As filed with the Securities and Exchange Commission on June 29, 2000
Registration No. 333-________
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ECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
PMC-SIERRA, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-2925073
(State of Incorporation) (I.R.S. Employer Identification No.)
105-8555 Baxter Place
Burnaby, British Columbia V5A 4V7
Canada
(Address of principal executive offices)
---------------------------------
Malleable Technologies, Inc. 1998 Stock Incentive Plan
(Full title of the plan)
The Corporation Trust Company
1209 Orange Street
Wilmington, Delaware 19801
(800) 677-3394
(Name, address and telephone number of agent for service)
---------------------------------
Copy to:
Neil Wolff
Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, California 94304-1050
CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Title of Maximum Maximum Amount
Securities Amount Offering Aggregate of
to be to be Price Per Offering Registration
Registered (1) Registered Share Price Fee
---------------- -------------- -------------- ---------------- ------------
Common Stock,
$0.001 par value 474,371 (2) $ 3.26 (2) $ 1,546,449.46 (2) $ 408.26
---------------- -------------- -------------- ------------------- ------------
Common Stock,
$0.001 par value 197,987 (3) $ 187.1719 (3) $ 37,057,602.96 (3) $ 9,783.20
================ ============== ============== =================== ============
(1) Pursuant to the Acquisition Agreement dated as of June 13, 2000 among
PMC-Sierra, Inc. ("PMC"), Maelstrom Acquisition Corporation, Malleable
Technologies, Inc. ("Malleable"), Curits Abbott and State Street Bank
and Trust Company of California, N.A., PMC assumed, effective as of June
27, 2000, all of the outstanding options to purchase common stock of
Malleable under the Malleable 1998 Stock Incentive Plan, and such
options became exercisable to purchase shares of PMC's common stock,
with appropriate adjustments to the number of shares and exercise price
of each assumed option.
(2) Options granted pursuant to an employee stock option plan. Estimated
pursuant to Rule 457(h)(1) under the Securities Act of 1933, as amended,
solely for the purpose of calculating the registration fee. Based on the
price per share at which the options may be exercised.
(3) Shares reserved for future issuance. Estimated pursuant to Rule 457(c)
under the Securities Act of 1933, as amended, solely for the purpose of
calculating the registration fee. Based on the average of the high and
low prices of the common stock on June 26, 2000, as reported on the
Nasdaq National Market.
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<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents and information are incorporated by reference
as filed with the Securities and Exchange Commission:
(a) PMC-Sierra, Inc.'s ("PMC's") Form 10-K Annual Report for the
fiscal year ended December 26, 1999, as amended (File No.
000-19084).
(b) PMC's proxy statement for the 2000 Annual Meeting of Stockholders
(File No. 000-19084).
(c) PMC's Form 10-Q Quarterly Report for the quarter ended March 26,
2000, as amended (File No. 000-19084).
(d) PMC's Forms 8-K dated March 20, 2000, April 12, 2000 and June 20,
2000 (File No. 000-19084).
All documents subsequently filed by PMC pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended, prior to
the filing of a post-effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference in this registration
statement and to be part hereof from the date of filing such documents.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Certain legal matters with respect to the shares will be passed upon
by Wilson, Sonsini, Goodrich & Rosati, a Professional Corporation, Palo Alto,
California.
Item 6. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law generally
provides that a corporation is empowered to indemnify any person who is made a
party to any threatened, pending or completed action, suit or proceeding by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation or is or was serving, at the request of the corporation, in any
of such capacities of another corporation or other enterprise, if such director,
officer, employee or agent 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,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. This statute describes in detail the right of
PMC to indemnify any such person.
<PAGE>
PMC's Certificate of Incorporation eliminates in certain circumstances
the liability of directors of PMC for monetary damages for breach of their
fiduciary duty as directors. This provision does not eliminate the liability of
a director (i) for breach of the director's duty of loyalty to PMC or its
stockholders, (ii) for acts or omissions by the director not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) for
willful or negligent declaration of an unlawful dividend, stock purchase or
redemption or (iv) for transactions from which the director derived an improper
personal benefit.
PMC's Certificate of Incorporation also provides generally for
indemnification of all directors and officers of PMC to the fullest extent
permitted by the General Corporation Law of the State of Delaware. Such right to
indemnification shall be deemed to be a contract right and includes generally
the right to be paid by PMC the expenses incurred in defending any proceeding
covered by this provision in advance of its final disposition. Individuals who
are entitled to indemnification may bring suit to seek recovery of amounts due
under the foregoing provisions and to recover the expenses of such suit if
successful.
PMC has entered into indemnification agreements to such effect with its
officers and directors containing provisions which are in some respects broader
than the specific indemnification provisions contained in the General
Corporation Law of Delaware. The indemnification agreements may require PMC,
among other things, to indemnify such officers and directors against certain
liabilities that may arise by reason of their status or service as directors or
officers (other than liabilities arising from willful misconduct of a culpable
nature) and to advance their expenses incurred as a result of any proceeding
against them as to which they could be indemnified.
PMC believes that it is the position of the Commission that insofar as
the foregoing provisions may be invoked to disclaim liability for damages
arising under the Securities Act, such provisions are against public policy as
expressed in the Securities Act and are therefore unenforceable.
PMC currently maintains an officers' and directors' liability insurance
policy which covers, subject to the exclusions and limitations of the policy,
officers and directors of PMC against certain liabilities which may be incurred
by them solely in such capacities.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
Exhibit
Number
-------
4.1 Malleable Technologies, Inc. 1998 Stock Incentive Plan
4.2 Form of Stock Option Agreement under Malleable Technologies,
Inc. 1998 Stock Incentive Plan
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation
23.1 Consent of Deloitte & Touche LLP, Independent Auditors
23.2 Consent of Counsel (Contained in Exhibit 5.1 above)
24.1 Power of Attorney (see page II-4)
<PAGE>
Item 9. Undertakings.
(a) PMC hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
registration statement 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.
(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
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
(b) PMC hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of PMC'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.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of PMC pursuant to the Delaware General Corporation Law, the Certificate of
Incorporation or the Bylaws of PMC, Indemnification Agreements entered into
between PMC and its officers and directors, or otherwise, PMC 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 PMC 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 hereunder, PMC will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, PMC 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
Burnaby, British Columbia, Canada, on this 27th day of June 2000.
PMC-SIERRA, INC.
By: /s/John W. Sullivan
----------------------------
John W. Sullivan, Vice
President of Finance
and Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each such person whose
signature appears below constitutes and appoints, jointly and severally, Robert
L. Bailey and John W. Sullivan his attorneys-in-fact, each with the power of
substitution, for him in any and all capacities, to sign any amendments to this
Registration Statement on Form S-8 (including post-effective amendments), and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Commission, hereby ratifying and confirming all that each of
said attorneys-in-fact, or his substitute or substitutes, may do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
Signature Title Date
-------------------- -------------------------------------- -------------
/s/ROBERT L. BAILEY President, Chief Executive Officer and June 27, 2000
-------------------- Chairman of the Board of Directors
(Robert L. Bailey) (principal executive officer)
/s/JOHN W. SULLIVAN Vice President of Finance and Chief June 27, 2000
------------------- Financial Officer (principal financial
(John W. Sullivan) and accounting officer)
/s/JAMES V. DILLER Director June 27, 2000
------------------
(James V. Diller)
/s/ALEXANDRE BALKANSKI Director June 27, 2000
----------------------
(Alexandre Balkanski)
/s/FRANK J. MARSHALL Director June 27, 2000
--------------------
(Frank J. Marshall)
/s/L. COLIN BEAUMONT Director June 27, 2000
-------------------
(L. Colin Beaumont)
<PAGE>
Exhibit 4.1
MALLEABLE TECHNOLOGIES, INC.
1998 STOCK INCENTIVE PLAN
1. Purposes of the Plan. The purposes of this Stock Incentive Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees, Directors and
Consultants and to promote the success of the Company's business.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of the Committees appointed to
administer the Plan.
(b) "Applicable Laws" means the legal requirements relating to the
administration of stock incentive plans, if any, under applicable
provisions of federal securities laws, California corporate and
securities laws, the Code, the rules of any applicable stock exchange
or national market system, and the rules of any foreign jurisdiction
applicable to Awards granted to residents therein.
(c) "Award" means the grant of an Option, Restricted Stock, or other right
or benefit under the Plan.
(d) "Award Agreement" means the written agreement evidencing the grant of
an Award executed by the Company and the Grantee, including any
amendments thereto.
(e) "Board" means the Board of Directors of the Company.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
(g) "Committee" means any committee appointed by the Board to administer
the Plan.
(h) "Common Stock" means the common stock of the Company.
(i) "Company" means Malleable Technologies, Inc.
(j) "Consultant" means any person who is engaged by the Company or Related
Entity to render consulting or advisory services as an independent
contractor and is compensated for such services.
(k) "Continuous Status as an Employee, Director or Consultant" means that
the provision of services to the Company or a Related Entity in any
capacity of Employee, Director or Consultant, is not interrupted or
terminated. Continuous Status as an Employee, Director or Consultant
shall not be considered interrupted in the case of (i) any approved
leave of absence, (ii) transfers between locations of the Company or
among the Company, any Related Entity, or any successor, in any
capacity of Employee, Director or Consultant, or (iii) any change in
status as long as the individual remains in the service of the Company
or a Related Entity in any capacity of Employee, Director or Consultant
(except as otherwise provided in the Award Agreement). For purposes of
Incentive Stock Options, no such leave may exceed ninety (90) days,
unless reemployment upon expiration of such leave is guaranteed by
statute or contract.
<PAGE>
(l) "Corporate Transaction" means any of the following shareholder-approved
transactions to which the Company is a party:
(i) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose
of which is to change the state in which the Company is
incorporated;
(ii) the sale, transfer or other disposition of all or substantially
all of the assets of the Company (including the capital stock of
the Company's subsidiary corporations) in connection with the
complete liquidation or dissolution of the Company; or
(iii)any reverse merger in which the Company is the surviving entity
but in which securities possessing more than fifty percent (50%)
of the total combined voting power of the Company's outstanding
securities are transferred to a person or persons different from
those who held such securities immediately prior to such merger.
(m) "Director" means a member of the Board.
(n) "Employee" means any person, including an Officer or Director, who is
an employee of the Company or any Related Entity. The payment of a
director's fee by the Company shall not be sufficient to constitute
"employment" by the Company.
(o) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(p) "Fair Market Value" means, as of any date, the value of Common Stock
determined as follows:
(i) Where there exists a public market for the Common Stock, the Fair
Market Value shall be (A) the closing price for a Share for the
last market trading day prior to the time of the determination
(or, if no closing price was reported on that date, on the last
trading date on which a closing price was reported) on the stock
exchange determined by the Administrator to be the primary market
for the Common Stock or the Nasdaq National Market, whichever is
applicable, or (B) if the Common Stock is not traded on any such
exchange or national market system, the average of the closing bid
and asked prices of a Share on the Nasdaq Small Cap Market for the
day prior to the time of the determination (or, if no such prices
were reported on that date, on the last date on which such prices
were reported), in each case, as reported in The Wall Street
Journal or such other source as the Administrator deems reliable;
or
(ii)In the absence of an established market of the type described in
(i), above, for the Common Stock, the Fair Market Value thereof
shall be determined by the Administrator in good faith and in a
manner consistent with Section 260.140.50 of Title 10 of the
California Code of Regulations.
(q) "Grantee" means an Employee, Director or Consultant who receives an
Award under the Plan.
(r) "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code
(s) "Non-Qualified Stock Option" means an Option not intended to qualify as
an Incentive Stock Option.
<PAGE>
(t) "Officer" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(u) "Option" means a stock option granted pursuant to the Plan.
(v) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(w) "Plan" means this 1998 Stock Incentive Plan.
(x) "Registration Date" means the closing of the first sale of Common Stock
to the general public pursuant to a registration statement filed with
and declared effective by the Securities and Exchange Commission under
the Securities Act of 1933, as amended.
(y) "Related Entity" means any Parent, Subsidiary and any business,
corporation, partnership, limited liability company or other entity in
which the Company, a Parent or a Subsidiary holds a substantial
ownership interest, directly or indirectly.
(z) "Restricted Stock" means Shares issued under the Plan to the Grantee
for such consideration, if any, and subject to such restrictions on
transfer, rights of first refusal, repurchase provisions, forfeiture
provisions, and other terms and conditions as established by the
Administrator.
(aa) "Share" means a share of the Common Stock.
(bb)"Subsidiary" means a "subsidiary corporation," whether now or hereafter
existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan.
(a) Subject to the provisions of Section 11(a) below, the maximum aggregate
number of Shares which may be issued pursuant to all Awards (including
Incentive Stock Options) is 6,404,938 Shares. The Shares may be
authorized, but unissued, or reacquired Common Stock.
(b) If an Award expires or becomes unexercisable without having been
exercised in full, or if any unissued Shares are retained by the
Company upon exercise of an Award in order to satisfy the exercise
price for such Award or any withholding taxes due with respect to such
Award, such unissued or retained Shares shall become available for
future grant or sale under the Plan (unless the Plan has terminated).
Shares that actually have been issued under the Plan pursuant to an
Award shall not be returned to the Plan and shall not become available
for future distribution under the Plan, except that if unvested Shares
are forfeited, or repurchased by the Company at their original purchase
price, such Shares shall become available for future grant under the
Plan.
<PAGE>
4. Administration of the Plan.
(a) Plan Administrator. With respect to grants of Awards to Employees,
Directors, Officers or Consultants, the Plan shall be administered by
(A) the Board or (B) a Committee (or a subcommittee of the Committee)
designated by the Board, which Committee shall be constituted in such a
manner as to satisfy Applicable Laws. Once appointed, such Committee
shall continue to serve in its designated capacity until otherwise
directed by the Board. The Board may authorize one or more Officers to
grant Awards and may limit such authority as the Board determines from
time to time.
(b) Powers of the Administrator.
Subject to Applicable Laws and the provisions of the Plan (including
any other powers given to the Administrator hereunder), and except as
otherwise provided by the Board, the Administrator shall have the
authority, in its discretion:
(i) to select the Employees, Directors and Consultants to whom
Awards may be granted from time to time hereunder;
(ii) to determine whether and to what extent Awards are granted
hereunder;
(iii) to determine the number of Shares or the amount of other
consideration to be covered by each Award granted hereunder;
(iv) to approve forms of Award Agreement for use under the Plan;
(v) to determine the terms and conditions of any Award granted
hereunder;
(vi) to establish additional terms, conditions, rules or procedures
to accommodate the rules or laws of applicable foreign
jurisdictions and to afford Grantees favorable treatment under
such laws; provided, however, that no Award shall be granted
under any such additional terms, conditions, rules or procedures
with terms or conditions which are inconsistent with the
provisions of the Plan;
(vii) to amend the terms of any outstanding Award granted under the
Plan, including a reduction in the exercise price of any Award
to reflect a reduction in the Fair Market Value of the Common
Stock since the grant date of the Award, provided that any
amendment that would adversely affect the Grantee's rights under
an outstanding Award shall not be made without the Grantee's
written consent;
(viii) to construe and interpret the terms of the Plan and Awards
granted pursuant to the Plan; and
(ix) to take such other action, not inconsistent with the terms of
the Plan, as the Administrator deems appropriate.
(c) Effect of Administrator's Decision. All decisions, determinations and
interpretations of the Administrator shall be conclusive and binding on
all persons.
5. Eligibility. Awards other than Incentive Stock Options may be granted
to Employees, Directors and Consultants. Incentive Stock Options may be
granted only to Employees of the Company, a Parent or a Subsidiary. An
Employee, Director or Consultant who has been granted an Award may, if
otherwise eligible, be granted additional Awards. Awards may be granted
to such Employees, Directors or Consultants who are residing in foreign
jurisdictions as the Administrator may determine from time to time.
6. Terms and Conditions of Awards.
(a) Type of Awards. The Administrator is authorized under the Plan to award
any type of arrangement to an Employee, Director or Consultant that is
not inconsistent with the provisions of the Plan and that by its terms
involves or might involve the issuance of (i) Shares, (ii) an Option,
or similar right with an exercise or conversion privilege at a fixed or
variable price related to the Common Stock and/or the passage of time,
the occurrence of one or more events, or the satisfaction of
performance criteria or other conditions, or (iii) any other security
with the value derived from the value of the Common Stock or securities
issued by a Related Entity. Such awards include, without limitation,
Options, and sales or bonuses of Restricted Stock. An Award may consist
of one such security or benefit, or two or more of them in any
combination or alternative.
<PAGE>
(b) Designation of Award. Each Award shall be designated in the Award
Agreement. In the case of an Option, the Option shall be designated as
either an Incentive Stock Option or a Non-Qualified Stock Option.
However, notwithstanding such designation, to the extent that the
aggregate Fair Market Value of Shares subject to Options designated as
Incentive Stock Options which become exercisable for the first time by
a Grantee during any calendar year (under all plans of the Company or
any Parent or Subsidiary) exceeds $100,000, such excess Options, to the
extent of the Shares covered thereby in excess of the foregoing
limitation, shall be treated as Non-Qualified Stock Options. For this
purpose, Incentive Stock Options shall be taken into account in the
order in which they were granted, and the Fair Market Value of the
Shares shall be determined as of the grant date of the relevant Option.
(c) Conditions of Award. Subject to the terms of the Plan, the
Administrator shall determine the provisions, terms, and conditions of
each Award including, but not limited to, the Award vesting schedule,
repurchase provisions, rights of first refusal, forfeiture provisions,
form of payment (cash, Shares, or other consideration) upon settlement
of the Award, payment contingencies, and satisfaction of any
performance criteria. The performance criteria established by the
Administrator may be based on any one of, or combination of, increase
in share price, earnings per share, total shareholder return, return on
equity, return on assets, return on investment, net operating income,
cash flow, revenue, economic value added, personal management
objectives, or other measure of performance selected by the
Administrator. Partial achievement of the specified criteria may result
in a payment or vesting corresponding to the degree of achievement as
specified in the Award Agreement.
(d) Early Exercise. The Award may, but need not, include a provision
whereby the Grantee may elect at any time while an Employee, Director
or Consultant to exercise any part or all of the Award prior to full
vesting of the Award. Any unvested Shares received pursuant to such
exercise may be subject to a repurchase right in favor of the Company
or to any other restriction the Administrator determines to be
appropriate.
(e) Term of Award. The term of each Award shall be the term stated in the
Award Agreement, provided, however, that the term shall be no more than
ten (10) years from the date of grant thereof. However, in the case of
an Incentive Stock Option granted to a Grantee who, at the time the
Option is granted, owns stock representing more than ten percent (10%)
of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the term of the Incentive Stock Option shall be
five (5) years from the date of grant thereof or such shorter term as
may be provided in the Award Agreement.
(f) Non-Transferability of Awards. Awards may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other
than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Grantee, only by the Grantee.
(g) Time of Granting Awards. The date of grant of an Award shall for all
purposes be the date on which the Administrator makes the determination
to grant such Award, or such other date as is determined by the
Administrator. Notice of the grant determination shall be given to each
Employee, Director or Consultant to whom an Award is so granted within
a reasonable time after the date of such grant.
<PAGE>
7. Award Exercise or Purchase Price, Consideration, Taxes and Reload
Options.
(a) Exercise
or Purchase Price. The exercise or purchase price, if any, for an Award
shall be as follows:
(i) In the case of an Incentive Stock Option:
(A) granted to an Employee who, at the time of the grant of such
Incentive Stock Option owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of
the Company or any Parent or Subsidiary, the per Share
exercise price shall be not less than one hundred ten
percent (110%) of the Fair Market Value per Share on the
date of grant.
(B) granted to any Employee other than an Employee described in
the preceding paragraph, the per Share exercise price shall
be not less than one hundred percent (100%) of the Fair
Market Value per Share on the date of grant.
(ii) In the case of a Non-Qualified Stock Option:
(A) granted to a person who, at the time of the grant of such
Option, owns stock representing more than ten percent (10%)
of the voting power of all classes of stock of the Company
or any Parent or Subsidiary, the per Share exercise price
shall be not less than one hundred ten percent (110%) of the
Fair Market Value per Share on the date of grant.
(B) granted to any person other than a person described in the
preceding paragraph, the per Share exercise price shall be
not less than eighty-five percent (85%) of the Fair Market
Value per Share on the date of grant.
(iii) In the case of the sale of Shares:
(A) granted to a person who, at the time of the grant of such
Award, or at the time the purchase is consummated, owns
stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any Parent
or Subsidiary, the per Share purchase price shall be not
less than one hundred percent (100%) of the Fair Market
Value per share on the date of grant.
(B) granted to any person other than a person described in the
preceding paragraph, the per Share purchase price shall be
not less than eighty-five percent (85%) of the Fair Market
Value per Share on the date of grant.
(b) Consideration. Subject to Applicable Laws, the consideration to be paid
for the Shares to be issued upon exercise or purchase of an Award
including the method of payment, shall be determined by the
Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant). In addition to any other types of
consideration the Administrator may determine, the Administrator is
authorized to accept as consideration for Shares issued under the Plan
the following:
(i) cash;
(ii) check;
(iii) delivery of Grantee's promissory note with such recourse,
interest, security, and redemption provisions as the
Administrator determines as appropriate;
(iv) if the exercise occurs on or after the Registration Date,
surrender of Shares or delivery of a properly executed form of
attestation of ownership of Shares as the Administrator may
require (including withholding of Shares otherwise deliverable
upon exercise of the Award) which have a Fair Market Value on
the date of surrender or attestation equal to the aggregate
exercise price of the Shares as to which said Award shall be
exercised (but only to the extent that such exercise of the
Award would not result in an accounting compensation charge
with respect to the Shares used to pay the exercise price
unless otherwise determined by the Administrator);
(v) if the exercise occurs on or after the Registration Date,
delivery of a properly executed exercise notice together with
such other documentation as the Administrator and the broker,
if applicable, shall require to effect an exercise of the
Award and delivery to the Company of the sale or loan proceeds
required to pay the exercise price; or
(vi) any combination of the foregoing methods of payment.
<PAGE>
(c) Taxes. No Shares shall be delivered under the Plan to any Grantee or
other person until such Grantee or other person has made arrangements
acceptable to the Administrator for the satisfaction of any foreign,
federal, state, or local income and employment tax withholding
obligations, including, without limitation, obligations incident to the
receipt of Shares or the disqualifying disposition of Shares received
on exercise of an Incentive Stock Option. Upon exercise of an Award the
Company shall withhold or collect from Grantee an amount sufficient to
satisfy such tax obligations.
(d) Reload Options. In the event the exercise price or tax withholding of
an Option is satisfied by the Company or the Grantee's employer
withholding Shares otherwise deliverable to the Grantee, the
Administrator may issue the Grantee an additional Option, with terms
identical to the Award Agreement under which the Option was exercised,
but at an exercise price as determined by the Administrator in
accordance with the Plan.
8. Exercise of Award.
(a) Procedure for Exercise; Rights as a Shareholder.
(i) Any Award granted hereunder shall be exercisable at such times
and under such conditions as determined by the Administrator
under the terms of the Plan and specified in the Award Agreement
but in the case of an Option, in no case at a rate of less than
20% per year over five (5) years from the date the Option is
granted, subject to reasonable conditions such as continued
employment. However, in the case of an Option granted to an
Officer, Director or Consultant, the Award Agreement may provide
that the Option may become fully exercisable, subject to
reasonable conditions such as continued employment, at any time
or during any period established in the Award Agreement.
(ii) An Award shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with
the terms of the Award by the person entitled to exercise the
Award and full payment for the Shares with respect to which the
Award is exercised has been received by the Company. Until the
issuance (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the
Company) of the stock certificate evidencing such Shares, no
right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to Shares subject to an
Award, notwithstanding the exercise of an Option or other Award.
No adjustment will be made for a dividend or other right for
which the record date is prior to the date the stock certificate
is issued, except as provided in the Award Agreement or Section
11(a), below.
(b) Exercise of Award Following Termination of Employment, Director
or Consulting Relationship. In the event of termination of a
Grantee's Continuous Status as an Employee, Director or
Consultant for any reason other than disability or death (but not
in the event of a Grantee's change of status from Employee to
Consultant or from Consultant to Employee), such Grantee may, but
only within three (3) months after the date of such termination
(but in no event later than the expiration date of the term of
such Award as set forth in the Award Agreement), exercise his or
her Award to the extent that the Grantee was entitled to exercise
it at the date of such termination or to such other extent as may
be determined by the Administrator. Notwithstanding the
foregoing, the Grantee's Award Agreement may provide that upon
the termination of the Grantee's Continuous Status as an
Employee, Director or Consultant for "Cause," the Grantee's right
to exercise the Award shall terminate concurrently with the
termination of Grantee's Continuous Status as an Employee,
Director or Consultant. The term "Cause" shall be as defined in
the Award Agreement. If the Grantee should die within three (3)
months after the date of such termination, the Grantee's estate
or the person who acquired the right to exercise the Award by
bequest or inheritance may exercise the Award to the extent that
the Grantee was entitled to exercise it at the date of such
termination within twelve (12) months of the Grantee's date of
death, but in no event later than the expiration date of the term
of such Award as set forth in the Award Agreement. In the event
of an Grantee's change of status from Employee to Consultant, an
Employee's Incentive Stock Option shall convert automatically to
a Non-Qualified Stock Option on the day three (3) months and one
day following such change of status. To the extent that the
Grantee is not entitled to exercise the Award at the date of
termination, or if the Grantee does not exercise such Award to
the extent so entitled within the time specified herein, the
Award shall terminate.
(c) Disability of Grantee. In the event of termination of a Grantee's
Continuous Status as an Employee, Director or Consultant as a
result of his or her disability, Grantee may, but only within
twelve (12) months from the date of such termination (and in no
event later than the expiration date of the term of such Award as
set forth in the Award Agreement), exercise the Award to the
extent that the Grantee was otherwise entitled to exercise it at
the date of such termination; provided, however, that if such
disability is not a "disability" as such term is defined in
Section 22(e)(3) of the Code, in the case of an Incentive Stock
Option such Incentive Stock Option shall automatically convert to
a Non-Qualified Stock Option on the day three (3) months and one
day following such termination. To the extent that the Grantee is
not entitled to exercise the Award at the date of termination, or
if Grantee does not exercise such Award to the extent so entitled
within the time specified herein, the Award shall terminate.
(d) Death of Grantee. In the event of the death of an Grantee, the
Award may be exercised at any time within twelve (12) months
following the date of death (but in no event later than the
expiration of the term of such Award as set forth in the Award
Agreement), by the Grantee's estate or by a person who acquired
the right to exercise the Award by bequest or inheritance, but
only to the extent that the Grantee was entitled to exercise the
Award at the date of death. If, at the time of death, the Grantee
was not entitled to exercise his or her entire Award, the Shares
covered by the unexercisable portion of the Award shall
immediately revert to the Plan. If, after death, the Grantee's
estate or a person who acquired the right to exercise the Award
by bequest or inheritance does not exercise the Award within the
time specified herein, the Award shall terminate.
(e) Buyout Provisions. The Administrator may at any time offer to buy
out for a payment in cash or Shares, an Award previously granted,
based on such terms and conditions as the Administrator shall
establish and communicate to the Grantee at the time that such
offer is made.
<PAGE>
9. Conditions Upon Issuance of Shares.
(a) Shares shall not be issued pursuant to the exercise of an Award
unless the exercise of such Award and the issuance and delivery
of such Shares pursuant thereto shall comply with all Applicable
Laws, and shall be further subject to the approval of counsel for
the Company with respect to such compliance.
(b) As a condition to the exercise of an Award, the Company may
require the person exercising such Award to represent and warrant
at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention
to sell or distribute such Shares if, in the opinion of counsel
for the Company, such a representation is required by any
Applicable Laws.
10. Repurchase Rights. If the provisions of an Award Agreement grant to the
Company the right to repurchase Shares upon termination of the Grantee's
Continuous Status as an Employee, Director or Consultant, the Award Agreement
shall provide that the repurchase price will be either:
(a) Not less than the Fair Market Value of the Shares to be repurchased on
the date of termination of the Grantee's Continuous Status as an
Employee, Director or Consultant, and the right to repurchase must be
exercised for cash or cancellation of purchase money indebtedness for
the Shares within ninety (90) days of the termination of the Grantee's
Continuous Status as an Employee, Director or Consultant (or in the
case of Shares issued upon exercise of Awards after the date of
termination of the Grantee's Continuous Status as an Employee, Director
or Consultant, within ninety (90) days after the date of the Award
exercise), and the right terminates when the Company's securities
become publicly traded; or
(b) The original purchase price, provided that the right to repurchase at
the original purchase price lapses at the rate of at least twenty
percent (20%) of the Shares subject to the Award per year over five (5)
years from the date the Award is granted (without respect to the date
the Award was exercised or became exercisable), and the right to
repurchase must be exercised for cash or cancellation of purchase money
indebtedness for the Shares within ninety (90) days of termination of
the Grantee's Continuous Status as an Employee, Director or Consultant
(or in the case of Shares issued upon exercise of Awards after the date
of termination of the Grantee's Continuous Status as an Employee,
Director or Consultant, within ninety (90) days after the date of the
Award exercise).
(c) In addition to the restrictions set forth in (a) and (b) above, the
Shares held by an Officer, Director or Consultant may be subject to
additional or greater restrictions.
11. Adjustments Upon Changes in Capitalization or Corporate Transaction.
(a) Adjustments upon Changes in Capitalization. Subject to any required
action by the shareholders of the Company, the number of Shares covered
by each outstanding Award, and the number of Shares which have been
authorized for issuance under the Plan but as to which no Awards have
yet been granted or which have been returned to the Plan, as well as
the price per share of Common Stock covered by each such outstanding
Award, shall be proportionately adjusted for any increase or decrease
in the number of issued shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other similar event
resulting in an increase or decrease in the number of issued shares of
Common Stock. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason
hereof shall be made with respect to, the number or price of Shares
subject to an Award.
<PAGE>
(b) Corporate Transaction. Except as provided otherwise in an individual
Award Agreement, in the event of any Corporate Transaction, the Award
will terminate immediately prior to the specified effective date of the
Corporate Transaction, unless the Award is assumed or an equivalent
Award is substituted by the successor corporation or a Parent or
Subsidiary of such successor corporation. Notwithstanding the
foregoing, the Administrator, in its discretion, may prevent the
acceleration of vesting and release from any restrictions on transfer
and repurchase or forfeiture rights of any outstanding Award with
respect to any Corporate Transaction. For the purposes of this
subsection, the Award shall be considered assumed or substituted for an
equivalent Award if, following the Corporate Transaction, the Award
confers with substantially equivalent provisions as the original Award,
for each Share subject to the Award immediately prior to the Corporate
Transaction, (i) the consideration (whether stock, cash, or other
securities or property) received in the Corporate Transaction by
holders of Common Stock for each Share subject to the Award held on the
effective date of the Corporate Transaction (and if holders were
offered a choice of consideration, the type of consideration chosen by
the holders of a majority of the outstanding Shares), or (ii) the right
to purchase such consideration in the case of an Option or similar
Award; provided, however, that if such consideration received in the
Corporate Transaction was not solely common stock of the successor
corporation or its Parent, the Administrator may, with the consent of
the successor corporation, provide for the consideration to be received
upon the exercise or exchange of the Award for each Share subject to
the Award to be solely common stock of the successor corporation or its
Parent equal in fair market value to the per share consideration
received by holders of Common Stock in the Corporate Transaction.
12. Term of Plan. The Plan shall become effective upon the earlier to occur of
its adoption by the Board or its approval by the shareholders of the Company. It
shall continue in effect for a term of ten (10) years unless sooner terminated.
13. Amendment, Suspension or Termination of the Plan.
(a) The Board may at any time amend, suspend or terminate the Plan. To the
extent necessary to comply with Applicable Laws, the Company shall
obtain shareholder approval of any Plan amendment in such a manner and
to such a degree as required.
(b) No Award may be granted during any suspension of the Plan or after
termination of the Plan.
(c) Any amendment, suspension or termination of the Plan (including
termination of the Plan under Section 12, above) shall not affect
Awards already granted, and such Awards shall remain in full force and
effect as if the Plan had not been amended, suspended or terminated,
unless mutually agreed otherwise between the Grantee and the
Administrator, which agreement must be in writing and signed by the
Grantee and the Company.
14. Reservation of Shares.
(a) The Company, during the term of the Plan, will at all times reserve and
keep available such number of Shares as shall be sufficient to satisfy
the requirements of the Plan.
(b) The inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares
hereunder, shall relieve the Company of any liability in respect of the
failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
<PAGE>
15. No Effect on Terms of Employment/Consulting Relationship. The Plan shall
not confer upon any Grantee any right with respect to continuation of employment
or consulting relationship with the Company, nor shall it interfere in any way
with his or her right or the Company's right to terminate his or her employment
or consulting relationship at any time, with or without cause.
16. Shareholder Approval. Continuance of the Plan shall be subject to approval
by the shareholders of the Company within twelve (12) months before or after the
date the Plan is adopted. Such shareholder approval shall be obtained in the
degree and manner required under Applicable Laws. Any Award exercised before
shareholder approval is obtained shall be rescinded if shareholder approval is
not obtained within the time prescribed, and Shares issued on the exercise of
any such Award shall not be counted in determining whether shareholder approval
is obtained.
17. Information to Grantees. The Company shall provide to each Grantee, during
the period for which such Grantee has one or more Awards outstanding, copies of
financial statements at least annually.
