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EXHIBIT 10.18
As Amended Effective 10-26-99
DALLAS SEMICONDUCTOR CORPORATION
AMENDED 1987 STOCK OPTION PLAN
1. Purpose. The Dallas Semiconductor Corporation 1987 Stock Option Plan
(the "Plan") is intended to advance the interests of Dallas Semiconductor
Corporation, a Delaware corporation (the "Company"), and its stockholders, by
encouraging and enabling selected officers, directors, consultants, agents and
employees, upon whose judgment, initiative and effort the Company is largely
dependent for the successful conduct of its business, to acquire and retain a
proprietary interest in the Company by ownership of its stock. It is intended
that options which may qualify for treatment as "incentive stock options" under
Section 422A of the Internal Revenue Code of 1986, as amended, and applicable
regulations and rulings promulgated thereunder (collectively the "Code"), as
well as options which may not so qualify, may be granted under the Plan.
2. Definitions.
(1) "Board" means the Board of Directors of the Company or a
Committee of the Board to whom its authority has been delegated.
(2) "Common Stock" means the Company's Common Stock, $.02 par value
per share.
(3) "Date of Grant" means the date on which an Option is granted
under the Plan, which will be the date the Board authorizes the Option
unless the Board specifies a later date.
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(4) "Date of Exercise" means the date on which an Option is validly
exercised pursuant to the Plan.
(5) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(6) "Fair Market Value" of the Company's Common Stock means, as long
as the Company's Common Stock is traded on the New York Stock Exchange,
the closing price of such stock on the New York Stock Exchange on such
date (or if such date is not a trading day, on the last trading day
immediately preceding such date) or, if not so traded, on the NASDAQ
National Market System or another national exchange upon which the
Company's Common Stock is traded or as otherwise determined by the
Board, based on any reasonable valuation method.
(7) "Option" means an option granted under the Plan.
(8) "Optionee" means a person to whom an Option, which has not
expired, has been granted under the Plan.
(9) "Subsidiary" or "Subsidiaries" means a subsidiary corporation or
corporations of the Company as defined in Section 425(f) of the Code.
(10) "Successor" means the legal representative of the estate of a
deceased optionee or the person or persons who acquire the right to
exercise an Option by bequest or inheritance or by reason of the death
of an Optionee.
(11) "Incentive Stock Option" means an option that qualifies as an
incentive stock option under all of the requirements of the Code.
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(12) "Incentive Stock Option Agreement" means the agreement between
the Company and the Optionee, in such form as may from time to time be
adopted by the Board, under which the Optionee may purchase Common Stock
pursuant to the terms of an Incentive Stock Option granted under the
Plan.
(13) "Non-Qualified Stock Option" means an option to purchase Common
Stock granted pursuant to the provisions of the Plan that does not
qualify as an Incentive Stock Option.
(14) "Non-Qualified Stock Option Agreement" means the agreement
between the Company and the Optionee, in such form as may from time to
time be adopted by the Board, under which the Optionee may purchase
Common Stock pursuant to the terms of a Non-Qualified Stock Option
granted under the Plan.
3. Administration and Interpretation of Plan. The Plan shall be
administered by the Board. The Board shall have full and final authority in its
discretion, subject to the provisions of the Plan: (i) to determine the
individuals to whom, and the time or times at which, Options shall be granted
and the number of shares of Common Stock covered by each Option; (ii) to
construe and interpret the Plan; and (iii) to make all other determinations and
take all other actions deemed necessary or advisable for the proper
administration of the Plan. All such actions and determinations by the Board
shall be final and conclusively binding for all purposes and upon all persons.
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4. Common Stock Subject to Options. The maximum number of shares of
Common Stock of the Company which may be issued upon the exercise of Options
granted under the Plan is 6,797,339, computed from the date of the adoption of
the Company's 1987 Stock Option Plan through the effective date of this amended
Plan (which number includes 850,000 shares authorized by the Board of Directors
on October 26, 1999, for issuance upon the exercise of Options under the Plan),
increased on and as of January 1 of each calendar year from and including
January 1, 2000, by a number of shares equal to one percent (1%) of the number
of shares of Common Stock outstanding on December 31 of the preceding year;
subject to appropriate adjustment by the Board to reflect any stock dividend,
stock split, reverse stock split, share combination, reorganization,
recapitalization or the like, of or by the Company. The shares of Common Stock
to be issued upon the exercise of Options may be authorized but unissued shares,
shares issued and reacquired by the Company or shares bought on the open market
for the purposes of the Plan. In the event any Option shall, for any reason,
terminate or expire or be canceled or surrendered without having been exercised
in full, the shares subject to such Option, but not purchased thereunder, shall
again be available for Options to be granted under the Plan.
5. Participants. Options may be granted under the Plan to any person who
is an officer, director, employee or consultant of the Company or any of its
Subsidiaries.
6. Terms and Conditions of Options. Any Option granted under the Plan
shall be evidenced by either an Incentive Stock Option Agreement or a Non-
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Qualified Stock Option Agreement executed by the Company and the Optionee. Such
agreement shall be subject to the following limitations and conditions:
(1) Option Price. The option price per share with respect to each
Option shall be determined by the Board but in no instance shall the
option price for an Option which is intended to qualify as an Incentive
Stock Option be less than 100% of the Fair Market Value of a share of
the Common Stock on the Date of Grant.
(2) Payment of Option Price. Full payment for shares purchased upon
exercising an Option shall be made in cash or by check, or by delivery
of previously owned shares of Common Stock, or partly in cash or by
check and partly in such stock. The value of shares of Common Stock
delivered in connection with the payment of the option price shall be
the Fair Market Value of such shares on the Date of Exercise of the
Option.
(3) Term of Option. The expiration date of each Incentive Stock
Option shall not be more than ten (10) years from the Date of Grant. The
expiration date of each Non-Qualified Stock Option shall not be more
than eleven (11) years from the Date of Grant.
(4) Vesting of Stockholder Rights. Neither an Optionee nor his
Successor shall have any of the rights of a stockholder of the Company
until the certificate or certificates evidencing the shares purchased
pursuant to the exercise of an Option are properly delivered to such
Optionee or his Successor.
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(5) Exercise of an Option. Each Option shall be exercisable at any
time, and from time to time, and in no particular order if the Optionee
holds more than one Option, throughout a period commencing on or after
the Date of Grant, as specified by the Board, and ending upon the
earliest of the expiration, cancellation, surrender or termination of
the Option; provided however, that no Option shall be exercisable in
whole or in part prior to the date of stockholder approval of the Plan.
Furthermore, the exercise of each Option shall be subject to the
condition that if at any time the Company shall determine in its
discretion that the satisfaction of withholding tax or other withholding
liabilities, or that the listing, registration, or qualification of any
share otherwise deliverable upon such exercise upon any securities
exchange or under any state or federal law, or that the report to, or
consent or approval of, stockholders or any regulatory body, is
necessary or desirable as a condition of, or in connection with, such
exercise or the delivery or purchase of shares pursuant thereto, then in
any such event, such exercise shall not be effective unless such
withholding, listing, registration, qualification, report, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Company.
(6) Stock Appreciation Rights. Any Option may include a Stock
Appreciation Right, either at the Date of Grant or later by amendment
approved by the Board, and provision therefor shall be included in the
stock option agreement at such time consistent with the terms hereof.
Such Stock Appreciation Right shall be subject to such terms and
conditions not
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inconsistent with the Plan as the Board shall impose, including the
following:
(1) It shall be exercisable only when and to the extent the
Option is exercisable and only at such time as the value of the
Company's Common Stock is equal to or greater than the option price
specified in such Option.
(2) It shall entitle the Optionee to surrender unexercised the
Option in which the Stock Appreciation Right is included (or any
portion of such Option) to the Company and to receive from the
Company in exchange therefor that number of shares of Common Stock
having an aggregate value equal to the excess of the Fair Market
Value of one share, on the day immediately preceding the date on
which the Stock Appreciation Right is exercised, over the purchase
price per share specified in such option, times the number of shares
called for by the Option, or portion thereof, which is so
surrendered. The Company, in its discretion, shall be entitled to
elect to settle its obligation arising out of the exercise of a
Stock Appreciation Right by the payment of cash equal to the
aggregate value of the shares it would otherwise be obligated to
deliver. The Company may also elect to settle such obligation partly
in cash and partly in Common Stock. In lieu thereof, the Company
shall have the right, in its discretion, to the extent it shall deem
advisable to consent to or disapprove the
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election of the Optionee to receive cash in full or partial
settlement of a Stock Appreciation Right.
(3) No fractional shares shall be delivered pursuant to exercise
of a Stock Appreciation Right but in lieu thereof a cash adjustment
shall be made.
(4) Notwithstanding the other provisions hereof, to the extent
that a Stock Appreciation Right included in an Option is exercised,
such Option shall be deemed to have been exercised to the extent of
the number of shares of Common Stock called for by the Option or
portion thereof which is surrendered on exercise of the Stock
Appreciation Right, so that such shares shall no longer be reserved
for issuance upon the exercise of Options to be granted under the
Plan.
(5) The Board shall have the right, without the consent or
approval of the Optionee, at any time after the grant of a Stock
Appreciation Right to limit the time within or extent to which such
Stock Appreciation Right may be exercisable, to limit the maximum
amount of appreciation that may be recognized in connection with the
exercise thereof or to in any other manner it, in its discretion,
shall deem advisable amend or terminate such Stock Appreciation
Right.
(6) A Stock Appreciation Right granted pursuant to the Plan
shall not be exercisable unless and until the Optionee shall have
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completed one (1) continuous year of full time employment with the
Company subsequent to the time of grant of such Stock Appreciation
Right. For the purposes hereof, full time employment shall be such
as may be established by the Board.
(7) The Company shall have the right at any time to amend this
provision of the Plan dealing with Stock Appreciation Rights, and
the provisions of any stock option agreement pursuant to the Plan
dealing with a Stock Appreciation Right, to the extent that it, in
its discretion, shall deem to be necessary in order to comply with
the provisions of Rule 16b-3.
(7) Non-ISO Tax Offset Bonus. The Board may grant a Tax Offset Bonus
to such Optionees and on such bases as the Board shall determine,
including, but not limited to, a Tax Offset Bonus which becomes
exercisable only upon an Optionee's being subject to the restrictions of
Section 16 of the Exchange Act. A Tax Offset Bonus may be granted only
with respect to a Non-Qualified Stock Option under the Plan, and may be
granted concurrently with or after the grant of the Non-Qualified Stock
Option. A Tax Offset Bonus shall entitle an Optionee to receive from the
Company or a Subsidiary an amount in cash no greater than the then
existing maximum statutory Federal income tax rate (including any surtax
or similar charge or assessment) for individuals multiplied by the
amount of ordinary income, if any, realized by the Optionee for Federal
income tax purposes as a result of the exercise of the Non-Qualified
Stock Option. The Board may cancel or
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place a limit on the term of, or the amount payable for, any Tax Offset
Bonus at any time. The Board shall determine all other terms and
provisions of any Tax Offset Bonus grant. The Company shall not be
required to fund such Tax Offset Bonus prior to the due date for such
taxes, and the proceeds of such Tax Offset Bonus shall be advanced to
the Optionee in the form of a check payable to the Internal Revenue
Service for the account of the Optionee or such other method as the
Board may determine. The Board shall have the right to require an
Optionee to present reasonable proof of the amount of such taxes as a
condition precedent to the making of such payment. The Company shall be
under no obligation of any nature to grant any Tax Offset Bonus to any
Optionee at any time.
(8) Company Loans. The Company may make stock purchase loans in
connection with Option exercises upon the following terms and
conditions:
(1) Upon the exercise by an Optionee of his Option, or any part
thereof, and the Optionee's request for a loan pursuant hereto, the
Company, upon approval by the Board, may loan said Optionee, for the
sole purpose of purchasing Common Stock from the Company pursuant to
the exercise of such Option, an amount equal to the excess of the
exercise price of the Option over the aggregate par value of the
Common Stock which the Optionee has elected to purchase pursuant to
such exercise; provided, however, that the Optionee shall
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execute concurrently a promissory note in form satisfactory to the
Board for such amount payable to the order of the Company;
(2) The Company shall have no obligation to make any loan to any
Optionee at any time;
(3) The promissory note referenced hereinbefore shall provide
for interest to be payable upon the outstanding principal balance
thereof at such rate and times as the Board may determine. Such note
shall also provide that the Board may require the Optionee to secure
the payment thereof at any time with collateral deemed adequate by
the Board in its sole discretion. Such note shall mature, and all
outstanding principal and interest shall become immediately due and
payable in installments or in lump sum at such time or times as the
Board shall provide. The note will provide for prepayment of
principal and accrued interest in whole or in part from time to time
without premium or penalty and may be extended or modified, from
time to time, at the Board's discretion. The note shall provide for
acceleration of maturity by the Company upon the happening of any
events determined appropriate by the Board, including without
limitation, any of the following events:
(1) failure of the Optionee to pay or perform any term
or provision thereof; or
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(2) termination of the Optionee's employment with the
Company or a Subsidiary for any reason, except retirement,
disability or death; or
(3) if the Optionee shall execute an assignment for the
benefit of creditors, or admit in writing his ability to pay
his debts generally as they become due, or voluntarily seek
the benefit of, or have a petition filed against him seeking
the benefit of, a judgment, order or decree filed against
him pursuant to any bankruptcy, insolvency, reorganization,
or similar debtor relief law affecting the rights of
creditors generally; or
(4) failure of the Optionee to have discharged within a
period of thirty (30) days after the commencement thereof
any attachment, sequestration, or similar proceeding against
any of the assets of the Optionee; or
(5) failure of the Optionee to pay any money judgment
against him at least thirty (30) days prior to the date on
which any of his assets may be lawfully sold to satisfy such
judgment; or
(6) failure or refusal of the Optionee to comply with
any of the terms and conditions of his stock option
agreement or any other oral or written agreement with the
Company; or
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(7) failure or refusal of the Optionee to provide
adequate security for payment of the promissory note
immediately upon request for collateral by the Board; or
(8) the divorce of the Optionee, unless arrangements
satisfactory to the Board are agreed to prior to the entry
of the divorce decree.
(9) Nontransferability of Option. Other than by will or by laws
of descent and distribution, an Option granted under the Plan shall
be transferable or assignable by an Optionee only if and under terms
and conditions approved by the Board, in its sole discretion.
Subject to the foregoing sentence, each Option shall be exercisable,
during the Optionee's lifetime, only by him. No Option or the shares
covered thereby shall be pledged or hypothecated in any way and no
Option or the shares covered thereby shall be subject to execution,
attachment, or similar process except with the prior express written
consent of the Board.
(10) Termination of Employment. Except as may otherwise be
authorized by the Board, upon termination of an Optionee's
employment with the Company or with any of its Subsidiaries for any
reason other than retirement, permanent disability or death, any and
all outstanding Option(s) of such Optionee shall immediately
thereupon be null and void. Neither the adoption of this Plan nor
the grant of an Option to an eligible person shall alter in any way
the Company's or the relevant Subsidiary's rights to terminate such
person's employment or directorship at any time with or
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without cause nor does it confer upon such person any rights or
privileges to continued employment, or any other rights and
privileges, except as specifically provided in the Plan.
(11) Death of Optionee. Except as may otherwise be authorized by
the Board, if an Optionee dies while in the employ of the Company or
any Subsidiary, his option privileges shall be limited to the shares
which were immediately purchasable by him at the date of death and
such option privileges shall expire unless exercised by his
Successor prior to the date of its expiration or one (1) year from
the date of the Optionee's death, whichever occurs first.
(12) Ten Percent Stockholder. Notwithstanding anything herein to
the contrary, an Option which is intended to qualify as an Incentive
Stock Option shall be granted hereunder to any Optionee who,
immediately before such Option is granted, beneficially owns,
directly or indirectly, more than 10% of the total voting power of
all classes of stock of the Company only if both of the following
conditions are met:
(1) The option price per share shall be no less than
110% of the Fair Market Value of a share of Common Stock on
the Date of Grant; and
(2) The expiration date of the Option shall be not more
than five (5) years from the Date of Grant.
(13) Other Terms. Each Incentive Stock Option Agreement or
Non-Qualified Stock Option Agreement, as the case may be, may
contain such
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other provisions as the Board in its discretion may determine,
including, without limitation:
(1) in the event that an Option shall be immediately exercisable,
any provision which shall provide that the shares acquired pursuant
thereto shall not be deemed to have been issued pursuant to a fully
vested stock option and thereby subject to repurchase rights (if any)
contained in the shareholder's agreement with the Optionee, entered
into pursuant to Paragraph 10 hereof;
(2) any provision which shall condition the exercise of all or
part of an Option upon such matters as the Board may deem appropriate
(if any) such as the passage of time, or the attainment of certain
performance goals, appropriate to reflect the contribution of the
Optionee to the performance of the Company;
(3) any provision which would accelerate the exercisability of an
Option in spite of any provision contained in an Option pursuant to
clause (2) above or otherwise, under such circumstances as the Board
may deem appropriate; and
(4) the manner in which an Option is to be exercised.
7. Allotment of Shares. The grant of an Option shall not be deemed
either to entitle the Optionee to, or disqualify the Optionee from,
participation in any other grant of options under this Plan or any other stock
option plan of the Company. The number of shares allotted to each Optionee shall
be determined as follows: The Board shall, in its discretion, determine the
number of shares of
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Common Stock to be offered from time to time by grant of Options to officers,
key employees and consultants of the Company or its Subsidiaries; provided that
the aggregate Fair Market Value (determined as of the time the option is
granted) of the Common Stock with respect to which Options which are intended to
qualify as Incentive Stock Options are exercisable for the first time by such
Optionee during any calendar year (under all such plans of the Optionee's
employer corporation and its parent and subsidiary corporations) shall not
exceed $100,000.
8. Adjustments. The number of shares of Common Stock covered by each
outstanding Option granted under the Plan and the option price shall be adjusted
to reflect, as deemed appropriate by the Board in its discretion, any stock
dividend, stock split, reverse stock split, share combination, exchange of
shares, recapitalization, merger, consolidation, separation, reorganization,
liquidation or the like of or by the Company. Decisions by the Board as to what
adjustments shall be made, and the extent thereof, shall be final, binding and
conclusive on all Optionees.
9. Designation of Incentive Stock Options. The Board shall cause each
Option granted hereunder to be clearly designated in the agreement evidencing
such Option, at the time of grant, as to whether or not it is intended to
qualify as an Incentive Stock Option.
10. Execution of Shareholder's Agreement. Options may only be exercised
hereunder by employees who have executed a Shareholder's Agreement in such form
as the Board may adopt from time to time.
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11. Notices. Whenever any notice is required or permitted hereunder,
such notice must be in writing and personally delivered or sent by mail. Any
notice required or permitted to be delivered hereunder shall be deemed to be
delivered on the date which it is personally delivered, or, whether actually
received or not, on the third business day after it is deposited in the United
States mail, certified or registered, postage prepaid, addressed to the person
who is to receive it at the address which such person has theretofore specified
by written notice delivered in accordance herewith. The Company or an Optionee
may change, at any time and from time to time, by written notice to the other,
the address which it or he had theretofore specified for receiving notices.
Until changed in accordance herewith, the Company and each Optionee shall
specify as its and his address for receiving notices the address set forth in
the option agreement pertaining to the shares to which such notice relates.
12. Amendment or Discontinuance. The Plan and any Option outstanding
hereunder may be amended or discontinued by the Board without the approval of
the stockholders of the Company, except that the Board may not, except as
expressly provided in the Plan, increase the aggregate number of shares which
may be issued under Options granted pursuant to the Plan, materially amend the
eligibility requirements of the Plan or materially increase the benefits which
may accrue to participants under the Plan, without such approval (if any) as may
be required pursuant to applicable law or the requirements of any national stock
exchange upon which the Company's Common Stock is traded.
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13. Effect of the Plan. Neither the adoption of this Plan nor any action
of the Board shall be deemed to give any officer or employee any right to be
granted an option to purchase Common Stock of the Company or any of its
Subsidiaries, or any other rights except as may be evidenced by a stock option
agreement, or any amendment thereto, duly authorized by the Board and executed
on behalf of the Company and then only to the extent and on the terms and
conditions expressly set forth therein.
14. Grant of Incentive Stock Options. No Incentive Stock Options shall
be granted pursuant to this Plan after the expiration of ten years from the date
of the earlier of: (i) the date the Plan is adopted, or (ii) the date the Plan
is approved by the stockholders of the Company.
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DALLAS SEMICONDUCTOR CORPORATION
AMENDMENT TO
AMENDED 1987 STOCK OPTION PLAN
(Adopted by the Board of Directors on November 27, 2000)
RESOLVED, that, subject to such approval (if any) as may be required
pursuant to the provisions of Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended, or applicable law or the requirements of the
New York Stock Exchange, the Amended 1987 Stock Option Plan of the Corporation
be, and the same hereby is further amended, effective November 27, 2000, so as
to increase the number of shares of Common Stock available for the grant of
options thereunder by 1,250,000 shares.