (ii) materially modify the requirements as to eligibility for
participation in the Plan.
(b) No amendment, suspension or termination of the Plan shall,
without the consent of the Optionee, alter or impair any rights or obligations
under any Option theretofore granted to such Optionee under the Plan.
(c) The terms and conditions of any Option granted to an Optionee
under the Plan may be modified or amended only by a written agreement executed
by the Optionee and the Company.
18. EFFECTIVE DATE OF PLAN
This Plan shall become effective upon adoption by the Board of
Directors of the Company and approval by the Company's shareholders; provided,
however, that prior to approval of the Plan by the Company's shareholders, but
after adoption by the Board of Directors, Options may be granted under the Plan
subject to obtaining the shareholders' approval of the adoption of the Plan.
Notwithstanding the foregoing, shareholders' approval must occur no later than
12 months after the date of adoption of the Plan by the Board of Directors.
19. TERM OF PLAN
No Option shall be granted pursuant to the Plan after 10 years from
the earlier of the date of adoption of the Plan by the Board of Directors of
the Company or the date of approval of the Plan by the Company's shareholders.
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The Plan was adopted by the Board on January 17, 1996. The Plan was
approved by the shareholders on September 12, 1996.
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