Rockford Corporation
2008 Stock Option Plan
The Rockford
Corporation 2008 Stock Option Plan is intended to assist in
attracting and retaining employees and directors and to motivate
such individuals to use their best efforts on behalf of the
Corporation.
The following
terms have the following meanings:
2.1 “1933
Act” means the Federal Securities Act of 1933 and applicable
state securities laws.
2.2 “1934
Act” means the Securities Exchange Act of 1934.
2.3
“Board” means the Board of Directors of Rockford
Corporation.
2.4
“Code” means the Internal Revenue Code of
1986.
2.5
“Committee” means the Compensation Committee of the
Board of Directors of Rockford Corporation.
2.6
“Corporation” means Rockford Corporation and any
Subsidiary.
2.7 “Fair
Market Value” means, as applied to a specific date, the
closing price for the Stock on such date as reported on the
principal stock exchange upon which the Corporation’s Stock
is listed (currently, the Nasdaq Stock Market — National
Market System (“NASDAQ”); or, if the stock is not
listed, then the mean between the most recent bid and asked prices
of any other recognized trading market or if no stock was traded on
the relevant date, on the next preceding day on which the Stock was
so traded. If no such market exists, then the Committee shall
determine in good faith the fair market value of the
Stock.
2.8
“Grant Date” means the date on which an Option is
granted as specified by the Committee, contingent on the Optionee
executing a Stock Option Agreement in form satisfactory to the
Committee.
2.9
“Incentive Option” means an Option eligible for tax
treatment as an incentive option under Section 422 of the
Code.
2.10
“Non-Qualified Option” means an Option that is not
eligible for tax treatment as an incentive option under
Section 422 of the Code.
2.11
“Option” means an option to purchase Stock granted
under this Plan.
2.12
“Optionee” means an employee or director to whom an
Option has been granted under the Plan.
2.13
“Plan” means the Rockford Corporation 2008 Stock Option
Plan, the terms and conditions of which are covered in this
instrument.
2.14
“Stock” means the common stock of the
Corporation.
2.15
“Stock Option Agreement” means a written agreement
entered into between the Corporation and the Optionee that provides
for the price and terms of an Option.
2.16
“Subsidiary” means any corporation of which the
majority of the outstanding capital stock is owned, directly or
indirectly, by the Corporation and which meets the definition of a
subsidiary corporation as set forth in Section 424(f) of the Code,
at the time of the granting of the Option.
2.17 “Ten
Percent Shareholder” means an individual who owns more than
10% of the total combined voting power of all classes of stock of
the Corporation.
3.1 The Plan
shall be administered by the Compensation Committee of the Board,
which Committee shall satisfy the requirements for “outside
directors” as set forth in section 162 (m) of the Code
and “non-employee directors” as set forth in rule 16b-3
of the 1934 Act. Without limiting the powers of the Committee, the
Committee shall have the power to determine the times during which
any Option shall be exercisable, the events upon which any Option
shall terminate, the amounts, if any, payable to beneficiaries of
an Optionee upon the death of such Optionee, the exercisability of
any Option on the sale of all, or substantially all, of the assets
of the Corporation, or a merger where the Corporation is not the
surviving corporation (other than a merger that is only a change in
form), and other terms of exercise. No member of the Committee
shall be eligible to vote on the grant of Options to him or her.
All decisions and determinations of the Committee in administering
the Plan shall be final.
3.2 If changes
are made to the Code that make it advisable, in the
Committee’s sole discretion, to change the character of
Options for income tax purposes, the Committee may change the
character of Options and may impose on Options any conditions
deemed necessary or appropriate to comply with the Code
requirements. However, except as otherwise provided herein, the
Committee may not change the character or terms of an outstanding
Option without the Optionee’s consent.
3.3 The
Committee, subject to the provisions of the Plan, shall make
determinations regarding:
(a) The
employees or directors who shall receive Options, the times when
such Options shall be granted, the time limits within which Options
may be exercised (subject to the provisions of this Plan), the
number of shares subject to each Option, and the terms and
provisions of Stock Option Agreements (which need not be
identical);
(b) Interpretation of Plan
provisions;
(c) Rules
and regulations relating to the Plan;
(d) Stock
Option Agreements under the Plan; and
(e) Other
determinations advisable for the proper administration of the
Plan.
4. Tax and
Other Characteristics of Options.
4.1 Options
granted pursuant to the Plan may be designated, but need not be
designated, as Incentive Options. The Stock Option Agreement shall
provide whether an Option is an Incentive Option or a Non-Qualified
Option. In the case of Incentive Options, the aggregate fair market
value of the Stock (at the time the Option is granted) for Options
that are exercisable for the first time by an Optionee during any
calendar year (under all stock option plans of the Corporation)
shall not exceed $100,000. Non-employee directors of the
Corporation shall not be eligible for the grant of Incentive
Options.
4.2 At all
times during the period beginning on the date of grant of the
Incentive Option and ending on the day three months before the date
of exercise of an Incentive Option, the Optionee must be an
Employee of the Corporation or a Subsidiary. Such 3-month period
shall be extended to twelve (12) months if employment ends due
to a total disability. If the Optionee terminates employment due to
death or dies within the allowable period specified in the Option
Agreement for exercise after termination of employment, the Option
may be exercised (to the extent the Optionee was entitled to
exercise the Option on the date of death) by the Optionee’s
estate, or by a person who acquired the right to exercise the
Option by bequest or inheritance, or by a person designed to
exercise the Option upon the Optionee’s death, but only
within a period ending up
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