<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY __, 2000
REGISTRATION NO. 333-_____
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
DITECH COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 94-2935531
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
--------------------------
825 E. MIDDLEFIELD ROAD
MOUNTAIN VIEW, CA 94043
(650) 623-1300
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
--------------------------
1999 NON-OFFICER EQUITY INCENTIVE PLAN
(Full title of the plan)
--------------------------
WILLIAM J. TAMBLYN
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
825 E. MIDDLEFIELD ROAD
MOUNTAIN VIEW, CA 94043
(650) 623-1300
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
--------------------------
COPIES TO:
ANDREI M. MANOLIU, ESQ.
BRETT D. WHITE, ESQ.
COOLEY GODWARD LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Proposed Maximum Proposed Maximum
Title of Securities Offering Aggregate Amount of
to be Registered Amount to be Registered Price per Share (1) Offering Price (1) Registration Fee
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$0.001 per share 500,000 shares $66.744 - $152.50 $58,662,902.25 $16,309.00
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(h) promulgated under the
Securities Act of 1933, as amended (the "Securities Act"). The price
per share and aggregate offering price are based upon (i) $66.744, the
weighted average exercise price for 205,083 shares subject to options
previously granted under the Company's 1999 Non-Officer Equity
Incentive Plan (the "1999 Plan"), and (ii) $152.50, the average of
the high and low prices of the Company's Common Stock as reported on
The Nasdaq Stock Market for February 8, 2000, for 294,917 shares reserved
for future issuance pursuant to the 1999 Plan.
<PAGE>
PART II
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Ditech Communications Corporation,
a Delaware corporation (the "Company"), with the Securities and Exchange
Commission are incorporated by reference into this Registration Statement:
(a) The final prospectus filed under Rule 424(b) of the Securities
Act contained in the Company's Registration Statement on Form S-1/A (File No.
333-86691), filed October 4, 1999 under the Securities Act including any
amendments or reports filed for the purpose of updating such prospectus; and
(b) All other reports filed pursuant to section 13(a) or section
15(d) of the Securities Exchange Act of 1934, as amended (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 contained in the
Company's Registration Statement on Form 8-A, filed May 28, 1999, under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), including
any amendments or reports 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 issuance of the Common Stock offered hereby will
be passed upon for the Company by Cooley Godward LLP, Palo Alto, California.
Attorneys of Cooley Godward LLP beneficially own 2,300 shares of Common Stock.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's certificate of incorporation limits the liability of
directors to the fullest extent permitted by the General Corporation Law of
the State of Delaware as it currently exists. Consequently, subject to the
General Corporation Law of the State of Delaware, no director will be
personally liable to the Company or its shareholders for monetary damages
resulting from his or her conduct as a director, except liability for (1)
acts or omissions involving intentional misconduct or knowing violations of
law; (2) unlawful distributions; or (3) transactions from which the director
personally receives a benefit in money, property or services to which the
director is not legally entitled.
The Company's certificate of incorporation also provides that the
Company may indemnify any individual made a party to a proceeding because
that individual is or was a director or officer, and this right to
indemnification will continue as to an individual who has ceased to be a
director or officer and will inure to the benefit of his or her heirs,
executors or administrators. Any repeal of or modification to our certificate
of incorporation may not adversely affect any right of a director or officer
who is or was a director or officer at the time of any repeal or
modification. To the extent the provisions of our certificate of
incorporation provide for indemnification of directors or officers for
liabilities arising under the Securities Act 1933, those provisions are, in
the opinion of the Securities and Exchange Commission (the "Commission"),
against public policy as expressed in the Securities Act and they are
therefore unenforceable.
The Company's bylaws provide that it will indemnify our directors
and officers and may indemnify our
<PAGE>
other officers and employees and other agents to the fullest extent permitted
by law.
The Company has entered into agreements to indemnify directors,
certain officers and other agents, in addition to indemnification provided
for in the Company's certificate of incorporation or bylaws. These
agreements, among other things, indemnify the Company's directors and certain
officers for certain expenses, including attorneys' fees, judgments, fines
and settlement amounts incurred by any of these persons in any action or
proceeding, including any action by the Company arising out of the person's
services as the Company's director or officer or any other company or
enterprise to which the person provides services at the Company's request.
The Company believes that these provisions and agreements are necessary to
attract and retain qualified persons as directors and officers. The Company
also currently maintains liability insurance for officers and directors.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
<S> <C>
5 Opinion of Cooley Godward LLP
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Cooley Godward LLP is contained in Exhibit 5 to this
Registration Statement
24 Power of Attorney is contained on the signature pages.
99.1 1999 Non-Officer Equity Incentive Plan
99.2 Form of Stock Option Agreement used in connection with the 1999
Non-Officer Equity Incentive Plan
</TABLE>
ITEM 9. UNDERTAKINGS
1. The undersigned registrant hereby undertakes:
(d) 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;
(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) (ss. 230.424(b) of this chapter) if, in the aggregate, the
changes in volume and price 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;
<PAGE>
PROVIDED, HOWEVER, that paragraphs (a)(i) and (a)(ii) of this
section do not apply if the registration statement is on form S-3, Forms S-8
or Form F-3, and 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 Exchange Act that are incorporated by reference herein.
(b) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered herein, 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.
2. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d)
of the Exchange Act (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to section 15(d) of the Exchange
Act) that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
3. Insofar as indemnification for liabilities arising under the Securities
Act 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 Securities 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
Securities Act and will be governed by the final adjudication of such
issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-8 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Mountain View, State
of California, on February 9, 2000.
DITECH COMMUNICATIONS CORPORATION
a Delaware corporation
By: /s/ Timothy K. Montgomery
----------------------------------
Timothy K. Montgomery
Title: Chief Executive Officer and
President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Timothy K. Montgomery and William J.
Tamblyn, and each or any one of them, his true and lawful attorney-in-fact
and agent, 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) 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 substitutes or substitute, may lawfully do or cause to be done
by virtue hereof.
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, 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/ TIMOTHY K. MONTGOMERY President and Chief Executive Officer
------------------------- (Principal Executive Officer) February 9, 2000
TIMOTHY K. MONTGOMERY
/s/ WILLIAM J. TAMBLYN Vice President and Chief Financial
------------------------- Officer (Principal Financial and
WILLIAM J. TAMBLYN Accounting Officer) February 9, 2000
/s/ PONG C. LIM
------------------------- Director February 9, 2000
PONG C. LIM
/s/ GREGORY M. AVIS
------------------------- Director February 9, 2000
GREGORY M. AVIS
/s/ PETER Y. CHUNG
------------------------- Director February 9, 2000
PETER Y. CHUNG
/s/ KENNETH E. JONES
------------------------- Director February 9, 2000
KENNETH E. JONES
/s/ WILLIAM A. HASLER
------------------------- Director February 9, 2000
WILLIAM A. HASLER
/s/ GEORGE J. TURNER
------------------------- Director February 9, 2000
GEORGE J. TURNER
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL PAGE
NUMBER DESCRIPTION NUMBERS
<S> <C> <C>
5 Opinion of Cooley Godward LLP
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Cooley Godward LLP is contained in Exhibit 5 to
this Registration Statement
24 Power of Attorney is contained on the signature pages.
99.1 1999 Non-Officer Equity Incentive Plan
99.2 Form of Stock Option Agreement used in connection with the
1999 Non-Officer Equity Incentive Plan
</TABLE>
<PAGE>
EXHIBIT 5
February 9, 2000
Ditech Communications Corporation
825 E. Middlefield Road
Mountain View, CA 94043
RE: 1999 NON-OFFICER EQUITY INCENTIVE PLAN
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by Ditech Communications Corporation, a Delaware corporation
(the "Company"), of a Registration Statement on Form S-8 (the "Registration
Statement") with the Securities and Exchange Commission covering the offering
of up to 500,000 shares of the Company's Common Stock, $0.001 par value, (the
"Shares") pursuant to its 1999 Non-Officer Equity Incentive Plan (the "Plan").
In connection with this opinion, we have examined the Registration Statement
and related Prospectus, your Certificate of Incorporation and By-laws, 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, the
Registration Statement and related Prospectus, will be validly issued, fully
paid, and nonassessable (except as to shares issued pursuant to certain
deferred payment arrangements, which will be fully paid and nonassessable
when such deferred payments are made in full).
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
COOLEY GODWARD LLP
By:
-----------------------------------
Brett D. White
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-8 of our report dated May 21, 1999, relating
to the financial statements of Ditech Communications Corporation which
appears in the Company's Registration Statement on Form S-1 (No. 333-86691).
/s/ PRICEWATERHOUSECOOPERS LLP
- -------------------------------
PricewaterhouseCoopers LLP
San Jose, California
February 9, 2000
<PAGE>
DITECH COMMUNICATIONS CORPORATION
1999 NON-OFFICER EQUITY INCENTIVE PLAN
ADOPTED OCTOBER 4, 1999
AMENDED NOVEMBER 9, 1999
STOCKHOLDER APPROVAL NOT REQUIRED
1. PURPOSES.
(a) The purpose of the Plan is to provide a means by which selected
Employees of and Consultants to the Company and its Affiliates who are not
Officers or members of the Boards of Directors of the Company or any of its
Affiliates, may be given an opportunity to benefit from increases in value of
the stock of the Company through the granting of (i) Nonstatutory Stock
Options, (ii) stock bonuses and (iii) rights to purchase restricted stock,
all as described below. The Plan is also intended to provide a means by which
the Company may grant options to persons not previously employed by the
Company as an inducement essential to those persons' entering employment
contracts with the Company. These inducement grants may be made to persons
who ultimately are employed by the Company as Officers.
The Company, by means of the Plan, seeks to retain the services of
persons who are now Employees of or Consultants to the Company or an
Affiliate and to provide incentives for such persons to exert maximum efforts
for the success of the Company and its Affiliates.
The Company intends that the Stock Awards issued under the Plan
shall, in the discretion of the Board or any Committee to which
responsibility for administration of the Plan has been delegated pursuant to
subsection 3(c), be either (i) Options granted pursuant to Section 6 hereof
or (ii) stock bonuses or rights to purchase restricted stock granted pursuant
to Section 7 hereof.
2. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation or subsidiary
corporation, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f) respectively, of the Code.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
(d) "COMMITTEE" means a Committee appointed by the Board in
accordance with subsection 3(c) of the Plan.
(e) "COMPANY" means Ditech Communications Corporation, a Delaware
corporation.
(f) "CONSULTANT" means any person, including an advisor, engaged by
the Company or an Affiliate to render consulting services and who is
compensated for such services, PROVIDED THAT the term "Consultant" shall not
include Directors.
<PAGE>
(g) "CONTINUOUS SERVICE" means that the service of an individual to
the Company, whether as an Employee, Officer, Director or Consultant, is not
interrupted or terminated. The Board or the chief executive officer of the
Company may determine, in that party's sole discretion, whether Continuous
Service shall be considered interrupted in the case of any leave of absence
approved by the Board or the chief executive officer of the Company,
including sick leave, military leave, or any other personal leave. Continuous
Service shall not be deemed to have terminated merely because of a change in
the capacity in which a person renders service to the Company or an
Affiliate, whether such service is as an Employee, Officer, Director or
Consultant or a change in the entity for which the person renders such
service, provided that there is no interruption in the person's service
relationship with the Company or an Affiliate.
(h) "DIRECTOR" means a member of the Board.
(i) "EMPLOYEE" means any person employed by the Company or any
Affiliate of the Company; PROVIDED THAT except as provided below, Officers
and Directors of the Company shall not be considered Employees for purposes
of the Plan. Notwithstanding the foregoing, an Officer shall be considered an
Employee for purposes of granting a Stock Award to that Officer as an
inducement essential to such Officer's entering into an employment contract
with the Company if such Officer was not an employee of the Company
immediately prior to the date on which such Stock Award is granted.
(j) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(k) "FAIR MARKET VALUE" means, as of any date, the value of the
common stock of the Company determined as follows:
(1) If the common stock is listed on any established stock
exchange or traded on the Nasdaq National Market or The Nasdaq SmallCap
Market, the Fair Market Value of a share 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 market (or the exchange or market with the
greatest volume of trading in the Company's common stock) on the last market
trading day prior to the day of determination, as reported in THE WALL STREET
JOURNAL or such other source as the Board deems reliable.
(2) In the absence of such markets for the common stock, the
Fair Market Value shall be determined in good faith by the Board.
(l) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not
a current Employee or Officer of the Company or its parent or subsidiary,
does not receive compensation (directly or indirectly) from the Company or
its parent or subsidiary for services rendered as a consultant or in any
capacity other than as a Director (except for an amount as to which
disclosure would not be required under Item 404(a) of Regulation S-K
promulgated pursuant to the Securities Act ("Regulation S-K")), does not
possess an interest in any other transaction as to which disclosure would be
required under Item 404(a) of Regulation S-K, and is not engaged in a
business relationship as to which disclosure would be required under Item
404(b) of Regulation S-K; or (ii) is otherwise considered a "non-employee
director" for purposes of Rule 16b-3.
<PAGE>
(m) "NONSTATUTORY STOCK OPTION" means a stock option not intended
to qualify as an incentive stock option within the meaning of Section 422 of
the Code and the regulations promulgated thereunder.
(n) "OFFICER" means a person who is an officer of the Company,
including any corporate officer with a title of Vice President or above or
any other Employee of the Company whom the Board or the Committee classifies
as an "Officer."
(o) "OPTION" means a Nonstatutory Stock Option granted pursuant to
the Plan.
(p) "OPTION AGREEMENT" means a written agreement between the
Company and an Optionee evidencing the terms and conditions of an individual
Option grant. Each Option Agreement shall be subject to the terms and
conditions of the Plan.
(q) "OPTIONEE" means a person to whom an Option is granted pursuant
to the Plan or, if applicable, such other person who holds an outstanding
Option.
(r) "PLAN" means this 1999 Non-Officer Equity Incentive Plan.
(s) "RULE 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect with respect to the Company at the time
discretion is being exercised regarding the Plan.
(t) "SECURITIES ACT" means the Securities Act of 1933, as amended.
(u) "STOCK AWARD" means any right granted under the Plan, including
any Option, any stock bonus, and any right to purchase restricted stock.
(v) "STOCK AWARD AGREEMENT" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of
an individual Stock Award grant. Each Stock Award Agreement shall be subject
to the terms and conditions of the Plan.
3. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless and until
the Board delegates administration to a Committee, as provided in subsection
3(c).
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(1) To determine from time to time which of the persons
eligible under the Plan shall be granted Stock Awards; when and how each
Stock Award shall be granted; whether a Stock Award will be an Option, a
stock bonus, a right to purchase restricted stock, or a combination of the
foregoing; the provisions of each Stock Award granted (which need not be
identical), including the time or times when a person shall be permitted to
receive stock pursuant to a Stock Award; and the number of shares with
respect to which a Stock Award shall be granted to each such person.
<PAGE>
(2) To construe and interpret the Plan and Stock Awards
granted under it, and to establish, amend and revoke rules and regulations
for its administration. The Board, in the exercise of this power, may correct
any defect, omission or inconsistency in the Plan or in any Stock Award
Agreement, in a manner and to the extent it shall deem necessary or expedient
to make the Plan fully effective.
(3) To amend the Plan or a Stock Award as provided in Section
12.
(4) To terminate or suspend the Plan as provided in Section 13.
(5) Generally, to exercise such powers and to perform such
acts as the Board deems necessary or expedient to promote the best interests
of the Company which are not in conflict with the provisions of the Plan.
(c) The Board may delegate administration of the Plan to a
committee of the Board composed of two (2) or more members (the "Committee"),
all of the members of which Committee may be, in the discretion of the Board,
Non-Employee Directors. If administration is delegated to a Committee, the
Committee shall have, in connection with the administration of the Plan, the
powers theretofore possessed by the Board, including the power to delegate to
a subcommittee any of the administrative powers the Committee is authorized
to exercise (and references in this Plan to the Board shall thereafter be to
the Committee or such a subcommittee), subject, however, to such resolutions,
not inconsistent with the provisions of the Plan, as may be adopted from time
to time by the Board. The Board may abolish the Committee at any time and
revest in the Board the administration of the Plan. In addition,
notwithstanding anything in this Section 3 to the contrary, the Board or the
Committee may delegate to a committee of one or more members of the Board the
authority to grant Stock Awards to eligible persons who are not then subject
to Section 16 of the Exchange Act.
4. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 11 relating to adjustments
upon changes in stock, the stock that may be issued pursuant to Stock Awards
shall not exceed in the aggregate Five Hundred Thousand (500,000) shares of
the Company's Common Stock. If any Stock Award shall for any reason expire or
otherwise terminate, in whole or in part, without having been exercised in
full, the stock not acquired under such Stock Award shall revert to and again
become available for issuance under the Plan.
(b) The stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.
5. ELIGIBILITY.
(a) Stock Awards may be granted only to Employees or Consultants.
(b) A Consultant shall not be eligible for the grant of a Stock
Award if, at the time of grant, a Form S-8 Registration Statement under the
Securities Act ("Form S-8") is not available to
<PAGE>
register either the offer or the sale of the Company's securities to such
Consultant because of the nature of the services that the Consultant is
providing to the Company, or because the Consultant is not a natural person,
or as otherwise provided by the rules governing the use of Form S-8, unless
the Company determines both (i) that such grant (A) shall be registered in
another manner under the Securities Act (E.G., on a Form S-3 Registration
Statement) or (B) does not require registration under the Securities Act in
order to comply with the requirements of the Securities Act, if applicable,
and (ii) that such grant complies with the securities laws of all other
relevant jurisdictions.
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise)
the substance of each of the following provisions:
(a) TERM. No Option shall be exercisable after the expiration of
ten (10) years from the date it was granted.
(b) PRICE. The exercise price of each Option shall be not less
than eighty-five percent (85%) of the Fair Market Value of the stock subject
to the Option on the date of grant.
(c) CONSIDERATION. The purchase price of stock acquired pursuant
to an Option shall be paid, to the extent permitted by applicable statutes
and regulations, either (i) in cash at the time the Option is exercised, or
(ii) at the discretion of the Board or the Committee, at the time of the
grant of the Option, (A) by delivery to the Company of other common stock of
the Company, (B) according to a deferred payment arrangement (however, in the
event the Company is then incorporated in the state of Delaware, then payment
of the common stock's "par value" as defined in the Delaware General
Corporation Law shall not be made by deferred payment), or other arrangement
(which may include, without limiting the generality of the foregoing, the use
of other common stock of the Company) with the person to whom the Option is
granted or to whom the Option is transferred pursuant to subsection 6(d) or
(C) in any other form of legal consideration that may be acceptable to the
Board. In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be
interest under the deferred payment arrangement.
(d) TRANSFERABILITY. An Option may be transferable to the extent
provided in the Option Agreement; provided, however, that if the Option
Agreement does not specifically provide for transferability, then such Option
shall not be transferable except by will or by the laws of descent and
distribution. Notwithstanding the foregoing, the person to whom the Option is
granted may, by delivering written notice to the Company, in a form
satisfactory to the Company, designate a third party who, in the event of the
death of the Optionee, shall thereafter be entitled to exercise the Option.
<PAGE>
(e) VESTING. The total number of shares of stock subject to an
Option may, but need not, be allotted in periodic installments (which may,
but need not, be equal). The Option Agreement may provide that from time to
time during each of such installment periods, the Option may become
exercisable ("vest") with respect to some or all of the shares allotted to
that period, and may be exercised with respect to some or all of the shares
allotted to such period and/or any prior period as to which the Option became
vested but was not fully exercised. The Option may be subject to such other
terms and conditions on the time or times when it may be exercised (which may
be based on performance or other criteria) as the Board may deem appropriate.
The provisions of this subsection 6(e) are subject to any Option provisions
governing the minimum number of shares as to which an Option may be exercised.
(f) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR
CONSULTANT. In the event an Optionee's Continuous Service terminates (other
than upon the Optionee's death or disability), the Optionee may exercise the
Option (to the extent that the Optionee was entitled to exercise it as of the
date of termination) but only within such period of time ending on the
earlier of (i) the date three (3) months following the termination of the
Optionee's Continuous Service (or such longer period as specified in the
Option Agreement), or (ii) the expiration of the term of the Option as set
forth in the Option Agreement; provided, however, if the Optionee is
terminated for cause, then the Option shall terminate on the date Optionee's
Continuous Service ceases. If, at the date of termination, the Optionee is
not entitled to exercise the entire Option, the shares covered by the
unexercisable portion of the Option shall revert to and again become
available for issuance under the Plan. If, after termination, the Optionee
does not exercise the Option within the time specified in the Option
Agreement, the Option shall terminate, and the shares covered by such Option
shall revert to and again become available for issuance under the Plan.
An Optionee's Option Agreement may also provide that if the exercise
of the Option following the termination of the Optionee's Continuous Service
(other than upon the Optionee's death or disability) would result in
liability under Section 16(b) of the Exchange Act, then the Option shall
terminate on the earlier of (i) the expiration of the term of the Option set
forth in the Option Agreement, or (ii) the tenth (10th) day after the last
date on which such exercise would result in such liability under Section
16(b) of the Exchange Act. Finally, an Optionee's Option Agreement may also
provide that if the exercise of the Option following the termination of the
Optionee's Continuous Service (other than upon the Optionee's death or
disability) would be prohibited at any time solely because the issuance of
shares would violate the registration requirements under the Securities Act,
then the Option shall terminate on the earlier of (i) the expiration of the
term of the Option set forth in the first paragraph of this subsection 6(f),
or (ii) the expiration of a period of three (3) months after the termination
of the Optionee's Continuous Service during which the exercise of the Option
would not be in violation of such registration requirements.
(g) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous
Service terminates as a result of the Optionee's disability, the Optionee may
exercise the Option (to the extent that the Optionee was entitled to exercise
it as of the date of termination), but only within such period of time ending
on the earlier of (i) the date twelve (12) months following such termination
(or such
<PAGE>
longer or shorter period specified in the Option Agreement), or (ii) the
expiration of the term of the Option as set forth in the Option Agreement.
If, at the date of termination, the Optionee is not entitled to exercise the
entire Option, the shares covered by the unexercisable portion of the Option
shall revert to and again become available for issuance under the Plan. If,
after termination, the Optionee does not exercise the Option within the time
specified herein, the Option shall terminate, and the shares covered by such
Option shall revert to and again become available for issuance under the Plan.
(h) DEATH OF OPTIONEE. In the event of the death of an Optionee
during, or within a period specified in the Option Agreement after the
termination of, the Optionee's Continuous Service, the Option may be
exercised (to the extent the Optionee was entitled to exercise the Option as
of the date of death) by the Optionee's estate, by a person who acquired the
right to exercise the Option by bequest or inheritance or by a person
designated to exercise the option upon the Optionee's death pursuant to
subsection 6(d), but only within the period ending on the earlier of (i) the
date eighteen (18) months following the date of death (or such longer or
shorter period specified in the Option Agreement), or (ii) the expiration of
the term of such Option as set forth in the Option Agreement. If, at the time
of death, the Optionee was not entitled to exercise the entire Option, the
shares covered by the unexercisable portion of the Option shall revert to and
again become available for issuance under the Plan. If, after death, the
Option is not exercised within the time specified herein, the Option shall
terminate, and the shares covered by such Option shall revert to and again
become available for issuance under the Plan.
(i) EARLY EXERCISE. The Option may, but need not, include a
provision whereby the Optionee may elect at any time before the Optionee's
Continuous Service terminates to exercise the Option as to any part or all of
the shares of Common Stock subject to the Option prior to the full vesting of
the Option. Any unvested shares of Common Stock so purchased may be subject
to a repurchase option in favor of the Company or to any other restriction
the Board determines to be appropriate. The Company will not exercise its
repurchase option until at least six (6) months (or such longer or shorter
period of time required to avoid a charge to earnings for financial
accounting purposes) have elapsed following exercise of the Option unless the
Board otherwise specifically provides in the Option.
7. TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK.
Each stock bonus or restricted stock purchase agreement shall be in
such form and shall contain such terms and conditions as the Board or the
Committee shall deem appropriate. The terms and conditions of stock bonus or
restricted stock purchase agreements may change from time to time, and the
terms and conditions of separate agreements need not be identical, but each
stock bonus or restricted stock purchase agreement shall include (through
incorporation of provisions hereof by reference in the agreement or
otherwise) the substance of each of the following provisions as appropriate:
(a) PURCHASE PRICE. The purchase price under each restricted stock
purchase agreement shall be such amount as the Board or Committee shall
determine and designate in such Stock Award Agreement, but in no event shall
the purchase price be less than eighty-five percent (85%) of the
<PAGE>
stock's Fair Market Value on the date such Stock Award is made.
Notwithstanding the foregoing, the Board or the Committee may determine that
eligible participants in the Plan may be awarded stock pursuant to a stock
bonus agreement in consideration for past services actually rendered to the
Company or for its benefit.
(b) TRANSFERABILITY. Rights under a stock bonus or restricted
stock purchase agreement shall be transferable only by will or the laws of
descent and distribution, so long as stock awarded under such Stock Award
Agreement remains subject to the terms of the agreement.
(c) CONSIDERATION. The purchase price of stock acquired pursuant
to a stock purchase agreement shall be paid either: (i) in cash at the time
of purchase; (ii) at the discretion of the Board or the Committee, according
to a deferred payment arrangement (however, in the event the Company is then
incorporated in the state of Delaware, then payment of the common stock's
"par value" as defined in the Delaware General Corporation Law shall not be
made by deferred payment), or other arrangement with the person to whom the
stock is sold; or (iii) in any other form of legal consideration that may be
acceptable to the Board or the Committee in its discretion. Notwithstanding
the foregoing, the Board or the Committee to which administration of the Plan
has been delegated may award stock pursuant to a stock bonus agreement in
consideration for past services actually rendered to the Company or for its
benefit.
(d) VESTING. Shares of stock sold or awarded under the Plan may,
but need not, be subject to a repurchase option in favor of the Company in
accordance with a vesting schedule to be determined by the Board or the
Committee.
(e) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR
CONSULTANT. In the event a Participant's Continuous Service terminates, the
Company may repurchase or otherwise reacquire any or all of the shares of
stock held by that person which have not vested as of the date of termination
under the terms of the stock bonus or restricted stock purchase agreement
between the Company and such person.
8. COVENANTS OF THE COMPANY.
(a) During the terms of the Stock Awards, the Company shall keep
available at all times the number of shares of stock required to satisfy such
Stock Awards.
(b) The Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such authority as may
be required to issue and sell shares of stock upon exercise of the Stock
Award; provided, however, that this undertaking shall not require the Company
to register under the Securities Act either the Plan, any Stock Award or any
stock issued or issuable pursuant to any such Stock Award. If, after
reasonable efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority which counsel for the Company deems
necessary for the lawful issuance and sale of stock under the Plan, the
Company shall be relieved from any liability for failure to issue and sell
stock upon exercise of such Stock Awards unless and until such authority is
obtained.
9. USE OF PROCEEDS FROM STOCK.
<PAGE>
Proceeds from the sale of stock pursuant to Stock Awards shall
constitute general funds of the Company.
10. MISCELLANEOUS.
(a) The Board shall have the power to accelerate the time at which
a Stock Award may first be exercised or the time during which a Stock Award
or any part thereof will vest pursuant to subsection 6(e) or 7(d),
notwithstanding the provisions in the Stock Award stating the time at which
it may first be exercised or the time during which it will vest.
(b) Neither an Employee nor a Consultant nor any person to whom a
Stock Award is transferred under subsection 6(d) or 7(b) shall be deemed to
be the holder of, or to have any of the rights of a holder with respect to,
any shares subject to such Stock Award unless and until such person has
satisfied all requirements for exercise of the Stock Award pursuant to its
terms.
(c) Nothing in the Plan or any instrument executed or Stock Award
granted pursuant thereto shall confer upon any Employee or Consultant or
other holder of Stock Awards any right to continue in the employ of the
Company or any Affiliate (or to continue serving as a Consultant) or shall
affect the right of the Company or any Affiliate to terminate the employment
of any Employee with or without cause or the right to terminate the
relationship of any Consultant subject to the terms of such Consultant's
agreement with the Company or any Affiliate.
(d) The Company may require any person to whom a Stock Award is
granted, or any person to whom a Stock Award is transferred pursuant to
subsection 6(d) or 7(b), as a condition of exercising or acquiring stock
under any Stock Award, (1) to give written assurances satisfactory to the
Company as to such person's knowledge and experience in financial and
business matters and/or to employ a purchaser representative reasonably
satisfactory to the Company who is knowledgeable and experienced in financial
and business matters, and that he or she is capable of evaluating, alone or
together with the purchaser representative, the merits and risks of
exercising the Stock Award; and (2) to give written assurances satisfactory
to the Company stating that such person is acquiring the stock subject to the
Stock Award for such person's own account and not with any present intention
of selling or otherwise distributing the stock. The foregoing requirements,
and any assurances given pursuant to such requirements, shall be inoperative
if (i) the issuance of the shares upon the exercise or acquisition of stock
under the Stock Award has been registered under a then currently effective
registration statement under the Securities Act, or (ii) as to any particular
requirement, a determination is made by counsel for the Company that such
requirement need not be met in the circumstances under the then applicable
securities laws. The Company may, upon advice of counsel to the Company,
place legends on stock certificates issued under the Plan as such counsel
deems necessary or appropriate in order to comply with applicable securities
laws, including, but not limited to, legends restricting the transfer of the
stock.
(e) To the extent provided by the terms of a Stock Award Agreement,
the person to whom a Stock Award is granted may satisfy any federal, state or
local tax withholding obligation relating to the exercise or acquisition of
stock under a Stock Award by any of the following means or by a combination
of such means: (1) tendering a cash payment; (2) authorizing the Company to
<PAGE>
withhold shares from the shares of the common stock otherwise issuable to the
participant as a result of the exercise or acquisition of stock under the
Stock Award; or (3) delivering to the Company owned and unencumbered shares
of Company common stock. Notwithstanding the foregoing, the Company shall not
be authorized to withhold shares of Common Stock at rates in excess of the
minimum statutory withholding rates for federal and state tax purposes,
including payroll taxes.
11. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or
subject to any Stock Award (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange
of shares, change in corporate structure or other transaction not involving
the receipt of consideration by the Company), the Plan will be appropriately
adjusted in the type(s) and maximum number of securities subject to the Plan
pursuant to subsection 4(a) and the outstanding Stock Awards will be
appropriately adjusted in the type(s) and number of securities and price per
share of stock subject to such outstanding Stock Awards. Such adjustments
shall be made by the Board or the Committee, the determination of which shall
be final, binding and conclusive. (The conversion of any convertible
securities of the Company shall not be treated as a "transaction not
involving the receipt of consideration by the Company.")
(b) In the event of (1) a dissolution or liquidation of the
Company; (2) a merger or consolidation in which the Company is not the
surviving corporation; (3) a reverse merger in which the Company is the
surviving corporation but the shares of the Company's common stock
outstanding immediately preceding the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash or
otherwise; or (4) any other capital reorganization in which more than fifty
percent (50%) of the shares of the Company entitled to vote are exchanged,
excluding in each case a capital reorganization in which the sole purpose is
to change the state of incorporation of the Company, then all outstanding
Stock Awards shall become vested and exercisable in full for a period of at
least ten (10) days. Outstanding Stock Awards that have not been exercised
prior to such event shall terminate on the date of such event unless assumed
by a successor corporation.
12. AMENDMENT OF THE PLAN AND STOCK AWARDS.
(a) The Board at any time, and from time to time, may amend the
Plan. However, except as provided in Section 11 relating to adjustments upon
changes in stock, no amendment shall be effective unless approved by the
stockholders of the Company to the extent stockholder approval is necessary
for the Plan to satisfy the requirements of Section 422 of the Code, Rule
16b-3 under the Exchange Act or any Nasdaq or securities exchange listing
requirements. The Board may in its sole discretion submit any other amendment
to the Plan for stockholder approval.
(b) Rights and obligations under any Stock Award granted before
amendment of the Plan shall not be impaired by any amendment of the Plan
unless (i) the Company requests the consent of the person to whom the Stock
Award was granted and (ii) such person consents in writing.
<PAGE>
(c) The Board at any time, and from time to time, may amend the
terms of any one or more Stock Award; provided, however, that the rights and
obligations under any Stock Award shall not be impaired by any such amendment
unless (i) the Company requests the consent of the person to whom the Stock
Award was granted and (ii) such person consents in writing.
13. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. No
Stock Awards may be granted under the Plan while the Plan is suspended or
after it is terminated.
(b) Rights and obligations under any Stock Award granted while the
Plan is in effect shall not be impaired by suspension or termination of the
Plan, except with the written consent of the person to whom the Stock Award
was granted.
14. EFFECTIVE DATE OF PLAN.
The Plan shall become effective on the date on which it is adopted
by the Board.
<PAGE>
DITECH COMMUNICATIONS CORPORATION
1999 NON-OFFICER EQUITY INCENTIVE PLAN
NONSTATUTORY STOCK OPTION AGREEMENT
Pursuant to your Stock Option Grant Notice ("Grant Notice") and this
Stock Option Agreement, Ditech Communications Corporation (the "Company") has
granted you an option under its 1999 Non-Officer Equity Incentive Plan (the
"Plan") to purchase the number of shares of the Company's Common Stock
indicated in your Grant Notice at the exercise price indicated in your Grant
Notice. Defined terms not explicitly defined in this Stock Option Agreement
but defined in the Plan shall have the same definitions as in the Plan.
The details of your option are as follows:
1. VESTING. Subject to the limitations contained herein, your
option will vest as provided in your Grant Notice, provided that vesting will
cease upon the termination of your Continuous Service.
2. EXERCISE PRIOR TO VESTING ("EARLY EXERCISE"). If permitted in
your Grant Notice (i.e., the "Exercise Schedule" indicates that "Early
Exercise" of your option is permitted) and subject to the provisions of your
option, you may elect at any time that is both (i) during the period of your
Continuous Service and (ii) during the term of your option, to exercise all
or part of your option, including the nonvested portion of your option;
provided, however, that:
(a) a partial exercise of your option shall be deemed to cover
first vested shares of common stock and then the earliest vesting installment
of unvested shares of common stock;
(b) any shares of common stock so purchased from installments
that have not vested as of the date of exercise shall be subject to the
purchase option in favor of the Company as described in the Company's form of
Early Exercise Stock Purchase Agreement; and
(c) you shall enter into the Company's form of Early Exercise
Stock Purchase Agreement with a vesting schedule that will result in the same
vesting as if no early exercise had occurred.
3. METHOD OF PAYMENT. Payment of the exercise price is due in full
upon exercise of all or any part of your option. You may elect to make
payment of the exercise price in cash or by check or in any other manner
PERMITTED BY YOUR GRANT NOTICE, which may include one or more of the
following:
(a) In the Company's sole discretion at the time your option is
exercised and provided that at the time of exercise the Common Stock is
publicly traded and quoted regularly in THE WALL STREET JOURNAL, pursuant to
a program developed under Regulation T as promulgated by the Federal Reserve
Board that, prior to the issuance of Common Stock, results in either the
receipt
<PAGE>
of cash (or check) by the Company or the receipt of irrevocable instructions
to pay the aggregate exercise price to the Company from the sales proceeds.
(b) Provided that at the time of exercise the Common Stock is
publicly traded and quoted regularly in THE WALL STREET JOURNAL, by delivery
of already-owned shares of Common Stock either that you have held for the
period required to avoid a charge to the Company's reported earnings
(generally six months) or that you did not acquire, directly or indirectly
from the Company, that are owned free and clear of any liens, claims,
encumbrances or security interests, and that are valued at Fair Market Value
on the date of exercise. "Delivery" for these purposes, in the sole
discretion of the Company at the time you exercise your option, shall include
delivery to the Company of your attestation of ownership of such shares of
Common Stock in a form approved by the Company. Notwithstanding the
foregoing, you may not exercise your option by tender to the Company of
Common Stock to the extent such tender would violate the provisions of any
law, regulation or agreement restricting the redemption of the Company's
stock.
4. WHOLE SHARES. You may exercise your option only for whole
shares of Common Stock.
5. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the
contrary contained herein, you may not exercise your option unless the shares
of Common Stock issuable upon such exercise are then registered under the
Securities Act or, if such shares of Common Stock are not then so registered,
the Company has determined that such exercise and issuance would be exempt
from the registration requirements of the Securities Act. The exercise of
your option must also comply with other applicable laws and regulations
governing your option, and you may not exercise your option if the Company
determines that such exercise would not be in material compliance with such
laws and regulations.
6. TERM. You may not exercise your option before the commencement
of its term or after its term expires. The term of your option commences on
the Date of Grant and expires upon the earliest of:
(i) the Expiration Date indicated in the Grant Notice;
(ii) the tenth (10th) anniversary of the Date of Grant;
(iii) eighteen (18) months after your death, if you die during,
or within three (3) months after the termination of your Continuous Service;
(iv) twelve (12) months after the termination of your
Continuous Service due to disability;
(v) immediately after the termination of your Continuous
Service for Cause; or
(vi) three (3) months after the termination of your Continuous
Service for any
<PAGE>
other reason, provided that if during any part of such three (3)-month period
the option is not exercisable solely because of the condition set forth in
paragraph 4 (Securities Law Compliance), in which event the option shall not
expire until the earlier of the Expiration Date or until it shall have been
exercisable for an aggregate period of three (3) months after the termination
of Continuous Service.
For these purposes, "Cause" shall include, but not be limited to,
the commission of any act of fraud, embezzlement or dishonesty, any
unauthorized use or disclosure of confidential information or trade secrets
of the Company, or any other intentional misconduct adversely affecting the
business or affairs of the Company in a material manner. The foregoing
definition shall not be deemed to be inclusive of all the acts or omissions
which the Company may consider as grounds for your dismissal or discharge.
7. EXERCISE.
(a) You may exercise the vested portion of your option during
its term by delivering a Notice of Exercise (in a form designated by the
Company) together with the exercise price to the Secretary of the Company, or
to such other person as the Company may designate, during regular business
hours, together with such additional documents as the Company may then
require.
(b) By exercising your option you agree that, as a condition
to any exercise of your option, the Company may require you to enter into an
arrangement providing for the payment by you to the Company of any tax
withholding obligation of the Company arising by reason of (1) the exercise
of your option, (2) the lapse of any substantial risk of forfeiture to which
the shares of Common Stock are subject at the time of exercise, or (3) the
disposition of shares of Common Stock acquired upon such exercise.
8. TRANSFERABILITY. Your option is not transferable, except by
will or by the laws of descent and distribution, and is exercisable during
your life only by you. Notwithstanding the foregoing, by delivering written
notice to the Company, in a form satisfactory to the Company, you may
designate a third party who, in the event of your death, shall thereafter be
entitled to exercise your option.
9. RIGHT OF REPURCHASE. To the extent provided in the Company's
bylaws as amended from time to time, the Company shall have the right to
repurchase all or any part of the shares of Common Stock you acquire pursuant
to the exercise of your option.
10. OPTION NOT A SERVICE CONTRACT. Your option is not an
employment or service contract, and nothing in your option shall be deemed to
create in any way whatsoever any obligation on your part to continue in the
employ of the Company or an Affiliate, or of the Company or an Affiliate to
continue your employment. In addition, nothing in your option shall obligate
the Company or an Affiliate, their respective shareholders, Boards of
Directors, Officers or Employees to continue any relationship that you might
have as a Director or Consultant for the Company or an Affiliate.
<PAGE>
11. WITHHOLDING OBLIGATIONS.
(a) At the time you exercise your option, in whole or in part,
or at any time thereafter as requested by the Company, you hereby authorize
withholding from payroll and any other amounts payable to you, and otherwise
agree to make adequate provision for (including by means of a "cashless
exercise" pursuant to a program developed under Regulation T as promulgated
by the Federal Reserve Board to the extent permitted by the Company), any
sums required to satisfy the federal, state, local and foreign tax
withholding obligations of the Company or an Affiliate, if any, which arise
in connection with your option.
(b) Upon your request and subject to approval by the Company,
in its sole discretion, and compliance with any applicable conditions or
restrictions of law, the Company may withhold from fully vested shares of
Common Stock otherwise issuable to you upon the exercise of your option a
number of whole shares of Common Stock having a Fair Market Value, determined
by the Company as of the date of exercise, not in excess of the minimum
amount of tax required to be withheld by law. If the date of determination of
any tax withholding obligation is deferred to a date later than the date of
exercise of your option, share withholding pursuant to the preceding sentence
shall not be permitted unless you make a proper and timely election under
Section 83(b) of the Code, covering the aggregate number of shares of Common
Stock acquired upon such exercise with respect to which such determination is
otherwise deferred, to accelerate the determination of such tax withholding
obligation to the date of exercise of your option. Notwithstanding the filing
of such election, shares of Common Stock shall be withheld solely from fully
vested shares of Common Stock determined as of the date of exercise of your
option that are otherwise issuable to you upon such exercise. Any adverse
consequences to you arising in connection with such share withholding
procedure shall be your sole responsibility.
(c) You may not exercise your option unless the tax
withholding obligations of the Company and/or any Affiliate are satisfied.
Accordingly, you may not be able to exercise your option when desired even
though your option is vested, and the Company shall have no obligation to
issue a certificate for such shares of Common Stock or release such shares of
Common Stock from any escrow provided for herein.
12. NOTICES. Any notices provided for in your option or the Plan
shall be given in writing and shall be deemed effectively given upon receipt
or, in the case of notices delivered by mail by the Company to you, five (5)
days after deposit in the United States mail, postage prepaid, addressed to
you at the last address you provided to the Company.
13. GOVERNING PLAN DOCUMENT. Your option is subject to all the
provisions of the Plan, the provisions of which are hereby made a part of
your option, and is further subject to all interpretations, amendments, rules
and regulations which may from time to time be promulgated and adopted
pursuant to the Plan. In the event of any conflict between the provisions of
your option and those of the Plan, the provisions of the Plan shall control.
