<PAGE>
As filed with the Securities and Exchange Commission on March 10, 2000
Registration No. 333-_______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_____________________
Copper Mountain Networks, Inc.
(Exact name of Registrant as specified in its charter)
_____________________
Delaware 33-0702004
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
2470 Embarcadero Way
Palo Alto, California 94303
(650) 687-3300
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
_____________________
Common Stock Issuable Upon Exercise of Options
Assumed by Copper Mountain Networks, Inc.,
Originally Granted Under the OnPREM Networks
Corporation 1998 Stock Option Plan
(Full title of the plans)
_____________________
Richard S. Gilbert
President and Chief Executive Officer
Copper Mountain Networks, Inc.
2470 Embarcadero Way
Palo Alto, California 94303
(650) 687-3300
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
_____________________
Copies to:
Lance W. Bridges, Esq.
Cooley Godward llp
4365 Executive Drive, Suite 1100
San Diego, CA 92121
(858) 550-6000
_____________________
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==============================================================================================================
Proposed Maximum
Proposed Maximum Aggregate Amount of
Title of Securities Amount to Offering Price Offering Price Registration
To be Registered be Registered Per Share (1) (1) Fee
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 par value 43,308 $ 0.3897 $ 16,877.13 $ 4.46
- --------------------------------------------------------------------------------------------------------------
Common Stock, $.001 par value 58,351 $ 1.4027 $ 81,848.95 $ 21.61
- --------------------------------------------------------------------------------------------------------------
Common Stock, $.001 par value 28,904 $ 2.3379 $ 67,574.66 $ 17.84
==============================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(h) of the Securities Act of 1933, as
amended (the "Act"). The price per share and aggregate offering price are
based upon the actual exercise price for shares subject to the options.
The shares registered hereunder will be issued upon the exercise of stock
options assumed by Copper Mountain Networks, Inc., a Delaware corporation (the
"Registrant"), pursuant to that certain Certificate of Merger filed by the
Registrant with the Secretary of State of the State of Delaware on February 29,
2000, and the Certificate of Merger filed by the Registrant with the Secretary
of State of the State of California on February 29, 2000. These options were
originally granted to employees of OnPREM Networks Corporation, the subsidiary
of the Registrant, under its 1998 Stock Option Plan.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed by Copper Mountain Networks, Inc. (the
"Company") with the Securities and Exchange Commission are incorporated by
reference into this Registration Statement:
(a) The Company's latest annual report on Form 10-K filed pursuant to
Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or either (1) the Company's latest prospectus filed pursuant to
Rule 424(b) under the Securities Act, that contains audited financial statements
for the Company's latest fiscal year for which such statements have been filed,
or (2) the Company's effective registration statement on Form 10 or 20-F filed
under the Exchange Act containing audited financial statements for the Company's
latest fiscal year.
(b) All other reports filed pursuant to Sections 13(a) or 15(d) of
the Exchange Act since the end of the fiscal year covered by the annual reports,
the prospectus or the registration statement referred to in (a) above.
(c) The description of the Company's Common Stock which is contained
in a registration statement filed under the Exchange Act, including any
amendment or report filed for the purpose of updating such description.
All reports and other documents subsequently filed by the Company pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing
of a post-effective amendment which indicates that all securities offered have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference herein and to be a part of this
registration statement from the date of the filing of such reports and
documents.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
The validity of the shares of Common Stock offered hereby will be
passed upon for the Company by Cooley Godward llp, San Diego, California. As of
the date of this Prospectus, certain members and associates of Cooley Godward
own an aggregate of two hundred thirty-four (234) shares of Common Stock through
an investment partnership.
II-1.
<PAGE>
Item 6. Indemnification of Directors and Officers.
Under Section 145 of the Delaware General Corporation Law, the Registrant
has broad powers to indemnify its Directors and officers against liabilities
they may incur in such capacities, including liabilities under the Securities
Act of 1933, as amended (the "Securities Act").
The Registrant's Certificate of Incorporation and Bylaws include provisions
to (i) eliminate the personal liability of its directors for monetary damages
resulting from breaches of their fiduciary duty to the extent permitted by
Section 102(b)(7) of the General Corporation Law of Delaware (the "Delaware
Law") and (ii) require the Registrant to indemnify its Directors and officers to
the fullest extent permitted by Section 145 of the Delaware Law, including
circumstances in which indemnification is otherwise discretionary. Pursuant to
Section 145 of the Delaware Law, a corporation generally has the power to
indemnify its present and former directors, officers, employees and agents
against expenses incurred by them in connection with any suit to which they are,
or are threatened to be made, a party by reason of their serving in such
positions so long as they acted in good faith and in a manner they reasonably
believed to be in or not opposed to, the best interests of the corporation and
with respect to any criminal action, they had no reasonable cause to believe
their conduct was unlawful. The Registrant believes that these provisions are
necessary to attract and retain qualified persons as Directors and officers.
These provisions do not eliminate the Directors' duty of care, and, in
appropriate circumstances, equitable remedies such as injunctive or other forms
of non-monetary relief will remain available under Delaware Law. In addition,
each Director will continue to be subject to liability for breach of the
Director's duty of loyalty to the Registrant, for acts or omissions not in good
faith or involving intentional misconduct, for knowing violations of law, for
acts or omissions that the Director believes to be contrary to the best
interests of the Registrant or its stockholders, for any transaction from which
the Director derived an improper personal benefit, for acts or omissions
involving a reckless disregard for the Director's duty to the Registrant or its
stockholders when the Director was aware or should have been aware of a risk of
serious injury to the Registrant or its stockholders, for acts or omissions that
constitute an unexcused pattern of inattention that amounts to an abdication of
the Director's duty to the Registrant or its stockholders, for improper
transactions between the Director and the Registrant and for improper
distributions to stockholders and loans to Directors and officers. The provision
also does not affect a Director's responsibilities under any other law, such as
the federal securities law or state or federal environmental laws.
The Registrant has entered into indemnity agreements with each of its
Directors and certain executive officers that require the Registrant to
indemnify such persons against expenses, judgments, fines, settlements and other
amounts incurred (including expenses of a derivative action) in connection with
any proceeding, whether actual or threatened, to which any such person may be
made a party by reason of the fact that such person is or was a Director or an
executive officer of the Registrant or any of its affiliated enterprises,
provided that such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
Registrant and, with respect to any criminal proceeding, had no
II-2.
<PAGE>
reasonable cause to believe his conduct was unlawful. The indemnification
agreements also set forth certain procedures that will apply in the event of a
claim for indemnification thereunder.
At present, there is no pending litigation or proceeding involving a
Director or officer of the Registrant as to which indemnification is being
sought nor is the Registrant aware of any threatened litigation that may result
in claims for indemnification by any officer or Director.
The Registrant has an insurance policy covering the officers and Directors
of the Registrant with respect to certain liabilities, including liabilities
arising under the Securities Act or otherwise.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
Exhibit No. Description
- ---------- -----------
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.
24.1 Power of Attorney is contained on the signature page.
99.1 OnPREM Networks Corporation 1998 Stock Option Plan.
99.2 Form of Stock Option Agreement pursuant to the OnPREM Networks
Corporation 1998 Stock Option Plan.
Item 9. Undertakings.
2. The undersigned Registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price
II-3.
<PAGE>
represent no more than a 20% change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the effective
Registration Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
Provided, however, that paragraphs (1)(a)(i) and (1)(a)(ii) above do
not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the Registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934 that are incorporated by reference
in this Registration Statement.
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
3. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act of 1934) that
is incorporated by reference in the Registration Statement shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
4. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-4.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of San Diego,
County of San Diego, State of California, on March 9, 2000.
By: /s/ John A. Creelman
_______________________________________
John A. Creelman
Vice President of Finance, Chief
Financial Officer and Secretary
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Richard S. Gilbert and John A. Creelman
and each of them, as his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place, and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments, exhibits thereto and other documents in connection
therewith) to this Registration Statement and any subsequent registration
statement filed by the registrant pursuant to Rule 462(b) of the Securities Act
of 1933, as amended, which relates to this Registration Statement, and to file
the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Richard S. Gilbert President, Chief Executive Officer and March 9, 2000
___________________________________ Director
Richard S. Gilbert (Principal Executive Officer)
/s/ John A. Creelman Vice President of Finance, Chief March 9, 2000
___________________________________ Financial Officer, and Secretary
John A. Creelman (Principal Financial and Accounting
Officer)
/s/ Joseph D. Markee Chief Technical Officer and Chairman of March 9, 2000
___________________________________ the Board
Joseph D. Markee
/s/ Robert L. Bailey Director March 9, 2000
___________________________________
Robert L. Bailey
/s/ Tench Coxe Director March 9, 2000
___________________________________
Tench Coxe
/s/ Roger Evans Director March 9, 2000
___________________________________
Roger Evans
/s/ Richard H. Kimball Director March 9, 2000
___________________________________
Richard H. Kimball
/s/ Raymond V. Thomas Director March 9, 2000
___________________________________
Raymond V. Thomas
/s/ Andrew W. Verhalen Director March 9, 2000
___________________________________
Andrew W. Verhalen
</TABLE>
II-5.
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Sequential
- ----------- ----------- Page No.
--------
<S> <C> <C>
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.
24.1 Power of Attorney is contained on the signature page.
99.1 OnPREM Networks Corporation 1998 Stock Option Plan.
99.2 Form of Stock Option Agreement pursuant to the OnPREM Networks Corporation 1998
Stock Option Plan.
</TABLE>
<PAGE>
EXHIBIT 5.1
OPINION OF COOLEY GODWARD LLP
March 10, 2000
Copper Mountain Networks, Inc.
2470 Embarcadero Way
Palo Alto, CA 94303
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by Copper Mountain Networks, Inc. (the "Company") of a
Registration Statement on Form S-8 (the "Registration Statement") with the
Securities and Exchange Commission covering the offering of an aggregate of
130,563 shares of the Company's Common Stock, $.001 par value, (the "Shares")
pursuant to outstanding options assumed by the Company, originally granted under
the OnPREM Networks Corporation 1998 Stock Option Plan (the "Plan").
In connection with this opinion, we have examined the Registration Statement and
related prospectus, the Plan, a form of each of the option agreements assumed by
the Company, the Company's Certificate of Incorporation and Bylaws, as amended,
and such other documents, records, certificates, memoranda and other instruments
as we deem necessary as a basis for this opinion. We have assumed the
genuineness and authenticity of all documents submitted to us as originals, the
conformity to originals of all documents submitted to us as copies thereof, and
the due execution and delivery of all documents where due execution and delivery
are a prerequisite to the effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares, when sold and issued in accordance with the Plan and the
respective option agreements, the Registration Statement and related prospectus,
will be validly issued, fully paid, and nonassessable.
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
Cooley Godward llp
By: Lance W. Bridges
-------------------------------------
Lance W. Bridges
<PAGE>
Exhibit 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to the Common Stock Issuable Upon Exercise of Options Assumed by
Copper Mountain Networks, Inc., Originally Granted Under the OnPREM Networks
Corporation 1998 Stock Option Plan of our report dated January 28, 2000, with
respect to the financial statements of Copper Mountain Networks, Inc. included
in the Current Report (Form 8-K) dated February 22, 2000, filed with the
Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
San Diego, California
March 9, 2000
<PAGE>
EXHIBIT 99.1
================================================================================
ONPREM NETWORKS CORPORATION
A California Corporation
1998 STOCK PLAN
================================================================================
<PAGE>
ONPREM NETWORKS CORPORATION
A California Corporation
1998 STOCK PLAN
(amended as of November 11, 1999)
1. Purposes of the Plan. The purposes of the Plan (as hereinafter
--------------------
defined) are to attract and retain the best available personnel for positions of
substantial responsibility, to provide additional incentive to Employees,
Directors and Consultants (each as hereinafter defined) and to promote the
success of the Company's business. Options granted under the Plan may be
Incentive Stock Options or Nonstatutory Stock Options (each as hereinafter
defined), as determined by the Administrator (as hereinafter defined) at the
time of grant thereof. Stock Purchase Rights (as hereinafter defined) may also
be granted under the Plan.
2. Definitions. As used herein, the following terms shall have the
-----------
following respective meanings:
(a) "Administrator" shall mean the Board, or any Committees
thereof, as shall be administering the Plan in accordance with Section 4 hereof.
---------
(b) "Applicable Laws" shall mean the requirements relating to
the administration of stock option plans under United States state corporate
laws, United States federal and state securities laws, the Code, any stock
exchange or quotation system on which the Common Stock is listed or quoted and
the applicable laws of any foreign country or jurisdiction where Options or
Stock Purchase Rights are granted under and pursuant to the Plan.
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(e) "Committee" shall mean a committee of the Board appointed by
the Board in accordance with Section 4 hereof.
---------
(f) "Common Stock" shall mean the Common Stock, par value $0.001
per share, of the Company.
(g) "Company" shall mean OnPrem Networks Corporation, a
California corporation.
(h) "Consultant" shall mean any person who is engaged by the
Company or any Parent or Subsidiary to render consulting or advisory services to
such entity.
(i) "Director" shall mean a member of the Board.
<PAGE>
(j) "Employee" shall mean any person, including officers and
Directors, employed by the Company, or any Parent or Subsidiary of the Company.
A Service Provider shall not cease to be an Employee in the case of (i) any
leave of absence approved by the Company or (ii) transfers between locations of
the Company or between the Company, its Parent, any Subsidiary, or any
successor. For purposes of Incentive Stock Options, no such leave may exceed
ninety (90) days, unless reemployment upon expiration of such leave is
guaranteed by statute or contract. If reemployment upon expiration of a leave
of absence approved by the Company is not so guaranteed, on the 181st day of
such leave any Incentive Stock Option held by the Optionee shall cease to be
treated as an Incentive Stock Option and shall be treated for tax purposes as a
Nonstatutory Stock Option. Neither service as a Director nor payment of a
director's fee by the Company shall be sufficient to constitute "employment" by
the Company.
(k) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(l) "Fair Market Value" shall mean, as of any date, the value of
Common Stock determined in accordance with the following:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including, without limitation, the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, Inc.,
then the Fair Market Value of Common Stock shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or system for the last market trading day prior to the time of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable.
(ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value of Common Stock shall be the mean between the high bid and low
asked prices for the Common Stock on the last market trading day prior to the
day of determination.
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Administrator.
(m) "Incentive Stock Option" shall mean an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.
(n) "Nonstatutory Stock Option" shall mean an Option not
intended to qualify as an Incentive Stock Option.
(o) "Option" shall mean an Incentive Stock Option or a
Nonstatutory Stock Option granted under and pursuant to the Plan.
(p) "Option Agreement" shall mean a written or electronic
agreement between the Company and an Optionee evidencing the terms and
conditions of an individual Option granted under and pursuant to the Plan.
Option Agreements are subject to the terms and conditions of the Plan.
-2-
<PAGE>
(q) "Option Exchange Program" shall mean a program or other
arrangement pursuant to which outstanding Options are exchanged for Options with
a lower exercise price.
(r) "Optioned Stock" shall mean the Common Stock subject to an
Option or a Stock Purchase Right.
(s) "Optionee" shall mean the holder of an outstanding Option or
Stock Purchase Right granted under and pursuant to the Plan.
(t) "Parent" shall mean a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(u) "Plan" shall mean this 1998 Stock Plan.
(v) "Restricted Stock" shall mean shares of Common Stock
acquired pursuant to the exercise of a Stock Purchase Right granted under and
pursuant to Section 10 hereof.
----------
(w) "Service Provider" shall mean an Employee, Director or
Consultant.
(x) "Share" shall mean a share of the Common Stock, as adjusted
in accordance with Section 12 hereof.
----------
(y) "Stock Purchase Right" shall mean a right to purchase Common
Stock pursuant to Section 10 hereof.
----------
(z) "Subsidiary" shall mean a "subsidiary corporation," whether
now or hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section
------------------------- -------
12 hereof, the maximum aggregate number of Shares which may be issued and sold
- --
by the Company upon the exercise of Options and Stock Purchase Rights granted
under and pursuant to the Plan is 3,050,000 Shares. The Shares may be
authorized but unissued, or reacquired shares of Common Stock. If an Option or
Stock Purchase Right terminates, expires or otherwise becomes unexercisable
without having been exercised in full, or is surrendered pursuant to an Option
Exchange Program, the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan, unless the Plan has
terminated. However, Shares that have actually been issued and sold upon the
exercise of either an Option or Stock Purchase Right granted under and pursuant
to the Plan shall not be returned to the Plan and shall not become available for
future distribution under the Plan, except that if Shares of Restricted Stock
are repurchased by the Company at their original purchase price, such Shares
shall become available for future grant under the Plan.
4. Administration of the Plan.
--------------------------
(a) Administrator. The Plan shall be administered by the Board
-------------
or a Committee thereof appointed by the Board, which Committee shall be
constituted to comply with Applicable Laws.
-3-
<PAGE>
(b) Powers of the Administrator. Subject to the provisions of
---------------------------
the Plan and, in the case of a Committee, the specific duties delegated by the
Board to such Committee, and subject to the approval of any relevant
authorities, the Administrator shall have the authority in its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options and Stock
Purchase Rights may from time to time be granted under and pursuant to the Plan;
(iii) to determine the number of Shares subject to each Option
and Stock Purchase Right granted under and pursuant to the Plan;
(iv) to approve forms of agreement for use under the Plan;
(v) to determine the terms and conditions of any Option or
Stock Purchase Right granted under and pursuant to the Plan; including, without
limitation, the exercise price, the time or times when Options or Stock Purchase
Rights may be exercised (which may be based on performance criteria), any
vesting acceleration or waiver of forfeiture restrictions, and any restriction
or limitation regarding any Option or Stock Purchase Right relating thereto,
based in each case on such factors as the Administrator, in its sole discretion,
shall determine;
(vi) to determine whether and under what circumstances an
Option may be settled in cash under subsection 9(e) instead of Common Stock;
(vii) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock subject
to such Option has declined since the date the Option was originally granted or
the exercise price thereof was last adjusted;
(viii) to initiate an Option Exchange Program;
(ix) to prescribe, amend and rescind rules and regulations
relating to the Plan, including, without limitation, rules and regulations
relating to sub-plans established for the purpose of qualifying for preferred
tax treatment under foreign tax laws;
(x) to allow Optionees to satisfy withholding tax obligations
by electing to have the Company withhold from the Shares to be issued upon
exercise of an Option or Stock Purchase Right that number of Shares having a
Fair Market Value equal to the amount required to be withheld. The Fair Market
Value of the Shares to be withheld shall be determined on the date that the
amount of tax to be withheld is to be determined. All elections by Optionees to
have Shares withheld for this purpose shall be made in such form and under such
conditions as the Administrator may deem necessary or advisable; and
(xi) to construe and interpret the terms of the Plan, and
Options and Stock Purchase Rights granted under and pursuant to the Plan.
(c) Effect of Administrator's Decision. All decisions,
----------------------------------
determinations and interpretations of the Administrator shall be final and
binding on all Optionees.
-4-
<PAGE>
5. Eligibility.
-----------
(a) Nonstatutory Stock Options and Stock Purchase Rights may be
granted to Service Providers.
(b) Incentive Stock Options may be granted only to Employees.
(c) Each Option shall be designated in the Option Agreement relating
thereto as either an Incentive Stock Option or a Nonstatutory Stock Option;
provided, however, that notwithstanding such designation, to the extent that the
aggregate Fair Market Value of the Shares with respect to which Incentive Stock
Options are exercisable for the first time during any calendar year by an
Optionee, whether such Incentive Stock Options were granted under the Plan,
other stock plans of the Company and any Parent or Subsidiary, exceeds $100,000,
such Options shall be treated as Nonstatutory Stock Options. For purposes of
this Section 5(c), Incentive Stock Options shall be taken into account in the
------------
order in which they were granted, and the Fair Market Value of the Shares
subject to such Options shall be determined as of the time the Options with
respect to such Shares were granted.
(d) Neither the Plan, nor any Option or Stock Purchase Right granted
under and pursuant to the Plan, shall confer upon any Optionee any right with
respect to continuing the Optionee's relationship as a Service Provider with the
Company, nor shall it interfere in any way with his or her right or the
Company's right to terminate such relationship at any time, with or without
cause.
6. Term of Plan. Subject to Section 18 hereof, the Plan shall become
------------ ----------
effective upon its adoption by the Board. It shall continue in effect for a
term of ten (10) years unless sooner terminated under Section 14 hereof.
----------
7. Term of Option.
--------------
(a) Subject to the terms of Section 7(b) hereof, the term of each
------------
Option shall be stated in the Option Agreement relating thereto; provided,
however, that the term of each Option shall not exceed ten (10) years from the
date of grant thereof.
(b) In the case of an Incentive Stock Option granted to an Optionee
who, at the time the Option is granted, owns stock representing more than ten
percent (10%) of the voting power of all classes of capital stock of the
Company, or any Parent or Subsidiary thereof, the term of the Option shall be
five (5) years from the date of grant thereof, or such shorter term as may be
provided in the Option Agreement relating thereto.
8. Option Exercise Price and Consideration.
---------------------------------------
(a) The per share exercise price for the Shares issuable upon the
exercise of an Option granted under and pursuant to the Plan shall be such price
as is determined by the Administrator, subject to the following restrictions and
limitations:
(i) In the case of an Incentive Stock Option:
-5-
<PAGE>
(A) granted to an Employee who, at the time of grant of
such Option, owns stock representing more than ten percent (10%) of the voting
power of all classes of capital stock of the Company, or any Parent or
Subsidiary thereof, the exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant thereof.
(B) granted to any other Employee, the per Share exercise
price shall be no less than 100% of the Fair Market Value per Share on the date
of grant.
(ii) In the case of a Nonstatutory Stock Option, the per Share
exercise price shall be determined by the Administrator.
(iii) Notwithstanding the terms of Sections 8(a)(i) and 8(a)(ii)
---------------- --------
hereof, Options may be granted with a per Share exercise price other than as
required by such provisions of this Plan pursuant to a merger or other corporate
transaction.
(b) The consideration to be paid for the Shares issuable upon the
exercise of an Option granted under and pursuant to the Plan, including the
method of payment, shall be determined by the Administrator (and, in the case of
an Incentive Stock Option, shall be determined at the time of grant); and such
consideration may consist of (i) cash, (ii) check, (iii) promissory note, (iv)
other Shares which (A) in the case of Shares acquired upon the exercise of an
Option granted under and pursuant to the Plan, have been owned by the Optionee
for more than six (6) months on the date of surrender, and (B) have a Fair
Market Value on the date of surrender equal to the aggregate exercise price of
the Shares as to which such Option shall be exercised, (v) consideration
received by the Company under a cashless exercise program implemented by the
Company in connection with the Plan, or (vi) any combination of the foregoing
methods of payment. In making its determination as to the type of consideration
to accept, the Administrator shall consider if acceptance of such consideration
may be reasonably expected to benefit the Company.
9. Exercise of Option.
------------------
(a) Procedure for Exercise; Rights as a Stockholder.
-----------------------------------------------
(i) Any Option granted under and pursuant to the Plan shall be
exercisable according to the terms hereof at such times and under such
conditions as may be determined by the Administrator and as set forth in the
Option Agreement relating thereto. Unless the Administrator provides otherwise,
vesting of Options granted under and pursuant to the Plan shall be tolled during
any unpaid leave of absence. An Option granted under and pursuant to the Plan
may not be exercised for a fraction of a Share.
(ii) An Option shall be deemed exercised when the Company
receives: (A) written or electronic notice of exercise (in accordance with the
Option Agreement) from the person entitled to exercise the Option, and (B) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as
-6-
<PAGE>
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), no right to vote or receive dividends
or any other rights as a stockholder shall exist with respect to the Shares,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such Shares promptly after the Option is exercised. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Shares are issued, except as provided in Section 12 hereof.
----------
(iii) Exercise of an Option in any manner shall result in a
decrease in the number of Shares thereafter available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Termination of Relationship as a Service Provider. If an
-------------------------------------------------
Optionee ceases to be a Service Provider, such Optionee may exercise his or her
Option within such period of time as specified in the Option Agreement relating
thereto (which period shall be at least thirty (30) days); provided, however,
that such Option may be exercised only to the extent that such Option is vested
on the date that such Optionee ceases to be a Service Provided; and provided
further, that such Option may be exercised no later than the expiration of the
term of such Option as set forth in such Option Agreement. In the absence of a
specified time in the Option Agreement, the Option shall remain exercisable for
three (3) months following the date on which the Optionee ceases to be a service
Provided. If, on the date an Optionee ceases to be a Service Provider, an Option
held by such Optionee is not vested as to the entire number of Shares issuable
upon the exercise of such Option, the Shares covered by the unvested portion of
the Option shall revert to the Plan. If, after an Optionee ceases to be a
Service Provider, such Optionee does not exercise an Option within the time
specified by the Administrator, such Option shall terminate, and the Shares
issuable upon the exercise of such Option shall revert to the Plan.
(c) Disability of Optionee. If an Optionee ceases to be a Service
----------------------
Provider as a result of the Optionee's total and permanent disability, as
defined in Section 22(e)(3) of the Code, the Optionee may exercise any Options
held by such Optionee within such period of time as specified in the Option
Agreement(s) relating thereto to the extent such Options are vested on the date
such Optionee ceases to be a Service Provider; provided, however, that such
Options may be exercised no later than the expiration of the respective terms of
such Options as set forth in the Option Agreement(s) relating thereto. In the
absence of a specified time in any such Option Agreement(s), the Option(s)
evidenced thereby shall remain exercisable for a period of twelve (12) months
following the date on which such Optionee ceased to be a Service Provider. If,
on the date an Optionee ceases to be a Service Provider, an Option held by such
Optionee is not vested as to the entire number of Shares issuable upon the
exercise of such Option, the Shares covered by the unvested portion of the
Option shall revert to the Plan. If, after an Optionee ceases to be a Service
Provider, such Optionee does not exercise an Option within the time specified by
the Administrator, such Option shall terminate, and the Shares issuable upon the
exercise of such Option shall revert to the Plan.
(d) Death of Optionee. If an Optionee dies while a Service Provider,
-----------------
Options held by such Optionee may be exercised within such period of time as
specified in the Option Agreement(s) relating thereto by the Optionee's estate
or by a person who acquires the right to exercise such Options by bequest or
inheritance; provided, however, that such Options may be
-7-
<PAGE>
exercised only to the extent that such Options are vested on the date of death;
and provided further that such Options may be exercised no later than the
expiration of the respective terms of such Options as set forth in the Option
Agreement(s) relating thereto. In the absence of a specified time in the Option
Agreement, the Option shall remain exercisable for a period of twelve (12)
months following the date of such Optionee's death. The Option may be exercised
by the executor or administrator of the Optionee's estate or, if none, by the
person(s) entitled to exercise the Option under the Optionee's will or the laws
of descent or distribution. If, on the date an Optionee's death, an Option held
by such Optionee is not vested as to the entire number of Shares issuable upon
the exercise of such Option, the Shares covered by the unvested portion of the
Option shall revert to the Plan. If, after the death of an Optionee, an Option
held by such deceased Optionee is not exercised within the time specified by the
Administrator, such Option shall terminate, and the Shares issuable upon the
exercise of such Option shall revert to the Plan.
(e) Buyout Provisions. The Administrator may at any time offer to
-----------------
buy out an Option previously granted under and pursuant to the Plan for a
payment in cash or Shares, based on such terms and conditions as the
Administrator shall establish and communicate to the Optionee at the time that
such offer is made.
10. Stock Purchase Rights.
---------------------
(a) Rights to Purchase. Stock Purchase Rights may be issued
------------------
either alone, in addition to, or in tandem with other awards of Options and/or
Stock Purchase Rights granted under and pursuant to the Plan and/or cash awards
made outside of the Plan. After the Administrator determines to offer Stock
Purchase Rights under and pursuant to the Plan, it shall advise the offeree in
writing or electronically of the terms, conditions and restrictions of the
offer, including, without limitation, the number of Shares that such person
shall be entitled to purchase upon the exercise of the offered Stock Purchase
Rights, the price to be paid therefor, and the time within which such offeree
must accept such offer. The offer shall be accepted by execution of a Restricted
Stock purchase agreement in the form designated by the Administrator from time
to time.
(b) Repurchase Option. Unless the Administrator shall determine
-----------------
otherwise, the Restricted Stock purchase agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's service with the Company for any reason, including, without
limitation, the death or disability of the purchaser. The purchase price for
Shares repurchased by the Company pursuant to a Restricted Stock purchase
agreement shall be the original price paid by the purchaser and may be paid by
cancellation of any indebtedness of the purchaser to the Company. The
repurchase option shall lapse at such rate as the Administrator may determine.
(c) Other Provisions. The Restricted Stock purchase agreement
----------------
shall contain such other terms, provisions and conditions not inconsistent with
the Plan as may be determined by the Administrator in its sole discretion.
(d) Rights as a Stockholder. Once the Stock Purchase Right is
-----------------------
exercised, the purchaser shall have rights equivalent to those of a stockholder
and shall be a stockholder when his or her purchase is entered upon the records
of the duly authorized transfer agent of the Company.
-8-
<PAGE>
No adjustment shall be made for a dividend or other right for which the record
date is prior to the date the Stock Purchase Right is exercised, except as
provided in Section 12 hereof.
----------
11. Non-Transferability of Options and Stock Purchase Rights. Unless
--------------------------------------------------------
otherwise determined by the Administrator, Options and Stock Purchase Rights
granted under and pursuant to he Plan may not be sold, pledged, assigned,
hypothecated, transferred or otherwise disposed of in any manner other than by
will or by the laws of descent or distribution, and may be exercised, during the
lifetime of the Optionee, only by the Optionee. If the Administrator makes an
Option or Stock Purchase Right transferable, such Option or Stock Purchase Right
shall contain such additional terms and conditions as the Administrator deems
appropriate.
12. Adjustments Upon Changes in Capitalization, Merger or Asset Sale.
----------------------------------------------------------------
(a) Changes in Capitalization. Subject to any required action by the
-------------------------
stockholders of the Company, the number of shares of Common Stock issuable upon
the exercise of each outstanding Option or Stock Purchase Right granted under
and pursuant to the Plan, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options or Stock
Purchase Rights have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option or Stock Purchase Right previously
granted under and pursuant to the Plan, as well as the exercise price per share
of Common Stock issuable upon the exercise of each such outstanding Option or
Stock Purchase Right granted under and pursuant to the Plan, shall be
proportionately adjusted for any increase or decrease in the number of issued
and outstanding shares of Common Stock resulting from a forward or reverse stock
split, stock dividend, combination, consolidation or reclassification of Common
Stock, or any other increase or decrease in the number of issued and outstanding
shares of Common Stock effected without receipt of consideration by the Company.
The conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration" for purposes of this
Section 12(a). Such adjustment shall be made by the Board, whose determination
- -------------
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class or
series thereof, or securities convertible into shares of stock of any class or
series thereof, shall affect, and no adjustment by reason thereof shall be made
with respect to, the number or exercise price of Shares of Common Stock issuable
upon the exercise of an Option or Stock Purchase Right granted under and
pursuant to the Plan.
(b) Dissolution or Liquidation. In the event of the proposed
--------------------------
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise any Options held by such Optionee until fifteen (15)
days prior to such transaction as to all or part of the Optioned Stock issuable
upon the exercise of such Options, including Shares as to which the Option would
not otherwise be exercisable and with respect to which such Option has not then
vested. In addition, the Administrator may provide that any Company repurchase
option applicable to any Shares purchased upon the exercise of an Option or
Stock Purchase Right
-9-
<PAGE>
granted under and pursuant to the Plan shall lapse as to all such Shares,
provided the proposed dissolution or liquidation takes place at the time and in
the manner contemplated. To the extent it has not been previously exercised, an
Option or Stock Purchase Right granted under and pursuant to the Plan shall
terminate immediately prior to the consummation of such proposed action.
(c) Merger or Asset Sale. In the event of a merger of the Company
--------------------
with or into another corporation, or the sale of substantially all of the assets
of the Company, each outstanding Option and Stock Purchase Right granted under
and pursuant to the Plan shall be assumed, or an equivalent option or right
shall be substituted, by the successor corporation or a Parent or Subsidiary of
the successor corporation. In the event that the successor corporation refuses
to so assume the outstanding Options or Stock Purchase Rights, or substitute a
new options or stock purchase rights therefor, all outstanding Options and Stock
Purchase Rights not so assumed or substituted for shall fully vest and
thereafter be exercisable with respect to all of the Optioned Stock issuable
upon the exercise of such Options and Stock Purchase Rights, including Shares as
to which such Options and Stock Purchase Rights otherwise would not then be
vested or exercisable. If an Option or Stock Purchase Right becomes fully
vested and exercisable in lieu of assumption or substitution in the event of a
merger or sale of assets, the Administrator shall notify the Optionee in writing
or electronically that the Option or Stock Purchase Right shall be fully
exercisable for a period of fifteen (15) days from the date of such notice, and
the Option or Stock Purchase Right shall terminate upon the expiration of such
period. For the purposes of this Section 12(c), the Option or Stock Purchase
-------------
Right shall be considered assumed if, following the merger or sale of assets,
the option or right substituted therefor confers the right to purchase or
receive, for each Share of Optioned Stock issuable upon the exercise of such
Option or Stock Purchase Right relating thereto, immediately prior to the merger
or sale of assets, the consideration (whether stock, cash, or other securities
or property) received in the merger or sale of assets by holders of Common Stock
for each Share held on the effective date of the transaction (and if holders
were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if
such consideration received in the merger or sale of assets is not solely common
stock of the successor corporation or its Parent, the Administrator may, with
the consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option or Stock Purchase Right, for each Share
of Optioned Stock issuable upon the exercise of the Option or Stock Purchase
Right relating thereto, to be solely that number of shares of common stock of
the successor corporation or its Parent that are equal in fair market value to
the per share consideration received by holders of Common Stock in the merger or
sale of assets.
13. Time of Granting Options and Stock Purchase Rights. The date of
--------------------------------------------------
grant of an Option or Stock Purchase Right granted under and pursuant to the
Plan shall, for all purposes, be the date on which the Administrator shall make
the determination to grant such Option or Stock Purchase Right, or such other
date as may be determined by the Administrator. Notice of the determination
shall be given to each Service Provider to whom an Option or Stock Purchase
Right is so granted within a reasonable time after the date of such grant.
14. Amendment and Termination of the Plan.
-------------------------------------
(a) Amendment and Termination. The Board may amend, alter, suspend
-------------------------
or terminate the Plan at any time and from time to time.
-10-
<PAGE>
(b) Stockholder Approval. The Board shall obtain stockholder
--------------------
approval of any amendment to the Plan to the extent necessary and desirable to
comply with Applicable Laws.
(c) Effect of Amendment or Termination. No amendment, alteration,
----------------------------------
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to Options and Stock Purchase
Rights granted under and pursuant to the Plan prior to the date of such
termination.
15. Conditions Upon Issuance of Shares.
----------------------------------
(a) Legal Compliance. Shares shall not be issued upon the exercise
----------------
of an Option or Stock Purchase Right granted under and pursuant to the Plan
unless the exercise of such Option or Stock Purchase Right, and the issuance and
delivery of Shares upon such exercise, shall comply with all Applicable Laws and
shall be further subject to the approval of counsel for the Company with respect
to such compliance.
(b) Investment Representations. As a condition to the exercise of an
--------------------------
Option or Stock Purchase Right, the Administrator may require the person
exercising such Option or Stock Purchase Right to represent and warrant at the
time of any such exercise that the Shares issuable upon such exercise are being
purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required.
16. Inability to Obtain Authority. The inability of the Company to
-----------------------------
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
17. Reservation of Shares. The Company, during the term of this
---------------------
Plan, shall at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.
18. Stockholder Approval. The Plan shall be subject to approval by
--------------------
the stockholders of the Company within twelve (12) months after the date the
Plan is adopted by the Board. Such stockholder approval shall be obtained in
the degree and manner required under Applicable Laws.
-11-
<PAGE>
================================================================================
ONPREM NETWORKS CORPORATION
A California Corporation
1998 STOCK PLAN
--------------------
STOCK OPTION AGREEMENT
================================================================================
<PAGE>
================================================================================
ONPREM NETWORKS CORPORATION
A California Corporation
1998 STOCK PLAN
--------------------
STOCK OPTION AGREEMENT
================================================================================
NOTICE OF GRANT
---------------
The undersigned Optionee has been granted an option (the "Option") to purchase
shares of Common Stock ("Shares") of OnPrem Networks Corporation, a California
corporation (the "Company"), subject to the terms and conditions of the
Company's 1998 Stock Plan (the "Plan") and this Option Agreement. Capitalized
terms used but not otherwise defined herein shall have the respective meanings
assigned thereto in the Plan. The principal terms of the Option are as follows:
Optionee ________________________________________
Address of Optionee: ________________________________________
________________________________________
Date of Grant: ________________________________________
Vesting Commencement Date: ________________________________________
Exercise Price Per Share: ________________________________________
Total Number of Shares Granted: ________________________________________
Total Exercise Price: ________________________________________
Type of Option: _______ Incentive Stock Option
_______ Nonstatutory Stock Option
Term/Expiration Date: ________________________________________
Vesting Schedule: ________________________________________
Termination Period: This Option shall be exercisable for three
months after Optionee ceases to be a Service
Provider. Upon Optionee's death or Disability,
this Option may be exercised for one year after
Optionee ceases to be a Service Provider. In no
event may Optionee exercise this Option after
the Term/Expiration Date as provided above.
-1-
<PAGE>
AGREEMENT
---------
Unless otherwise defined herein, the terms defined in the Plan shall have
the same defined meanings in this Option Agreement.
1. Grant of Option. The Plan Administrator of the Company hereby grants
---------------
to the Optionee named in the Notice of Grant (the "Optionee"), an option (the
"Option") to purchase the number of Shares set forth in the Notice of Grant, at
the exercise price per Share set forth in the Notice of Grant (the "Exercise
Price"), and subject to the terms and conditions of the Plan, which is
incorporated herein by reference. Subject to Section 14(c) of the Plan, in the
event of a conflict between the terms and conditions of the Plan and this Option
Agreement, the terms and conditions of the Plan shall prevail. If designated in
the Notice of Grant as an Incentive Stock Option ("ISO"), this Option is
intended to qualify as an Incentive Stock Option as defined in Section 422 of
the Code. Nevertheless, to the extent that it exceeds the $100,000 rule of Code
Section 422(d), this Option shall be treated as a Nonstatutory Stock Option
("NSO").
2. Exercise of Option.
------------------
(a) Right to Exercise. This Option shall be exercisable during its
-----------------
term in accordance with the Vesting Schedule set out in the Notice of Grant and
with the applicable provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option shall be exercisable by delivery
------------------
of an exercise notice in the form attached hereto as Exhibit A (the "Exercise
---------
Notice") which shall state the election to exercise the Option, the number of
Shares with respect to which the Option is being exercised, and such other
representations and agreements as may be required by the Company. The Exercise
Notice shall be accompanied by payment of the aggregate Exercise Price as to all
Exercised Shares. This Option shall be deemed to be exercised upon receipt by
the Company of such fully executed Exercise Notice accompanied by the aggregate
Exercise Price. No Shares shall be issued pursuant to the exercise of an Option
unless such issuance and such exercise complies with Applicable laws. Assuming
such compliance, for income tax purposes the Shares shall be considered
transferred to the Optionee on the date on which the Option is exercised with
respect to such Shares.
3. Optionee's Representations. In the event the Shares have not been
--------------------------
registered under the Securities Act of 1933, as amended, at the time this Option
is exercised, the Optionee shall, if required by the Company, concurrently with
the exercise of all or any portion of this Option, deliver to the Company his or
her Investment Representation Statement in the form attached hereto as Exhibit
-------
B.
- -
4. Lock-Up Period. Optionee hereby agrees that, if so requested by the
--------------
Company or any representative of the underwriters (the "Managing Underwriter")
in connection with any registration
-2-
<PAGE>
of the offering of any securities of the Company under the Securities Act,
Optionee shall not sell or otherwise transfer any Shares or other securities of
the Company during the 180-day period (or such other period as may be requested
in writing by the Managing Underwriter and agreed to in writing by the Company)
(the "Market Standoff Period") following the effective date of a registration
statement of the Company filed under the Securities Act. Such restriction shall
apply only to the first registration statement of the Company to become
effective under the Securities Act that includes securities to be sold on behalf
of the Company to the public in an underwritten public offering under the
Securities Act. The Company may impose stop-transfer instructions with respect
to securities subject to the foregoing restrictions until the end of such Market
Standoff Period.
5. Method of Payment. Payment of the aggregate Exercise Price shall be
-----------------
by any of the following or a combination thereof, at the election of the
Optionee:
(a) cash or check;
(b) consideration received by the Company under a formal cashless
exercise program adopted by the Company in connection with the Plan;
(c) surrender of other Shares which, (i) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (ii) have a Fair Market Value
on the date of surrender equal to the aggregate Exercise Price of the Exercised
Shares; or
(d) foregiveness of indebtedness of the Company to the Optionee.
6. Restrictions on Exercise. This Option may not be exercised until such
------------------------
time as the Plan has been approved by the shareholders of the Company, or if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any Applicable
Law.
7. Non-Transferability of Option. This Option may not be transferred in
-----------------------------
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by Optionee. The terms of
the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
8. Term of Option. This Option may be exercised only within the term set
--------------
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option.
9. Tax Consequences. Set forth below is a brief summary as of the date
----------------
of this Option of some of the federal tax consequences of exercise of this
Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE,
AND THE TAX LAWS AND
-3-
<PAGE>
REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER
BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
(a) Exercise of ISO. If this Option qualifies as an ISO, there will
---------------
be no regular federal income tax liability upon the exercise of the Option,
although the excess, if any, of the Fair Market Value of the Shares on the date
of exercise over the Exercise Price will be treated as an adjustment to the
alternative minimum tax for federal tax purposes and may subject the Optionee to
the alternative minimum tax in the year of exercise.
(b) Exercise of Nonstatutory Stock Option. There may be a regular
-------------------------------------
federal income tax liability upon the exercise of a Nonstatutory Stock Option.
The Optionee will be treated as having received compensation income (taxable at
ordinary income tax rates) equal to the excess, if any, of the Fair Market Value
of the Shares on the date of exercise over the Exercise Price. If Optionee is
an Employee or a former Employee, the Company will be required to withhold from
Optionee's compensation or collect from Optionee and pay to the applicable
taxing authorities an amount in cash equal to a percentage of this compensation
income at the time of exercise, and may refuse to honor the exercise and refuse
to deliver Shares if such withholding amounts are not delivered at the time of
exercise.
(c) Disposition of Shares. In the case of an NSO, if Shares are held
---------------------
for at least one year, any gain realized on disposition of the Shares will be
treated as long-term capital gain for federal income tax purposes. In the case
of an ISO, if Shares transferred pursuant to the Option are held for at least
one year after exercise and of at least two years after the Date of Grant, any
gain realized on disposition of the Shares will also be treated as long-term
capital gain for federal income tax purposes. If Shares purchased under an ISO
are disposed of within one year after exercise or two years after the Date of
Grant, any gain realized on such disposition will be treated as compensation
income (taxable at ordinary income rates) to the extent of the difference
between the Exercise Price and the lesser of (1) the Fair Market Value of the
Shares on the date of exercise, or (2) the sale price of the Shares. Any
additional gain will be taxed as capital gain, short-term or long-term depending
on the period that the ISO Shares were held.
(d) Notice of Disqualifying Disposition of ISO Shares. If the Option
-------------------------------------------------
granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or before the
later of (1) the date two years after the Date of Grant, or (2) the date one
year after the date of exercise, the Optionee shall immediately notify the
Company in writing of such disposition. Optionee agrees that Optionee may be
subject to income tax withholding by the Company on the compensation income
recognized by the Optionee.
10. Entire Agreement; Governing Law. The Plan is incorporated herein by
-------------------------------
reference. The Plan and this Option Agreement constitute the entire agreement
of the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely
-4-
<PAGE>
to the Optionee's interest except by means of a writing signed by the Company
and Optionee. This agreement is governed by the internal substantive laws but
not the choice of law rules of California.
11. NO GUARANTEE OF CONTINUED SERVICE. OPTIONEE ACKNOWLEDGES AND AGREES
---------------------------------
THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED
ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (NOT THROUGH
THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A
SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL
NOT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE.
Optionee acknowledges receipt of a copy of the Plan and represents that he
or she is familiar with the terms and provisions thereof, and hereby accepts
this Option subject to all of the terms and provisions thereof. Optionee has
reviewed the Plan and this Option in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option and fully
understands all provisions of the Option. Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option.
Optionee further agrees to notify the Company upon any change in the residence
address indicated below.
OPTIONEE ONPREM NETWORKS CORPORATION
______________________________ By:_________________________________
______________________________ Name: ______________________________
Title: _____________________________
______________________________
Optionee's Residence Address
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EXHIBIT A
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ONPREM NETWORKS CORPORATION
A California Corporation
1998 STOCK PLAN
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EXERCISE NOTICE
OnPrem Networks Corporation
Attention: Secretary
1. Exercise of Option. Effective as of today, ______________, the
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undersigned ("Optionee") hereby elects to exercise Optionee's option to purchase
__________ shares of the Common Stock (the "Shares") of OnPrem Networks
Corporation, a California corporation (the "Company") under and pursuant to the
Company's 1998 Stock Plan (the "Plan") and the Stock Option Agreement dated
December 4, 1998 (the "Option Agreement").
2. Delivery of Payment. Purchaser herewith delivers to the Company the
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full purchase price of the Shares, as set forth in the Option Agreement.
3. Representations of Optionee. Optionee acknowledges that Optionee has
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received, read and understood the Plan and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.
4. Rights as Shareholder. Until the issuance of the Shares (as evidenced
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by the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Shares shall be issued to the
Optionee as soon as practicable after the Option is exercised. No adjustment
shall be made for a dividend or other right for which the record date is prior
to the date of issuance except as provided in Section 12 of the Plan.
5. Company's Right of First Refusal. Before any Shares held by Optionee
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or any transferee (either being sometimes referred to herein as the "Holder")
may be sold or otherwise transferred (including transfer by gift or operation of
law), the Company or its assignee(s) shall have a right of first refusal to
purchase the Shares on the terms and conditions set forth in this Section 5 (the
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"Right of First Refusal").
(a) Notice of Proposed Transfer. The Holder of the Shares shall
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deliver to the Company a written notice (the "Notice") stating: (i) the
Holder's bona fide intention to sell or otherwise transfer such Shares; (ii) the
name of each proposed purchaser or other transferee
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("Proposed Transferee"); (iii) the number of Shares to be transferred to each
Proposed Transferee; and (iv) the bona fide cash price or other consideration
for which the Holder proposes to transfer the Shares (the "Offered Price"), and
the Holder shall offer the Shares at the Offered Price to the Company or its
assignee(s).
(b) Exercise of Right of First Refusal. At any time within thirty
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(30) days after receipt of the Notice, the Company and/or its assignee(s) may,
by giving written notice to the Holder, elect to purchase all, but not less than
all, of the Shares proposed to be transferred to any one or more of the Proposed
Transferees, at the purchase price determined in accordance with Section 5(c)
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below.
(c) Purchase Price. The purchase price ("Purchase Price") for the
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Shares purchased by the Company or its assignee(s) under this Section 5 shall be
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the Offered Price. If the Offered Price includes consideration other than cash,
the cash equivalent value of the non-cash consideration shall be determined by
the Board of Directors of the Company in good faith.
(d) Payment. Payment of the Purchase Price shall be made, at the
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option of the Company or its assignee(s), in cash (by check), by cancellation of
all or a portion of any outstanding indebtedness of the Holder to the Company
(or, in the case of repurchase by an assignee, to the assignee), or by any
combination thereof within 30 days after receipt of the Notice or in the manner
and at the times set forth in the Notice.
(e) Holder's Right to Transfer. If all of the Shares proposed in the
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Notice to be transferred to a given Proposed Transferee are not purchased by the
Company and/or its assignee(s) as provided in this Section 5, then the Holder
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may sell or otherwise transfer such Shares to that Proposed Transferee at the
Offered Price or at a higher price, provided that such sale or other transfer is
consummated within 120 days after the date of the Notice, that any such sale or
other transfer is effected in accordance with any applicable securities laws and
that the Proposed Transferee agrees in writing that the provisions of this
Section 5 shall continue to apply to the Shares in the hands of such Proposed
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Transferee. If the Shares described in the Notice are not transferred to the
Proposed Transferee within such period, a new Notice shall be given to the
Company, and the Company and/or its assignees shall again be offered the Right
of First Refusal before any Shares held by the Holder may be sold or otherwise
transferred.
(f) Exception for Certain Family Transfers. Anything to the contrary
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contained in this Section 5 notwithstanding, the transfer of any or all of the
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Shares during the Optionee's lifetime or on the Optionee's death by will or
intestacy to the Optionee's immediate family or a trust for the benefit of the
Optionee's immediate family shall be exempt from the provisions of this Section
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5. "Immediate Family" as used herein shall mean spouse, lineal descendant or
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antecedent, father, mother, brother or sister. In such case, the transferee or
other recipient shall receive and hold the Shares so transferred subject to the
provisions of this Section 5, and there shall be no further transfer of such
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Shares except in accordance with the terms of this Section 5.
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(g) Termination of Right of First Refusal. The Right of First
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Refusal shall terminate as to any Shares upon the first sale of Common Stock of
the Company to the general public pursuant to a registration statement filed
with and declared effective by the Securities and Exchange Commission under the
Securities Act of 1933, as amended.
6. Tax Consultation. Optionee understands that Optionee may suffer
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adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
7. Restrictive Legends and Stop-Transfer Orders.
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(a) Legends. Optionee understands and agrees that the Company shall
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cause the legends set forth below or legends substantially equivalent thereto,
to be placed upon any certificate(s) evidencing ownership of the Shares together
with any other legends that may be required by the Company or by state or
federal securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER
THE ACT OR, IN THE OPINION OF COMPANY COUNSEL SATISFACTORY
TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR
TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE
THEREWITH.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER AND A RIGHT OF FIRST
REFUSAL HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH
IN THE EXERCISE NOTICE BETWEEN THE ISSUER AND THE ORIGINAL
HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT
THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER
RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON
TRANSFEREES OF THESE SHARES.
(b) Stop-Transfer Notices. Optionee agrees that, in order to ensure
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compliance with the restrictions referred to herein, the Company may issue
appropriate "stop transfer" instructions to its transfer agent, if any, and
that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
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(c) Refusal to Transfer. The Company shall not be required (i) to
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transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or (ii) to treat as owner
of such Shares or to accord the right to vote or pay dividends to any purchaser
or other transferee to whom such Shares shall have been so transferred.
8. Successors and Assigns. The Company may assign any of its rights
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under this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer herein set forth, this Agreement shall be binding
upon Optionee and his or her heirs, executors, administrators, successors and
assigns.
9. Interpretation. Any dispute regarding the interpretation of this
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Agreement shall be submitted by Optionee or by the Company forthwith to the
Administrator which shall review such dispute at its next regular meeting. The
resolution of such a dispute by the Administrator shall be final and binding on
all parties.
10. Governing Law; Severability. This Agreement is governed by the
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internal substantive laws but not the choice of law rules, of California.
11. Entire Agreement. The Plan and Option Agreement are incorporated
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herein by reference. This Agreement, the Plan, the Option Agreement and the
Investment Representation Statement constitute the entire agreement of the
parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee.
Submitted by: Accepted by:
OPTIONEE ONPREM NETWORKS CORPORATION
________________________________ By:
Name: _____________________________
Title:_____________________________
Address:________________________ Address:___________________________
________________________________ ___________________________________
Date Received: ____________________
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EXHIBIT B
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INVESTMENT REPRESENTATION STATEMENT
OPTIONEE:
COMPANY: ONPREM NETWORKS CORPORATION
SECURITY: COMMON STOCK
AMOUNT:
DATE:
In connection with the purchase of the above-listed Securities, the
undersigned Optionee hereby represents to the Company as follows:
(a) Optionee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. Optionee is
acquiring these Securities for investment for Optionee's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").
(b) Optionee acknowledges and understands that the Securities constitute
"restricted securities" under the Securities Act and have not been registered
under the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of Optionee's
investment intent as expressed herein. In this connection, Optionee understands
that, in the view of the Securities and Exchange Commission, the statutory basis
for such exemption may be unavailable if Optionee's representation was
predicated solely upon a present intention to hold these Securities for the
minimum capital gains period specified under tax statutes, for a deferred sale,
for or until an increase or decrease in the market price of the Securities, or
for a period of one year or any other fixed period in the future. Optionee
further understands that the Securities must be held indefinitely unless they
are subsequently registered under the Securities Act or an exemption from such
registration is available. Optionee further acknowledges and understands that
the Company is under no obligation to register the Securities. Optionee
understands that the certificate evidencing the Securities will be imprinted
with a legend which prohibits the transfer of the Securities unless they are
registered or such registration is not required in the opinion of counsel
satisfactory to the Company, a legend prohibiting their transfer without the
consent of the Commissioner of Corporations of the State of California and any
other legend required under applicable state securities laws.
(c) Optionee is familiar with the provisions of Rule 701 and Rule 144,
each promulgated under the Securities Act, which, in substance, permit limited
public resale of "restricted securities" acquired, directly or indirectly from
the issuer thereof, in a non-public offering subject to the
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satisfaction of certain conditions. Rule 701 provides that if the issuer
qualifies under Rule 701 at the time of the grant of the Option to the Optionee,
the exercise will be exempt from registration under the Securities Act. In the
event the Company becomes subject to the reporting requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or
such longer period as any market stand-off agreement may require) the Securities
exempt under Rule 701 may be resold, subject to the satisfaction of certain of
the conditions specified by Rule 144, including: (1) the resale being made
through a broker in an unsolicited "broker's transaction" or in transactions
directly with a market maker (as said term is defined under the Securities
Exchange Act of 1934); and, in the case of an affiliate, (2) the availability of
certain public information about the Company, (3) the amount of Securities being
sold during any three month period not exceeding the limitations specified in
Rule 144(e), and (4) the timely filing of a Form 144, if applicable.
In the event that the Company does not qualify under Rule 701 at the time
of grant of the Option, then the Securities may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires the resale
to occur not less than one year after the later of the date the Securities were
sold by the Company or the date the Securities were sold by an affiliate of the
Company, within the meaning of Rule 144; and, in the case of acquisition of the
Securities by an affiliate, or by a non-affiliate who subsequently holds the
Securities less than two years, the satisfaction of the conditions set forth in
sections (1), (2), (3) and (4) of the paragraph immediately above.
(d) Optionee further understands that in the event all of the applicable
requirements of Rule 701 or 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk. Optionee understands that no assurances can be given that
any such other registration exemption will be available in such event.
Signature of Optionee:
_________________________________________
Date:____________________________________
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