As filed with the Securities and Exchange Commission on November 19, 1999
Registration No. 333_______________
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form S-8
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
---------------------------
AETHER SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 52-2186634
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
11460 Cronridge Drive
Owings Mills, Maryland 21117
(Address of Principal Executive Offices)
(410) 654-6400
(Registrant's telephone number, including area code)
Aether Systems, Inc.
1999 Equity Incentive Plan
(Full title of the plan)
David S. Oros
Chairman of the Board,
Chief Executive Officer & President
Aether Systems, Inc.
11460 Cronridge Drive
Owings Mills, Maryland 21117
(410) 654-6400
(Name and address, including zip code, and telephone number,
including area code, of agent for service)
---------------------------
With a copy to:
R. Scott Kilgore, Esq.
Wilmer, Cutler & Pickering
2445 M Street, N.W.
Washington, D.C. 20037
---------------------------
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
<S> <C> <C> <C> <C> <C>
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Name of Plan Registered Registered Per Share (1) Price (1) Fee (1)
- ------------------------------------------------------------------------------------------------------------------------------------
1999 Equity Incentive Common Stock, par $0.01 5,400,000 $31.98 $172,690,096 $48,008
Plan (the "1999 Plan")
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) In accordance with Rule 457(h) and Rule 457(c) the aggregate offering price and the amount of the registration fee are
computed on the basis of (a) for 2,481,091 shares not yet subject to options, $66.69, the average of the high and low
prices reported in the Nasdaq Stock Market on November 12, 1999, and (b) for granted options for 2,918,959 shares, the
actual exercise prices specified in those granted options (which range from $0.40 to $8.00.) Also registered hereunder
are such additional number of shares of Common Stock, presently indeterminable, as may be necessary to satisfy the
antidilution provisions of the Plan to which this Registration Statement relates.
</FN>
</TABLE>
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<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Note: The document(s) containing the information required by
Item 1 of Form S-8 and the statement of availability of registrant information
and any other information required by Item 2 of Form S-8 will be sent or given
to participants as specified by Rule 428 under the Securities Act of 1933, as
amended (the "Securities Act"). In accordance with Rule 428 and the requirements
of Part I of Form S-8, such documents are not being filed with the SEC either as
part of this Registration Statement or as prospectuses or prospectus supplements
pursuant to Rule 424 under the Securities Act. Aether Systems, Inc. (the
"Registrant" or the "Company") shall maintain a file of such documents in
accordance with the provisions of Rule 428. Upon request, the Registrant shall
furnish the SEC or its staff a copy or copies of all of the documents included
in such file.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The Company hereby incorporates by reference the documents
listed in (a) through (c) below. In addition, all documents subsequently filed
by the Company pursuant to Section 13(a), 13(c), 14 and 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (prior to 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 in this Registration Statement and to be a part
hereof from the date of filing of such documents.
(a) Prospectus on Form 424B4 filed by the Company on October 21, 1999.
(b) The Company's Registration Statement on Form S-1 (SEC No.333-85697
filed by the Company on August 20, 1999 and all amendments
thereafter.
(c) The description of the Company's Common Stock which is
incorporated by reference from the Prospectus on Form 424B4 filed
by the Company on October 21, 1999, including any amendment or
report filed for the purpose of updating such description.
Item 4. Description of Securities
Not Applicable
Item 5. Interests of Named Experts and Counsel
The validity of the shares of Company Common Stock that may be
issued under options granted under the 1999 Plan is being passed upon for the
Company by Wilmer, Cutler & Pickering. George P. Stamas, a member of the Board
of Directors, is a partner in Wilmer, Cutler & Pickering. As of the date of this
Registration Statement, Mr. Stamas had received stock options to purchase
23,850 shares of Common Stock and he holds a non-voting interest in Telcom-ATI
Investors.
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<PAGE>
Item 6. Indemnification of Directors and Officers
Under Section 145 of the General Corporate law of the State of
Delaware, Aether Systems 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").
Aether Systems' bylaws also provide for mandatory indemnification of its
directors and executive officers, and permissive indemnification of its
employees and agents, to the fullest extent permissible under Delaware law.
Aether's certificate of incorporation provides that the
liability of its directors for monetary damages shall be eliminated to the
fullest extent permissible under Delaware law. Pursuant to Delaware law, this
includes elimination of liability for monetary damages for breach of the
directors' fiduciary duty of care to Aether and its stockholders. 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 Aether, for acts or omissions not in good faith or involving
intentional misconduct, for knowing violations of law, for any transaction from
which the director derived an improper personal benefit, and for payment of
dividends or approval of stock repurchases or redemptions that are unlawful
under Delaware law. The provision also does not affect a director's
responsibilities under any other laws, such as the federal securities laws or
state or federal environmental laws.
Prior to the effective date of the Registration Statement,
Aether will have entered into agreements with its directors and certain of its
executive officers that require Aether to indemnify such persons against II-1
expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred (including expenses of a derivative action) in connection
with any proceeding, whether actual or threatened, to which any such person
maybe made a party by reason of the fact that such person is or was a director
or officer of Aether or any of its affiliated enterprises, provided such person
acted in good father and in a manner such person reasonably believed to be in or
not opposed to the best interests of Aether and, with respect to any criminal
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
The indemnification agreements also set forth certain procedures that will apply
in the event of a claim for indemnification thereunder.
Aether intends to obtain in conjunction with the effectiveness
of the Registration Statement a policy of directors' and officers' liability
insurance that insures Aether's directors and officers against the cost of
defense, settlement or payment of a judgment under certain circumstances.
The Underwriting Agreement filed as Exhibit 1.1 to the
Registration Statement provides for indemnification by the underwriters of
Aether and its officers and directors for certain liabilities arising under the
Securities Actor otherwise.
Item 7. Exemption from Registration Claimed
Not Applicable.
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<PAGE>
Item 8. Exhibits
The Exhibit Index attached to this Registration Statement is incorporated herein
by reference.
Item 9. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) 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
this 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 this Registration
Statement;
(iii) To include any material information with
respect to the plan of distribution not
previously disclosed in this Registration
Statement or any material change to such
information in this Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii)
do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to section
13 or section 15(d) of the Exchange Act that are
incorporated by reference in the registration statement.
(2) 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 therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) 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.
(b) 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 any
employee benefit plan's annual report pursuant to section 15(d) of the
Exchange Act) that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement reflating
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.
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<PAGE>
(c) 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
SEC 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
of 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.
[The remainder of this page is intentionally left blank.]
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Company 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 Owings Mill, Maryland on the 18th day of November, 1999.
AETHER SYSTEMS, INC.
By: /s/ David S. Oros
-------------------------------
David S. Oros
Chief Executive Office
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
under the heading "Signature" constitutes and appoints David S. Oros and David
C. Reymann as his or her true and lawful attorney-in-fact each acting alone,
with full power of substitution and resubstitution, for him or her and in his or
her name, place and stead, in any and all capacities to sign any or 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 attorney-in-fact full power and authority to do and perform each and every
act and thing requisite and necessary to be done in and about the premises, as
fully for all intents and purposes as he or she might or could do in person,
hereby ratifying and confirming all that said attorney-in-fact, or his or her
substitute, acting alone, may lawfully do or cause to be done by virtue hereof.
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.
Signature Title Date
Chairman of the Board,
/s/ David S. Oros Chief Executive Officer
- ------------------------ and President November 18, 1999
David S. Oros
/s/ David C. Reymann
- ------------------------ Chief Financial Officer November 18, 1999
David C. Reymann
/s/ J. Carter Beese, Jr.
- ------------------------ Director November 18, 1999
J. Carter Beese, Jr.
/s/ Frank A. Bonsal, Jr.
- ------------------------ Director November 18, 1999
Frank A. Bonsal, Jr.
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<PAGE>
Signature Title Date
/s/ Mark D. Ein
- ------------------------ Director November 18, 1999
Mark D. Ein
/s/ Rahul C. Prakash
- ------------------------ Director November 18, 1999
Rahul C. Prakash
/s/ Janice M. Roberts
- ------------------------ Director November 18, 1999
Janice M. Roberts
/s/ Rajendra Singh
- ------------------------ Director November 18, 1999
Dr. Rajendra Singh
/s/ George P. Stamas
- ------------------------ Director November 18, 1999
George P. Stamas
/s/ Devin N. Wenig
- ------------------------ Director November 18, 1999
Devin N. Wenig
/s/ Thomas E. Wheeler
- ------------------------ Director November 18, 1999
Thomas E. Wheeler
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<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
_____________________
4.1 1999 Equity Incentive Plan
5 Opinion of Wilmer, Cutler & Pickering as to the legality of the
securities being registered
23.1 Consent of KPMG LLP
23.2 Consent of PricewaterhouseCoopers LLP
24 Power of attorney (included on signature pages of this Registration
Statement)
- ---------------------
- 9 -
AETHER SYSTEMS, INC.
1999 EQUITY INCENTIVE PLAN
PURPOSE Aether Systems, Inc., a Delaware corporation (the
"Company"), wishes to recruit, reward, and retain employees,
outside directors, and other service providers. To further
these objectives, the Company hereby sets forth the Aether
Systems, Inc. 1999 Equity Incentive Plan (the "Plan"),
effective as of October 1, 1999 (the "Effective Date"), to
provide options ("Options") to employees, outside directors,
and other service providers of the Company and its
subsidiaries to purchase shares of the Company's common
stock (the "Common Stock").
PARTICIPANTS All Employees of the Company and any Eligible Subsidiaries
are eligible for Options under this Plan. Eligible employees
become "optionees" when the Administrator grants them an
option under this Plan. The Administrator may also grant
options to consultants and certain other service providers.
The term optionee also includes, where appropriate, a person
authorized to exercise an Option in place of the original
recipient.
Employee means any person employed as a common law employee
of the Company or an Eligible Subsidiary.
ADMINISTRATOR The Administrator will be the Compensation Committee of the
Board of Directors, unless the Board specifies another
committee of the Board, but the Board may still act under
the Plan as though it were the Compensation Committee.
The Administrator is responsible for the general operation
and administration of the Plan and for carrying out its
provisions and has full discretion in interpreting and
administering the provisions of the Plan. Subject to the
express provisions of the Plan, the Administrator may
exercise such powers and authority of the Board as the
Administrator may find necessary or appropriate to carry out
its functions. The Administrator may delegate its functions
(other than those described in the Granting of Options
section) to officers or other employees of the Company.
The Administrator's powers will include, but not be limited
to, the power to amend, waive, or extend any provision or
limitation of any Option. The Administrator may act through
meetings of a majority of its members or by unanimous
consent.
________________________________________________________________________________
Aether Systems, Inc.
1999 Equity Incentive Plan
Page 1 of 17
<PAGE>
GRANTING OF Subject to the terms of the Plan, the Administrator will, in
OPTIONS its sole discretion, determine
the persons who receive Options,
the terms of such Options,
the schedule for exercisability (including any
requirements that the optionee or the Company
satisfy performance criteria),
the time and conditions for expiration of the
Option, and
the form of payment due upon exercise.
The Administrator's determinations under the Plan need not
be uniform and need not consider whether possible recipients
are similarly situated.
Options granted to employees may be "incentive stock
options" ("ISOs") within the meaning of Section 422 of the
Internal Revenue Code of 1986 (the "Code"), or the
corresponding provision of any subsequently enacted tax
statute, or nonqualified stock options ("NQSOs"), and the
Administrator will specify which form of option it is
granting. (If the Administrator fails to specify the form,
it will be an ISO.) Any options granted to outside directors
must be nonqualified stock options.
Substitutions The Administrator will grant Options in
replacement for any outstanding options with
respect to Aether Technologies International,
L.L.C. held by persons eligible to receive Options
under this Plan. The Administrator may also grant
Options in substitution for options or other
equity interests held by individuals who become
Employees of the Company or of an Eligible
Subsidiary as a result of the Company's or
Subsidiary's acquiring or merging with the
individual's employer or acquiring its assets. In
addition, the Administrator may provide for the
Plan's assumption of options granted outside the
Plan to persons who would have been eligible under
the terms of the Plan to receive a grant,
including both persons who provided services to
any acquired company or business and persons who
provided services to the Company or any
Subsidiary. If necessary to conform the Options to
the interests for which they are substitutes, the
Administrator may grant substitute Options under
terms and conditions that vary from those the Plan
otherwise requires.
________________________________________________________________________________
Aether Systems, Inc.
1999 Equity Incentive Plan
Page 2 of 17
<PAGE>
DATE OF GRANT The Date of Grant will be the date as of which the
Administrator grants an Option to a participant, as
specified in the Administrator's minutes.
EXERCISE PRICE The Exercise Price is the value of the consideration that an
optionee must provide in exchange for one share of Common
Stock. The Administrator will determine the Exercise Price
under each Option and may set the Exercise Price without
regard to the Exercise Price of any other Options granted at
the same or any other time. The Company may use the
consideration it receives from the optionee for general
corporate purposes.
The Exercise Price per share for NQSOs may not be less than
100% of the Fair Market Value of a share on the Date of
Grant for grants made after the IPO Effective Date. For
ISOs, the Exercise Price per share must be at least 100% of
the Fair Market Value (on the Date of Grant) of a share of
Common Stock covered by the Option; provided, however, that
if the Administrator decides to grant an ISO to someone
covered by Code Sections 422(b)(6) and 424(d) (as a
more-than-10%-stock-owner), the Exercise Price must be at
least 110% of the Fair Market Value.
FAIR MARKET Fair Market Value of a share of Common Stock for
VALUE purposes of the Plan will be determined as follows:
if the Company has no publicly-traded stock, the
Administrator will determine the Fair Market Value
for purposes of the Plan using any measure of
value it determines in good faith to be
appropriate; if the Common Stock trades on a
national securities exchange, the closing sale
price on that date;
if the Common Stock does not trade on any such
exchange, the closing sale price as reported by
the National Association of Securities Dealers,
Inc. Automated Quotation System ("Nasdaq") for
such date;
if no such closing sale price information is
available, the average of the closing bid and
asked prices that Nasdaq reports for such date; or
if there are no such closing bid and asked prices,
the average of the closing bid and asked prices as
reported by any other commercial service for such
date.
________________________________________________________________________________
Aether Systems, Inc.
1999 Equity Incentive Plan
Page 3 of 17
<PAGE>
For any date that is not a trading day, the Fair
Market Value of a share of Common Stock for such
date will be determined by using the closing sale
price or the average of the closing bid and asked
prices, as appropriate, for the immediately
preceding trading day. The Administrator can
substitute a particular time of day or other
measure of "closing sale price" if appropriate
because of changes in exchange or market
procedures.
The Fair Market Value will be treated as equal to
the price established in an IPO for any Options
granted as of the IPO if they are granted on or
before the date on which the IPO's underwriters
price the IPO or granted on the following day
before trading opens in the Common Stock.
The Administrator has sole discretion to determine
the Fair Market Value for purposes of this Plan,
and all Options are conditioned on the optionees'
agreement that the Administrator's determination
is conclusive and binding even though others might
make a different and also reasonable
determination.
EXERCISABILITY The Administrator will determine the times and conditions
for exercise of each Option.
Options will become exercisable at such times and in such
manner as the Administrator determines and the Option
Agreement indicates; provided, however, that the
Administrator may, on such terms and conditions as it
determines appropriate, accelerate the time at which the
optionee may exercise any portion of an Option.
If the Administrator does not specify otherwise, Options
will become exercisable as to 25% per year on each
anniversary of the Date of Grant.
No portion of an Option that is unexercisable at an
optionee's termination of employment will thereafter become
exercisable, unless the Option Agreement provides otherwise,
either initially or by amendment.
CHANGE OF Upon a Change of Control (as defined below), all Options
CONTROL will become fully exercisable, unless the optionee's Option
Agreement provides otherwise. A Change of Control for this
purpose means the occurrence of any one or more of the
following events after the Company's IPO:
________________________________________________________________________________
Aether Systems, Inc.
1999 Equity Incentive Plan
Page 4 of 17
<PAGE>
(i) sale of all or substantially all of the assets
of the Company to one or more individuals,
entities, or groups (other than an "Excluded
Owner" as defined below);
(ii) complete or substantially complete
dissolution or liquidation of the Company;
(iii) a person, entity, or group (other than an
Excluded Owner) acquires or attains ownership of
at least 80% of the undiluted total voting power
of the Company's then-outstanding securities
eligible to vote to elect members of the Board
("Company Voting Securities");
(iv) completion of a merger or consolidation of
the Company with or into any other entity (other
than an Excluded Owner) unless the holders of the
Company Voting Securities outstanding immediately
before such completion, together with any trustee
or other fiduciary holding securities under a
Company benefit plan, retain control because they
hold securities that represent immediately after
such merger or consolidation more than 20% of the
combined voting power of the then outstanding
voting securities of either the Company or the
other surviving entity or its ultimate parent
(v) the individuals who constitute the Board
immediately before a proxy contest cease to
constitute at least a majority of the Board
(excluding any Board seat that is vacant or
otherwise unoccupied) immediately following the
proxy contest; or
(vi) during any two year period, the individuals
who constitute the Board at the beginning of the
period (the "Incumbent Directors") cease for any
reason to constitute at least a majority of the
Board (excluding any Board seat that is vacant or
otherwise unoccupied), provided that any
individuals that a majority of Incumbent Directors
approve for service on the Board are treated as
Incumbent Directors.
________________________________________________________________________________
Aether Systems, Inc.
1999 Equity Incentive Plan
Page 5 of 17
<PAGE>
An "Excluded Owner" consists of the Company, any Company
Subsidiary, any Company benefit plan, or any underwriter
temporarily holding securities for an offering of such
securities.
Even if other tests are met, a Change of Control has not
occurred under any circumstance in which the Company files
for bankruptcy protection or is reorganized following a
bankruptcy filing. The Administrator may determine that a
particular optionee's Options will not become fully
exercisable as a result of what the Administrator, in its
sole discretion, determines is the optionee's insufficient
cooperation with the Company with respect to a Change of
Control. In addition, the acceleration will not occur if it
would prevent use of "pooling of interest" accounting for a
reorganization, merger, or consolidation of the Company that
the Board approves.
The Administrator may allow conditional exercises in advance
of the completion of a Change of Control that are then
rescinded if no Change of Control occurs.
SUBSTANTIAL Upon a Change of Control that is also a Substantial
CORPORATE Corporate Change, the Options will become exercisable
CHANGE (unless the Change of Control section provides otherwise)
and the Plan and any unexercised Options will terminate
(after the occurrence of one of the alternatives set forth
in the next full paragraph) unless either (i) such
termination would prevent use of "pooling of interest"
accounting for a reorganization, merger, or consolidation of
the Company that the Board approves or (ii) provision is
made in writing in connection with such transaction for
the assumption or continuation of outstanding
Options, or
the substitution for such options or grants of any
options or grants covering the stock or securities
of a successor employer entity, or a parent or
subsidiary of such successor, with appropriate
adjustments as to the number and kind of shares of
stock and prices, in which event the Options will
continue in the manner and under the terms so
provided.
________________________________________________________________________________
Aether Systems, Inc.
1999 Equity Incentive Plan
Page 6 of 17
<PAGE>
If an Option would otherwise terminate under the preceding
sentence and the Fair Market Value of the Common Stock as a
result of the Substantial Corporate Change exceeds or is
likely to exceed the Exercise Price, the Administrator will
either provide that
optionees will have the right, at such time before
the completion of the transaction causing such
termination as the Board or the Administrator
reasonably designates, to exercise any unexercised
portions of the Option, including those portions
that the Change of Control will make exercisable
or
cause the Company, or agree to allow the
successor, to cancel each Option after payment to
the optionee of an amount in cash, cash
equivalents, or successor equity interests
substantially equal to the Fair Market Value under
the transaction minus the Exercise Price for the
shares covered by the Option (and, where the Board
or Administrator determines it is appropriate, any
required tax withholdings).
The Administrator may allow conditional exercises in advance
of the completion of a Substantial Corporate Change that are
then rescinded if no Substantial Corporate Change occurs.
The Board or other Administrator may take any actions
described in the Substantial Corporate Changes section,
without any requirement to seek optionee consent.
A Substantial Corporate Change means any of the following
events:
a sale as described in clause (i) under Change of
Control,
a dissolution or liquidation as described in
clause (ii),
an ownership change as described in clause (iii),
but with the percentage ownership increased to
100%
merger, consolidation, or reorganization of the
Company with one or more corporations or other
entities in which the Company is not the surviving
entity, or
________________________________________________________________________________
Aether Systems, Inc.
1999 Equity Incentive Plan
Page 7 of 17
<PAGE>
any other transaction (including a merger or
reorganization in which the Company survives)
approved by the Board that results in any person
or entity (other than an Excluded Owner) owning
100% of Company Voting Securities.
LIMITATION ON An Option granted to an employee will be an ISO only to the
ISOS extent that the aggregate Fair Market Value (determined at
the Date of Grant) of the stock with respect to which ISOs
are exercisable for the first time by the optionee during
any calendar year (under the Plan and all other plans of
the Company and its subsidiary corporations, within the
meaning of Code Section 422(d)), does not exceed $100,000.
This limitation applies to Options in the order in which
such Options were granted. If, by design or operation, the
Option exceeds this limit, the excess will be treated as an
NQSO.
METHOD OF To exercise any exercisable portion of an Option, the
EXERCISE optionee must:
Deliver notice of exercise to the Secretary of the
Company (or to whomever the Administrator
designates), in a form complying with any rules
the Administrator may issue, signed or otherwise
authenticated by the optionee, and specifying the
number of shares of Common Stock underlying the
portion of the Option the optionee is exercising;
Pay the full Exercise Price by cash or a
cashier's or certified check for the shares
of Common Stock with respect to which the
Option is being exercised, unless the
Administrator consents to another form of
payment (which could include loans from the
Company or the use of Common Stock); and
Deliver to the Administrator such
representations and documents as the
Administrator, in its sole discretion, may
consider necessary or advisable.
After an IPO, payment in full of the Exercise Price need not
accompany the written notice of exercise if the exercise
complies with a previously-approved cashless exercise
method, including, for example, that the notice directs that
the stock certificates (or other indicia of ownership) for
the shares issued upon the exercise be delivered to a
licensed broker acceptable to the Company as the agent for
the individual exercising the option and at the time the
stock certificates (or other indicia) are delivered to the
broker, the broker will tender to the Company cash or cash
equivalents acceptable to the Company and equal to the
Exercise Price and any required withholding taxes.
________________________________________________________________________________
Aether Systems, Inc.
1999 Equity Incentive Plan
Page 8 of 17
<PAGE>
If the Administrator agrees to allow an optionee to pay
through tendering shares of Common Stock to the Company, the
individual can only tender stock he has held for at least
six months at the time of surrender. Shares of stock offered
as payment will be valued, for purposes of determining the
extent to which the optionee has paid the Exercise Price, at
their Fair Market Value on the date of exercise. The
Administrator may also, in its discretion, accept
attestation of ownership of Common Stock and issue a net
number of shares upon Option exercise, or, after an IPO, by
having a broker tender to the Company cash equal to the
exercise price and any withholding taxes.
OPTION No one may exercise an Option more than ten years after its
EXPIRATION Date of Grant (or five years for ISOs granted to 10% owners
covered by Code Sections 422(b)(6) and 424(d)). Unless the
Option Agreement provides otherwise, either initially or by
amendment, no one may exercise an Option after the first to
occur of:
EMPLOYMENT The 90th day after the date of termination of
TERMINATION employment (other than for death or Disability),
where termination of employment means the time
when the employer-employee or other
service-providing relationship between the
employee and the Company ends for any reason. The
Administrator may provide that Options terminate
immediately upon termination of employment for
"cause" under an employee's employment or
consultant's services agreement or under another
definition specified in the Option Agreement.
Unless the Option Agreement provides otherwise,
termination of employment does not include
instances in which the Company immediately rehires
a common law employee as an independent
contractor. The Administrator, in its sole
discretion, will determine all questions of
whether particular terminations or leaves of
absence are terminations of employment.
GROSS MISCONDUCT For the Company's termination of the optionee's
employment as a result of the optionee's Gross
Misconduct, the time of such termination. For
purposes of this Plan, "Gross Misconduct" means
the optionee has committed fraud,
misappropriation, embezzlement, or willful
misconduct that has resulted or is likely to
result in material harm to the Company;
committed or been indicted for or convicted of, or
pled guilty or no contest to, any misdemeanor
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Aether Systems, Inc.
1999 Equity Incentive Plan
Page 9 of 17
<PAGE>
(other than for minor infractions or traffic
violations) involving fraud, breach of trust,
misappropriation, or other similar activity, or
any felony; or committed an act of gross
negligence or otherwise acted with willful
disregard for the Company's best interests in a
manner that has resulted or is likely to result
in material harm to the Company.
If the optionee has a written employment agreement in
effect at the time of his termination that specifies
"cause" for termination, "Gross Misconduct" for
purposes of his termination will refer to "cause" under
the employment agreement, rather than to the foregoing
definition.
DISABILITY For disability, the earlier of (i) the first anniversary
of the optionee's termination of employment for
disability and (ii) 60 days after the optionee no longer
has a disability, where "disability" means the inability
to engage in any substantial gainful activity because of
any medically determinable physical or mental impairment
that can be expected to result in death or that has
lasted or can be expected to last for a continuous
period of not less than 12 months; or
DEATH The date 12 months after the optionee's death.
If exercise is permitted after termination of employment,
the Option will nevertheless expire as of the date that the
former service provider violates any covenant not to compete
or other post-employment covenant in effect between the
Company and the former service provider. In addition, an
optionee who exercises an Option more than 90 days after
termination of employment with the Company and/or Eligible
Subsidiaries will only receive ISO treatment to the extent
the law permits, and becoming or remaining an employee of
another related company (that is not an Eligible Subsidiary)
or an independent contractor will not prevent loss of ISO
status because of the formal termination of employment.
Nothing in this Plan extends the term of an Option beyond
the tenth anniversary of its Date of Grant, nor does
anything in this Option Expiration section make an Option
exercisable that has not otherwise become exercisable,
unless the Administrator specifies otherwise.
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Aether Systems, Inc.
1999 Equity Incentive Plan
Page 10 of 17
<PAGE>
OPTION Option Agreements (which could be certificates) will set
AGREEMENT forth the terms of each Option and will include such terms
and conditions, consistent with the Plan, as the
Administrator may determine are necessary or advisable. To
the extent the agreement is inconsistent with the Plan, the
Plan will govern. The Option Agreements may contain special
rules.
PUT AND CALL The Administrator may provide in Option Agreements that the
RIGHTS Company has the right (or obligation) to purchase
outstanding Options, or the shares received from exercising
an Option, under certain circumstances, including
termination of employment for any reason or death and may
provide for rights of first refusal. The Administrator may
distinguish between unexercisable and exercisable Options.
STOCK SUBJECT Except as adjusted below under Corporate Changes,
TO PLAN
the aggregate number of shares of Common Stock
that may be subject to outstanding Options may not
exceed 20% of the shares of Common Stock issued
and outstanding as of the date on which the
Administrator seeks to make an additional grant
(provided that a decrease in shares outstanding
will not invalidate any previously issued Option),
the maximum number of shares that may be granted
under Options for a single individual in a
calendar year may not exceed 10% of the shares of
Common Stock outstanding at the closing of the
IPO, and
the aggregate number of shares of Common Stock that
may be issued under ISOs may not exceed 3,000,000.
The Common Stock will come from either authorized but
unissued shares or from previously issued shares that the
Company reacquires, including shares it purchases on the
open market or holds as treasury shares. If any Option
expires, is canceled, or terminates for any other reason,
the shares of Common Stock available under that Option will
again be available for the granting of new Options (but will
be counted against that calendar year's limit for a given
individual).
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Aether Systems, Inc.
1999 Equity Incentive Plan
Page 11 of 17
<PAGE>
No adjustment will be made for a dividend or other right for
which the record date precedes the date of exercise.
The optionee will have no rights of a stockholder with
respect to the shares of stock subject to an Option except
to the extent that the Company has issued certificates for,
or otherwise confirmed ownership of, such shares upon the
exercise of the Option.
The Company will not issue fractional shares pursuant to the
exercise of an Option, unless the Administrator determines
otherwise, but the Administrator may, in its discretion,
direct the Company to make a cash payment in lieu of
fractional shares.
PERSON WHO During the optionee's lifetime and except as provided under
MAY EXERCISE Transfers, Assignments, and Pledges, only the optionee or
his duly appointed guardian or personal representative may
exercise the Options. After his death, his personal
representative or any other person authorized under a will
or under the laws of descent and distribution may exercise
any then exercisable portion of an Option. If someone other
than the original recipient seeks to exercise any portion of
an Option, the Administrator may request such proof as it
may consider necessary or appropriate of the person's right
to exercise the Option.
ADJUSTMENTS Subject to any required action by the Company (which it
UPON CHANGES agrees to promptly take) or its stockholders, and subject
IN CAPITAL to the provisions of applicable corporate law, if, after
STOCK the Date of Grant of an Option,
the outstanding shares of Common Stock increase or
decrease or change into or are exchanged for a
different number or kind of security because of
any recapitalization, reclassification, stock
split, reverse stock split, combination of shares,
exchange of shares, stock dividend, or other
distribution payable in capital stock, or
some other increase or decrease in such Common
Stock occurs without the Company's receiving
consideration (excluding, unless the Administrator
determines otherwise, stock repurchases),
the Administrator must make a proportionate and appropriate
adjustment in the number of shares of Common Stock
underlying each Option, so that the proportionate interest
of the optionee immediately following such event will, to
the extent practicable, be the same as immediately before
such event. (This adjustment does not apply to Common Stock
_______________________________________________________________________________
Aether Systems, Inc.
1999 Equity Incentive Plan
Page 12 of 17
<PAGE>
that the optionee has already purchased.) Unless the
Administrator determines another method would be
appropriate, any such adjustment to an Option will not
change the total price with respect to shares of Common
Stock underlying the unexercised portion of the Option but
will include a corresponding proportionate adjustment in the
Option's Exercise Price. The Board or other Administrator
may take any actions described in the Adjustments upon
Changes in Capital Stock section without any requirement to
seek optionee consent.
The Administrator will make a commensurate change to the
maximum number and kind of shares provided in the Stock
Subject to Plan section.
All references to numbers of shares of Common Stock in the
Plan and in any Option grants made on or before the IPO
Effective Date assume the IPO is or will be completed and
thus relate to post-IPO numbers of shares.
Any issue by the Company of any class of preferred stock, or
securities convertible into shares of common or preferred
stock of any class, will not affect, and no adjustment by
reason thereof will be made with respect to, the number of
shares of Common Stock subject to any Option or the Exercise
Price except as this Adjustments section specifically
provides. The grant of an Option under the Plan will not
affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes
of its capital or business structure, or to merge or to
consolidate, or to dissolve, liquidate, sell, or transfer
all or any part of its business or assets.
SUBSIDIARY Employees of Company Subsidiaries will be entitled to
EMPLOYEES participate in the Plan, except as otherwise designated by
the Board of Directors or the Administrator.
Eligible Subsidiary means each of the Company's
Subsidiaries, except as the Administrator otherwise
specifies. For ISO grants, Subsidiary means any corporation
(other than the Company) in an unbroken chain of
corporations beginning with the Company if, at the time an
Option is granted to a Participant under the Plan, each
corporation (other than the last corporation in the unbroken
________________________________________________________________________________
Aether Systems, Inc.
1999 Equity Incentive Plan
Page 13 of 17
<PAGE>
chain) owns stock possessing 50% or more of the total
combined voting power of all classes of stock in another
corporation in such chain. For ISOs, Subsidiary also
includes a single-member limited liability company included
within the chain described in the preceding sentence. The
Board or the Administrator may use a different definition of
Subsidiary for NQSOs.
LEGAL The Company will not issue any shares of Common Stock under
COMPLIANCE an Option until all applicable requirements imposed by
Federal and state securities and other laws, rules, and
regulations, and by any applicable regulatory agencies or
stock exchanges, have been fully met. To that end, the
Company may require the optionee to take any reasonable
action to comply with such requirements before issuing such
shares. No provision in the Plan or action taken under it
authorizes any action that Federal or state laws otherwise
prohibit.
The Plan is intended to conform to the extent necessary with
all provisions of the Securities Act of 1933 ("Securities
Act") and the Securities Exchange Act of 1934 and all
regulations and rules the Securities and Exchange Commission
issues under those laws. Notwithstanding anything in the
Plan to the contrary, the Administrator must administer the
Plan, and Options may be granted and exercised, only in a
way that conforms to such laws, rules, and regulations. To
the extent permitted by applicable law, the Plan and any
Options will be treated as amended to the extent necessary
to conform to such laws, rules, and regulations.
PURCHASE FOR Unless a registration statement under the Securities Act
INVESTMENT AND covers the share of Common Stock an optionee receives upon
OTHER exercising his Option, the Administrator may require, at the
RESTRICTIONS time of such exercise, that the optionee agree in writing to
acquire such shares for investment and not for public resale
or distribution, unless and until the shares subject to the
Option are registered under the Securities Act. Unless the
shares are registered under the Securities Act, the optionee
must acknowledge:
that the shares purchased on exercise of the
Option are not so registered,
that the optionee may not sell or otherwise
transfer the shares unless
such sale or transfer complies with all applicable
laws, rules, and regulations, including all
applicable Federal and state securities laws,
rules, and regulations, and either
________________________________________________________________________________
Aether Systems, Inc.
1999 Equity Incentive Plan
Page 14 of 17
<PAGE>
the shares have been registered under the
Securities Act in connection with the sale or
transfer thereof, or
counsel satisfactory to the Company has issued an
opinion satisfactory to the Company that the sale
or other transfer of such shares is exempt from
registration under the Securities Act.
Additionally, the Common Stock, when issued upon the
exercise of an Option, will be subject to any other transfer
restrictions, rights of first refusal, and rights of
repurchase set forth in or incorporated by reference into
other applicable documents, including the Option Agreements,
or the Company's articles or certificate of incorporation,
by-laws, or generally applicable stockholders' agreements.
The Administrator may, in its sole discretion, take whatever
additional actions it deems appropriate to comply with such
restrictions and applicable laws, including placing legends
on certificates and issuing stop- transfer orders to
transfer agents and registrars.
TAX WITHHOLDING The optionee must satisfy all applicable Federal, state, and
local income and employment tax withholding requirements
before the Company will deliver stock certificates or
otherwise recognize ownership upon the exercise of an
Option. The Company may decide to satisfy the withholding
obligations through additional withholding on salary or
wages. If the Company does not or cannot withhold from other
compensation, the optionee must pay the Company, with a
cashier's check or certified check, the full amounts, if
any, required for withholding. Payment of withholding
obligations is due at the same time as is payment of the
Exercise Price. If the Administrator so determines, the
optionee may instead satisfy the withholding obligations by
directing the Company to retain shares from the Option
exercise, by tendering previously owned shares, or by
attesting to his ownership of shares (with the distribution
of net shares), or, after an IPO, by having a broker tender
to the Company cash equal to the withholding taxes.
TRANSFERS, Unless the Administrator otherwise approves in advance in
ASSIGNMENTS, writing for estate planning or other purposes, an Option may
AND PLEDGES not be assigned, pledged or otherwise transferred in any
way, whether by operation of law or otherwise or through any
legal or equitable proceedings (including bankruptcy), by
the optionee to any person, except by will or by operation
of applicable laws of descent and distribution. If necessary
to comply with Rule 16b-3, the optionee may not transfer or
pledge shares of Common Stock acquired upon exercise of an
Option until at least six months have elapsed from (but
excluding) the Date of Grant, unless the Administrator
approves otherwise in advance in writing. The Administrator
may, in its discretion, expressly provide that an optionee
may transfer his Option, without receiving consideration, to
________________________________________________________________________________
Aether Systems, Inc.
1999 Equity Incentive Plan
Page 15 of 17
<PAGE>
(i) members of his immediate family (children,
grandchildren, or spouse), (ii) trusts for the benefit of
such family members, or (iii) partnerships whose only
partners are such family members.
AMENDMENT OR The Board may amend, suspend, or terminate the Plan at any
TERMINATION time, without the consent of the optionees or their
OF PLAN AND beneficiaries; provided, however, that such actions are
OPTIONS consistent with this section. Except as required by law or
by the SUBSTANTIAL CORPORATE CHANGES section, the
Administrator may not, without the optionee's or
beneficiary's consent, modify the terms and conditions of an
Option so as to materially adversely affect the optionee. No
amendment, suspension, or termination of the Plan will,
without the optionee's or beneficiary's consent, terminate
or materially adversely affect any right or obligations
under any outstanding Options, except as provided in the
SUBSTANTIAL CORPORATE CHANGES Section.
PRIVILEGES OF No optionee and no beneficiary or other person claiming
STOCK under or through such optionee will have any right, title,
OWNERSHIP or interest in or to any shares of Common Stock allocated or
reserved under the Plan or subject to any Option except as
to such shares of Common Stock, if any, already issued to
such optionee.
EFFECT ON Whether exercising an Option causes the optionee to accrue
OTHER PLANS or receive additional benefits under any pension or other
plan is governed solely by the terms of such other plan.
LIMITATIONS ON Notwithstanding any other provisions of the Plan, no
LIABILITY individual acting as a director, officer, other employee, or
agent of the Company will be liable to any optionee, former
optionee, spouse, beneficiary, or any other person for any
claim, loss, liability, or expense incurred in connection
with the Plan, nor will such individual be personally liable
because of any contract or other instrument he executes in
such other capacity. The Company will indemnify and hold
harmless each director, officer, other employee, or agent of
the Company to whom any duty or power relating to the
administration or interpretation of the Plan has been or
will be delegated, against any cost or expense (including
attorneys' fees) or liability (including any sum paid in
settlement of a claim with the Board's approval) arising out
of any act or omission to act concerning this Plan unless
arising out of such person's own fraud or bad faith.
NO EMPLOYMENT Nothing contained in this Plan constitutes an employment
CONTRACT contract between the Company and the optionees. The Plan
does not give any optionee any right to be retained in the
Company's employ, nor does it enlarge or diminish the
Company's right to end the optionee's employment or other
relationship with the Company.
________________________________________________________________________________
Aether Systems, Inc.
1999 Equity Incentive Plan
Page 16 of 17
<PAGE>
APPLICABLE LAW The laws of the State of Delaware (other than its choice of
law provisions) govern this Plan and its interpretation.
DURATION OF Unless the Board extends the Plan's term, the Administrator
PLAN may not grant Options after September 20, 2009. The Plan
will then terminate but will continue to govern unexercised
and unexpired Options.
APPROVAL OF The Plan must be submitted to Company stockholders for their
THE PLAN approval within 12 months before or after the Board adopts
the Plan to qualify any Options designated as ISOs for
treatment as such. If the stockholders do not so approve the
Plan, the Plan and any outstanding ISOs will be treated as
void and of no effect.
________________________________________________________________________________
Aether Systems, Inc.
1999 Equity Incentive Plan
Page 17 of 17
WILMER, CUTLER & PICKERING
2445 M Street, N.W.
Washington, D.C. 20037-1420
Telephone (202) 663-6000
Facsimile (202) 663-6363
November 18, 1999
Aether Systems, Inc.
11460 Cronridge Drive, Suite 106
Owings Mills, Maryland 21117
Re: Aether Systems, Inc. Registration Statement on Form S-8
Dear Ladies and Gentlemen:
We have acted as counsel to Aether Systems, Inc., a Delaware
corporation (the "Company"), in connection with a registration statement on Form
S-8 (the "Registration Statement") to be filed with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended. The
Registration Statement relates to the registration of the shares of Common Stock
of the Company, par value $0.01 per share (the "Shares"), to be issued under the
Company's 1999 Equity Incentive Plan (the "1999 Plan").
For the purposes of this opinion, we have examined and relied
upon the following documents, as certified by the Secretary of the Company on
November, as then being complete, accurate and in effect:
(1) a copy of the 1999 Plan; and
(2) a copy of the Resolutions of the Board of Directors
dated September 20, 1999 adopting the Plan.
In our examination of the aforesaid documents, we have assumed
the genuineness of all signatures, the legal capacity of natural persons, the
authenticity of all documents submitted to us as originals, and the conformity
with the original documents of all documents submitted to us as certified,
telecopied, photostatic, or reproduced copies. We have assumed the accuracy of
the foregoing certifications, on which we are relying, and have made no
independent investigation thereof.
Based solely upon the foregoing, and upon our examination of
such questions of law and statutes as we have considered necessary or
appropriate, and subject to the
<PAGE>
Aether Systems, Inc.
November 18, 1999
Page 2
assumptions, qualifications, limitations, and exceptions set forth in this
letter, we are of the opinion that: (a) the Shares have been lawfully and duly
authorized; and (b) such Shares will be validly issued, fully paid, and
nonassessable upon payment of the purchase price established under the 1999
Plan.
This opinion is limited to the laws of the United States and
the General Corporation Law of Delaware. Although we do not hold ourselves out
as being experts in the Laws of Delaware, we have made an investigation of such
laws to the extent necessary to render our opinion. Our opinion is rendered
only with respect to the laws and the rules, regulations, and orders thereunder
that are currently in effect.
We assume no obligation to advise you of any changes in the
foregoing subsequent to the delivery of this opinion. This opinion has been
prepared for your use in connection with the filing of the Registration
Statement on or about November 19, 1999, and should not be quoted in whole or
in part or otherwise be referred to, nor otherwise be filed with or furnished
to any governmental agency or other person or entity, without our express prior
written consent.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement.
Sincerely,
WILMER, CUTLER & PICKERING
By: /s/ R. Scott Kilgore
----------------------------
R. Scott Kilgore, a partner
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
Aether Systems, Inc.
We consent to the use of our reports incorporated herein by reference, which
reports appear in Amendment No. 5 to the Form S-1 (No. 333-85697) of Aether
Systems, Inc. dated October 20, 1999.
/s/ KPMG LLP
McLean, Virginia
November 19, 1999
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of Aether Systems, Inc. of our report dated March 10, 1999
relating to the financial statements of Mobeo, Inc. as of December 31, 1997 and
1998 and the three years in the period ended December 31, 1998.
/s/ PricewaterhouseCoopers LLP
McLean, Virginia
November 19, 1999
