<PAGE> 1
As filed with the Securities and Exchange Commission on December 10, 1997
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------------
DSC COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 54-1025763
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1000 COIT ROAD 75075
PLANO, TEXAS (Zip Code)
(Address of principal executive offices)
DSC COMMUNICATIONS CORPORATION DSC SPECIAL CELCORE INCENTIVE PLAN
(Full title of the Plan)
GEORGE B. BRUNT
DSC COMMUNICATIONS CORPORATION
1000 COIT ROAD
PLANO, TEXAS 75075
(972) 519-3000
(Name and address of agent for service)
with a copy to:
DANIEL W. RABUN
BAKER & MCKENZIE
2001 ROSS AVENUE, SUITE 4500
DALLAS, TEXAS 75201
(214) 978-3000
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=====================================================================================================================
Title of Each Class of Proposed Maximum Proposed Maximum Amount of
Securities to be Amount to be Offering Price Per Aggregate Offering Registration
Registered(1) Registered(2) Security(3) Price(3) Fee(4)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value 145,946 Shares $23.375 $3,411,488 $1,007
- ---------------------------------------------------------------------------------------------------------------------
Preferred Stock Purchase Rights 145,946 Rights Not Applicable Not Applicable Not Applicable
=====================================================================================================================
</TABLE>
(1) Shares of common stock of DSC Communications Corporation (the
"Company"), $.01 par value per share (the "Common Stock"), being
registered hereby relate to the DSC Communications Corporation DSC
Special Celcore Incentive Plan (the "Plan"). Pursuant to Rule 416
promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), there are also being registered such additional
shares of Common Stock as may become issuable pursuant to the
anti-dilution provisions of the Plan.
(2) The shares covered by this Registration Statement were previously
registered under the Company's Registration Statement, Registration No.
333-39591 (which covers 1,515,098 shares of Common Stock). A
registration fee in the amount of $2,194.00 was paid with respect to
such Registration Statement.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) and (h) promulgated under the Securities Act
on the basis of the average of the high and low sale prices of the
Common Stock on December 9, 1997, as reported on the Nasdaq Stock
Market.
(4) In accordance with rule 457(g), no additional registration fee is
required in respect of Preferred Stock Purchase Rights.
================================================================================
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The documents listed in (a) through (h) below are hereby incorporated
by reference into this Registration Statement. All documents subsequently
filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), prior to the
filing of a post-effective amendment to the Registration Statement which
indicates that all shares of Common Stock, including the preferred stock
purchase rights attaching to such stock pursuant to that certain Rights
Agreement dated April 25, 1996 by and between the Company and Harris Trust and
Savings Bank, formerly KeyCorp Shareholder Services, Inc. (the "Preferred Stock
Purchase Rights"), offered hereunder have been sold or which deregisters all
shares then remaining unsold, shall be deemed to be incorporated herein by
reference and to be a part hereof from the date of filing of such documents.
(a) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996;
(b) The Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1997;
(c) The Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 1997;
(d) The Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 1997;
(e) The Company's Current Report on Form 8-K filed August 26,
1997;
(f) The Company's Current Report on Form 8-K filed November 3,
1997;
(g) The Company's Current Report on Form 8-K filed November 13,
1997; and
(h) The description of the Company's Common Stock as contained in
the Company's Registration Statement on Form 8-A dated October
27, 1981, including all amendments and reports filed for the
purpose of updating such descriptions; and the description of
the Company's Preferred Stock Purchase Rights as contained in
the Company's Registration Statement on Form 8-A dated May 13,
1996, including all amendments and reports filed for the
purpose of updating such descriptions.
ITEM 4. DESCRIPTION OF SECURITIES
Not Applicable.
ITEM 5. INTEREST OF NAMED EXPERTS AND COUNSEL
None.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's bylaws require that directors and officers be
indemnified to the maximum extent permitted by law. The Company's Restated
Certificate of Incorporation includes a provision eliminating, to the fullest
extent permitted by the General Corporation Law of the State of Delaware (the
"DGCL"), director liability for monetary damages for breaches of fiduciary
duty.
Section 145 of the DGCL provides that a director or officer of a
corporation (i) shall be indemnified by the corporation for all expenses of
litigation or other legal proceedings brought against such person by reason of
the fact that such person is or was a director or an officer of the corporation
when he is successful on the merits, (ii) may be indemnified by the corporation
for the expenses, judgments, fines, and amounts paid in settlement of such
litigation (other than a derivative suit) even if he is not successful on the
merits if he acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the corporation (and, in the case of
a criminal proceeding, had no reason to believe his conduct was unlawful), and
(iii) may be indemnified by the corporation for expenses of a
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<PAGE> 3
derivative suit (a suit by a stockholder alleging a breach by a director or
officer of a duty owed to the corporation), even if he is not successful on the
merits, if he acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the corporation, provided that no
such indemnification may be made in accordance with this clause (iii) if the
director or officer is adjudged liable to the corporation, unless a court
determines that, despite such adjudication but in view of all circumstances, he
is fairly and reasonably entitled to indemnification of such expenses. The
indemnification described in clauses (ii) and (iii) above shall be made only
upon order by a court or a determination by (a) a majority of directors who are
not parties to such action, (b) a majority vote of a committee consisting of
such disinterested directors, (c) independent legal counsel in a written
opinion if no such disinterested directors exist, or if such disinterested
directors so direct, or (d) the stockholders, that indemnification is proper
because the applicable standard of conduct is met. Expenses incurred by a
director or officer in defending an action may be advanced by the corporation
prior to the final disposition of such action upon receipt of an undertaking by
such director or officer to repay such expenses if it is ultimately determined
that he is not entitled to be indemnified in connection with the proceeding to
which the expenses relate.
The Company has purchased and currently has in force directors' and
officers' liability insurance policies which cover certain liabilities of
directors and officers arising out of claims based on certain acts or omissions
by them in their capacity as directors or officers. The Company has entered
into indemnification agreements with certain of its directors and executive
officers. Each of these agreements, among other things, contractually
obligates the Company to, under certain circumstances, indemnify the officer or
director against certain expenses and liabilities arising out of legal
proceedings which may be brought against such officer or director by reason of
his status or service as a director or officer. In addition, in a related
trust agreement (the "Trust Agreement"), the Company has provided $1 million to
be held in trust by a third-party trustee to be used to satisfy the Company's
obligations pursuant to the indemnification agreements which have been executed
and any similar agreements which may be executed in the future. The Trust
Agreement further provides that the Company's Board of Directors may, in its
discretion, provide up to an additional $1 million to the trustee.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
None.
ITEM 8. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
*3.1 Restated Certificate of Incorporation of the Company, dated November 3, 1997
4.1 Indenture, dated August 12, 1997, between the Company and The Bank of New York, as Trustee
(incorporated by reference to Exhibit No. 4.1 to the Company's Current Report on Form 8-K, Commission
File No. 0-10018, dated August 26, 1997)
4.2 Registration Rights Agreement, dated as of August 12, 1997, among the Company, Goldman, Sachs & Co. and
NationsBanc Capital Markets, Inc. (incorporated by reference to Exhibit No. 4.2 to the Company's
Current Report on Form 8-K, Commission File No. 0-10018, dated August 26, 1997)
*4.3 Restated Certificate of Incorporation of the Company, dated November 3, 1997 (included in Exhibit 3.1)
4.4 Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit No. 3.4 to the
Company's Annual Report on Form 10-K for the year ended December 31, 1996, Commission File No. 0-10018,
dated March 31, 1997)
4.5 Rights Agreement, dated April 25, 1996 between the Company and Harris Trust and Savings Bank, formerly
KeyCorp Shareholder Services, Inc., as rights agent (incorporated by reference to Exhibit No. 4 to the
Company's Current Report on Form 8-K, Commission File No. 0-010018, dated May 9, 1996)
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C>
4.6 Form of Notes (included in Exhibit 4.1)
*4.7 DSC Communications Corporation DSC Special Celcore Incentive Plan
*5.1 Opinion of Baker & McKenzie
*23.1 Consent of Baker & McKenzie (included in Exhibit 5.1)
*23.2 Consent of Ernst & Young LLP
*24 Power of Attorney (see signature pages of Registration Statement)
</TABLE>
- ------------------------
* Filed herewith.
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 the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement;
(iii) To include any material information with respect to the
Plan of Distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
Registration Statement is on Form S-3, or Form S-8, 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 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 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 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> 5
(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 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.
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<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 Plano, State of Texas, on December 10, 1997.
DSC COMMUNICATIONS CORPORATION
By: /s/ James L. Donald
-------------------------------------------
Name: JAMES L. DONALD
Title: Chairman of the Board, President and
Chief Executive Officer
POWER OF ATTORNEY
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. Each person whose signature appears
below hereby authorizes and appoints James L. Donald and Gerald F. Montry, and
each of them, either one of whom may act without joinder of the other, as his
attorney-in-fact to sign on his behalf individually and in the capacity stated
below all amendments and post-effective amendments to this Registration
Statement as that attorney-in-fact may deem necessary or appropriate.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ James L. Donald Chairman of the Board, President and Chief December 10, 1997
-------------------------------------- Executive Officer (Principal Executive
JAMES L. DONALD Officer)
/s/ Gerald F. Montry Senior Vice President, Chief Financial December 10, 1997
-------------------------------------- Officer, and Director (Principal Financial
GERALD F. MONTRY Officer)
/s/ Kenneth R. Vines Vice President, Finance (Principal
-------------------------------------- Accounting Officer) December 10, 1997
KENNETH R. VINES
/s/ Raymond J. Dempsey Director December 10, 1997
--------------------------------------
RAYMOND J. DEMPSEY
/s/ Sir John Fairclough Director December 10, 1997
--------------------------------------
SIR JOHN FAIRCLOUGH
/s/ James L. Fischer Director December 10, 1997
--------------------------------------
JAMES L. FISCHER
</TABLE>
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<PAGE> 7
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C> <C>
/s/ Robert S. Folsom Director December 10, 1997
--------------------------------------
ROBERT S. FOLSOM
/s/ William O. Hunt Director December 10, 1997
--------------------------------------
WILLIAM O. HUNT
/s/ Morton L. Topfer Director December 10, 1997
--------------------------------------
MORTON L. TOPFER
</TABLE>
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<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
*3.1 Restated Certificate of Incorporation of the Company, dated November 3, 1997
4.1 Indenture, dated August 12, 1997, between the Company and The Bank of New York, as Trustee
(incorporated by reference to Exhibit No. 4.1 to the Company's Current Report on Form 8-K, Commission
File No. 0-10018, dated August 26, 1997)
4.2 Registration Rights Agreement, dated as of August 12, 1997, among the Company, Goldman, Sachs & Co. and
NationsBanc Capital Markets, Inc. (incorporated by reference to Exhibit No. 4.2 to the Company's
Current Report on Form 8-K, Commission File No. 0-10018, dated August 26, 1997)
*4.3 Restated Certificate of Incorporation of the Company, dated November 3, 1997 (included in Exhibit 3.1)
4.4 Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit No. 3.4 to the
Company's Annual Report on Form 10-K for the year ended December 31, 1996, Commission File No. 0-10018,
dated March 31, 1997)
4.5 Rights Agreement, dated April 25, 1996 between the Company and Harris Trust and Savings Bank, formerly
KeyCorp Shareholder Services, Inc., as rights agent (incorporated by reference to Exhibit No. 4 to the
Company's Current Report on Form 8-K, Commission File No. 0-010018, dated May 9, 1996)
4.6 Form of Notes (included in Exhibit 4.1)
*4.7 DSC Communications Corporation DSC Special Celcore Incentive Plan
*5.1 Opinion of Baker & McKenzie
*23.1 Consent of Baker & McKenzie (included in Exhibit 5.1)
*23.2 Consent of Ernst & Young LLP
*24 Power of Attorney (see signature pages of Registration Statement)
</TABLE>
- ------------------------
* Filed herewith.
<PAGE> 1
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
DSC COMMUNICATIONS CORPORATION
(Originally Incorporated as Digital Switch Corporation on September 20, 1976)
DSC COMMUNICATIONS CORPORATION, a corporation duly organized and
existing under the General Corporation Laws of the State of Delaware, does
hereby certify that the following Restated Certificate of Incorporation was
duly adopted by the Board of Directors of the corporation on October 27, 1997
in accordance with the provisions of Section 245 of the General Corporation
Laws of the State of Delaware. This Restated Certificate of Incorporation only
restates and integrates and does not further amend the provisions of this
corporation's Certificate of Incorporation as theretofore amended or
supplemented and there is no discrepancy between the Certificate of
Incorporation and this Restated Certificate of Incorporation.
FIRST: The name of the corporation is DSC COMMUNICATIONS CORPORATION.
SECOND: The address of the registered office of the corporation in the
State of Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington,
New Castle County, Delaware, 19801. The name of the registered agent of the
corporation at such address is The Corporation Trust Company.
THIRD: The purpose of the corporation is to engage in any
lawful act or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH: The total number of shares of all classes of stock which the
corporation shall have the authority to issue shall be as set forth in
subsections (a) and (b) below.
(a) The total number of shares of Common Stock which the
corporation shall have the authority to issue shall be five hundred
million (500,000,000) shares of the par value of $.01 each.
(b) The total number of shares of Preferred Stock which
the corporation shall have authority to issue shall be five million
(5,000,000) shares of the par value of $1.00 each. The Preferred Stock
may be issued from time to time in one or more series with such
distinctive series designations as may be stated in the resolution or
resolutions providing for the issue of such stock as from time to time
authorized by the Board of Directors. The resolution or resolutions
providing for the issue of shares of a particular series shall fix,
subject to applicable laws and provisions of this Restated Certificate
of Incorporation, the designation, rights, preferences and limitations
of the shares of each such series. The authority of the Board of
Directors with respect to each series shall include, but not be limited
to, determination of the following:
(i) the number of shares constituting such series, including
authority to increase or decrease such number, and the
distinctive designation of such series;
(ii) the rate of dividends payable on shares of such series,
the dates on which such dividends shall be paid, and the date or
dates from which such dividends shall be cumulative;
(iii) the voting power, if any, for such series and the terms
and conditions under which such voting power may be exercised;
(iv) the right, if any, of the corporation to redeem shares
of such series and the terms and conditions of such redemption;
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<PAGE> 2
(v) the obligation, if any, of the corporation to retire
shares of such series pursuant to a retirement or sinking fund
or funds of a similar nature or otherwise and the terms and
conditions of such obligation;
(vi) the terms and conditions, if any, upon which shares of
such series shall be convertible into or exchangeable for shares
of stock of any other class or classes or shares of stock of a
subsidiary or subsidiaries of the corporation or other property,
including the price or prices or the rate or rates of conversion
or exchange and the terms of adjustment, if any;
(vii) the amount which the holders of the shares of such series
shall be entitled to receive in case of a voluntary or
involuntary liquidation, dissolution or winding up of the
corporation;
(viii) the relative seniority, parity or junior rank of such
series as to dividends or assets with respect to any other class
or series of stock then or thereafter issued; and
(ix) any other rights, preferences or limitation of the shares
of such series;
so far as not inconsistent with the provisions of this Restated
Certificate of Incorporation, and to the full extent now or hereafter
permitted by the laws of Delaware. All shares of Preferred Stock
shall be of equal rank, except in respect of the particulars that may
be fixed by the Board of Directors as hereinabove in this paragraph
provided, and all shares of each series shall be identical in all
respects except as to the dates from which dividends thereon shall be
cumulative.
FIFTH: The business and affairs of the corporation shall be managed and
controlled by a Board of Directors consisting of not more than fifteen nor less
than seven members. Within such limits, the number of directors constituting
the Board of Directors may be increased or decreased at any time by resolution
passed by a majority of the directors holding office at such time; provided,
however, that no decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director. The directors
shall be classified with respect to the time during which they shall severally
hold office by dividing them into three classes, as nearly equal in number as
possible, with each class including not less than two directors. In instances
where the total number of directors constituting the whole Board of Directors
is a number other than an integral multiple of three, the number of directors
in each class shall be determined by the Board of Directors. All directors of
the corporation shall hold office for the term which elected and until their
respective successors shall be elected and qualified or until their earlier
resignation or removal. At the meeting of the stockholders of the corporation
held for the election of the first such classified board, the directors of the
first class (designated as Class I) shall be elected for a term expiring at the
annual meeting of stockholders one year thereafter, the directors of the second
class (designated as Class II) for a term expiring at the annual meeting of
stockholders two years thereafter and the directors of the third class
(designated as Class III) for a term expiring at the annual meeting of
stockholders three years thereafter and, in each instance, until their
respective successors shall be elected and qualified or until their earlier
resignation or removal. At each annual meeting of stockholders held after such
classification and election, the successors to the class of directors whose
terms shall expire that year shall be elected to hold office for a term of
three years and until their respective successors shall be elected and
qualified or until their earlier resignation or removal, so that the term of
office of one class of directors shall expire at the annual meeting of
stockholders each year. Notwithstanding the foregoing, whenever the holders of
any one or more class or series of Preferred Stock issued by the corporation
shall have the right, voting separately by class or series, to elect directors
at an annual or special meeting of stockholders, the election, term of office,
filing of vacancies and other features of such directorships shall be governed
by the term of this Restated Certificate of Incorporation applicable thereto,
and such directors so elected shall not be divided into classes pursuant to
this Article FIFTH unless expressly provided by such terms.
In the event of newly created directorships resulting from an increase
in the number of directors or any vacancies in the Board of Directors,
including vacancies occurring in the Board of Directors by reason of removal of
directors, a majority of the remaining members of the board, although less than
a quorum, may elect directors to fill such newly created directorships or
vacancies, and directors so chosen shall hold office until the next election of
the class for which such directors shall have been chosen and until their
respective successors shall be elected and qualified or until their earlier
resignation or removal.
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<PAGE> 3
None of the directors need be a stockholder of the corporation or a
resident of the State of Delaware. Each Director must have obtained the age of
majority.
SIXTH: Any merger or consolidation of the corporation with or into any
other corporation, or any sale, lease, exchange or other disposition of all or
substantially all of the assets of the corporation to or with any other
corporation, person or other entity, shall require the affirmative vote of the
holders of at least three-fourths of the outstanding shares of capital stock of
the corporation issued and outstanding and entitled to vote if, as of the record
date for the determination of stockholders entitled to notice thereof and to
vote thereon, such other corporation, person or entity is the beneficial owner,
directly or indirectly, of five percent (5%) or more of the outstanding shares
of capital stock of the corporation issued and outstanding and entitled to vote.
For purposes of this Article SIXTH, a corporation, person or other
entity shall be deemed to be the beneficial owner of any shares of capital
stock of the corporation (i) which it has the right to acquire pursuant to any
agreement, or upon exercise of conversion rights, warrants or options, or
otherwise, or (ii) which are beneficially owned, directly or indirectly
(including shares deemed owned through application of clause (i) of this
paragraph above), by any other corporation, person, or other entity (a) with
which it or its "affiliate" or "associate" (as referenced below) has any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of capital stock of the corporation or (b) which is its
"affiliate" or "associate" as those terms are defined in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act of 1934. For
purposes of this Article SIXTH, the outstanding shares of capital stock of the
corporation shall include shares deemed owned through the application of
clauses (i) and (ii) of this paragraph but shall not include any other shares
which may be issuable pursuant to any agreement, or upon exercise of conversion
rights, warrants or options, or otherwise.
The Board of Directors of the corporation shall have the power and
duty to determine for the purposes of this Article SIXTH, on the basis of
information then known to it, whether (a) any corporation, person, or other
entity beneficially owns, directly or indirectly, five percent (5%) or more of
the outstanding shares of capital stock of the corporation entitled to vote and
(b) any sale, lease, exchange or other disposition of part of the assets of the
corporation involves substantially all of the assets of the corporation. Any
such determination by the Board shall be conclusive and binding for all
purposes of this Article SIXTH.
This Article SIXTH may not be amended or rescinded except by the
affirmative vote of the holders of at least three-fourths of the outstanding
shares of capital stock of the corporation issued and outstanding and entitled
to vote, at any regular or special meeting of the stockholders if notice of the
proposed alteration or amendment be contained in the notice of the meeting.
SEVENTH: In furtherance and not in limitation of the powers conferred
by the laws of the State of Delaware, the Board of Directors is expressly
authorized to adopt, amend or repeal the bylaws.
EIGHTH: The corporation reserves the right to amend and repeal any
provision contained in this Restated Certificate of Incorporation in the manner
prescribed by the laws of the State of Delaware and, in matters pertaining
thereto, consistent with the provisions of Article SIXTH hereof. All rights
herein conferred are granted subject to this reservation.
NINTH: A Director of this corporation shall not be liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent such exemption from liability or
limitation thereof is not permitted under the Delaware General Corporation Law
as the same exists or may hereafter be amended.
Any repeal or modification of the foregoing paragraph by the
stockholders of this corporation shall not adversely affect any right or
protection of a Director of the corporation existing at the time of such repeal
or modification.
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<PAGE> 4
IN WITNESS WHEREOF, DSC COMMUNICATIONS CORPORATION has caused this
Restated Certificate of Incorporation to be signed and attested by its duly
authorized officers, this 27th day of October, 1997.
DSC COMMUNICATIONS CORPORATION
By: /s/ Gerald F. Montry
-------------------------------------------------
Gerald F. Montry, Senior Vice President
and Chief Financial Officer
Attest:
/s/ George B. Brunt
- -----------------------------
George B. Brunt, Vice President,
Secretary and General Counsel
Secretary and General Counsel
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<PAGE> 1
EXHIBIT 4.7
DSC COMMUNICATIONS CORPORATION
DSC SPECIAL CELCORE INCENTIVE PLAN
Scope and Purpose of Plan
This DSC Special Celcore Incentive Plan (the "Plan") provides for the granting
of:
(a) Options (hereinafter defined) to certain employees of DSC
Communications Corporation, a Delaware corporation (the
"Corporation"), or its Affiliates (as hereinafter defined) who
are Eligible Individuals (as hereinafter defined), and
(b) The right to cash payments (the "Cash Payments") to certain
employees of the Corporation or its Affiliates who are
Eligible Individuals.
This Plan is being implemented pursuant to the terms of the Amended and
Restated Agreement and Plan of Merger (the "Merger Agreement"), dated as of
December ___, 1997 by and among the Corporation, CI Acquisition Company, a
Delaware corporation and a direct, wholly owned subsidiary of the Corporation,
and CELCORE, INC., a Delaware corporation ("Celcore").
SECTION 1. DEFINITIONS.
"ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"AFFILIATES" shall mean all persons and business entities,
whether corporations, partnerships, joint ventures or otherwise, which now or
hereafter control, or are owned or controlled, directly or indirectly, by the
Corporation, or are under common control with the Corporation.
"AGGREGATE OPTION AMOUNT" shall mean (i) with respect to the
Fiscal Year ending December 31, 1998, an amount equal to $800,000 divided by the
Closing Sales Price, (ii) with respect to the Fiscal Year ending December 31,
1999, an amount equal to $1,450,000 divided by the Closing Sales Price, and
(iii) with respect to each Fiscal Year ending December 31, 2000 and December 31,
2001, an amount equal to the difference of (A) $2,250,000 minus (B) the then
aggregate of the Annual Option Vesting Amount for each of the Fiscal Years prior
to the Fiscal Year in question.
"AGGREGATE OPTION SHARES" shall have the meaning set forth in
Section 2.1 hereof.
"AGGREGATE PAYMENT AMOUNT" shall mean (i) with respect to the
Fiscal Year ending December 31, 1998, an amount equal to $800,000, and (ii) with
respect to the Fiscal Year ending December 31, 1999, an amount equal to
$1,450,000.
"AGREEMENT" shall mean the written agreement between the
Corporation and an Eligible Individual in the form attached as Exhibit A hereto
evidencing the Option and Cash Payment granted by the Corporation.
"ANNUAL OPTION VESTING AMOUNT" shall have the meaning set
forth in Section 6.2(a) hereof.
"ANNUAL PAYMENT AWARD" shall have the meaning set forth in
Section 2.2 hereof.
"APPLICABLE PERCENTAGE" shall mean with respect to a Fiscal
Year, the sum of (i) sixty percent (60%), plus (ii) the product of (A) two (2),
times (B) the difference of the Attained Percentage with respect to such Fiscal
Year, minus eighty percent (80%); provided, however, in the event the Applicable
Percentage for that Fiscal Year is less than zero, the Applicable Percentage for
such Fiscal Year shall be deemed to be zero.
"ATTAINED PERCENTAGE" shall mean with respect to a Fiscal
Year, the percentage when expressed as a fraction has as its numerator the
Celcore Revenues with respect to that Fiscal Year and has as its denominator the
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Target Revenue with respect to that Fiscal Year; provided that in no event
shall the Attained Percentage exceed one hundred twenty-five percent (125%).
"BOARD OF DIRECTORS" shall mean the board of directors of the
Corporation.
"CASH PAYMENT" shall have the meaning set forth in the
recitals hereof.
"CAUSE" means conduct that amounts to (i) fraud or dishonesty
against the Corporation or its Affiliates, (ii) Eligible Individual's willful
misconduct, repeated refusal to follow the reasonable directions of the board of
directors of the Corporation or its Affiliates, or knowing violation of law in
the course of performance of the duties of Eligible Individual's service with
the Corporation or its Affiliates, (iii) repeated absences from work without a
reasonable excuse, (iv) repeated intoxication with alcohol or drugs while on the
Corporation or Affiliates' premises during regular business hours, (v) a
conviction or plea of guilty or nolo contendere to a felony or a crime involving
dishonesty, (vi) a breach or violation of the terms of any agreement to which an
Eligible Individual and the Corporation or its Affiliates are party, including,
without limitation, any agreement providing for the protection of the
confidential information or the proprietary rights of the Corporation or its
Affiliates or any agreement involving non-competition obligations of the
Eligible Individual, or (vii) the violation of the sexual harassment policy of
the Corporation or any of its Affiliates or the determination that such Eligible
Individual has engaged in any misconduct of a sexual nature that unreasonably
interferes with an individual's work performance or creates an intimidating,
hostile or offensive working environment at the Corporation or any of its
Affiliates; provided, however, notwithstanding the foregoing, in respect of
Messrs. Berger, Gonzalez and Foley, the term "Cause" shall have the meaning
provided in their respective Employment Agreements dated October 29, 1997.
"CELCORE REVENUES" shall mean the revenues, if any, of the
Corporation and its Affiliates recognized by the Corporation under its revenue
recognition policy and attributable to the line of products currently being
developed or marketed by Celcore as of the Effective Time. For purposes of this
Plan, "Celcore Revenues" and "revenues" (i) shall be reduced by all discounts or
rebates, and Federal, state, county, city and local taxes and any charges for
shipping, duty or insurance, relating to the products and related services
referred to above and (ii) shall include revenues derived from services
associated with such products, including engineering, installation, repair,
service and training.
"CLOSING SALES PRICE" shall mean the reported last sale prices
of a share of Stock on the NASDAQ National Market as reported on the date of the
Effective Time.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended.
"COMMITTEE" shall mean the committee appointed pursuant to
Section 3 hereof by the Board of Directors to administer this Plan.
"EFFECTIVE TIME" shall have the meaning provided in the Merger
Agreement.
"ELIGIBLE INDIVIDUALS" shall mean the employees of the
Corporation or its Affiliates participating in the Plan.
"FISCAL YEAR" shall mean the twelve months beginning on
January 1 of any year and ending on December 31 of the same year, except that
the first Fiscal Year shall begin on January 1, 1998 and shall end on December
31, 1998.
"OPTION" shall mean any stock option which is granted by the
Committee to an Eligible Individual under the Plan.
"PERCENTAGE PARTICIPATION" of an Eligible Individual with
respect to the Annual Payment Award and/or the Annual Option Vesting Amount, as
the case may be, for any Fiscal Year shall be the percentage opposite such
Eligible Individual's name as set forth on Schedule I hereto.
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"PERMANENT AND TOTAL DISABILITY" has the same meaning as
provided in the long-term disability plan or policy maintained or, if
applicable, most recently maintained, by the Corporation or, if applicable, any
Affiliate of the Corporation for the Eligible Individual. If no long-term
disability plan or policy was ever maintained on behalf of the Eligible
Individual Permanent and Total Disability shall mean that condition described in
Code Section 22(e)(3), as amended from time to time. In the event of a dispute,
the determination of Permanent and Total Disability shall be made by the Board
of Directors and shall be supported by advice of a physician competent in the
area to which such Permanent and Total Disability relates. The scope of this
definition shall automatically be reduced or expanded to the extent that section
22(e)(3) of the Code is amended to reduce or expand the scope of the definition
of Permanent and Total Disability thereunder.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"STOCK" shall mean the Corporation's authorized $0.01 par
value common stock together with any other securities with respect to which
Options granted hereunder may become exercisable (including any preferred stock
purchase rights issuable pursuant to the Rights Agreement, dated April 25, 1996
between the Corporation and Harris Trust and Savings Bank (formerly KeyCorp
Shareholder Services, Inc.) as rights agent, or any other purchase right issued
in substitution thereof).
"TARGET REVENUE" shall mean an amount equal to (i) $60,000,000
with respect to the Fiscal Year ending December 31, 1998, (ii) $110,000,000 with
respect to the Fiscal Year ending December 31, 1999, (iii) $215,000,000 with
respect to Fiscal Year ending December 31, 2000 and (iv) $300,000,000 with
respect to Fiscal Year ending December 31, 2001.
"TERMINATION OF SERVICE" means the termination of the service
relationship, whether employment or otherwise, between an Eligible Individual
and the Corporation and its Affiliates, regardless of the fact that severance or
similar payments are made to the Eligible Individual for any reason, including,
but not by way of limitation, a termination by resignation, discharge, death,
Permanent and Total Disability or retirement. The Committee shall, in its
absolute discretion, determine the effect of all matters and questions relating
to Termination of Service, including, but not by way of limitation, the question
of whether a leave of absence constitutes a Termination of Service, or whether a
Termination of Services is for Cause.
SECTION 2. MAXIMUM NUMBER OF SHARES SUBJECT TO AND AMOUNT OF CASH
PAYMENTS AVAILABLE UNDER THE PLAN.
2.1 DESCRIPTION OF STOCK AND MAXIMUM SHARES ALLOCATED. The Stock
which Options granted hereunder give an Eligible Individual the right to
purchase may be unissued or reacquired shares of Stock, as the Board of
Directors may, in its sole and absolute discretion, from time to time
determine. Subject to the adjustments provided for in Section 6.9 hereof, the
aggregate number of shares of Stock available for issuance pursuant to the
exercise of all Options granted hereunder shall be $3,375,000 divided by the
Closing Sales Price (the "Aggregate Option Shares"). The Options granted to
each Eligible Individual pursuant to this Plan shall vest in accordance with
the provisions of paragraph (a) of Section 6.2 hereof.
2.2 MAXIMUM AMOUNT OF CASH PAYMENTS. The aggregate amount of
funds available for Cash Payments to all Eligible Individuals pursuant to the
Plan shall be $3,375,000. The aggregate amount of Cash Payments (the "Annual
Payment Award") to be made to Eligible Individuals with respect to a Fiscal Year
shall be an amount equal to the product of (i) the Aggregate Payment Amount with
respect to such Fiscal Year, times (ii) the Applicable Percentage with respect
to such Fiscal Year. Notwithstanding anything contained herein to the contrary,
no Cash Payment shall be made in a Fiscal Year under this Plan if the Attained
Percentage for that Fiscal Year is less than eighty percent (80%). With respect
to a Fiscal Year, any portion of the Aggregate Payment Amount attributable to
such Fiscal Year which shall not have been delivered as Cash Payments pursuant
to this Plan with respect to such Fiscal Year shall cease to be available for
Cash Payments under this Plan.
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SECTION 3. ADMINISTRATION OF THIS PLAN.
3.1 COMMITTEE. The Plan shall be administered by the Committee.
The Committee shall consist of such number of directors of the Corporation as
shall be determined by the Board of Directors, and may be constituted by all
members of the Board of Directors.
3.2 DURATION, REMOVAL, ETC. The members of the Committee shall
serve at the pleasure of the Board of Directors, which shall have the power, at
any time and from time to time, to remove members from the Committee or to add
members thereto. Vacancies on the Committee, however caused, shall be filled by
action of the Board of Directors.
3.3 MEETINGS AND ACTIONS OF COMMITTEE. The Committee shall elect
one of its members as its Chairman and shall hold its meetings at such times and
places as it may determine. All decisions and determinations of the Committee
shall be made by the majority vote or decision of all of its members present at
a meeting; provided, however, that any decision or determination reduced to
writing and signed by all of the members of the Committee shall be as fully
effective as if it had been made at a meeting duly called and held. The
Committee may make any rules and regulations for the conduct of its business
that are not inconsistent with the provisions hereof and with the by-laws of the
Corporation as it may deem advisable.
3.4 COMMITTEE'S POWERS. Subject to the express provisions hereof,
the Committee shall have the authority, in its sole and absolute discretion
exercised in good faith, (a) to adopt, amend, and rescind administrative and
interpretive rules and regulations relating to this Plan; (b) to determine the
Celcore Revenues for purposes of determining the vesting of the Options and the
award of Cash Payments; (c) to determine the circumstances of any termination of
employment of an Eligible Individual for purposes of applying the provisions of
Section 6.8 hereof and the effect of approved leaves of absence; (d) to construe
the respective Agreements and this Plan; (e) to make all other determinations
and perform all other acts necessary or advisable for administering this Plan,
including the delegation of such ministerial acts and responsibilities as the
Committee deems appropriate; and (f) to correct any defect or supply any
omission or reconcile any inconsistency in this Plan or in any Agreement in the
manner and to the extent it shall deem expedient to carry it into effect,
provided that no such correction, addition, reconciliation or other amendment to
this Plan shall adversely affect the rights of any Eligible Individual.
SECTION 4. ELIGIBILITY AND PARTICIPATION.
Options and Cash Payments shall be granted hereunder as of the Effective Time
to all persons who are Eligible Individuals and only to persons who are
Eligible Individuals, subject to the provisions of Section 6.8 hereof. In
addition, no person shall be considered an Eligible Individual and entitled to
any of the rights under the Plan unless such person has executed and delivered
to the Corporation the Employee Patent, Copyright, and Proprietary Information
Agreement, attached hereto as Exhibit B.
SECTION 5. GRANT OF OPTIONS AND CERTAIN TERMS OF THE AGREEMENTS.
Each Option and Cash Payment granted hereunder shall be evidenced by an
Agreement, dated as of the Effective Time, executed by the Corporation and the
Eligible Individual to whom the Option and Cash Payment is granted. The
Effective Time shall be deemed to be the date on which the Option covered by an
Agreement is granted, even though the Agreement may not be executed until a
later time.
SECTION 6. TERMS AND CONDITIONS OF OPTIONS AND CASH PAYMENTS.
All Options and Cash Payments granted hereunder shall comply with, be deemed to
include, and be subject to the following terms and conditions:
6.1 NUMBER OF SHARES. Each Agreement shall provide for the grant
of Options to an Eligible Individual to purchase a number of shares of Stock,
subject to the adjustments provided for in Section 6.9 hereof, equal to the
product of (a) the Aggregate Option Shares and (b) the Percentage Participation
allocated to such Eligible Individual.
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6.2 VESTING OF OPTIONS.
(a) Subject to the provisions of Section 6.8 hereof, the Options
granted to an Eligible Individual shall be eligible for vesting at the end of
each of the Fiscal Years of the Corporation ending December 31, 1998 to December
31, 2001 as provided in this Section 6.2(a). The number of Options that shall
vest (the "Annual Option Vesting Amount") at the end of the Fiscal Years of the
Corporation ending December 31, 1998 through December 31, 2001 shall equal the
product of (i) the Aggregate Option Amount with respect to such Fiscal Year
times (ii) the Applicable Percentage with respect to such Fiscal Year.
Notwithstanding anything contained herein to the contrary, the Annual Option
Vesting Amount shall be zero in any Fiscal Year in which the Attained Percentage
for that Fiscal Year is less than eighty percent (80%). The number of Options
granted to an Eligible Individual that shall vest with respect to each Fiscal
Year of the Corporation ending December 31, 1998 through December 31, 2001 shall
be an amount equal to the Percentage Participation of such Eligible Individual
with respect to that Fiscal Year times the Annual Option Vesting Amount, if any,
for that Fiscal Year. If the number of Options that would vest according to the
immediately preceding sentence exceeds the number of Options granted to an
Eligible Individual which have not yet vested, then only those Options that have
not yet vested shall vest according to this Section 6.2(a). All Options that
have not vested with respect to the Fiscal Years ending December 31, 1998
through December 31, 2001 in accordance with this Section 6.2(a) shall vest on
December 31, 2002.
(b) An Eligible Individual may not purchase the shares of Stock
subject to an Option until such time as that portion of the Option has vested
pursuant to this Section 6.2. Notwithstanding any other provision of this Plan,
including the provisions of Section 6.8 hereof, no Option shall be exercisable
after the fifth anniversary of the vesting date of such Option.
6.3 EXERCISE PRICE OF OPTIONS. The exercise price per share of
Stock subject to an Option shall be the Closing Sales Price.
6.4 CASH PAYMENTS. Each Agreement shall provide for the grant of
the right to Cash Payments to an Eligible Individual with respect to each Fiscal
Year of the Corporation ending December 31, 1998 and December 31, 1999 in an
amount equal to the Percentage Participation of such Eligible Individual with
respect to that Fiscal Year times the Annual Payment Award, if any, for that
Fiscal Year. Each Cash Payment under this Section 6.4 shall be deemed payable
as of December 31 in respect of each Fiscal Year and the delivery of any Cash
Payment with respect to a Fiscal Year shall be made by the Corporation not later
than 75 days after the end of such Fiscal Year. The Corporation may, in its
discretion, withhold from the amount of any Cash Payment delivered to an
Eligible Individual the portion thereof that it deems necessary to satisfy its
obligation to withhold Federal, state or local income or other taxes incurred by
reason of such Cash Payment.
6.5 DETERMINATION OF CELCORE REVENUES. For purposes of
determining the Annual Option Vesting Amount with respect to a Fiscal Year and
the Annual Payment Award with respect to a Fiscal Year, within 60 days after the
end of each Fiscal Year of the Corporation (i) from December 31, 1998 to
December 31, 2001 with respect to the Annual Option Vesting Amount and (ii)
December 31, 1998 and December 31, 1999 with respect to the Annual Payment
Award, the Corporation shall furnish the Committee with such financial
information as it shall require in order to determine the Celcore Revenues with
respect to that Fiscal Year, and the Committee shall make such determination in
good faith as soon as possible after the receipt of such information, which
determination shall be final and binding on all Eligible Individuals. Within 75
days after the end of each Fiscal Year of the Corporation ending December 31,
1998 to December 31, 2001, the Committee shall notify each Eligible Individual
with respect to whom an Option is eligible for vesting for that Fiscal Year of
the determination of the Celcore Revenues for that Fiscal Year and the number of
shares of Stock subject to such Eligible Individual's Option which has vested
with respect to that Fiscal Year, together with delivery of the Cash Payment, if
any, with respect to that Fiscal Year.
6.6 MEDIUM AND TIME OF PAYMENT, METHOD OF EXERCISE, AND
WITHHOLDING TAXES. The exercise price of an Option shall be payable upon the
exercise of the Option in cash or by check payable to the order of the
Corporation. Exercise of an Option shall not be effective until the Corporation
has received written notice of exercise. Such notice must specify the number of
whole shares of Stock to be purchased and be accompanied by payment in full of
the aggregate exercise price of the number of shares purchased. The Corporation
shall not in any case be required to sell, issue, or deliver a fractional share
with respect to any Option.
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The Committee may, in its discretion, require an Eligible Individual to pay to
the Corporation at the time of exercise of an Option or portion thereof the
amount that the Corporation deems necessary to satisfy its obligation to
withhold Federal, state or local income or other taxes incurred by reason of
the exercise.
6.7 TERM, TIME OF EXERCISE, AND TRANSFERABILITY OF OPTIONS. In
addition to such other terms and conditions as may be included in a particular
Agreement granting an Option, during the term of an Option such Option shall be
exercisable during an Eligible Individual's lifetime only by him or by his
guardian or legal representative. An Option shall not be transferable other
than by will or the laws of descent and distribution. No Option shall be deemed
to satisfy the provisions of Section 422A of the Code. As soon as reasonably
practicable after the Corporation receives written notice that the Eligible
Individual has elected to exercise all or a portion of an Option which has
vested pursuant to the Plan, such notice to be accompanied by payment in full of
the aggregate Option price of the number of shares purchased, the Corporation
shall issue and deliver a certificate representing the shares acquired in
consequence of the exercise and any other amounts payable in consequence of such
exercise.
Nothing herein or in any Option granted hereunder shall require the Corporation
to issue any shares upon exercise of any Option if such issuance would, in the
opinion of counsel for the Corporation, constitute a violation of the
Securities Act or any similar or superseding statute or statutes, any
applicable blue sky or state securities laws or any other applicable statute or
regulation, as then in effect. The Corporation shall file or cause to be filed
with the Securities and Exchange Commission at least twenty days prior to the
date of the notification to Eligible Individuals of that portion of the Options
which has vested with respect to the Fiscal Year ended December 31, 1998, a
Registration Statement on Form S-8 registering under the Securities Act the
Stock issuable upon exercise of the Options, and shall keep such Registration
Statement effective for so long as Options remain outstanding and exercisable
under this Plan or, if shorter, so long as such Form S-8, or any successor
form, remains available to the Corporation for registration of such Stock. At
the time of any exercise of an Option, in the event such Registration Statement
on Form S-8 or successor form is not effective, the Corporation may, as a
condition precedent to the exercise of such Option, require from the Eligible
Individual exercising such Option (or in the event of his death, his legal
representatives, heirs, legatees, or distributees) such written
representations, if any, concerning his intentions with regard to the retention
or disposition of the shares being acquired by exercise of such Option and such
written covenants and agreements, if any, as to the manner of disposal of such
shares as, in the opinion of counsel to the Corporation, may be necessary to
ensure that any disposition by such Eligible Individual (or in the event of his
death, his legal representatives, heirs, legatees, or distributees), will not
involve a violation of the Securities Act or any similar or superseding statute
or statutes, or any other applicable state or federal statute or regulation, as
then in effect.
6.8 TERMINATION OF EMPLOYMENT, DEATH OR DISABILITY.
(a) If an Eligible Individual ceases to be employed by at least
one of the employers in the group of employers consisting of the Corporation and
its Affiliates because the Eligible Individual voluntarily terminates employment
with such group of employers, (i) the portion, if any, of an Option that has not
yet vested under the terms of the Plan, on the date of the Eligible Individual's
Termination of Service shall terminate as of such date, (ii) the Eligible
Individual shall have the right for thirty (30) days after such Termination of
Service to exercise the portion, if any, of the Option which has vested pursuant
to the Plan as of the date of the Eligible Individual's Termination of Service,
and thereafter such Option shall terminate and cease to be exercisable, (iii)
the portion of any Option which has vested with respect to a Fiscal Year ending
prior to the date of the Eligible Individual's Termination of Service but with
respect to which the Committee has not yet determined the amount which has
vested at the date of such termination may be exercised by the Eligible
Individual within thirty (30) days after (A) the date of receipt by the Eligible
Individual of the portion of any Cash Payment which has vested with respect to
such Fiscal Year, or (B) if no Cash Payment is made with respect to such Fiscal
Year, the date of receipt by the Eligible Individual of a notice from the
Committee pursuant to Section 6.5 hereof of the number of shares of Stock
subject to such Eligible Individual's Option which has vested with respect to
that Fiscal Year, and thereafter such portion shall terminate and cease to be
exercisable, and (iv) the portion of any Cash Payment granted to the Eligible
Individual which is payable with respect to a Fiscal Year ending prior to the
date of the Eligible Individual's Termination of Service shall be paid to such
Eligible Individual at the time provided for in this Plan, and no other Cash
Payment shall be required to be paid by the Corporation in connection with this
Plan. Notwithstanding the foregoing, if an Eligible Individual ceases to be
employed during the Fiscal Year because the Eligible Individual voluntarily
terminates employment as provided in this Section 6.8(a), no Cash Payment for
such Fiscal Year shall be payable to the Eligible Individual and no Options
shall vest in respect of such Fiscal Year.
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(b) If an Eligible Individual ceases to be employed by at least
one of the employers in the group of employers consisting of the Corporation and
its Affiliates because any of such entities terminates the Eligible Individual's
employment for Cause, (i) the portion, if any, of an Option that remains
unexercised, including that portion, if any, that has vested under the terms of
the Plan, on the date of the Eligible Individual's Termination of Service, shall
terminate and cease to be exercisable as of such date, and (ii) the right of
such Eligible Individual to any Cash Payment which has not been paid prior to
the date of the Eligible Individual's Termination of Service shall be
terminated.
(c) If an Eligible Individual ceases to be employed by at least
one of the employers in the group of employers consisting of the Corporation and
its Affiliates because one or more of such entities terminates the employment of
the Eligible Individual but not for Cause, (i) subject to Section 6.8(f) below,
the portion, if any, of an Option that has not yet vested under the terms of the
Plan, on the date of the Eligible Individual's Termination of Service shall
terminate as of such date, (ii) subject to Section 6.8(f) below, such Eligible
Individual shall be entitled to exercise the Option to the extent that such
Eligible Individual was entitled to exercise it on such date, but only until the
earlier of the date (A) the Option held by such Eligible Individual expires, or
(B) six (6) months after the date of the Termination of Services of such
Eligible Individual, and (iii) subject to Section 6.8(f) below, such Eligible
Individual shall receive a Cash Payment pursuant to Section 2.2 hereof.
(d) Notwithstanding the provisions of Sections 6.8(a), (b) and (c)
above, if an Eligible Individual ceases to be employed by at least one of the
employers in the group of employers consisting of the Corporation and its
Affiliates by reason of Permanent and Total Disability, (i) subject to Section
6.8(f) below, the portion, if any, of an Option that has not yet vested under
the terms of the Plan on the date of the Eligible Individual's Termination of
Service due to such Permanent and Total Disability shall terminate as of such
date, (ii) subject to Section 6.8(f) below, notwithstanding such Termination of
Service, such Eligible Individual may exercise an Option in whole or in part to
the extent such Option was exercisable on the date of Termination of Service of
such Eligible Individual due to such Permanent and Total Disability, but only
until the earlier of the date (A) the Option held by the Eligible Individual
expires, or (B) twelve (12) months from the date of Termination of Service of
such Eligible Individual due to such Permanent and Total Disability, and (ii)
subject to Section 6.8(f) below, such Eligible Individual shall be eligible to
receive a Cash Payment pursuant to Section 2.2 hereof.
(e) Upon the death of an Eligible Individual, (i) any Option held
by an Eligible Individual shall terminate and be of no further effect; provided,
however, notwithstanding the provisions of Sections 6.8(a), (b) and (c) above
and subject to Section 6.8(f) below, if an Eligible Individual dies while in the
employ of the Corporation or an Affiliate, such legal representatives, heirs,
legatees, or distributees shall have the right to exercise such Options in
accordance with this Plan and such Eligible Individual's Agreement to the extent
such Options had vested at the time of such Eligible Individual's death, but
only until the earlier of the date (A) the Option held by the Eligible
Individual expires, or (B) twelve (12) months from the date of the Eligible
Individual's death, and (ii) subject to Section 6.8(f) below, the Eligible
Individual's legal representatives, heirs, legatees, or distributees shall be
eligible to receive a Cash Payment pursuant to Section 2.2 hereof.
(f) Unless otherwise determined by the Committee or required by
applicable law, in the event during the Fiscal Year an Eligible Individual
ceases to be employed by at least one of the employers in the group of employers
consisting of the Corporation and its Affiliates because one or more of such
entities terminates the employment of such Eligible Individual but not for
Cause, or by reason of death or Permanent and Total Disability of such Eligible
Individual that occurs:
(i) if such Eligible Individual is otherwise entitled to
receive a Cash Payment under Section 2.2 hereof for such Fiscal Year
but for the fact the Eligible Individual is no longer employed, the
Eligible Individual (or the Eligible Individual's legal representative
or beneficiary) shall receive a Cash Payment equal to the product of
(i) the Cash Payment he/she would have received for such entire Fiscal
Year, multiplied by (ii) a fraction, the numerator of which is the
number of days during such Fiscal Year in which the Eligible Individual
was an employee of the Corporation or its Affiliates, and the
denominator of which is the number of days in such Fiscal Year; and
(ii) if an Option would otherwise vest under Section 6.2
hereof, the Annual Option Vesting amount allocable to such Eligible
Individual based on his Percentage Participation shall be adjusted such
that the number of Options granted to such Eligible Individual that
shall vest with respect to such Fiscal Year shall
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<PAGE> 8
be equal to the product of (i) the Annual Option Vesting Amount that
would have been allocable to such Eligible Individual for such entire
Fiscal Year, multiplied by (ii) a fraction, the numerator of which is
the number of days during such Fiscal Year in which the Eligible
Individual was an employee of the Corporation or its Affiliates, and
the denominator of which is the number of days in such Fiscal Year.
6.9 ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGER, ETC.
Notwithstanding any other provision hereof, in the event of any change in the
number of outstanding shares of Stock effected without receipt of consideration
therefor by the Corporation, by reason of a stock dividend, or split,
combination, exchange of shares of other recapitalization, merger, or otherwise,
in which the Corporation is the surviving corporation, the aggregate number and
class of the reserved shares, the number and class of shares subject to each
outstanding Option and the exercise price of each outstanding Option shall be
automatically adjusted to accurately and equitably reflect the effect thereon of
such change, provided that any fractional share resulting from such adjustment
may be eliminated, and provided further that the exercise price of an Option
shall not be less than $.01 per share. In the event of a dispute concerning
such adjustment, the decision of the Committee made in good faith shall be
conclusive. Neither this Plan nor any Agreement shall affect the right of the
Corporation or any Affiliate thereof to reclassify, recapitalize or otherwise
change its capital or debt structure or to merge, consolidate, convey any or all
of its assets, dissolve, liquidate, wind up, or otherwise reorganize.
In the event of (a) a dissolution or liquidation of the Corporation, (b) a
merger or consolidation (other than a merger effecting a reincorporation of the
Corporation in another state or other jurisdiction or any other merger or a
consolidation in which the stockholders of the surviving corporation and their
proportionate interests therein immediately after the merger or consolidation
are substantially identical to the stockholders of the Corporation and their
proportionate interests therein immediately prior to the merger or
consolidation) in which the Corporation is not the surviving corporation (or
survives only as a subsidiary of another corporation in a transaction in which
the stockholders of the parent of the Corporation and their proportionate
interests therein immediately after the transaction are not substantially
identical to the stockholders of the Corporation and their proportionate
interests therein immediately prior to the transaction; provided that the Board
of Directors may at any time prior to such merger or consolidation provide by
resolution that the foregoing provisions of this parenthetical shall not apply
if a majority of the board of directors of such parent immediately after the
transaction consists of individuals who constituted a majority of the Board of
Directors immediately prior to the transaction), or (c) a transaction in which
any person becomes the owner of 50% or more of the total combined voting power
of all classes of stock of the Corporation (provided that the Board of
Directors may at any time prior to such transaction provide by resolution that
this Subparagraph (c) shall not apply if such acquiring person is a corporation
and a majority of the board of directors of such corporation immediately after
the transaction consists of individuals who constituted a majority of the Board
of Directors immediately prior to the acquisition of such 50% or more total
combined voting power), every Option then outstanding shall terminate, but the
holders of each such then outstanding Option shall, in any event, have the
right, immediately prior to such dissolution, liquidation, merger,
consolidation, or transaction, to exercise such Options, to the extent not
theretofore exercised, without regard to the vesting provisions of Section 6.2
hereof if (and only if) such Options have not at that time expired or been
terminated pursuant to Section 6.8 hereof. Such acceleration of exercisability
shall not apply to a given Option if any surviving or acquiring corporation
agrees to assume such Option in connection with the merger, consolidation, or
transaction, in which event such Options will continue to be subject to the
vesting provisions of Section 6.2 hereof.
6.10 RIGHTS AS A STOCKHOLDER. An Eligible Individual shall have no
right as a stockholder with respect to any shares covered by his Option until a
certificate representing such shares is issued to him. No adjustment shall be
made for dividends (ordinary or extraordinary, whether in cash or other
property) or distributions or other rights for which the record date is prior to
the date such certificate is issued, except as provided in Section 6.9 hereof.
6.11 FURNISH INFORMATION. Each Eligible Individual shall furnish
to the Corporation all information requested by the Corporation to enable it to
comply with any reporting or other requirement imposed upon the Corporation by
or under any applicable statute or regulation.
6.12 OBLIGATION TO EXERCISE. The granting of an Option hereunder
shall impose no obligation upon the Eligible Individual to exercise the same or
any part thereof.
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SECTION 7. GENERAL.
7.1 APPLICATION OF FUNDS; ISSUANCE OF SHARES. The proceeds
received by the Corporation from the sale of shares pursuant to Options shall be
used for general corporate purposes. When issued upon exercise of Options in
accordance with the terms of this Plan, all shares of Stock will be duly
authorized, validly issued, fully paid and nonassessable.
7.2 RIGHT OF THE CORPORATION AND AFFILIATES TO TERMINATE
EMPLOYMENT. Nothing contained in this Plan, or in any Agreement, shall confer
upon any Eligible Individual the right to continue in the employ of the
Corporation or any Affiliate, or interfere in any way with the rights of the
Corporation or any Affiliate to terminate or modify in any way the terms,
including but not limited to the compensation and responsibilities, of the
Eligible Individual's employment at any time. Nothing contained herein shall be
deemed to require any action on the part of the Committee or the Board of
Directors of the Corporation or any Affiliate in connection with the termination
of employment of an Eligible Individual.
7.3 NO LIABILITY FOR GOOD FAITH DETERMINATIONS. Neither the
members of the Board of Directors nor any member of the Committee shall be
liable for any act, omission, or determination taken or made in good faith with
respect to this Plan or any Option or right to Cash Payment granted under it,
and members of the Board of Directors and the Committee shall be entitled to
indemnification and reimbursement by the Corporation in respect of any claim,
loss, damage, or expense (including attorneys' fees, the costs of settling any
suit, provided such settlement is approved by independent legal counsel selected
by the Corporation, and amounts paid in satisfaction of a judgment, except a
judgment based on a finding of bad faith) arising therefrom to the full extent
permitted by law and under any directors and officers liability or similar
insurance coverage that may from time to time be in effect.
7.4 OTHER BENEFITS. Participation in the Plan shall not preclude
the Eligible Individual from eligibility in any other stock option plan of the
Corporation or any Affiliate or any old age benefit, insurance, pension, profit
sharing retirement, bonus, or other extra compensation plans which the
Corporation or any Affiliate has adopted, or may, at any time, adopt for the
benefit of its employees.
7.5 EXECUTION OF RECEIPTS AND RELEASES. Any payment of cash or
any issuance or transfer of shares of Stock to the Eligible Individual, or to
his legal representatives, heir, legatee, or distributee, in accordance with the
provisions hereof, shall, to the extent thereof, be in full satisfaction of all
claims of such persons with respect to such payment, issuance or transfer
hereunder. The Committee may require any Eligible Individual, legal
representative, heir, legatee, or distributee, as a condition precedent to such
payment, to execute a release and receipt therefor in such form as it shall
determine.
7.6 NO GUARANTEE OF INTERESTS. Neither the Committee nor the
Corporation guarantees the Stock of the Corporation from loss or depreciation.
7.7 SEVERABILITY. If any provision of this Plan is held to be
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining provisions hereof, but such provision shall be fully severable and
this Plan shall be construed and enforced as if the illegal or invalid provision
had never been included herein.
7.8 NOTICES. Whenever any notice is required or permitted
hereunder, such notice must be in writing and personally delivered or sent by
mail. Any notice required or permitted to be delivered hereunder shall be
deemed to be delivered on the date on which it is personally delivered, or,
whether actually received or not on the third business day after it is deposited
in the United States mail, certified or registered, postage prepaid, addressed
to the person who is to receive it at the address which such person has
theretofore specified by written notice delivered in accordance herewith. The
Corporation or an Eligible Individual may change, at any time and from time to
time, by written notice to the other, the address which it or he/she had
previously specified for receiving notices. Until changed in accordance
herewith, the Corporation and each Eligible Individual shall specify as his
address for receiving notices, the address set forth in the Agreement pertaining
to the Option or Cash Payment to which such notice relates.
7.9 WAIVER OF NOTICE. Any person entitled to notice hereunder
may waive such notice.
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<PAGE> 10
7.10 HEADLINES. The title and headings of Sections are included
for convenience of reference only and are not to be considered in construction
of the provisions hereof.
7.11 GOVERNING LAW. All questions arising with respect to the
provisions of the Plan and each Agreement shall be determined by application of
the laws of the State of Texas except to the extent Texas law is preempted by
federal law. The obligation of the Corporation to sell and deliver Stock
hereunder is subject to applicable laws and to the approval of any governmental
authority required in connection with the authorization, issuance, sale, or
delivery of such Stock.
7.12 WORD USAGE. Words used in the masculine shall apply to ,the
feminine where applicable, and wherever the context of this Plan dictates, the
plural shall be read as the singular and the singular as the plural.
7.13 FISCAL YEAR. Nothing contained in this Plan or any Agreement
shall be deemed to restrict or prohibit the Corporation from changing its Fiscal
Year, provided that in the event the Corporation changes its Fiscal Year
appropriate adjustments shall be made with respect to the vesting schedule for
the Options and the Cash Payments to avoid any impairment of benefits hereunder
caused by such change in Fiscal Year.
7.14 OTHER AGREEMENTS. Notwithstanding any provision in the Plan
to the contrary, the right of an Eligible Individual to receive, or obtain the
benefits after the receipt of, Cash Payments and Options pursuant to the Plan
is subject to the rights and remedies of the Corporation pursuant to the
Employee Patent, Copyright, and Proprietary Information Agreement with such
Eligible Individual.
IN WITNESS WHEREOF, DSC Communications Corporation, acting by and through its
officers hereunto duly authorized has executed this instrument, this 4th day
of December, 1997.
DSC COMMUNICATIONS CORPORATION
/s/ GERALD F. MONTRY
-------------------------------------------------
Gerald F. Montry
Senior Vice President and Chief Financial Officer
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EXHIBIT 5.1
December ___, 1997
DSC Communications Corporation
1000 Coit Road
Plano, Texas 75075
Gentlemen:
DSC Communications Corporation, a Delaware corporation (the "Company"),
intends to file with the Securities and Exchange Commission (the "Commission")
a registration statement (the "Registration Statement") on Form S-8 under the
Securities Act of 1933, as amended (the "Act"). The Registration Statement
covers (i) 145,946 shares of the Company's common stock, $.01 par value per
share, including the preferred stock purchase rights attaching to such stock
pursuant to that certain Rights Agreement dated April 25, 1996 by and between
the Company and Harris Trust and Savings Bank, formerly KeyCorp Shareholder
Services, Inc. (the "Common Stock"), which shall be issued pursuant to the DSC
Communications Corporation DSC Special Celcore Incentive Plan (the "Plan"), and
(ii) such additional shares of Common Stock as may become issuable pursuant to
the anti-dilution provisions of the Plan (such shares collectively referred to
as the "Securities").
We have acted as counsel to the Company in connection with the preparation
and filing of the Registration Statement. In rendering this opinion we have
examined such corporate records, documents and instruments of the Company and
such certificates of public officials, have received such representations from
officers of the Company, and have reviewed such questions of law as in our
judgment are necessary, relevant or appropriate to enable us to render the
opinion expressed below. In such examination, we have assumed the genuineness
of all signatures, the authenticity of all corporate records, documents and
instruments submitted to us as originals, the conformity to original documents
of all documents submitted to us as conformed, certified or photostatic copies
thereof, and the authenticity of the originals of such photostatic, certified
or conformed copies.
Based upon such examination and review and upon representations made to us
by officers of the Company, we are of the opinion that upon issuance and
delivery of the Securities in accordance with the terms and conditions of the
Plan, and upon receipt by the Company of the full consideration for the
Securities as determined pursuant to the Plan, the Securities will be legally
issued, fully paid and nonassessable shares of Common Stock of the Company.
This firm consents to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not admit that we come
within the category of persons whose consent is required by Section 7 of the
Act or the rules and regulations of the Commission thereunder.
Respectfully submitted,
BAKER & MCKENZIE
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EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement on
Form S-8 pertaining to the DSC Communications DSC Special Celcore Incentive
Plan of our reports dated January 23, 1997, with respect to the consolidated
financial statements of DSC Communications Corporation incorporated by
reference in its Annual Report (Form 10-K) for the year ended December 31, 1996
and the related financial statement schedule included therein, filed with the
Securities and Exchange Commission.
/s/ ERNST & YOUNG, LLP
Dallas, Texas,
December 5, 1997
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