<PAGE> 1
As filed with the Securities and Exchange Commission on March 27, 1995.
Registration No. 33-___________
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM S-8
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
____________________
AURORA ELECTRONICS, INC.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 75-1539534
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2030 Main Street, Suite 1120
Irvine, California 92714
(Address of principal executive offices, including zip code)
____________________
AURORA ELECTRONICS, INC.
1995 EMPLOYEE STOCK PURCHASE PLAN
(Full title of Plan)
____________________
Jim C. Cowart Copy to: Alan J. Bogdanow
Chairman and Chief Executive Officer Hughes & Luce, L.L.P.
Aurora Electronics, Inc. 2800 Bank One Center
2030 Main Street, Suite 1120 1717 Main Street
Irvine, California 92714 Dallas, Texas 75201
(714) 660-1232
(Name, address and telephone number,
including area code, of agent for service)
____________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
Title of Amount Proposed Maximum Proposed Maximum Amount of
Securities to be Offering Price Aggregate Registration
to be Registered Registered(1) Per Share(2) Offering Price(2) Fee(3)
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 350,000 $3.5625 $1,250,869 $431.30
$.03 par value
---------------------------------------------------------------------------------------------------------
</TABLE>
(1) Pursuant to Rule 416 under the Securities Act of 1933, as amended,
there are also being registered such additional shares of
Registrant's Common Stock, $.03 par value (the "Common Stock"), as
may become issuable pursuant to the antidilution provisions of the
Registrant's 1995 Employee Stock Purchase Plan (the "Plan").
(2) The offering price for shares of Common Stock under the Plan is
85% of the lesser of the last sale price of the shares on (a) the
date on which a participant in the Plan is granted an option to
purchase the shares or (b) the date on which the participant is
deemed to have exercised his or her option to purchase the shares.
The offering price for shares not subject to options on the date
hereof and shares subject to options on the date
<PAGE> 2
hereof but for which the offering price is not known, $3.5625 per
share, has been estimated solely for the purpose of computing the
registration fee on the basis of the high and the low prices paid
for a share of the Common Stock on March 21, 1995, as reported on
the American Stock Exchange, all in accordance with Rule 457(h)
under the Securities Act of 1933, as amended. The offering price
for shares subject to options on the date hereof for which the
offering price is known is 85% of the last sale price of the
Common Stock on December 30, 1994.
(3) The registration fee consists of $14.68 payable with respect to
10,832 shares subject to options on the date hereof at an offering
price of $3.93125 per share, plus $416.62 payable with respect to
339,168 shares that are not subject to options on the date hereof
and shares subject to options on the date hereof but for which the
offering price is not known.
____________________
<PAGE> 3
EXPLANATORY NOTE
This Registration Statement has been filed pursuant to General
Instruction A on Form S-8 to register 350,000 shares of Common Stock offered
pursuant to the 1995 Employee Stock Purchase Plan (the "Plan") of Aurora
Electronics, Inc. (the "Registrant" or the "Company").
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
ITEM 1. PLAN INFORMATION.
Not required to be filed with this Registration Statement.
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.
Not required to be filed with this Registration Statement.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The Registrant incorporates by reference in this Registration
Statement the following documents, which have been filed previously with the
Securities and Exchange Commission (the "Commission"):
(a) Annual Report on Form 10-K for the fiscal year ended
September 30, 1994, dated January 5, 1995, which contains audited
financial statements of the Company for the fiscal year ended September
30, 1994, as amended by Amendment No. 1 on Form 10-K/A dated February 6,
1995 (collectively referred to herein as the "1994 10-K").
(b) All other reports filed by the Registrant pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), since the end of the fiscal year covered by the
1994 10-K (including Amendments No. 1 and 2 to each of the Quarterly
Reports on Form 10-Q for the quarters ended December 31, 1993, March 31,
1994 and June 30, 1994 dated January 5, 1995 and February 6, 1995,
respectively, and the Quarterly Report on Form 10-Q for the quarter ended
December 31, 1994 dated February 14, 1995).
(c) The description of the Registrant's Common Stock contained
in the Registrant's Registration Statement on Form 8-A dated February 14,
1983, including any amendment or report filed for the purpose of updating
such description.
All documents subsequently filed by the Registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing
of a post-effective amendment to this Registration Statement which indicates
that all of the shares of Common Stock offered have been sold or which
deregisters all of such shares then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to be a part
hereof from the date of filing of such documents.
-1-
<PAGE> 4
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any other subsequently filed document which also is
incorporated or deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Restated Certificate of Incorporation and Bylaws, as
amended to date, provide for indemnification to officers and directors of the
Company to the fullest extent permitted by the Delaware General Corporation
Law ("DGCL"). The Company's Restated Certificate of Incorporation provides,
consistent with the provisions of the DGCL, that no director of the Company
will be personally liable to the Company or any of its stockholders for
monetary damages arising from the director's breach of fiduciary duty as a
director. However, this does not apply with respect to any action in which
the director would be liable under Section 174 of Title 8 of the DGCL nor
does it apply with respect to any liability in which the director (i) has
breached his duty of loyalty to the Company and its stockholders, (ii) does
not act in good faith or, in failing to act, does not act in good faith,
(iii) has acted in a manner involving intentional misconduct or a knowing
violation of law or, in failing to act, has acted in a manner involving
intentional misconduct or a knowing violation of law, or (iv) has derived an
improper personal benefit.
Pursuant to the provisions of Section 145 of the DGCL, every
Delaware corporation has the power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding (other than an action by or in the right
of the corporation) by reason of the fact that he is or was a director,
officer, employee or agent of any corporation, partnership, joint venture,
trust or other enterprise, against any and all expenses, judgments, fines and
amounts paid in settlement and reasonably incurred in connection with such
action, suit or proceeding. The power to indemnify applies only if such
person acted in good faith and in a manner he reasonably believed to be in
the best interest, or not opposed to the best interest, of the corporation
and with respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful.
The power to indemnify applies to actions brought by or in the right
of the corporation as well, but only to the extent of defense and settlement
expenses and not to any satisfaction of a judgment or settlement of the claim
itself, and with the further limitation that in such actions no
indemnification shall be made in the event of any adjudication unless the
court, in its discretion, believes that in light of all the circumstances
indemnification should apply.
To the extent any of the persons referred to in the two immediately
preceding paragraphs is successful in the defense of actions referred to
therein, such person is entitled, pursuant to Section 145, to indemnification
as described above.
-2-
<PAGE> 5
The Company has entered into indemnity agreements with each of its
directors. Each such Indemnification Agreement provides for indemnification
of directors of the Company to the fullest extent permitted by the DGCL and
additionally permits advancing attorneys' fees and all other costs, expenses,
obligations, fines and losses, paid or incurred by a director generally in
connection with the investigation, defense or other participation in any
threatened, pending or completed action, suit or proceeding or any inquiry or
investigation thereof, whether conducted by or on behalf of the Company or
any other party. If it is later determined that the director is or was not
entitled to indemnification under applicable law, the Company is entitled to
reimbursement by the director.
The Indemnification Agreements further provide that in the event of
a change in control of the Company, then with respect to all matters
thereafter arising concerning the rights of directors to indemnity payments
and expense advances, all determinations regarding excludable claims will be
made only by a court of competent jurisdiction or by a special independent
legal counsel selected by the director and approved by the Company.
To the extent the board of directors or the stockholders of the
Company may in the future wish to limit or repeal the ability of the Company
to indemnify directors, such repeal or limitation may not be effective as to
directors who are currently parties to the Indemnification Agreements,
because their rights to full protection are contractually assured by the
Indemnification Agreements. It is anticipated that similar contracts may be
entered into, from time to time, with future directors of the Company.
The Company also provides customary indemnification of all of the
officers and directors of the Company pursuant to an insurance policy with a
third party insurer.
Insofar as indemnification by the Company for liabilities arising
under the Securities Act may be permitted to directors, officers or persons
controlling the Company pursuant to the foregoing provisions, the Company has
been informed that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is therefore unenforceable.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
The Exhibits to this Registration Statement are listed in the Index
to Exhibits on page E-1 of this Registration Statement, which Index is
incorporated herein by reference.
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
-3-
<PAGE> 6
(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;
(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, Form S-8 or Form F-3 and
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished
to the Commission by the Registrant pursuant to Section 13 or Section
15(d) of the Exchange Act that are incorporated by reference 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 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 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.
(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 provisions described in Item 6,
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.
-4-
<PAGE> 7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Irvine, State of California, on
March 22, 1995.
AURORA ELECTRONICS, INC.
By: /s/ Jim C. Cowart
Jim C. Cowart,
Chairman and
Chief Executive Officer
-5-
<PAGE> 8
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
Jim C. Cowart and John P. Grazer, and each of them, his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments to this Registration Statement
(including post-effective amendments), and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or either of them or their substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on March 22, 1995:
<TABLE>
<CAPTION>
Signature Title
<S> <C>
/s/ Jim C. Cowart Chairman, Chief Executive Officer
Jim C. Cowart and Director (Principal
Executive Officer)
/s/ John P. Grazer Chief Financial Officer and
John P. Grazer Senior Vice President-
Finance and Administration
(Principal Financial and
Accounting Officer)
/s/ Robert G. Allison Director
Robert G. Allison
/s/ Harvey B. Cash Director
Harvey B. Cash
/s/ Amin J. Khoury Director
Amin J. Khoury
/s/ David A. Lahar Director
David A. Lahar
/s/ William H. Watkins, Jr. Director
William H. Watkins, Jr.
</TABLE>
-6-
<PAGE> 9
EXHIBIT INDEX
<TABLE>
<CAPTION> Sequentially
Exhibit Numbered
Number Description of Exhibit Page
------ ---------------------- ------------
<S> <C> <C>
4.1 The Restated Certificate of - -
Incorporation of the Registrant, as
amended (incorporated by reference to
Exhibit 3.1 of the Registrant's
Transition Report on Form 10-K for the
transition period ended September 30,
1992)
4.2 Bylaws of the Registrant, as amended
(incorporated by reference to Exhibit
4.2 of the Registrant's Registration
Statement on Form S-8 dated May 27, - -
1994)
** 5.1 Opinion of Hughes & Luce, L.L.P.
regarding validity of the Common Stock
**23.1 Consent of Hughes & Luce, L.L.P.
(Contained in Exhibit 5.1)
**23.2 Consent of Arthur Andersen LLP
**24.1 Power of Attorney (Set forth on the
signature page of this Registration
Statement)
** 99.1 Aurora Electronics, Inc. 1995 Employee
Stock Purchase Plan
</TABLE>
____________________
** Filed herewith.
E-1
<PAGE> 1
EXHIBIT 5.1
<PAGE> 2
March 21, 1995
Aurora Electronics, Inc.
2030 Main Street, Suite 1120
Irvine, California 92714
Ladies and Gentlemen:
We have acted as counsel for Aurora Electronics, Inc., a Delaware
corporation (the "Company"), in connection with the registration under
the Securities Act of 1933, as amended, of the issuance of up to 350,000
shares (the "Shares") of the Company's common stock, par value $.03 per
share, issuable under the Aurora Electronics, Inc. 1995 Employee Purchase
Plan (the "Plan"). The issuance of the Shares is being registered
pursuant to a Registration Statement on Form S-8 to be filed with the
Securities and Exchange Commission on or about March 24, 1995 (the
"Registration Statement").
In connection with this opinion, we have examined such documents and
records of the Company and such statutes, regulations and other
instruments and certificates as we have deemed necessary or advisable for
the purposes of this opinion. We have assumed that all signatures on all
documents presented to us are genuine, that all documents submitted to us
as originals are accurate and complete and that all documents submitted
to us as copies are true and correct copies of accurate and complete
originals thereof. We have also relied upon such certificates of public
officials, corporate agents, and officers of the Company and such other
certifications with respect to the accuracy of material factual matters
contained therein that were not independently established.
Based on the foregoing, we are of the opinion that, if and when the
Shares have been issued and sold and consideration received therefor by
the Company in accordance with the terms of the Plan, the Shares will
have been validly issued and will be fully paid and non-assessable.
We consent to the use of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ HUGHES & LUCE, L.L.P.
HUGHES & LUCE, L.L.P.
<PAGE> 1
EXHIBIT 23.2
<PAGE> 2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Form S-8 of our report dated
December 30, 1994, included in Aurora Electronics, Inc.'s Form 10-K for
the year ended September 30, 1994, as amended by Amendment No. 1 on
Form 10K/A, and to all references to our Firm included in this
registration statement.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Orange County, California
March 22, 1995
<PAGE> 1
EXHIBIT 99.1
<PAGE> 2
AURORA ELECTRONICS, INC.
1995 EMPLOYEE STOCK PURCHASE PLAN
SECTION 1 PURPOSE OF PLAN
The Aurora Electronics, Inc. 1995 Employee Stock Purchase Plan (the "Plan")
is intended to provide a method by which eligible employees of Aurora
Electronics, Inc. ("Aurora") and of such of Aurora's subsidiaries as
Aurora's Board of Directors (the "Board of Directors") may from time to time
designate (such subsidiaries, together with Aurora, being hereinafter
referred to as the "Company") may use voluntary, systematic payroll
deductions to purchase shares of the Common Stock of Aurora (the "Stock")
and thereby acquire an interest in the future of the Company. For purposes
of the Plan, a "subsidiary" is any corporation in which Aurora owns,
directly or indirectly, stock possessing 50% or more of the total combined
voting power of all classes of stock.
SECTION 2 OPTIONS TO PURCHASE STOCK
Under the Plan, there is available an aggregate of not more than 350,000
shares of Stock (subject to adjustment as provided in Section 15) for sale
pursuant to the exercise of options ("Options") granted under the Plan to
employees of the Company ("Employees") who meet the eligibility requirements
set forth in Section 3 hereof ("Eligible Employees"). The Stock to be
delivered upon exercise of Options under the Plan may be either shares of
authorized but unissued Stock or shares of reacquired Stock, as the Board of
Directors may determine.
SECTION 3 ELIGIBLE EMPLOYEES
Except as otherwise provided below, each individual who is an Employee of
the Company, who has a customary working schedule of at least 20 hours per
week, and who has been an Employee for at least 90 days will be eligible to
participate in the Plan.
(a) Any Employee who immediately after the grant of an option to him would
(in accordance with the provisions of Sections 423 and 424(d) of the
Internal Revenue Code of 1986, as amended (the "Code"), own stock possessing
5% or more of the total combined voting power or value of all classes of
stock of the employer corporation or of its parent or subsidiary
corporations, as defined in Section 424 of the Code, will not be eligible to
receive an option to purchase stock pursuant to the Plan.
(b) No Employee will be granted an option under the Plan which would permit
his or her rights to purchase shares of stock under all employee stock
purchase plans of the Company and parent and subsidiary corporations to
accrue at a rate which exceeds $25,000.00 of fair market value of such stock
(determined at the time the option is granted) for each calendar year during
which any Option granted to such Employee is outstanding at any time, as
provided in Sections 423 and 424 (d) of the Code.
(c) No Employee will be granted an option under the Plan which would permit
his or her rights to purchase shares of Stock to accrue at a rate which
exceeds $20,000.00 in fair market value such Stock (determined at the time
the option is granted) for each calendar year during which any such Option
granted to such Employee is outstanding at any time.
1
<PAGE> 3
SECTION 4 METHOD OF PARTICIPATION
Each of the periods during which this Plan remains in effect is hereinafter
referred to as a "Purchase Period". Purchase Periods shall be of
three-months duration to commence on October 1,1994. Each person who will
be an Eligible Employee on the first day of a Purchase Period may elect to
participate in the Plan by executing and delivering, at least 15 days prior
to such day, a payroll deduction authorization in accordance with Section 5.
Such Employee will thereby become a participant ("Participant") for such
Purchase Period and for each subsequent consecutive Purchase Period, subject
to Section 5 below.
SECTION 5 PAYROLL DEDUCTION
The payroll deduction authorization will request withholding at a rate (in
whole percentages) of not less than 1% nor more than 15% from the
Participant's Compensation by means of substantially equal payroll
deductions over the Purchase Period. The payroll deduction authorization
will remain in effect for consecutive subsequent Purchase Periods unless
changed or revoked by the Participant pursuant to this Section 5. For
purposes of the Plan, "Compensation" will mean all compensation paid to the
Participant by the Company and currently includible in his or her income,
including bonuses, commissions and other amounts includible in the
definition of compensation provided in the Treasury Regulations promulgated
under Section 415 of the Code, plus any amount that would be so included but
for the fact that it was contributed to a qualified plan pursuant to an
elective deferral under Section 401(k) of the Code or contributed under a
salary reduction agreement pursuant to Section 125 of the Code, but not
including payments under stock option plans and other employee benefit plans
or any other amounts excluded from the definition of compensation provided
in the Treasury Regulations under Section 415 of the Code. A Participant may
reduce the withholding rate of his or her payroll deduction authorization by
one or more whole percentage points (but not to below 1%) at any time during
a Purchase Period by delivering written notice to the Company, such
reduction to take effect prospectively as soon as practicable following
receipt of such notice by the Company. A Participant may increase or reduce
the withholding rate of his or her payroll deduction authorization for a
future Purchase Period, or cease participation entirely for a future
Purchase Period, by written notice delivered to the Company at least 15 days
prior to the first day of the Purchase Period as to which the change is to
be effective. All amounts withheld in accordance with a Participant's
payroll deduction authorization will be credited to a withholding account
for such Participant.
SECTION 6 GRANT OF OPTIONS
Each person who is a Participant on the first day of a Purchase Period will
as of such day be granted an Option for such Purchase Period. Such Option
will be for the number of shares (not in excess of the global share maximum
as hereinafter defined) of Stock to be determined by dividing (i) the
balance in the Participant's withholding account on the last day of the
Purchase Period, by (ii) the purchase price per share of the Stock
determined under Section 7. For purposes of the preceding sentence, the
global share maximum with respect to any Option for any Purchase Period
shall be the largest number of shares which, when multiplied by the fair
market value of a share of Stock at the beginning of the Purchase Period,
produces a dollar amount of $5,000.00 or less. The number of shares of
Stock receivable by each Participant upon exercise of his or her Option for
a Purchase Period will be reduced, on a substantially proportionate basis,
in the event that the number of shares than available under the Plan is
otherwise insufficient.
2
<PAGE> 4
SECTION 7 PURCHASE PRICE
The purchase price of Stock issued pursuant to the exercise of an Option
will be 85% of the fair market value of the Stock at (a) the time of grant
of the Option or (b) the time at which the Option is deemed exercised,
whichever is less. Fair market value on any given day will mean the Closing
Price of the Stock on such day (or, if there was no Closing Price on such
day, the latest day prior thereto on which there was a Closing Price). The
"Closing Price" of the Stock on any business day will be the last sale price
as reported on the principal market on which the Stock is traded or, if no
last sale is reported, then the mean between the highest bid and lowest
asked prices on that day. A good faith determination by the Board of
Directors as to fair market value shall be final and binding.
SECTION 8 EXERCISE OF OPTIONS
Each Employee who is a Participant in the Plan on the last day of a Purchase
Period will be deemed to have exercised on the last day of the Purchase
Period the Option granted to him or her for that Purchase Period. Upon such
exercise, the balance of the Participant's withholding account will be
applied to the purchase of the number of shares of Stock determined under
Section 6.
Notwithstanding anything herein to the contrary, Aurora Electronics'
obligation to issue and deliver shares of Stock under the Plan is subject to
the approval required of any governmental authority in connection with the
authorization, issuance, sale or transfer of said shares, to any
requirements of any national securities exchange applicable thereto, and to
compliance by the Company with other applicable legal requirements in effect
from time to time, including without limitation any applicable tax
withholding requirements.
SECTION 9 INTEREST
No interest will be payable on withholding accounts.
SECTION 10 CANCELLATION AND WITHDRAWAL
A Participant who holds an Option under the Plan may at any time prior to
exercise thereof under Section 8 cancel such Option as to all (but not less
than all) the shares subject or to be subject to such Option by written
notice delivered to the Company. Upon such cancellation, the balance in his
or her withholding account will be returned to him or her.
A participant may terminate his or her payroll deduction authorization as of
any date by written notice delivered to the Company and will thereby cease
to be a Participant as of such date. Any Participant who voluntarily
terminates his or her payroll deduction authorization prior to the last
business day of a Purchase Period will be deemed to have canceled his or her
Option. Any Participant who cancels an Option or terminates his or her
payroll deduction authorization may as of the beginning of a subsequent
Purchase Period again become a Participant in accordance with Section 4;
provided, however, that any such Participant who is at the time subject to the
provisions of Section 16 of the Securities Exchange Act of 1934, as amended
(the "1934 Act"), may not again become a Participant until at least six
months have elapsed after the date on which he or she ceased to be a
Participant.
3
<PAGE> 5
SECTION 11 TERMINATION OF EMPLOYMENT
Subject to Section 12, upon the termination of a Participant's service with
the Company for any reason, he or she will cease to be a Participant, and
any Option held by such Participant under the Plan will be deemed canceled,
the balance of his or her withholding account will be returned to him or
her, and he or she will have no further rights under the Plan.
SECTION 12 DEATH OF PARTICIPANT
A Participant may file a written designation of beneficiary specifying who
is to receive any Stock and/or cash credited to the Participant under the
Plan in the event of the Participant's death, which designation will also
provide for the election by the Participant of either (i) cancellation of
the Participant's Option upon his or her death, as provided in Section 10 or
(ii) application as of the last day of the Purchase Period of the balance of
the deceased Participant's withholding account at the time of death to the
exercise of his or her Option, pursuant to Section 8 of the Plan. In the
absence of a valid election otherwise, the death of a Participant will be
deemed to effect a cancellation of his or her Option. A designation of
beneficiary and election may be changed by the Participant at any time, by
written notice. In the event of the death of a Participant and receipt by
Aurora Electronics of proof of the identity and existence at the
Participant's death of a beneficiary validly designated by him or her under
the Plan, Aurora Electronic will deliver to such beneficiary such Stock
and/or cash to which the beneficiary is entitled under the Plan. Where the
Participant has elected option (ii) above but there is no surviving designed
beneficiary, Aurora Electronic will deliver such Stock and/or cash to the
executor or administrator of the estate of the Participant. No beneficiary
will, prior to the death of the Participant by whom he or she has been
designated, acquire any interest in any Stock or cash credited to the
Participant under the Plan.
SECTION 13 PARTICIPANT'S RIGHTS NOT TRANSFERABLE
All Participants will have the same rights and privileges under the Plan.
Each Participant's rights and privileges under any Option may be exercisable
during his or her lifetime only by him or her, and may not be sold, pledged,
assigned, or transferred in any manner. In the event any Participant
violates the terms of the Section, any Option held by him or her may be
terminated by the Company and upon return to the Participant of the balance
of his or her withholding account, all his or her rights under the Plan will
terminate.
SECTION 14 EMPLOYMENT RIGHTS
Nothing contained in the provisions of the Plan will be construed to give to
any Employee the right to be retained in the employ of the Company or to
interfere with the right of the Company to discharge any Employee at any
time. The loss of existing or potential profit in Options will not
constitute an element of damages in the event of termination of employment
for any reason, even if the termination is in violation of an obligation to
the Participant.
SECTION 15 CHANGE IN CAPITALIZATION
In the event of any change in the outstanding Stock of Aurora Electronic by
reason of a stock dividend, split-up, recapitalization, merger,
consolidation, reorganization, or other capital change, after the effective
date of the Plan, the aggregate number of shares available under the Plan,
the number of shares under Options granted but not exercised, and the Option
price will be appropriately adjusted.
4
<PAGE> 6
SECTION 16 ADMINISTRATION OF PLAN
The Plan will be administered by the Compensation Committee of the Board of
Director. The Compensation Committee is authorized to take such actions as
may be necessary to carry out the provisions and purposes of the Plan and
shall have the authority to control and manage the operation and
administration of the Plan. The Compensation Committee shall have the
authority to make, and from time to time, revise, rules and regulations for
the administration of the Plan. In order to effectuate the purposes of the
Plan, the Compensation Committee shall have the discretionary power to
construe and interpret the Plan, to supply any omissions therein, to
reconcile and correct any errors or inconsistencies, to decide any questions
in the administration and application of the Plan, and to make equitable
adjustments for any mistakes or errors made in the administration of the
Plan, and all such actions or determinations made by the Compensation
Committee, and the application of rules and regulations to a particular case
or issue by the Compensation Committee, in good faith, shall not be subject
to review by anyone, but shall be final, binding and conclusive on all
persons ever interested hereunder. In construing the Plan and in exercising
its power under provisions requiring Compensation Committee approval, the
Compensation Committee shall attempt to ascertain the purpose of the
provisions in question and when such purpose is known or reasonably
ascertainable, such purpose shall be given effect to the extent feasible.
Likewise, the Compensation Committee is authorized to determine all
questions with respect to the individual rights of all Participants and
their beneficiaries, if any, under this Plan.
SECTION 17 AMENDMENT AND TERMINATION OF PLAN
Aurora Electronics reserves the right, at anytime or from time to time, by
action of its Board of Directors, to amend in whole or in part any or all of
the provisions of this Plan.; provided, however, that any amendment relating
to the aggregate number of shares which may be issued under the Plan (other
than an adjustment provided for in Section 15) or to the Employees (or class
of Employees) eligible to receive Options under the Plan will have no force
or effect unless it is approved by the shareholders within twelve months
before or after its adoption.
The Plan shall terminate automatically following the end of the second
Purchase Period beginning in 2005; provided, however, that the Board of
Directors in its discretion may extend the Plan for one or more Purchase
Periods. The Plan may be earlier suspended or terminated by the Board of
Directors, but no such suspension or termination will adversely affect the
rights and privileges of holders of outstanding Options. The Plan will
terminate in any case when all or substantially all the Stock reserved for
the purposes of the Plan has been purchased.
SECTION 18 INDEMNIFICATION OF COMPENSATION COMMITTEE
Members of the Compensation Committee shall be indemnified and entitled to
reimbursement of their expenses pursuant to the Company's Certificate of
Incorporation and Bylaws to the same extent as if they were directors of the
Company.
SECTION 19 APPROVAL OF SHAREHOLDERS
The Plan is subject to the approval of the shareholders of Aurora
Electronics, which approval must be secured within twelve months before or
after the date the Plan is adopted by the Board of Directors, and any Option
granted hereunder prior to such approval is conditioned on such approval
being obtained prior to the exercise thereof.
5
<PAGE> 7
IN WITNESS WHEREOF, the Company has caused this Plan to be executed on its
behalf the ___ day of ________________ , 1995.
AURORA ELECTRONICS, INC.
By: _________________________________
6
