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EXHIBIT 4.1
ROCKETCHIPS,INC.
1996 STOCK OPTION PLAN
1. PURPOSE
The purpose of this 1996 Stock Option Plan is to promote the interests of
RocketChips, Inc., a Minnesota corporation, by providing employees of the
Company and certain independent contractors and consultants with an opportunity
to acquire a proprietary interest in the Company, and thereby develop a stronger
incentive to contribute to the Company's continued success and growth. In
addition, the opportunity to acquire a proprietary interest in the Company by
the offering and availability of stock options will assist the Company in
attracting and retaining key personnel, independent contractors and consultants
of outstanding ability.
2. DEFINITIONS
Wherever used in the Plan, the following terms have the meanings set forth
below:
2.1 "Act" means the Securities Act of 1933, as amended.
2.2 "Board" means the Board of Directors of the Company.
2.3 "Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
2.4 "Committee" means the Committee which may be designated from time to
time by the Board to administer the Plan pursuant to Section 3.5.
2.5 "Company" means RocketChips, Inc. and any Subsidiary thereof.
2.6 "Incentive Stock Option" or "ISO" means the stock option which is
intended to qualify as an incentive stock option as defined in Section 422 of
the Code.
2.7 "Non-Statutory Stock Option" or "NSO" means a stock option that is not
intended to, or does not, qualify as an incentive stock option as defined in
Section 422 of the Code.
2.8 "Option" means, where required by the context of the Plan, an ISO or a
NSO granted pursuant to the Plan.
2.9 "Optionee" means a Participant in the Plan who has been granted one or
more Options under the Plan.
2.10 "Participant" means an individual described in Section 5 of this Plan
who may be granted Options under the Plan.
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2.11 "Plan" means this 1996 Stock Option Plan.
2.12 "Stock" means the Common Stock, $.01 par value, of the Company.
2.13 "Subsidiary" means any corporation, other than the Company, in an
unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns 50% or
more of the voting stock in one of the other corporations in such chain.
3. ADMINISTRATION
3.1 The Plan shall be administered by the Board, which shall have full
power, subject to the provisions of the Plan, to grant Options, construe and
interpret the Plan, establish rules and regulations with respect to the Plan and
Options granted hereunder, and perform all other acts, including the delegation
of administrative responsibilities, that it believes reasonable and necessary.
3.2 The Board shall have the sole discretion, subject to the provisions of
the Plan, to determine the Participants eligible to receive Options pursuant to
the Plan and the amount, type, and terms of any Options and the terms and
conditions of option agreements relating to any Option. On a case by case
basis, the Board, in its sole discretion, may: (i) accelerate the schedule of
the time or times when an Option granted under the Plan may be exercised; and
(ii) extend the duration of any Option granted under the Plan.
3.3 The Board may correct any defect, supply any omission, or reconcile
any inconsistency in the Plan or in any Option granted hereunder in the manner
and to the extent it shall deem necessary to carry out the terms of the Plan.
3.4 Any decision made, or action taken, by the Board arising out of or in
connection with the interpretation and administration of the Plan shall be
final, conclusive and binding upon all Optionees.
3.5 The Board may designate a Committee from time to time to administer
the Plan. If designated, the Committee shall be composed of not less than two
persons (who need not be members of the Board) who are appointed from time to
time by the Board. If the Board has appointed a Committee pursuant to this
Section 3.5, then the Committee may administer the Plan and exercise all of the
rights and powers granted to the Board hereunder, including, without limitation,
the right to grant Options pursuant to the Plan and to establish the Option
price as provided in the Plan.
4. SHARES SUBJECT TO THE PLAN
4.1 Number. The total number of shares of Stock reserved for issuance
upon exercise of Options under the Plan is 1,400,000. Such shares shall consist
of authorized but unissued Stock. If any Option granted under the Plan lapses
or terminates for any reason before being completely exercised, the shares
covered by the unexercised portion of such Option may again be made subject to
Options under the Plan.
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4.2 Changes in Capitalization. In the event of any change in the
outstanding shares of Stock of the Company by reason of any stock dividend,
split, recapitalization, reorganization, merger, consolidation, combination,
exchange of shares, or rights offering to purchase stock at a price
substantially below fair market value, or other similar corporate change, the
aggregate number of shares which may be subject to Options under the Plan and
the terms of any outstanding Option, including the number and kind of shares
subject to such Options and the purchase price per share thereof, shall be
appropriately adjusted by the Board, consistent with such change and in such
manner as the Board, in its sole discretion, may deem equitable to prevent
substantial dilution or enlargement of the rights granted to or available for
Optionees. Notwithstanding the preceding sentence, in no event shall any
fraction of a share of Stock be issued upon the exercise of an Option.
5. ELIGIBLE PARTICIPANTS
The following persons are Participants eligible to participate in the Plan:
5.1 Incentive Stock Options. Incentive Stock Options may be granted only
to employees of the Company or any Subsidiary, including officers and directors
who are also employees of the Company or any Subsidiary; provided, however, that
officers who are not employed full-time shall not be eligible for Incentive
Stock Options.
5.2 Non-Statutory Stock Options. Non-statutory stock options may be
granted to (i) any employee of the Company or any Subsidiary, including any
officer or director who is also an employee of the Company or any Subsidiary;
and (ii) any consultant to, or other independent contractor of, the Company.
6. GRANT OF OPTIONS
6.1 Discretionary Grants. Subject to the terms, conditions, and
limitations set forth in this Plan, the Company, by action of its Board, may
from time to time grant Options to purchase shares of the Company's Stock to
those eligible Participants as may be selected by the Board, in such amounts and
on such other terms as the Board in its sole discretion shall determine. In
making stock option grants the Board shall specify in each stock option
agreement the vesting schedule which shall apply to each such grant.
6.2 Limitations. Options specified in Section 6.1 above may be (i)
"Incentive Stock Options" so designated by the Board and which, when granted,
are intended to qualify as incentive stock options as defined in Section 422 of
the Code; (ii) "Non-Statutory Stock Options" so designated by the Board and
which, when granted, are not intended to, or do not, qualify as incentive stock
options under Section 422 of the Code; or (iii) a combination of both. The date
on which the Board approves the granting of an Option shall be the date of grant
of such Option, unless a different date is specified by the Board on such date
of approval. Notwithstanding the foregoing, with respect to the grant of any
Incentive Stock Option under the Plan, the aggregate fair market value of Stock
(determined as of the date the Option is granted) with respect to which
Incentive Stock Options are exercisable for the first time by an Optionee in any
calendar year (under all such stock option plans of the Company or Subsidiaries)
shall not exceed $100,000. Each grant of an Option under the Plan
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shall be evidenced by a written stock option agreement between the Company and
the Optionee setting forth the terms and conditions, not inconsistent with the
Plan, under which the Option so granted may be exercised pursuant to the Plan
and containing such other terms with respect to the Option as the Board in its
sole discretion may determine.
7. OPTION PRICE AND FORM OF PAYMENT
7.1 Incentive Stock Options. The purchase price for a share of Stock
subject to an Incentive Stock Option granted hereunder shall not be less than
100% of the fair market value of the Stock at the time the option is granted
Notwithstanding the foregoing, in the case of an Incentive Stock Option granted
to any Optionee then owning more than 10% of the voting power of all classes of
the Company's Stock, the purchase price per share of the Stock subject to such
Option shall not be less than 110% of the fair market value of the Stock on the
date of grant of the Incentive Stock Option, determined as provided in Section
7.3.
7.2 Non-Statutory Stock Options. The purchase price for a share of Stock
subject to a Non-Statutory Stock Option shall be not less than 100% of the fair
market value of the Stock.
7.3 Determination of Fair Market Value. For purposes of this Section 7,
the "fair market value" of the Stock shall be determined as follows:
(a) if the Stock of the Company is listed or admitted to unlisted
trading privileges on a national securities exchange, the fair market value
on any given day shall be the closing sale price for the Stock, or if no
sale is made on such day, the closing bid price for such day on such
exchange;
(b) if the Stock is not listed or admitted to unlisted trading
privileges on a national securities exchange, the fair market value on any
given day shall be the closing sale price for the Stock as reported on the
NASDAQ National Market System on such day, or if no sale is made on such
day, the closing bid price for such day as entered by a market maker for
the Stock;
(c) if the Stock is not listed on a national securities exchange, is
not admitted to unlisted trading privileges on any such exchange, and is
not eligible for inclusion in the NASDAQ National Market System, the fair
market value on any given day shall be the average of the closing
representative bid and asked prices as reported by the National Quotation
Bureau, Inc. or, if the Stock is not quoted on the National Association of
Securities Dealers Automated Quotations System, then as reported in any
publicly available compilation of the bid and asked prices of the Stock in
any over-the-counter market on which the Stock is traded; or
(d) if there exists no public trading market for the Stock, the fair
market value on any given day shall be an amount determined in good faith
by the Board in such manner as it may reasonably determine in its
discretion, provided that such amount shall not be less than the book value
per share as reasonably determined by the Board as of the date of
determination or less than the par value of the Stock.
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7.4 Payment of Purchase Price. Except as provided herein, the purchase
price of each share of Stock purchased upon the exercise of any Option shall be
paid:
(a) in United States dollars in cash or by check, bank draft or money
order payable to the order of the Company; or
(b) at the discretion of the Board, through the delivery of shares of
Stock, having initially or as a result of successive exchanges of shares,
an aggregate fair market value (as determined in the manner provided under
this Plan) equal to the aggregate purchase price for the Stock as to which
the Option is being exercised; or
(c) at the discretion of the Board, by a combination of both (a) and
(b) above; or
(d) by such other method as may be permitted in the written stock
option agreement between the Company and the Optionee.
If payment by tendering stock is authorized, the Board shall determine
procedures for tendering Stock as payment upon exercise of an Option and may
impose such additional limitations and prohibitions on the use of Stock as
payment upon the exercise of an Option as it deems appropriate.
If the Board in its sole discretion so agrees, the Company may finance the
amount payable by an Optionee upon exercise of any Option upon such terms and
conditions as the Board may determine at the time such Option is granted under
this Plan.
8. EXERCISE OF OPTIONS
8.1 Manner of Exercise. An Option, or any portion thereof, shall be
exercised by delivering a written notice of exercise to the Board and paying to
the Company the full purchase price of the Stock to be acquired upon the
exercise of the Option. Until certificates for the Stock acquired upon the
exercise of an Option are issued to an Optionee, such Optionee shall not have
any rights as a shareholder of the Company with respect to such stock.
8.2 Limitations and Conditions on Exercise of Options. In addition to any
other limitations or conditions contained in this Plan or that may be imposed by
the Board from time to time or in the stock option agreement to be entered into
with respect to Options granted hereunder, the following limitations and
conditions shall apply to the exercise of Options granted under this Plan:
8.2.1 No Incentive Stock Option may be exercisable by its terms after
the expiration of ten (10) years from the date of the grant thereof.
8.2.2 No Incentive Stock Option granted pursuant to the Plan to an
eligible Participant then owning more than 10% of the voting power of all
classes of the Company's stock may be exercisable by its terms after the
expiration of five years from the date of the grant thereof.
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9. INVESTMENT PURPOSES
Unless a registration statement under the Act is in effect with respect to
Stock to be purchased upon exercise of Options to be granted under the Plan, the
Company shall require that an Optionee agree with and represent to the Company
in writing that he or she is acquiring such shares of Stock for the purpose of
investment and with no present intention to transfer, sell or otherwise dispose
of such shares of Stock other than by transfers which may occur by will or by
the laws of descent and distribution, and no shares of Stock may be transferred
unless, in the opinion of counsel to the Company, such transfer would be in
compliance with applicable securities laws. In addition, unless a registration
statement under the Act is in effect with respect to the Stock to be purchased
under the Plan, each certificate representing any shares of Stock issued to an
Optionee hereunder shall have endorsed thereon a legend in substantially the
following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT") AND WITHOUT REGISTRATION UNDER ANY APPLICABLE STATE
SECURITIES LAWS, IN RELIANCE UPON EXEMPTION(S) CONTAINED THEREIN.
NO TRANSFER OF THESE SHARES OR ANY INTEREST THEREIN MAY BE MADE
EXCEPT PURSUANT TO EFFECTIVE REGISTRATION STATEMENTS UNDER SAID
LAWS UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL
SATISFACTORY TO IT THAT SUCH TRANSFER OR DISPOSITION DOES NOT
REQUIRE REGISTRATION UNDER SAID LAWS AND, FOR ANY SALES UNDER
RULE 144 OF THE ACT, SUCH EVIDENCE AS IT SHALL REQUEST FOR
COMPLIANCE WITH THAT RULE, OR APPLICABLE STATE SECURITIES LAWS.
10. TRANSFERABILITY OF OPTIONS
Except as otherwise provided by the Board, no Option granted under the Plan
shall be transferable by an Optionee (whether by sale, assignment, hypothecation
or otherwise) other than by will or the laws of descent and distribution.
11. TERMINATION OF EMPLOYMENT
11.1 Generally. Except as otherwise provided in this Section 11, if an
Optionee's employment with the Company or Subsidiary is terminated (hereinafter
"Termination") other than by death or Disability (as hereinafter defined), the
Optionee may exercise any Option granted under the Plan, to the extent the
Optionee was vested in and entitled to exercise the Option at the date of
Termination, or until the term of the Option has expired, whichever date is
earlier.
11.2 Termination for Cause. If the employment of an Optionee is
terminated by the Company or a Subsidiary for cause, then the Board shall have
the right to cancel any Options granted to the Optionee under the Plan.
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11.3 Suspension or Termination for Misconduct. If the Board reasonably
believes that an Optionee has committed an act of misconduct, it may suspend the
Optionee's right to exercise any Option pending a determination by the Board.
If the Board determines that an Optionee has committed an act of embezzlement,
fraud, dishonesty, nonpayment of an obligation owed to the Company, breach of
fiduciary duty or deliberate disregard of the Company's rules resulting in loss,
damage or injury to the Company, or if an Optionee makes an unauthorized
disclosure of any Company trade secret or confidential information, engages in
any conduct constituting unfair competition with respect to the Company, or
induces any party to breach a contract with the Company, neither the Optionee
nor the Optionee's estate or any permitted assignee shall be entitled to
exercise any Option whatsoever. In making such determination, the Board shall
act fairly and shall give the Optionee an opportunity to appear and present
evidence on the Optionee's behalf at a hearing before the Board.
12. AMENDMENT AND TERMINATION OF PLAN
12.1 The Board, may at any time and from time to time, insofar as
permitted by law, suspend or terminate the Plan or amend it in such respects as
it determines may be in the best interests of the Company.
12.2 No amendment, suspension or termination of this Plan shall, without
the Optionee's consent, alter or impair any of the rights or obligations under
any Option theretofore granted to him or her under the Plan.
12.3 The Board may amend the Plan, subject to the limitations cited above,
in such manner as it deems necessary to permit the granting of Incentive Stock
Options meeting the requirements of future amendments to the Code.
12.4 In the event of the proposed dissolution or liquidation of the
Company, each Option will terminate immediately prior to the consummation of
such proposed action, unless otherwise provided by the Board. The Board may, in
the exercise of its sole discretion in such instance, declare that any Option
shall terminate as of a date fixed by the Board and give each Optionee the right
to exercise his or her Option as to all or any part of the Option, including
Stock as to which the Option would not otherwise be exercisable.
13. CHANGE IN CONTROL PROVISIONS
13.1 Impact of Event. Notwithstanding any other provision of the Plan to
the contrary, in the event of a Change in Control (as defined in 13.2), any
Options outstanding as of the date such Change in Control is determined to have
occurred and not then exercisable and vested shall become fully exercisable and
vested in the fullest extent of the original grant.
13.2 Definition of Change in Control. For purposes of the Plan, a "Change
in Control" shall mean the happening of any of the following events:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of thirty percent
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(30%) or more of either (1) the then outstanding shares of Common Stock of
the Company or (2) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors; provided, however, that the following acquisitions shall not
constitute a Change in Control: (i) any acquisition directly from the
Company; (ii) any acquisition by the Company; (iii) any acquisition by a
Person including the participant or with whom or with which the participant
is affiliated; (iv) any acquisition by a Person or Persons one or more of
which is a member of the Board or an officer of the Company or an affiliate
of any of the foregoing on the Effective Date, (v) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company; or (vi) any
acquisition by any corporation pursuant to a transaction described in
clauses (A), (B) and (C) of paragraph (c) of this Section 13.2; or
(b) During any period of twenty-four (24) consecutive months,
individuals who, as of the beginning of such period, constituted the entire
Board cease for any reason to constitute at least a majority of the Board,
unless the election, or nomination for election, by the Company's
shareholders, of each new director was approved by a vote of at least two-
thirds (2/3rds) of the Continuing Directors, as hereinafter defined, in
office on the date of such election or nomination for election for the new
director. For purposes hereof, "Continuing Director" shall mean (i) any
member of the Board at the close of business on the Effective Date, or (ii)
any member of the Board who succeeded any Continuing Director described in
clause (i) above if such successor's election, or nomination for election,
by the Company's shareholders, was approved by a vote of at least two-
thirds (2/3rds) of the Continuing Directors then still in office. The
term "Continuing Director" shall not, however, include any individual whose
initial assumption of office occurs as a result of either an actual or
threatened election contest (as such term is used in Rule 14a-11 of
Regulation 14A of the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a person other than
the Board.
(c) Approval by the shareholders of the Company of a reorganization,
merger or consolidation, in each case, unless, following such
reorganization, merger or consolidation, (A) more than 60% of the then
outstanding securities having the right to vote in the election of
directors of the corporation resulting from such reorganization, merger or
consolidation is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners of the outstanding securities having the right to vote in the
election of directors of the Company immediately prior to such
reorganization, merger or consolidation, (B) no Person (excluding the
Company, any employee benefit plan (or related trust) of the Company or
such corporation resulting from such reorganization, merger or
consolidation and any Person beneficially owning, immediately prior to such
reorganization, merger or consolidation, directly or indirectly, 30% or
more of the then outstanding securities having the right to vote in the
election of directors of the Company) beneficially owns, directly or
indirectly, 30% or more of the then outstanding securities having the right
to vote in the election of the corporation resulting from such
reorganization, merger or consolidation, and (C) at least a majority of the
members of the board of directors of the corporation resulting from such
reorganization, merger or consolidation are
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Continuing Directors at the time of the execution of the initial agreement
providing for such reorganization, merger or consolidation; or
(d) Approval by the shareholders of the Company of the sale or other
disposition of all or substantially all of the assets of the Company, other
than to a corporation, with respect to which following such sale or other
disposition, (A) more than 60% of the then outstanding securities having
the right to vote in the election of directors of such corporation is then
beneficially owned, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners of the
outstanding securities having the right to vote in the election of
Directors of the Company immediately prior to such sale or other
disposition of such outstanding securities, (B) no Person (excluding the
Company and any employee benefit plan (or related trust) of the Company or
such corporation and any Person beneficially owning, immediately prior to
such sale or other disposition, directly or indirectly, 30% or more of the
outstanding securities having the right to vote in the election of
Directors of the Company) beneficially owns, directly or indirectly, 30% or
more of the then outstanding securities having the right to vote in the
election of directors of such corporation, and (C) at least a majority of
the members of the board of directors of such corporation are Continuing
Directors at the time of the execution of the initial agreement or action
of the Board providing for such sale or other disposition of assets of the
Company.
14. MISCELLANEOUS PROVISIONS
14.1 No Right to Continued Employment. No person shall have any claim or
right to be granted an Option under the Plan, and the grant of an Option under
the Plan shall not be construed as giving an Optionee the right to continued
employment with the Company. The Company further expressly reserves the right
at any time to dismiss an Optionee or reduce an Optionee's compensation with or
without cause, free from any liability, or any claim under the Plan, except as
provided herein or in a stock option agreement.
14.2 Transfer of Stock and Payment of Withholding Taxes. The Company
shall have the right to require that payment or provision for payment of any and
all withholding taxes due upon the grant or exercise of an Option hereunder or
the disposition of any Stock or other property acquired upon exercise of an
Option be made by an Optionee. Stock acquired upon exercise of an Incentive
Stock Option may not be disposed of by the Optionee before the later of two
years from the date of grant or one year from the date of exercise unless
adequate provision is made for payment to the Company of funds sufficient for
payment of any withholding and other taxes required by any governmental
authority in respect of the disposition of such stock. The Company may place a
legend on certificates restricting the transfer of Stock issued pursuant to
Incentive Stock Options in order to obtain compliance with tax withholding
requirements. In connection therewith, the Board shall have the right to
establish such rules and regulations or impose such terms and conditions in any
agreement relating to an Option granted hereunder with respect to such tax
withholding as the Board may deem necessary and appropriate.
14.3 Governing Law. The Plan shall be administered in the State of
Minnesota, and the validity, construction, interpretation, and administration of
the Plan and all rights relating to the Plan
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shall be determined solely in accordance with the laws of such state, unless
controlled by applicable federal law, if any.
15. EFFECTIVE DATE
The effective date of the Plan is October 1, 1996 subject, however, to
approval of this Plan by shareholders of the Company in the manner prescribed by
law not later than October 1, 1997. No Option may be granted after October 1,
2006; provided, however, that the Plan and all outstanding Options shall remain
in effect until such outstanding Options have expired or been canceled.
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