<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)
CELCORE, INC. 1996 STOCK 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 621,589 Shares $23.375 $14,529,643 $4,287
- -------------------------------------------------------------------------------------------------------------------------
Preferred Stock Purchase Rights 621,589 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 Celcore, Inc. 1996 Stock Incentive
Plan (the "Plan") assumed by the Company. 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.
333-39903 (which covers 4,936,663 shares of Common Stock). A
registration fee in the amount of $37,540.00 was paid with respect to
such Registration Statements.
(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.
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<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
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<PAGE> 3
expenses of a 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
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<S> <C>
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 (incorporated by reference
to Exhibit 3.1 to the Company's Registration Statement on Form S-8, Registration No. 333-41929, dated
December 10, 1997)
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>
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4.6 Form of Notes (included in Exhibit 4.1)
*4.7 Celcore, Inc. 1996 Stock 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
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<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 December 10, 1997
- ------------------------- Accounting Officer)
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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<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <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
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<S> <C>
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 (incorporated by reference to
Exhibit 3.1 to the Company's Registration Statement on Form S-8,
Registration No. 333-41929, dated December 10, 1997)
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 Celcore, Inc. 1996 Stock 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 4.7
CELCORE, INC.
1996 STOCK INCENTIVE PLAN
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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SECTION 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2 THE STOCK INCENTIVE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Purpose of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Stock Subject to the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3 Administration of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4 Eligibility and Limits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3 TERMS OF STOCK INCENTIVES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1 Terms and Conditions of All Stock Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 Terms and Conditions of Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(a) Option Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(b) Option Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(c) Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(d) Conditions to the Exercise of an Option . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(e) Termination of Incentive Stock Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(f) Special Provisions for Certain Substitute Options . . . . . . . . . . . . . . . . . . . . . . 9
3.3 Terms and Conditions of Stock Appreciation Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(a) Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(b) Conditions to Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.4 Terms and Conditions of Stock Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.5 Terms and Conditions of Dividend Equivalent Rights . . . . . . . . . . . . . . . . . . . . . . . . . 10
(a) Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(b) Conditions to Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.6 Terms and Conditions of Performance Unit Awards . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(a) Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(b) Conditions to Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.7 Terms and Conditions of Phantom Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(a) Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(b) Conditions to Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.8 Treatment of Awards Upon Termination of Service. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4 RESTRICTIONS ON STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.1 Escrow of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.2 Forfeiture of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.3 Restrictions on Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5 GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.1 Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.2 Changes in Capitalization; Merger; Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.3 Cash Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.4 Compliance with Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
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<TABLE>
<S> <C> <C>
5.5 Right to Terminate Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.6 Restrictions on Delivery and Sale of Shares; Legends . . . . . . . . . . . . . . . . . . . . . . . . 14
5.7 Non-alienation of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.8 Termination and Amendment of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.9 Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.10 Choice of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.11 Effective Date of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
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<PAGE> 4
CELCORE, INC.
1996 STOCK INCENTIVE PLAN
SECTION 1 DEFINITIONS
1.1 Definitions. Whenever used herein, the masculine pronoun
shall be deemed to include the feminine, and the singular to include the
plural, unless the context clearly indicates otherwise, and the following
capitalized words and phrases are used herein with the meaning thereafter
ascribed:
(a) "Board of Directors" means the board of directors of
the Company.
(b) "Cause" has the same meaning as provided in the
employment agreement between the Participant and the Company or, if applicable,
any affiliate of the Company on the date of Termination of Service, or if no
such definition or employment agreement exists, "Cause" means conduct amounting
to (1) fraud or dishonesty against the Company or its affiliates, (2)
Participant's willful misconduct, repeated refusal to follow the reasonable
directions of the board of directors of the Company or its affiliates, or
knowing violation of law in the course of performance of the duties of
Participant's service with the Company or its affiliates, (3) repeated absences
from work without a reasonable excuse, (4) repeated intoxication with alcohol
or drugs while on the Company or affiliates' premises during regular business
hours, (5) a conviction or plea of guilty or nolo contendere to a felony or a
crime involving dishonesty, or (6) a breach or violation of the terms of any
agreement to which Participant and the Company or its affiliates are party.
(c) "Change in Control" means any one of the following
events which may occur following completion of the initial public offering, if
any, of the Company:
(1) the acquisition by any individual, entity or
"group", within the meaning of Section 13(d)(3) or Section 14(d)(2) of the
Securities Exchange Act of 1934, as amended, (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Securities
Exchange Act of 1934) of voting securities of the Company where such
acquisition causes any such Person to own fifty percent (50%) or more of the
combined voting power of the then outstanding voting securities then entitled
to vote generally in the election of directors (the "Outstanding Voting
Securities"); provided, however, that for purposes of this Section l(c)(1), the
following shall not be deemed to result in a Change in Control, (i) any
acquisition directly from the Company, unless such a Person subsequently
acquires additional shares of Outstanding Voting Securities other than from the
Company, in which case any such subsequent acquisition shall be deemed to be a
Change in Control; (ii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any corporation
controlled by the Company; or (iii) any acquisition by merger, consolidation,
share exchange, combination, reorganization, sale or transfer or like
transaction that is not otherwise described in Section 1.1(c)(2) or 1.1(c)(4)
below as long as no Person (other than an employee benefit plan or related
trust sponsored or maintained by the Company, any corporation controlled by the
Company or any company resulting from such business combination) obtains
beneficial ownership of fifty percent (50%) or more of the then Outstanding
Voting Securities;
<PAGE> 5
(2) a merger, consolidation, share exchange,
combination, reorganization or like transaction involving the Company in which
the stockholders of the Company immediately prior to such transaction do not
own at least fifty percent (50%) of the value or voting power of the issued and
outstanding capital stock of the Company or its successor immediately after
such transaction;
(3) the sale or transfer (other than as security
for the Company's obligations) of more than fifty percent (50%) of the assets
of the Company in any one transaction, a series of related transactions or a
series of transactions occurring within a one (1) year period in which the
Company, any corporation controlled by the Company or the stockholders of the
Company immediately prior to the transaction do not own at least fifty percent
(50%) of the value or voting power of the issued and outstanding equity
securities of the acquiror immediately after the transaction;
(4) the sale or transfer of more than fifty
percent (50%) of the value or voting power of the issued and outstanding
capital stock of the Company by the holders thereof in any one transaction, a
series of related transactions or a series of transactions occurring within a
one (1) year period in which the Company, any corporation controlled by the
Company or the stockholders of the Company immediately prior to the transaction
do not own at least fifty percent (50%) of the value or voting power of the
issued and outstanding equity securities of the acquiror immediately after the
transaction; or
(5) the dissolution or liquidation of the
Company.
(d) "Code" means the Internal Revenue Code of 1986, as
amended.
(e) "Committee" means the committee appointed by the
Board of Directors to administer the Plan pursuant to Plan Section 2.3.
(f) "Company" means Celcore, Inc., a Delaware
corporation.
(g) "Disability" has the same meaning as provided in the
long-term disability plan or policy maintained or, if applicable, most recently
maintained, by the Company or, if applicable, any affiliate of the Company for
the Participant. If no long-term disability plan or policy was ever maintained
on behalf of the Participant or, if the determination of Disability relates to
an Incentive Stock Option, 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 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 Disability relates.
(h) "Disposition" means any conveyance, sale, transfer,
assignment, pledge or hypothecation, whether outright or as security, inter
vivos or testamentary, with or without consideration, voluntary or involuntary.
(i) "Dividend Equivalent Rights" means certain rights to
receive cash payments as described in Plan Section 3.5.
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(j) "Fair Market Value" refers to the determination of
value of a share of Stock. If the Stock is actively traded on any national
securities exchange or any Nasdaq quotation or market system, Fair Market Value
shall mean the closing price at which sales of Stock shall have been sold on
the most recent trading date immediately prior to the date of determination, as
reported by any such exchange or system selected by the Committee on which the
shares of Stock are then traded. If the shares of Stock are not actively
traded on any such exchange or system, Fair Market Value shall mean the
arithmetic mean of the bid and asked prices for the shares of Stock on the most
recent trading date within a reasonable period prior to the determination date
as reported by such exchange or system. If there are no bid and asked prices
within a reasonable period or if the shares of Stock are not traded on any
exchange or system as of the determination date, Fair Market Value shall mean
the fair market value of a share of Stock as determined by the Committee taking
into account such facts and circumstances deemed to be material by the
Committee to the value of the Stock in the hands of the Participant; provided
that, for purposes of granting awards other than Incentive Stock Options, Fair
Market Value of a share of Stock may be determined by the Committee by
reference to the average market value determined over a period certain or as of
specified dates, to a tender offer price for the shares of Stock (if settlement
of an award is triggered by such an event) or to any other reasonable measure
of fair market value and provided further that, for purposes of granting
Incentive Stock Options, Fair Market Value of a share of Stock shall be
determined in accordance with the valuation principles described in the
regulations promulgated under Code Section 422.
(k) "Incentive Stock Option" means an incentive stock
option, as defined in Code Section 422, described in Plan Section 3.2.
(l) "Non-Qualified Stock Option" means a stock option,
other than an option qualifying as an Incentive Stock Option, described in Plan
Section 3.2.
(m) "Option" means a Non-Qualified Stock Option or an
Incentive Stock Option.
(n) "Over 10% Owner" means an individual who at the time
an Incentive Stock Option is granted owns Stock possessing more than 10% of the
total combined voting power of the Company or one of its Parents or
Subsidiaries, determined by applying the attribution rules of Code Section
424(d).
(o) "Parent" means any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company if, with
respect to Incentive Stock Options, at the time of granting of the Option, each
of the corporations other than the Company owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one of the other
corporations in the chain.
(p) "Participant" means an individual who receives a
Stock Incentive hereunder.
(q) "Performance Unit Award" refers to a performance unit
award described in Plan Section 3.6.
(r) "Phantom Shares" refers to the rights described in
Plan Section 3.7.
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(s) "Plan" means the Celcore, Inc. 1996 Stock Incentive
Plan.
(t) "Stock" means the Company's common stock, $.10 par
value per share.
(u) "Stock Appreciation Right" means a stock appreciation
right described in Plan Section 3.3.
(v) "Stock Award" means a stock award described in Plan
Section 3.4.
(w) "Stock Incentive Agreement" means an agreement
between the Company and a Participant or other documentation evidencing an
award of a Stock Incentive.
(x) "Stock Incentive Program" means a written program
established by the Committee pursuant to which Stock Incentives, other than
Options or Stock Appreciation Rights, are awarded under the Plan under uniform
terms, conditions and restrictions set forth in such written program and
distributed among eligible officers, employees and directors.
(y) "Stock Incentives" means, collectively, Dividend
Equivalent Rights, Incentive Stock Options, Non-Qualified Stock Options,
Performance Unit Awards, Phantom Shares, Stock Appreciation Rights and Stock
Awards.
(z) "Subsidiary" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company if,
with respect to Incentive Stock Options, at the time of the granting of the
Option, each of the corporations other than the last corporation in the
unbroken chain owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in the chain.
(aa) "Termination of Service" means the termination of the
service relationship, whether employment or otherwise, between a Participant
and the Company and its affiliates, regardless of the fact that severance or
similar payments are made to the Participant for any reason, including, but not
by way of limitation, a termination by resignation, discharge, death,
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 Service is for Cause.
SECTION 2 THE STOCK INCENTIVE PLAN
2.1 Purpose of the Plan. The Plan is intended to (a) provide
incentive to officers, employees, directors and consultants of the Company and
its affiliates to stimulate their efforts toward the continued success of the
Company and to operate and manage the business in a manner that will provide
for the long-term growth and profitability of the Company; (b) encourage stock
ownership by officers, employees, directors and consultants by providing them
with a means to acquire a proprietary interest in the Company by acquiring
shares of Stock or to receive compensation which is based upon appreciation in
the value of Stock; and (c) provide a means of obtaining and rewarding key
personnel.
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2.2 Stock Subject to the Plan. The aggregate number of shares of
Stock reserved exclusively for issuance pursuant to Stock Incentives under the
Plan shall not exceed 3,000,000 as of the date the Plan is adopted by the Board
of Directors; provided, however, that automatically and without further action,
the aggregate number of shares of Stock reserved exclusively for issuance
pursuant to Stock Incentives shall be redetermined annually as of the first day
of each succeeding fiscal year of the Company and, from that date of
determination until the immediately succeeding date of determination, shall not
exceed the greater of (a) 3,000,000 (subject to adjustment in accordance with
Section 5.2 below); or (b) the number of shares (rounded to the nearest whole
number) of Stock equal to fifteen percent (15%) of the issued and outstanding
shares of Stock (calculated on a fully diluted basis assuming the conversion or
exercise of all outstanding options, warrants and purchase rights to acquire
Stock) as of the date of redetermination; provided, however, that the aggregate
number of shares of Stock reserved exclusively for issuance of Stock Incentives
that are Incentive Stock Options shall never exceed the 3,000,000 shares of
Stock originally reserved. The number of shares of Stock reserved hereunder,
as so determined from time to time, shall be subject to any further adjustment
in accordance with Section 5.2 below. The shares of Stock attributable to the
nonvested, unpaid, unexercised, unconverted or otherwise unsettled portion of
any Stock Incentive awarded that is subsequently forfeited or cancelled or
expires or terminates for any reason without becoming vested, paid, exercised,
converted or otherwise settled in full shall again be available for purposes of
the Plan.
2.3 Administration of the Plan. The Plan shall be administered by
the Committee. The Committee shall have full authority in its discretion to
determine the officers, employees, directors and consultants of the Company or
its affiliates to whom Stock Incentives shall be granted and the terms and
provisions of Stock Incentives, subject to the Plan. Subject to the provisions
of the Plan, the Committee shall have full and conclusive authority to
interpret the Plan; to prescribe, amend and rescind rules and regulations
relating to the Plan; to determine the terms and provisions of the respective
Stock Incentive Agreements or Stock Incentive Programs and to make all other
determinations necessary or advisable for the proper administration of the
Plan. The Committee's determinations under the Plan need not be uniform and
may be made by it selectively among persons who receive, or are eligible to
receive, awards under the Plan (whether or not such persons are similarly
situated). The Committee's decisions shall be final and binding on all
Participants.
As to any matter involving a Participant who is not a "reporting
person" for purposes of Section 16 of the Securities Exchange Act of 1934, the
Committee may delegate to any member of the Board of Directors or officer of
the Company the administrative authority to (a) interpret the provisions of the
Participant's Stock Incentive Agreement and (b) determine the treatment of
Stock Incentives upon a Termination of Service, as contemplated by Plan Section
3.8.
The Committee shall consist of at least two members of the Board of
Directors and, during those periods that the Company is subject to the
provisions of Section 16 of the Securities Exchange Act of 1934, the Board of
Directors shall consider the advisability of whether each such appointee shall
qualify as a "non-employee director", as that term is defined in Rule 16b-3 as
then in effect under the Securities Exchange Act of 1934, and, during those
periods that the Company has issued equity securities required to be registered
under Section 12 of the Securities Exchange Act of 1934, the Board of Directors
shall consider the advisability of whether each such appointee shall separately
qualify as an "outside director", within the meaning of Code Section 162(m) and
the regulations
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promulgated thereunder. The Board of Directors may from time to time remove
members from or add members to the Committee. Vacancies on the Committee shall
be filled by the Board of Directors.
2.4 Eligibility and Limits. Stock Incentives may be granted only
to officers, employees, directors and consultants of the Company or an
affiliate; provided, however, that an Incentive Stock Option may only be
granted to an employee of the Company or any Parent or Subsidiary. In the case
of Incentive Stock Options, the aggregate Fair Market Value (determined as at
the date an Incentive Stock Option is granted) of stock with respect to which
stock options intended to meet the requirements of Code Section 422 become
exercisable for the first time by an individual during any calendar year under
all plans of the Company and its Parents and Subsidiaries shall not exceed
$100,000; provided further, that if the limitation is exceeded, the Incentive
Stock Option(s) which cause the limitation to be exceeded shall be treated as
Non-Qualified Stock Option(s); except as the terms of the Stock Incentive
Agreement may expressly provide otherwise. To the extent required under Code
Section 162(m) and regulations thereunder for compensation to be treated as
qualified performance-based compensation, the maximum number of shares Stock
with respect to which Options or Stock Appreciation Rights may be granted
during any single fiscal year of the Company to any participant shall not
exceed 200,000.
SECTION 3 TERMS OF STOCK INCENTIVES
3.1 Terms and Conditions of All Stock Incentives.
(a) The number of shares of Stock as to which a Stock
Incentive shall be granted shall be determined by the Committee in its sole
discretion, subject to the provisions of Section 2.2 as to the total number of
shares available for grants under the Plan. If a Stock Incentive Agreement so
provides, a Participant may be granted a new Option to purchase a number of
shares of Stock equal to the number of previously owned shares of Stock
tendered in payment of the Exercise Price (as defined below) for each share of
Stock purchased pursuant to the terms of the Stock Incentive Agreement.
(b) Each Stock Incentive shall be evidenced either by a
Stock Incentive Agreement in such form and containing such terms, conditions
and restrictions as the Committee may determine is appropriate or be made
subject to the terms of a Stock Incentive Program, containing such terms,
conditions and restrictions as the Committee may determine is appropriate.
Each Stock Incentive Agreement or Stock Incentive Program shall be subject to
the terms of the Plan and any provision in a Stock Incentive Agreement or Stock
Incentive Program that is inconsistent with the Plan shall be null and void.
(c) The date a Stock Incentive is granted shall be the
date on which the Committee has approved the terms and conditions of the Stock
Incentive Agreement or Stock Incentive Program and has determined the recipient
of the Stock Incentive and the number of shares covered by the Stock Incentive
and has taken all such other action necessary to complete the grant of the
Stock Incentive.
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(d) The Committee may provide in any Stock Incentive
Agreement or pursuant to any Stock Incentive Program (or subsequent to the
award of a Stock Incentive but prior to its expiration or cancellation, as the
case may be) that, in the event of a Change in Control, the Stock Incentive
shall or may be cashed out on the basis of any price not greater than the
highest price paid for a share of Stock in any transaction reported by any
market or system selected by the Committee on which the shares of Stock are
then actively traded during a specified period immediately preceding or
including the date of the Change in Control or offered for a share of Stock in
any tender offer occurring during a specified period immediately preceding or
including the date the tender offer commences; provided that, in no case shall
any such specified period exceed one (1) year (the "Change in Control Price").
For purposes of this Subsection, the cash-out of a Stock Incentive shall be
determined as follows:
(1) Options shall be cashed out on the basis of
the excess, if any, of the Change in Control Price (but not more than the Fair
Market Value of the Stock on the date of the cash-out in the case of Incentive
Stock Options) over the Exercise Price with or without regard to whether the
Option may otherwise be exercisable only in part;
(2) Stock Awards and Phantom Shares shall be
cashed out in an amount equal to the Change in Control Price with or without
regard to any conditions or restrictions otherwise applicable to any such Stock
Incentive; and
(3) Stock Appreciation Rights, Dividend
Equivalent Rights and Performance Unit Awards shall be cashed out with or
without regard to any conditions or restrictions otherwise applicable to any
such Stock Incentive and the amount of the cash out shall be determined by
reference to the number of shares of Stock that would be required to pay the
Participant in kind for the value of the Stock Incentive as of the date of the
Change in Control multiplied by the Change in Control Price.
(e) Any Stock Incentive may be granted in connection with
all or any portion of a previously or contemporaneously granted Stock
Incentive. Exercise or vesting of a Stock Incentive granted in connection with
another Stock Incentive may result in a pro rata surrender or cancellation of
any related Stock Incentive, as specified in the applicable Stock Incentive
Agreement or Stock Incentive Program.
(f) Stock Incentives shall not be transferable or
assignable except by will or by the laws of descent and distribution and shall
be exercisable, during the Participant's lifetime, only by the Participant; in
the event of the Disability of the Participant, by the legal representative of
the Participant; or in the event of the death of the participant, by the
personal representative of the Participant's estate or if no personal
representative has been appointed, by the successor in interest determined
under the Participant's will.
3.2 Terms and Conditions of Options. Each Option granted under
the Plan shall be evidenced by a Stock Incentive Agreement. At the time any
Option is granted, the Committee shall determine whether the Option is to be an
Incentive Stock Option or a Non-Qualified Stock Option, and the Option shall be
clearly identified as to its status as an Incentive Stock Option or a
Non-Qualified Stock Option. At the time any Incentive Stock Option is
exercised, the Company shall be
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entitled to place a legend on the certificates representing the shares of Stock
purchased pursuant to the Option to clearly identify them as shares of Stock
purchased upon exercise of an Incentive Stock Option. An Incentive Stock
Option may only be granted within ten (10) years from the earlier of the date
the Plan is adopted by the Board of Directors or approved by the Company's
stockholders.
(a) Option Price. Subject to adjustment in accordance
with Section 5.2 and the other provisions of this Section 3.2, the exercise
price (the "Exercise Price") per share of Stock purchasable under any Option
shall be as set forth in the applicable Stock Incentive Agreement. With
respect to each grant of an Incentive Stock Option to a Participant who is not
an Over 10% Owner or to each grant of any Option to a Participant who is then a
"covered employee," within the meaning of Code Section 162(m), the Exercise
Price per share shall not be less than the Fair Market Value on the date the
Option is granted. With respect to each grant of an Incentive Stock Option to
a Participant who is an Over 10% Owner, the Exercise Price shall not be less
than 110% of the Fair Market Value on the date the Option is granted.
(b) Option Term. The term of an Option shall be as
specified in the applicable Stock Incentive Agreement; provided, however that
any Incentive Stock Option granted to a Participant who is not an Over 10%
Owner shall not be exercisable after the expiration of ten (10) years after the
date the Option is granted and any Incentive Stock Option granted to an Over
10% Owner shall not be exercisable after the expiration of five (5) years after
the date the Option is granted.
(c) Payment. Payment for all shares of Stock purchased
pursuant to exercise of an Option shall be made in any form or manner
authorized by the Committee in the Stock Incentive Agreement or by amendment
thereto, including, but not limited to, cash or, if the Stock Incentive
Agreement provides, (1) by delivery to the Company of a number of shares of
Stock which have been owned by the holder for at least six (6) months prior to
the date of exercise having an aggregate Fair Market Value of not less than the
product of the Exercise Price multiplied by the number of shares the
Participant intends to purchase upon exercise of the Option on the date of
delivery; (2) in a cashless exercise through a broker; or (3) by having a
number of shares of Stock withheld, the Fair Market Value of which as of the
date of exercise is sufficient to satisfy the Exercise Price. In its
discretion, the Committee also may authorize (at the time an Option is granted
or thereafter) Company financing or bonus compensation to assist the
Participant as to payment of the Exercise Price on such terms as may be offered
by the Committee in its discretion. Payment shall be made at the time that the
Option or any part thereof is exercised, and no shares shall be issued or
delivered upon exercise of an option until full payment has been made by the
Participant. The holder of an Option, as such, shall have none of the rights
of a stockholder.
(d) Conditions to the Exercise of an Option. Each Option
granted under the Plan shall be exercisable by whom, at such time or times, or
upon the occurrence of such event or events, and in such amounts, as the
Committee shall specify in the Stock Incentive Agreement; provided, however,
that subsequent to the grant of an Option, the Committee, at any time before
complete termination of such Option, may accelerate the time or times at which
such Option may be exercised in whole or in part, including, without
limitation, upon a Change in Control and may permit the Participant or any
other designated person to exercise the Option, or any portion thereof, for all
or
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part of the remaining Option term notwithstanding any provision of the Stock
Incentive Agreement to the contrary.
(e) Termination of Incentive Stock Option. With respect
to an Incentive Stock Option, in the event of the Termination of Service of a
Participant, the Option or portion thereof held by the Participant which is
unexercised shall expire, terminate, and become unexercisable no later than the
expiration of three (3) months after the date of Termination of Service;
provided, however, that in the case of a holder whose Termination of Service is
due to death or Disability, one (1) year shall be substituted for such three
(3) month period. For purposes of this Subsection (e), Termination of Service
of the Participant shall not be deemed to have occurred if the Participant is
employed by another corporation (or a parent or subsidiary corporation of such
other corporation) which has assumed the Incentive Stock Option of the
Participant in a transaction to which Code Section 424(a) is applicable.
(f) Special Provisions for Certain Substitute Options.
Notwithstanding anything to the contrary in this Section 3.2, any Option issued
in substitution for an option previously issued by another entity, which
substitution occurs in connection with a transaction to which Code Section
424(a) is applicable, may provide for an exercise price computed in accordance
with such Code Section and the regulations thereunder and may contain such
other terms and conditions as the Committee may prescribe to cause such
substitute Option to contain as nearly as possible the same terms and
conditions (including the applicable vesting and termination provisions) as
those contained in the previously issued option being replaced thereby.
3.3 Terms and Conditions of Stock Appreciation Rights. Each Stock
Appreciation Right granted under the Plan shall be evidenced by a Stock
Incentive Agreement. A Stock Appreciation Right may be granted in connection
with all or any portion of a previously or contemporaneously granted Stock
Incentive or not in connection with a Stock Incentive. A Stock Appreciation
Right shall entitle the Participant to receive the excess of (a) the Fair
Market Value of a specified or determinable number of shares of the Stock at
the time of payment or exercise over (b) a specified price (1) which, in the
case of a Stock Appreciation Right granted in connection with an Option, shall
be not less than the Exercise Price for that number of shares and (2) which, in
the case of a Stock Appreciation Right that is granted to a Participant who is
then a "covered employee," within the meaning of Code Section 162(m), shall not
be less than the Fair Market Value of the Stock at the time of the award. A
Stock Appreciation Right granted in connection with a Stock Incentive may only
be exercised to the extent that the related Stock Incentive has not been
exercised, paid or otherwise settled. The exercise of a Stock Appreciation
Right granted in connection with a Stock Incentive shall result in a pro rata
surrender or cancellation of any related Stock Incentive to the extent the
Stock Appreciation Right has been exercised.
(a) Settlement. Upon settlement of a Stock Appreciation
Right, the Company shall pay to the Participant the appreciation in cash or
shares of Stock (valued at the aggregate Fair Market Value on the date of
payment or exercise) as provided in the Stock Incentive Agreement or, in the
absence of such provision, as the Committee may determine.
(b) Conditions to Exercise. Each Stock Appreciation
Right granted under the Plan shall be exercisable or payable at such time or
times, or upon the occurrence of such event or
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events, and in such amounts, as the Committee shall specify in the Stock
Incentive Agreement; provided, however, that subsequent to the grant of a Stock
Appreciation Right, the Committee, at any time before complete termination of
such Stock Appreciation Right, may accelerate the time or times at which such
Stock Appreciation Right may be exercised or paid in whole or in part.
3.4 Terms and Conditions of Stock Awards. The number of shares of
Stock subject to a Stock Award and restrictions or conditions on such shares,
if any, shall be as the Committee determines, and the certificate for such
shares shall bear evidence of any restrictions or conditions. Subsequent to
the date of the grant of the Stock Award, the Committee shall have the power to
permit, in its discretion, an acceleration of the expiration of an applicable
restriction period with respect to any part or all of the shares awarded to a
Participant. The Committee may require a cash payment from the Participant in
an amount no greater than the aggregate Fair Market Value of the shares of
Stock awarded determined at the date of grant in exchange for the grant of a
Stock Award or may grant a Stock Award without the requirement of a cash
payment.
3.5 Terms and Conditions of Dividend Equivalent Rights. A
Dividend Equivalent Right shall entitle the Participant to receive payments
from the Company in an amount determined by reference to any cash dividends
paid on a specified number of shares of Stock to Company stockholders of record
during the period such rights are effective. The Committee may impose such
restrictions and conditions on any Dividend Equivalent Right as the Committee
in its discretion shall determine, including the date any such right shall
terminate and may reserve the right to terminate, amend or suspend any such
right at any time.
(a) Payment. Payment in respect of a Dividend Equivalent
Right may be made by the Company in cash or shares of Stock (valued at Fair
Market Value on the date of payment) as provided in the Stock Incentive
Agreement or, in the absence of such provision, as the Committee may determine.
(b) Conditions to Payment. Each Dividend Equivalent
Right granted under the Plan shall be payable at such time or times, or upon
the occurrence of such event or events, and in such amounts, as the Committee
shall specify in the Stock incentive Agreement or Stock Incentive Program;
provided, however, that subsequent to the grant of a Dividend Equivalent Right,
the Committee, at any time before complete termination of such Dividend
Equivalent Right, may accelerate the time or times at which such Dividend
Equivalent Right may be paid in whole or in part.
3.6 Terms and Conditions of Performance Unit Awards. A
Performance Unit Award shall entitle the Participant to receive, at a future
date, payment of an amount equal to all or a portion of the value of a number
of units (stated in terms of a designated dollar amount per unit) granted by
the Committee, all as the Committee shall specify in the Stock Incentive
Agreement or Stock Incentive Program. At the time of the grant, the Committee
must determine the base value of each unit, the number of units subject to a
Performance Unit Award, the performance factors applicable to the determination
of the ultimate payment value of the Performance Unit Award and the period over
which Company performance shall be measured. The Committee may provide for an
alternate base value for each unit under certain specified conditions.
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(a) Payment. Payment in respect of Performance Unit
Awards may be made by the Company in cash or shares of Stock (valued at Fair
Market Value on the date of payment) as provided in the Stock Incentive
Agreement or Stock Incentive Program or, in the absence of such provision, as
the Committee may determine.
(b) Conditions to Payment. Each Performance Unit Award
granted under the Plan shall be payable at such time or times, or upon the
occurrence of such event or events, and in such amounts, as the Committee shall
specify in the Stock Incentive Agreement or Stock Incentive Program; provided,
however, that subsequent to the grant of a Performance Unit Award, the
Committee, at any time before complete termination of such Performance Unit
Award, may accelerate the time or times at which such Performance Unit Award
may be paid in whole or in part.
3.7 Terms and Conditions of Phantom Shares. Phantom Shares shall
entitle the Participant to receive, at a future date, payment of an amount
equal to all or a portion of the Fair Market Value of a number of shares of
Stock at the end of a certain period, all as the Committee shall specify in the
Stock Incentive Agreement or Stock Incentive Program. At the time of the
grant, the Committee shall determine the factors which will govern the portion
of the rights so payable, including, at the discretion of the Committee, any
performance criteria that must be satisfied as a condition to payment.
(a) Payment. Payment in respect of Phantom Shares may be
made by the Company in cash or shares of Stock (valued at Fair Market Value on
the date of payment) as provided in the Stock Incentive Agreement or Stock
Incentive Program or, in the absence of such provision, as the Committee may
determine.
(b) Conditions to Payment. Each Phantom Share granted
under the Plan shall be payable at such time or times, or upon the occurrence
of such event or events, and in such amounts, as the Committee shall specify in
the Stock Incentive Agreement or Stock Incentive Program; provided, however,
that subsequent to the grant of a Phantom Share, the Committee, at any time
before complete termination of such Phantom Share, may accelerate the time or
times at which such Phantom Share may be paid in whole or in part.
3.8 Treatment of Awards Upon Termination of Service. Except as
otherwise provided by Plan Section 3.2(e), any award under this Plan to a
Participant who suffers a Termination of Service may be cancelled, accelerated,
paid or continued, as provided in the Stock Incentive Agreement or Stock
Incentive Program or, in the absence of such provision, as the Committee may
determine. The portion of any award exercisable in the event of continuation
or the amount of any payment due under a continued award may be adjusted by the
Committee to reflect the Participant's period of service from the date of grant
through the date of the Participant's Termination of Service or such other
factors as the Committee determines are relevant to its decision to continue
the award.
SECTION 4 RESTRICTIONS ON STOCK
4.1 Escrow of Shares. Any certificates representing the shares of
Stock issued under the Plan shall be issued in the Participant's name, but, if
the Stock Incentive Agreement or Stock Incentive Program so provides, the
shares of Stock shall be held by a custodian designated by the
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Committee (the "Custodian"). Each applicable Stock Incentive Agreement or
Stock Incentive Program providing for transfer of shares of Stock to the
Custodian shall appoint the Custodian as the attorney-in-fact for the
Participant for the term specified in the applicable Stock Incentive Agreement
or Stock Incentive Program, with full power and authority in the Participant's
name, place and stead to transfer, assign and convey to the Company any shares
of Stock held by the Custodian for such Participant, if the Participant
forfeits the shares under the terms of the applicable Stock Incentive Agreement
or Stock Incentive Program. During the period that the Custodian holds the
shares subject to this Section, the Participant shall be entitled to all
rights, except as provided in the applicable Stock Incentive Agreement or Stock
Incentive Program, applicable to shares of Stock not so held. Any dividends
declared on shares of Stock held by the Custodian shall, as the Committee may
provide in the applicable Stock Incentive Agreement or Stock Incentive Program,
be paid directly to the Participant or, in the alternative, be retained by the
Custodian until the expiration of the term specified in the applicable Stock
Incentive Agreement or Stock Incentive Program and shall then be delivered,
together with any proceeds, with the shares of Stock to the Participant or to
the Company, as applicable.
4.2 Forfeiture of Shares. Notwithstanding any vesting schedule
set forth in any Stock Incentive Agreement or Stock Incentive Program, in the
event that the Participant violates a noncompetition agreement as set forth in
the Stock Incentive Agreement or Stock Incentive Program, all Stock Incentives
and shares of Stock issued to the holder pursuant to the Plan shall be
forfeited; provided, however, that the Company shall return to the holder the
lesser of any consideration paid by the Participant in exchange for Stock
issued to the Participant pursuant to the Plan or the then Fair Market Value of
the Stock forfeited hereunder.
4.3 Restrictions on Transfer. The Participant shall not have the
right to make or permit to exist any Disposition of the shares of Stock issued
pursuant to the Plan except as provided in the Plan or the applicable Stock
Incentive Agreement or Stock Incentive Program. Any Disposition of the shares
of Stock issued under the Plan by the Participant not made in accordance with
the Plan or the applicable Stock Incentive Agreement or Stock Incentive Program
shall be void. The Company shall not recognize, or have the duty to recognize,
any Disposition not made in accordance with the Plan and the applicable Stock
Incentive Agreement or Stock Incentive Program, and the shares so transferred
shall continue to be bound by the Plan and the applicable Stock Incentive
Agreement or Stock Incentive Program.
SECTION 5 GENERAL PROVISIONS
5.1 Withholding. The Company shall deduct from all cash
distributions under the Plan any taxes required to be withheld by federal,
state or local government. Whenever the Company proposes or is required to
issue or transfer shares of Stock under the Plan or upon the vesting of any
Stock Award, the Company shall have the right to require the recipient to remit
to the Company an amount sufficient to satisfy any federal, state and local
withholding tax requirements prior to the delivery of any certificate or
certificates for such shares or the vesting of such Stock Award. A Participant
may pay the withholding tax in cash, or, if the applicable Stock Incentive
Agreement or Stock Incentive Program provides, a Participant may elect to have
the number of shares of Stock he is to receive reduced by, or with respect to a
Stock Award, tender back to the Company, the smallest number of whole shares of
Stock which, when multiplied by the Fair Market Value of the shares of
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<PAGE> 16
Stock determined as of the Tax Date (defined below), is sufficient to satisfy
federal, state and local, if any, withholding taxes arising from exercise or
payment of a Stock Incentive (a "Withholding Election"). A Participant may
make a Withholding Election only if both of the following conditions are met:
(a) The Withholding Election must be made on or prior to
the date on which the amount of tax required to be withheld is determined (the
"Tax Date") by executing and delivering to the Company a properly completed
notice of Withholding Election as prescribed by the Committee; and
(b) Any Withholding Election made will be irrevocable;
however, the Committee may in its sole discretion disapprove and give no effect
to the Withholding Election.
5.2 Changes in Capitalization; Merger; Liquidation.
(a) The number of shares of Stock reserved for the grant
of Options, Dividend Equivalent Rights, Performance Unit Awards, Phantom
Shares, Stock Appreciation Rights and Stock Awards; the number of shares of
Stock reserved for issuance upon the exercise or payment, as applicable, of
each outstanding Option, Dividend Equivalent Right, Performance Unit Award,
Phantom Share and Stock Appreciation Right and upon vesting or grant, as
applicable, of each Stock Award; the Exercise Price of each outstanding Option
and the specified number of shares of Stock to which each outstanding Dividend
Equivalent Right, Phantom Share and Stock Appreciation Right pertains shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Stock resulting from a subdivision or combination of shares or the
payment of an ordinary stock dividend in shares of Stock to holders of
outstanding shares of Stock or any other increase or decrease in the number of
shares of Stock outstanding effected without receipt of consideration by the
Company.
(b) In the event of any merger, consolidation,
extraordinary dividend (including a spin-off), reorganization or other change
in the corporate structure of the Company or its Stock or tender offer for
shares of Stock, the Committee, in its sole discretion, may make such
adjustments with respect to awards and take such other action as it deems
necessary or appropriate to reflect or in anticipation of such merger,
consolidation, extraordinary dividend, reorganization, other change in
corporate structure or tender offer, including, without limitation, the
substitution of new awards, the termination or adjustment of outstanding
awards, the acceleration of awards or the removal of restrictions on
outstanding awards, all as may be provided in the applicable Stock Incentive
Agreement or Stock Incentive Program or, if not expressly addressed therein, as
the Committee subsequently may determine in the event of any such merger,
consolidation, extraordinary dividend (including a spin-off), reorganization or
other change in the corporate structure of the Company or its Stock or tender
offer for shares of Stock. Any adjustment pursuant to this Section 5.2 may
provide, in the Committee's discretion, for the elimination without payment
therefor of any fractional shares that might otherwise become subject to any
Stock Incentive.
(c) The existence of the Plan and the Stock Incentives
granted pursuant to the Plan shall not affect in any way the right or power of
the Company to make or authorize any adjustment, reclassification,
reorganization or other change in its capital or business structure, any
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<PAGE> 17
merger or consolidation of the Company, any issue of debt or equity securities
having preferences or priorities as to the Stock or the rights thereof, the
dissolution or liquidation of the Company, any sale or transfer of all or any
part of its business or assets, or any other corporate act or proceeding.
5.3 Cash Awards. The Committee may, at any time and in its
discretion, grant to any holder of a Stock Incentive the right to receive, at
such times and in such amounts as determined by the Committee in its
discretion, a cash amount which is intended to reimburse such person for all or
a portion of the federal, state and local income taxes imposed upon such person
as a consequence of the receipt of the Stock Incentive or the exercise of
rights thereunder.
5.4 Compliance with Code. All Incentive Stock Options to be
granted hereunder are intended to comply with Code Section 422, and all
provisions of the Plan and all incentive Stock Options granted hereunder shall
be construed in such manner as to effectuate that intent.
5.5 Right to Terminate Service. Nothing in the Plan or in any
Stock Incentive Agreement or Stock Incentive Program shall confer upon any
Participant the right to continue as an employee, officer, director or
consultant of the Company or any of its affiliates or affect the right of the
Company or any of its affiliates to terminate the Participant's service at any
time.
5.6 Restrictions on Delivery and Sale of Shares; Legends. Each
Stock Incentive is subject to the condition that if at any time the Committee,
in its discretion, shall determine that the listing, registration or
qualification of the shares covered by such Stock Incentive upon any securities
exchange or under any state or federal law is necessary or desirable as a
condition of or in connection with the granting of such Stock Incentive or the
purchase or delivery of shares thereunder, the delivery of any or all shares
pursuant to such Stock Incentive may be withheld unless and until such listing,
registration or qualification shall have been effected. If a registration
statement is not in effect under the Securities Act of 1933 or any applicable
state securities laws with respect to the shares of Stock purchasable or
otherwise deliverable under Stock Incentives then outstanding, the Committee
may require, as a condition of exercise of any Option or as a condition to any
other delivery of Stock pursuant to a Stock Incentive, that the Participant or
other recipient of a Stock Incentive represent, in writing, that the shares
received pursuant to the Stock Incentive are being acquired for investment and
not with a view to distribution and agree that the shares will not be disposed
of except pursuant to an effective registration statement, unless the Company
shall have received an opinion of counsel that such disposition is exempt from
such requirement under the Securities Act of 1933 and any applicable state
securities laws. The Company may include on certificates representing shares
delivered pursuant to a Stock Incentive such legends referring to the foregoing
representations or restrictions or any other applicable restrictions on resale
as the Company, in its discretion, shall deem appropriate.
5.7 Non-alienation of Benefits. Other than as specifically
provided with regard to the death of a Participant, no benefit under the Plan
shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge; and any attempt to do so shall be
void. No such benefit shall, prior to receipt by the Participant, be in any
manner liable for or subject to the debts, contracts, liabilities, engagements
or torts of the Participant.
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<PAGE> 18
5.8 Termination and Amendment of the Plan. The Board of Directors
at any time may amend or terminate the Plan without stockholder approval;
provided, however, that the Board of Directors may condition any amendment on
the approval of stockholders of the Company if such approval is necessary or
advisable with respect to tax, securities or other applicable laws. No such
termination or amendment without the consent of the holder of a Stock Incentive
shall adversely affect the rights of the Participant under such Stock
Incentive.
5.9 Stockholder Approval. The Plan shall be submitted to the
stockholders of the Company for their approval within twelve (12) months before
or after its adoption by the Board of Directors. If such approval is not
obtained, any Stock Incentive granted under the Plan shall be void.
5.10 Choice of Law. The laws of the State of Delaware shall govern
the Plan, to the extent not preempted by federal law.
5.11 Effective Date of Plan. The Plan shall become effective upon
the date the Plan is approved by the Board of Directors.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed
this 22nd day of November, 1996.
CELCORE, INC.
By: /s/ ROBERT P. GOODMAN
----------------------------------------
Title: Chairman and Chief Executive Officer
------------------------------------
Attest:
/s/ THOMAS R. BERGER
- ---------------------------
Secretary
[CORPORATE-SEAL]
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<PAGE> 1
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) 621,589 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 Celcore, Inc. 1996 Stock Incentive Plan (the "Plan") assumed by the
Company, 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
<PAGE> 1
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 Celcore, Inc. 1996 Stock 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
