Exhibit 10.4
CREE, INC.
2001 NONQUALIFIED STOCK OPTION PLAN
(as amended July 31, 2001)
ARTICLE I - GENERAL PROVISIONS
1.1 The Plan is designed to provide for grants of Nonqualified Stock Options
to Eligible Participants. Directors and officers of Cree, Inc. are not
eligible for Awards under the Plan.
1.2 Awards under the Plan may be made to Participants only in the form of
Nonqualified Stock Options at a purchase price per share that is not
less than the Fair Market Value of the Stock on the Option Grant Date.
Awards may otherwise be made, to the extent not inconsistent with the
Plan, at such times, in such amounts, under such terms and to such
Eligible Participants as is determined from time to time by the
Committee administering the Plan.
1.3 The Plan was adopted effective April 30, 2001.
ARTICLE II - DEFINITIONS
Except where the context otherwise indicates, the following definitions
apply:
2.1 "Act" means the Securities Exchange Act of 1934, as now in effect or as
hereafter amended. All citations to sections of the Act or rules
thereunder are to such sections or rules as they may from time to time
be amended or renumbered.
2.2 "Agreement" means the written agreement evidencing an Award or Awards
granted to a Participant under the Plan and includes the notice of grant
issued by the Company to the Participant with respect to the Award (the
"Notice of Grant") if the agreement applicable to the Award so provides.
2.3 "Award" means a Stock Option granted to a Participant in accordance with
the provisions of the Plan.
2.4 "Board" means the Board of Directors of Cree, Inc.
2.5 "Code" means the Internal Revenue Code of 1986, as now in effect or as
hereafter amended. All citations to sections of the Code are to such
sections as they may from time to time be amended or renumbered.
2.6 "Committee" means the Compensation Committee of the Board or such other
committee consisting of two or more members of the Board as may be
appointed by the Board to administer this Plan pursuant to Article III.
2.7 "Company" means Cree, Inc., a North Carolina corporation, and its
successors and assigns. Except where the context otherwise indicates,
the term "Company" shall include any corporation which is a member of a
controlled group of corporations (as defined in Section 414(b) of the
Code, as modified by Section 415(h) of the Code) that includes the
Company; any trade or
business (whether or not incorporated) that is under common control (as
defined in Section 414(c) of the Code, as modified by Section 415(h) of
the Code) with the Company; any organization (whether or not
incorporated) that is a member of an affiliated service group (as
defined in Section 414(m) of the Code) which includes the Company; and
any other entity required to be aggregated with the Company pursuant to
regulations under Section 414(o) of the Code. With respect to all
actions relating to the Plan, including, but not limited to, the
establishment, amendment, termination, operation and administration of
the Plan, Cree, Inc. shall be authorized to act on behalf of all other
entities included within the definition of "Company."
2.8 "Disability" means (i) with respect to a Participant who is eligible to
participate in the Company's program of long-term disability insurance,
a condition with respect to which the Participant is entitled to
commence benefits under such program of long-term disability insurance
and which results in Termination of Employment of the Participant, and
(ii) with respect to any Participant (including a Participant who is
eligible to participate in the Company's program of long-term disability
insurance), a disability as determined under procedures established by
the Committee or in any Award.
2.9 "Eligible Participant" means any employee of the Company, as shall be
determined by the Committee; provided, however, that no officers or
directors of the Company shall be Eligible Participants.
2.10 "Fair Market Value" means the last sale price of the Stock in the
regular trading session on The Nasdaq Stock Market on the date of
reference (or, if there is no regular trading session that day, the
nearest preceding day on which there was a regular trading session). The
Committee may in its discretion establish an alternative method of
determining Fair Market Value.
2.11 "Nonqualified Stock Option" means a Stock Option that is not an
incentive stock option under Section 422 of the Code. All Awards under
this Plan shall be Nonqualified Stock Options.
2.12 "Option Grant Date" means, as to any Stock Option, the later of:
(a) the date on which the Committee approves the grant of the Stock
Option to the Participant;
(b) such other date (later than the date described in (a) above) as
the Committee may designate.
2.13 "Participant" means an Eligible Participant to whom an Award has been
granted and who has entered into an Agreement evidencing the Award.
2.14 "Plan" means the Cree, Inc. 2001 Nonqualified Stock Option Plan as set
forth herein and as further amended or amended and restated from time to
time.
2.15 "Stock" means shares of the Common Stock of Cree, Inc., par value
$0.00125 per share, as may be adjusted pursuant to the provisions of
Section 3.10.
2.16 "Stock Option" means an Award under this Plan of an option to purchase
Stock.
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2.17 "Termination of Employment" means the discontinuance of employment of a
Participant with the Company for any reason, whether voluntary or
involuntary. The determination of whether a Participant has discontinued
employment shall be made by the Committee in its discretion.
ARTICLE III - ADMINISTRATION
3.1 The Plan shall be administered by the Committee. The Committee, in its
discretion, may delegate to one or more of its members such of its
powers as it deems appropriate. The Committee also may limit the power
of any member to the extent necessary to comply with any law. Members of
the Committee shall be appointed originally, and as vacancies occur, by
the Board, to serve at the pleasure of the Board. The Board may serve as
the Committee if all Board members are otherwise eligible to serve on
the Committee.
3.2 The Committee shall meet at such times and places as it determines. A
majority of its members shall constitute a quorum, and the decision of a
majority of those present at any meeting at which a quorum is present
shall constitute the decision of the Committee. A memorandum or other
document signed by all of its members shall constitute the decision of
the Committee without the necessity, in such event, for holding an
actual meeting.
3.3 The Committee shall have the exclusive right to interpret, construe and
administer the Plan, to determine the persons who are eligible to
receive Awards, and to act in all matters pertaining to the granting of
Awards and the contents of the Agreements evidencing the Awards,
including without limitation, the determination of the number of shares
of Stock subject to an Award, and the form, terms, conditions and
duration of each Award, and any amendment thereof, consistent with the
provisions of the Plan. All acts, determinations and decisions of the
Committee made or taken pursuant to grants of authority under the Plan
or with respect to any questions arising in connection with the
administration and interpretation of the Plan, including the
severability of any and all of the provisions thereof, shall be
conclusive, final and binding upon all Participants, Eligible
Participants and their beneficiaries.
3.4 The Committee may adopt such rules, regulations and procedures of
general application for the administration of the Plan as it deems
appropriate.
3.5 The number of shares of Stock which are available for Award under the
Plan shall be Three Million (3,000,000) shares. Such shares of Stock
shall be made available from authorized and unissued shares. If, for any
reason, any shares of Stock subject to purchase under the Plan are not
purchased, or are reacquired by the Company, for reasons including, but
not limited to, forfeiture, termination, expiration or cancellation of a
Stock Option, such shares of Stock shall not be charged against the
aggregate number of shares of Stock available for Awards under the Plan
and shall again be available for Award under the Plan.
3.6 Each Award granted under the Plan shall be evidenced by a written
Agreement. Each Agreement shall be subject to and incorporate, by
reference or otherwise, the applicable terms and conditions of the Plan,
and any other terms and conditions, not inconsistent with the Plan, as
may be directed by the Committee.
3.7 The Company shall not be required to issue any shares of Stock or
deliver certificates therefor prior to:
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(a) the listing of such shares on any stock exchange on which the
Stock may then be listed; and
(b) the completion of any registration or qualification of such shares
of Stock under any federal or state law, or any ruling or
regulation of any government body which the Company shall, in its
discretion, determine to be necessary or advisable.
3.8 All certificates for shares of Stock delivered under the Plan shall also
be subject to such stop-transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any stock
exchange or national market system upon which the Stock is then listed
and any applicable federal or state laws, and the Committee may cause a
legend or legends to be placed on any such certificates to make
appropriate reference to such restrictions. In making such
determination, the Committee may rely upon an opinion of counsel for the
Company.
3.9 Except as provided otherwise in the Plan or in an Agreement, no
Participant awarded a Stock Option shall have any right as a shareholder
with respect to any shares of Stock covered by his or her Stock Option
prior to the date of issuance to him or her of a certificate or
certificates for such shares of Stock.
3.10 If any reorganization, recapitalization, reclassification, stock
split-up, stock dividend, or consolidation of shares of Stock, merger or
consolidation of the Company or sale or other disposition by the Company
of all or a portion of its assets, any other change in the Company's
corporate structure, or any distribution to shareholders other than a
cash dividend results in the outstanding shares of Stock, or any
securities exchanged therefor or received in their place, being
exchanged for a different number or class of shares of Stock or other
securities of the Company, or for shares of Stock or other securities of
any other corporation; or new, different or additional shares or other
securities of the Company or of any other corporation being received by
the holders of outstanding shares of Stock, then equitable adjustments
shall be made by the Committee in:
(a) the limitation on the aggregate number of shares of Stock that may
be awarded as set forth in Section 3.5 of the Plan;
(b) the number and class of shares of Stock that may be purchased upon
exercise of outstanding Stock Options;
(c) the purchase price to be paid per share of Stock under outstanding
Stock Options; and
(d) the terms, conditions or restrictions of any Award and the
Agreement evidencing such Award.
3.11 The Committee may require each person purchasing shares of Stock
pursuant to a Stock Option or other Award under the Plan to represent to
and agree with the Company in writing that he or she is acquiring the
shares of Stock without a view to distribution thereof and/or that he or
she has met such other requirements as the Committee determines may be
applicable to such purchase. The certificates for such shares of Stock
may include any legend that the Committee deems appropriate to reflect
any restrictions on transfer.
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3.12 The Committee shall be authorized to make adjustments in the terms and
conditions of Awards in recognition of unusual or nonrecurring events
affecting the Company or its financial statements or changes in
applicable laws, regulations or accounting principles. The Committee may
correct any defect, supply any omission or reconcile any inconsistency
in the Plan or any Agreement in the manner and to the extent it shall
deem desirable to carry it into effect.
3.13 The Committee shall have full power and authority to determine whether,
to what extent and under what circumstances, any Award, or the vesting
schedule or the exercise thereof, shall be canceled, suspended or
rescinded if the Participant (a) without the consent of the Committee,
while employed by the Company or after termination of such employment,
becomes associated with, employed by, renders services to, or owns any
interest in (other than any insubstantial interest, as determined by the
Committee) any business that is in competition with the Company as
determined by the Committee in its discretion; (b) is terminated for
cause as determined by the Committee in its discretion; (c) takes an
extended unpaid leave of absence as determined by the Committee in its
discretion, or (d) otherwise engages in activity detrimental to the
Company as determined by the Committee in its discretion.
ARTICLE IV - NONQUALIFIED STOCK OPTIONS
4.1 One or more Stock Options may be granted as Nonqualified Stock Options
to persons who are Eligible Participants on the Option Grant Date of
such Awards, granting such persons the right to purchase shares of Stock
at such time or times determined by the Committee, following the
Effective Date, subject to the terms and conditions set forth in this
Article IV.
4.2 The purchase price per share of Stock under each Nonqualified Stock
Option shall be established in the Agreement but may not be less than
100% of the Fair Market Value on the Option Grant Date.
4.3 Unless the Committee, in its discretion at the time of the grant of the
Stock Option, provides for a longer or shorter period and such longer or
shorter period is specified in the Notice of Grant, or the Committee
extends the termination date as provided in Section 3.12 or Section 6.5
of the Plan, the Stock Options granted under the Plan shall terminate
and cease to be exercisable at 11:59 p.m. local time Durham, North
Carolina, on the seventh (7/th/) anniversary of the Option Grant Date if
not sooner exercised or terminated.
4.4 Nonqualified Stock Options may be exercised in full or in part from time
to time within such periods as may be specified in the applicable
Agreements; provided that, in any event, Nonqualified Stock Options
shall lapse and cease to be exercisable upon a Termination of Employment
or within such period following a Termination of Employment as shall
have been specified in the Nonqualified Stock Option Agreement, which
period shall not exceed three months unless:
(a) employment shall have terminated as a result of death or
Disability, in which event such period shall not exceed one year
after the date of death or Disability;
(b) death shall have occurred following a Termination of Employment
and while the Nonqualified Stock Option was still exercisable, in
which event such period shall not exceed one year after the date
of death; or
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(c) the Committee, in its discretion at the time of the option grant,
provides for a longer period and such longer period is specified
in the Agreement;
provided, further, that such period following a Termination of
Employment shall in no event extend the original exercise period of the
Nonqualified Stock Option.
4.5 Nonqualified Stock Option Agreements may include any other terms and
conditions not inconsis-tent with this Article IV or Article V below, as
determined by the Committee.
ARTICLE V - INCIDENTS OF STOCK OPTIONS
5.1 Each Stock Option shall be granted subject to such terms and conditions,
if any, not inconsistent with this Plan, as shall be determined by the
Committee, including any provisions as to continued employment as
consideration for the grant or exercise of such Stock Option and any
provisions that may be advisable to comply with applicable laws,
regulations or rulings of any governmental authority.
5.2 Except as provided below, a Stock Option shall be exercisable during the
lifetime of the Participant only by him or his guardian or legal
representative and shall not be transferable by the Participant other
than by will or by the laws of descent and distribution. However, the
Committee may, in its sole discretion, either pursuant to an Agreement
or otherwise, permit a Participant to transfer a Nonqualified Stock
Option by gift or other donative transfer without payment of
consideration, conditioned upon and subject to compliance with all
applicable law (including, but not limited to, securities law).
5.3 Shares of Stock purchased upon exercise of a Stock Option shall be paid
for in such amounts, at such times and upon such terms as shall be
determined by the Committee, subject to limitations set forth in the
Stock Option Agreement. Without limiting the foregoing, the Committee
may establish payment terms for the exercise of Stock Options which
permit the Participant to deliver shares of Stock, or other evidence of
ownership of Stock satisfactory to the Company, with a Fair Market Value
equal to the Stock Option price as payment.
5.4 The Committee may at any time offer to buy out for a payment in cash or
Stock an Option previously granted, based on such terms and conditions
as the Committee shall establish and communicate to the Participant at
the time that such offer is made.
5.5 If a Participant is required to pay to the Company an amount with
respect to income and employment tax withholding obligations in
connection with exercise of a Nonqualified Stock Option, the Committee,
in its discretion and subject to such rules as it may adopt, may permit
the Participant to satisfy the obligation, in whole or in part, by
making an irrevocable election that a portion of the total Fair Market
Value of the shares of Stock subject to the Nonqualified Stock Option be
paid in the form of cash in lieu of the issuance of Stock and that such
cash payment be applied to the satisfaction of the withholding
obligations. The amount to be withheld shall not exceed
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the statutory minimum federal and state income and employment tax
liability arising from the Stock Option exercise transaction.
ARTICLE VI - CHANGE IN CONTROL
6.1 A "Change in Control" shall be deemed to have occurred upon any of the
following events:
(a) Any "Person" as defined in Section 3(a)(9) of the Act, including a
"group" (as that term is used in Sections 13(d)(3) and 14(d)(2) of
the Act), but excluding the Company (as defined in Section 2.7 of
this Plan) and any employee benefit plan sponsored or maintained
by the Company (including any trustee of such plan acting as
trustee), together with its "affiliates" and "associates" (as
those terms are defined in Rule 12b-2 under the Act) becomes the
"Beneficial Owner" (within the meaning of Rule 13d-3 under the
Act) of 20% or more of the then-outstanding shares of Stock or the
combined voting power of the then-outstanding securities of the
Company entitled to vote generally in the election of its
directors. For purposes of calculating the number of shares or
voting power held by such Person and its affiliates and associates
under this Section 6.1(a), there shall be excluded any securities
acquired by such Person or its affiliates or associates directly
from the Company.
(b) A sale or other disposition of all or substantially all of the
Company's assets is consummated, other than such a sale or
disposition that would not have constituted a Change of Control
under Section 6.1(d) below had it been structured as a merger or
consolidation.
(c) The shareholders of the Company approve a definitive agreement or
plan to liquidate the Company.
(d) A merger or consolidation of the Company with and into another
entity is consummated, unless immediately following such
transaction (1) more than 50% of the members of the governing body
of the surviving entity are Incumbent Directors (as defined in
Section 6.1(e) below) at the time of execution of the initial
agreement providing for such transaction, (2) no "Person" (as
defined in Section 6.1(a) above), together with its "affiliates"
and "associates" (as defined in Section 6.1(a) above), is the
"Beneficial Owner" (as defined in Section 6.1 (a) above), directly
or indirectly, of 20% or more of the then-outstanding equity
interests of the surviving entity or the combined voting power of
the then-outstanding equity interests of the surviving entity
entitled to vote generally in the election of members of its
governing body, and (3) more than 50% of the then-outstanding
equity interests of the surviving entity and the combined voting
power of the then-outstanding equity interests of the surviving
entity entitled to vote generally in the election of members of
its governing body is "Beneficially Owned," directly or
indirectly, by all or substantially all of the individuals and
entities who were the "Beneficial Owners" of the shares of Stock
immediately prior to such transaction in substantially the same
proportions as their ownership immediately prior to such
transaction.
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(e) During any period of 24 consecutive months during the existence of
the Plan, the individuals who, at the beginning of such period,
constitute the Board (the "Incumbent Directors") cease for any
reason other than death to constitute at least a majority thereof;
provided, however, that a director who was not a director at the
beginning of such 24-month period shall be deemed to have
satisfied such 24-month requirement, and be an Incumbent Director,
if such director was elected by, or on the recommendation of or
with the approval of, at least two-thirds of the directors who
then qualified as Incumbent Directors either actually, because
they were directors at the beginning of such 24-month period, or
by prior operation of this Section 6.1 (e), but excluding for this
purpose any such individual whose initial assumption of office is
in connection with an actual or threatened election context
subject to Rule 14a-11 of Regulation 14A promulgated under the Act
or other actual or threatened solicitation of proxies or consents
by or on behalf of a "Person" (as defined in Section 6.1(a) above)
other than the Board.
6.2 The Option shall become fully vested and exercisable, to the extent not
already fully vested and exercisable, immediately prior to any Change in
Control, provided Participant is employed by the Company on the date of
the Change in Control, except that the Option shall not become
exercisable if and to the extent it is cashed out upon the Change in
Control pursuant to the terms of the Plan and shall not vest or become
exercisable to the extent it is assumed by one of the surviving entities
of the transaction.
6.3 In the event of a Change in Control, the Committee may in its sole
discretion and consistent with the requirements of applicable law decide
to cash-out the value of all outstanding Stock Options, in each case to
the extent vested pursuant to Sections 6.2 above or otherwise, on the
basis of the "Change in Control Price" (as defined in Section 6.4) less
the exercise price under such Award (if any) as of the date such Change
in Control is determined to have occurred or such other date prior to
the Change in Control as the Committee may determine.
6.4 For purposes of Section 6.3, "Change in Control Price" means the highest
price per share of Stock paid in any transaction reported on the
exchange on which the Stock is then traded or on The Nasdaq Stock
Market, as the case may be, or paid or offered in any bona fide
transaction related to a Change in Control, at any time during the
120-day period immediately preceding the occurrence of the Change in
Control, as determined by the Committee.
6.5 The Committee shall be authorized to take such actions that are not
inconsistent with Sections 6.2, 6.3 and 6.4 above as the Committee
determines to be necessary or advisable, and fair and equitable, to
Participants with respect to Awards in the event of a Change in Control.
Such actions may include, but shall not be limited to, establishing,
amending or waiving the forms, terms, conditions and duration of Awards
and the applicable Agreements so as to provide for earlier, later,
extended or additional times for exercise or payment, differing methods
for calculating payments and alternate forms and amounts of payment. The
Committee may take such actions pursuant to this Section 6.5 by adopting
rules and regulations of general applicability to all Participants or to
certain categories of Participants, by including, amending or waiving
terms and conditions in an Award and the Agreement, or by taking action
with respect to individual Participants.
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ARTICLE VII - AMENDMENT AND TERMINATION
7.1 The Board, upon recommendation of the Committee, or otherwise, at any
time and from time to time may amend or terminate the Plan.
7.2 No amendment to or discontinuance of this Plan or any provision thereof
by the Board or the shareholders of the Company shall, without the
written consent of the Participant, adversely affect, as shall be
determined by the Committee, any Award previously granted to such
Participant under this Plan; provided, however, the Committee shall
retain the right and power to:
(a) annul any Award if the Participant is terminated for cause as
determined by the Committee; and
(b) provide for the forfeiture of shares of Stock or other gain under
an Award for competing against the Company as determined by the
Committee or for engaging in such other activities detrimental to
the Company as may be specified in the Agreement evidencing the
Award.
ARTICLE VIII - MISCELLANEOUS PROVISIONS
8.1 Nothing in the Plan or any Award granted hereunder shall confer upon any
Participant any right to continue in the employ of the Company, or to
serve as a director thereof, or interfere in any way with the right of
the Company to terminate his or her employment at any time. Unless
specifically provided otherwise, no Award granted under the Plan shall
be deemed salary or compensation for the purpose of computing benefits
under any employee benefit plan or other arrangement of the Company for
the benefit of its employees unless the Company shall determine
otherwise. No Participant shall have any claim to an Award until it is
actually granted under the Plan. To the extent that any person acquires
a right to receive payments from the Company under the Plan, such right
shall, except as otherwise provided by the Committee, be no greater than
the right of an unsecured general creditor of the Company. All payments
to be made hereunder shall be paid from the general funds of the
company, and no special or separate fund shall be established and no
segregation of assets shall be made to assure payment of such amounts,
except as otherwise provided by the Committee.
8.2 The Company may make such provisions and take such steps as it may deem
necessary or appropriate for the withholding of any taxes which the
Company is required by any law or regulation of any governmental
authority, whether federal, state or local, domestic or foreign, to
withhold in connection with any Stock Option or the exercise thereof,
including, but not limited to, the withholding of payment of all or any
portion of such Award or another Award under this Plan until the
Participant reimburses the Company for the amount the Company is
required to withhold with respect to such taxes, or canceling any
portion of such Award or another Award under this Plan in an amount
sufficient to reimburse itself for the amount it is required to so
withhold, or selling any property contingently credited by the Company
for the purpose of paying such Award or another Award under this Plan,
in order to withhold or reimburse itself for the amount it is required
to so withhold.
8.3 The Plan and the grant of Awards shall be subject to all applicable
federal and state laws, rules, and regulations and to such approvals by
any United States government or regulatory agency as may be required.
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8.4 The terms of the Plan shall be binding upon the Company, and its
successors and assigns.
8.5 No Stock Option shall be transferable except as provided for herein. If
a Participant attempts to transfer a Stock Option in violation hereof,
the Committee shall have the authority to terminate the Stock Option.
8.6 This Plan and all actions taken hereunder shall be governed by the laws
of the State of North Carolina.
8.7 If any provision of this Plan or an Agreement is or becomes or is deemed
invalid, illegal or unenforceable in any jurisdiction, or would
disqualify the Plan or any Agreement under any law deemed applicable by
the Committee, such provision shall be construed or deemed amended to
conform to applicable laws or if it cannot be construed or deemed
amended without, in the determination of the Committee, materially
altering the intent of the Plan or the Agreement, it shall be stricken
and the remainder of the Plan or the Agreement shall remain in full
force and effect.
8.8 In the event of inconsistency between the Plan, the Agreement and any
other documents relating to the Plan or Stock Options awarded
thereunder, the following order of precedence shall apply: (i) the Plan,
(ii) any Plan policy or interpretation adopted by the Committee, (iii)
the Notice of Grant, (iv) the Agreement (other than the Notice of
Grant), and (v) any other documents, including but not limited to the
Plan prospectus.
CERTIFICATE
I, Adam H. Broome, Secretary of Cree, Inc., having in my custody and
possession the corporate records of said corporation, do hereby certify that the
foregoing is a true and correct copy of the Cree, Inc. 2001 Nonqualified Stock
Option Plan as adopted by the Board of Directors on April 30, 2001 and amended
on July 31, 2001.
Witness my hand and seal this ______ day of ___________, 2001.
___________________________
Adam H. Broome
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