<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 4, 1996.
REGISTRATION NO. 333-______
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
DIGITAL MICROWAVE CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 77-0016028
(State or Other Jurisdiction (I.R.S. Employer Identification No.)
of Incorporation or Organization)
170 ROSE ORCHARD WAY, SAN JOSE, CA 95134
(Address of Principal Executive Offices) (Zip Code)
DIGITAL MICROWAVE CORPORATION
1996 NON-OFFICER EMPLOYEE STOCK OPTION PLAN
(Full Title of the Plan)
CHARLES D. KISSNER
CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE OFFICER
DIGITAL MICROWAVE CORPORATION
170 ROSE ORCHARD WAY
SAN JOSE, CA 95134
(Name and Address of Agent For Service)
408/943-0777
(Telephone Number, Including Area Code,
of Agent For Service)
With a copy to:
Bruce Alan Mann, Esq.
Morrison & Foerster LLP
345 California Street
San Francisco, CA 94104
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<PAGE> 2
<TABLE>
<CAPTION>
Calculation of Registration Fee
- ---------------------------------------------------------------------------------------------------------------
Proposed Maximum Proposed Maximum
Offering Price Per Aggregate Offering
Title of Securities to Number of shares to Share Price Amount of
be Registered be Registered Registration Fee
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.01 par
value per share 500,000 $16.28* $8,140,000 $2,806.90
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
* Calculated solely for purposes of this offering under Rule 457(h) of the
Securities Act of 1933 on the basis of the average of the high and low price per
share of Digital Microwave Corporation's Common Stock on the Nasdaq National
Market on August 27, 1996.
<PAGE> 3
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Digital Microwave Corporation (the "Registrant") hereby
incorporates by reference into this Registration Statement the following
documents previously filed with the Securities and Exchange Commission (the
"SEC").
(a) The Registrant's Annual Report on Form 10-K for the fiscal
year ended March 31, 1996 filed with the SEC on June 28,
1996.
(b) The Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 1996 filed with the SEC on August 14,
1996.
(c) The Registrant's Registration Statement No. 0-15895 on Form
8-A filed with the SEC on May 22, 1987, in which there is
described the terms, rights and provisions applicable to the
Registrant's outstanding Common Stock.
All reports and definitive proxy or information statements filed
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934 (the "1934 Act") after the date of this Registration Statement and prior to
the filing of a post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all securities then remaining
unsold shall be deemed to be incorporated by reference into this Registration
Statement and to be a part hereof from the date of filing of such documents.
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 subsequently filed document which also is deemed to
be incorporated by reference herein modifies or supersedes such statement. Any
such 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 DIRECTOR AND OFFICERS
The Registrant's Restated Certificate of Incorporation provides
that no director of the Registrant will be personally liable to the Registrant
or any of its stockholders for monetary damages arising from the director's
II-1
<PAGE> 4
breach of his fiduciary duties. However, such exemption from liability does not
apply with respect to any action in which the director would be liable under
Section 174 of Title 8 of the Delaware General Corporation Law ("Delaware Law"),
nor does it apply with respect to any liability in which the director (i)
breached his duty of loyalty to the Registrant; (ii) did not act in good faith
or, in failing to act, did not act in good faith; (iii) acted in a manner
involving intentional misconduct or knowing violation of law or, in failing to
act, acted in a manner involving intentional misconduct or knowing violation of
law; or (iv) derived an improper personal benefit.
Pursuant to the provisions of Section 145 of Delaware Law, the
Registrant as a 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 Registrant) by reason of the fact that he is or was a director, officer,
employee or agent of the Registrant or of any corporation, partnership, joint
venture, trust or other enterprise for which he is or was serving in such
capacity at the request of the Registrant, against any and all expenses,
judgments, fines and amounts paid in settlement which were reasonably incurred
by him 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 interests, or not opposed to the best
interests, of the Registrant and, with respect to any criminal action or
proceeding, if he had no reasonable cause to believe his conduct was unlawful.
The power to indemnify also applies to actions brought by or in
the right of the Registrant, but only to the extent of defense and settlement
expenses and not to the satisfaction of a judgment or settlement of the claim
itself. In such actions, however, no indemnification will be made if there is
any adjudication of negligence or misconduct, unless the court, in its
discretion, finds that in the light of all the circumstances indemnification
should apply.
To the extent any such person is successful in the defense of the
actions referred to above, such person is entitled pursuant to Section 145 of
Delaware Law to indemnification as described above. Section 145 also grants the
power to advance litigation expenses upon receipt of an undertaking to reply
such advances in the event no right to indemnification is subsequently shown. A
corporation may also obtain insurance at its expense to protect anyone who might
be indemnified, or has a right to insist on indemnification, under the statute.
The Registrant has entered into indemnification agreements with
its directors and certain officers which provide for indemnification to the
fullest extent permitted by Delaware Law, including Section 145 thereof. The
Registrant may also enter into similar agreements from time to time with future
directors and/or present or future officers of the Registrant.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
II-2
<PAGE> 5
ITEM 8. EXHIBITS
Exhibit No. Description
5.1 Opinion of Morrison & Foerster LLP as to the legality of the
securities being registered.
23.1 Consent of Arthur Andersen LLP, Independent Public Accountants.
23.2 Consent of Morrison & Foerster LLP (contained in the opinion of
counsel filed as Exhibit 5.1 to this Registration Statement).
24.1 Power of Attorney (set forth on the signature page of this
Registration Statement).
99.1 Digital Microwave Corporation 1996 Non-Officer Employee Stock
Option Plan.
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 of 1933, as amended (the "1933 Act"),
(ii) to reflect in the prospectus any facts or events arising after the
effective date of this Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in this Registration Statement,
and (iii) to include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement, provided,
however, that clauses (1)(i) and (1)(ii) shall not apply if the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Registrant pursuant to Section 13 or
Section 15(d) of the 1934 Act that are incorporated by reference into this
Registration Statement; (2) that for the purpose of determining any liability
under the 1933 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; and (3) to remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold upon the termination of the Registrant's 1996 Non-Officer Employee Stock
Option Plan.
B. The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the 1933 Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act that is
incorporated by reference into this 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.
II-3
<PAGE> 6
C. Insofar as indemnification for liabilities arising under the
1933 Act may be permitted to directors, officers or controlling persons of the
Registrant pursuant to the indemnity provisions summarized in Item 6 above or
otherwise, the Registrant has been informed that in the opinion of the SEC such
indemnification is against public policy as expressed in the 1933 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 1933 Act and will be governed by the final
adjudication of such issue.
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 San Jose, State of California, on September 4, 1996.
DIGITAL MICROWAVE CORPORATION
By:/s/ CHARLES D. KISSNER
------------------------------------
Charles D. Kissner
Chairman of the Board, President and Chief
Executive Officer
II-4
<PAGE> 7
POWER OF ATTORNEY AND ADDITIONAL SIGNATURES
Each person whose signature appears below constitutes and appoints
Charles D. Kissner and Carl A. Thomsen, 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 or 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 full power
and authority to do so 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 their substitutes, may lawfully do or
cause to be done by virtue thereof.
Further, 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 date indicated.
<TABLE>
<CAPTION>
Signature Title Date
- ------------------------------------ ------------------------------------------ ------------------
<S> <C> <C>
/s/ CHARLES D. KISSNER
- ------------------------------------
Charles D. Kissner Chairman of the Board, President and Chief September 4, 1996
Executive Officer
/s/ RICHARD C. ALBERDING
- ------------------------------------
Richard C. Alberding Director September 4, 1996
/s/ CLIFFORD H. HIGGERSON
- ------------------------------------
Clifford H. Higgerson Director September 4, 1996
/s/ JAMES D. MEINDL
- ------------------------------------
James D. Meindl Director September 4, 1996
/s/ BILLY B. OLIVER
- ------------------------------------
Billy B. Oliver Director September 4, 1996
</TABLE>
II-5
<PAGE> 8
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ CARL A. THOMSEN
- ------------------------------------
Carl A. Thomsen Vice President, Chief Financial Officer September 4, 1996
and Secretary (Principal Financial and
Accounting Officer)
</TABLE>
II-6
<PAGE> 9
EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
5.1 Opinion of Morrison & Foerster LLP as to the legality of the
securities being registered.
23.1 Consent of Arthur Andersen LLP, Independent Public Accountants.
23.2 Consent of Morrison & Foerster LLP (contained in the opinion of
counsel filed as Exhibit 5.1 to this Registration Statement).
24.1 Power of Attorney (set forth on the signature page of this
Registration Statement).
99.1 Digital Microwave Corporation 1996 Non-Officer Employee Stock
Option Plan.
<PAGE> 1
EXHIBIT 5.1
OPINION OF MORRISON & FOERSTER LLP
September 3, 1996
Digital Microwave Corporation
170 Rose Orchard Way
San Jose, California 95134
Ladies and Gentlemen:
At your request, we have examined the Registration Statement on Form
S-8 to be filed by Digital Microwave Corporation, a Delaware corporation (the
"Company"), with the Securities and Exchange Commission in connection with
the registration under the Securities Act of 1933, as amended, of 500,000
shares of the Company's Common Stock, $0.01 par value (the "Common Stock").
As counsel to the Company, we have examined the proceedings taken by
the Company in connection with the issuance of the 500,000 shares of the Common
Stock to be reserved for issuance under the Company's 1996 Non-Officer Employee
Stock Option Plan.
It is our opinion that the 500,000 shares of Common Stock which may be
issued and sold by the Company, when issued and sold in the manner referred to
in the Registration Statement, will be legally and validly issued, fully paid
and nonassessable.
We consent to the use of this opinion as an exhibit to the
Registration Statement and further consent to all references to us in the
Registration Statement and any further amendments thereto.
Very truly yours,
/s/ MORRISON & FOERSTER LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated April 22, 1996
included or incorporated by reference in Digital Microwave Corporation's Form
10-K for the year ended March 31, 1996.
/s/ ARTHUR ANDERSEN LLP
San Jose, California
September 3, 1996
<PAGE> 1
EXHIBIT 99.1
DIGITAL MICROWAVE CORPORATION
1996 NON-OFFICER EMPLOYEE STOCK OPTION PLAN
ARTICLE ONE
GENERAL
I. PURPOSE OF THE PLAN
A. This 1996 Non-Officer Employee Stock Option Plan (the "Plan") is
intended to promote the interests of Digital Microwave Corporation, a Delaware
corporation (the "Corporation"), by providing key employees (excluding officers)
of the Corporation (or its Parent or Subsidiary corporations) who are
responsible for the management, growth and financial success of the Corporation
with the opportunity to acquire a proprietary interest, or otherwise increase
their proprietary interest, in the Corporation as an incentive for them to
remain in the service of the Corporation (or its subsidiary corporations).
B. The Effective Date of the Plan is April 18, 1996.
C. Capitalized terms shall, except as otherwise specifically defined
within the provisions of the Plan, have the meanings assigned to such terms in
the Glossary.
II. ADMINISTRATION OF THE PLAN
A. The Committee shall have sole and exclusive authority to administer
the Discretionary Option Grant Program. Members of the Committee shall serve for
such period as the Corporation's Board of Directors (the "Board") may determine
and shall be subject to removal by the Board at any time.
B. The Committee as Plan Administrator shall have full power and
discretion (subject to the express provisions of the Plan) to establish such
rules and regulations as it may deem appropriate for the proper administration
of the Discretionary Option Grant Program and to make such determinations under,
and issue such interpretations of, the provisions of such program and any
outstanding option grants thereunder as it may deem necessary or advisable.
Decisions of the Plan Administrator shall be final and binding on all parties
who have an interest in the program or any outstanding option thereunder.
C. Service on the Committee shall constitute service as a Board member,
and members of the Committee shall accordingly be entitled to full
indemnification and reimbursement as Board members for their service on the
Committee. No member of the Committee shall be liable for any act or omission
made in good faith with respect to the Plan or any option grants under the Plan.
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<PAGE> 2
III. ELIGIBILITY
A. The persons eligible to participate in the Discretionary Option
Grant Program are key employees (other than officers) of the Corporation (or any
Parent or Subsidiary) who render services which contribute to the management,
growth and financial success of the Corporation.
B. Non-employee Board members shall not be eligible to participate in
the Discretionary Option Grant Program.
C. The Plan Administrator shall have full authority to determine, with
respect to grants made under the Discretionary Option Grant Program, which
eligible individuals are to receive such grants, the number of shares to be
covered by each such grant, the time or times at which each granted option is to
become exercisable and the maximum term for which the option may remain
outstanding.
IV. STOCK SUBJECT TO THE PLAN
A. Shares of Common Stock shall be available for issuance under the
Plan and shall be drawn from either the Corporation's authorized but unissued
shares of Common Stock or from reacquired shares of Common Stock, including
shares repurchased by the Corporation on the open market. The number of shares
of Common Stock reserved for issuance over the term of the Plan shall initially
be fixed at 500,000 shares.
B. Should one or more outstanding options under this Plan expire or
terminate for any reason prior to exercise in full, then the shares subject to
the portion of each option not so exercised shall be available for subsequent
issuance under the Plan. Shares subject to any stock appreciation rights
exercised under the Plan, whether or not the issued shares are subsequently
repurchased by the Corporation pursuant to its repurchase rights under the Plan,
shall reduce on a share-for-share basis the number of shares of Common Stock
available for subsequent issuance under the Plan. In addition, should the
exercise price of an outstanding option under the Plan be paid with shares of
Common Stock or should shares of Common Stock otherwise issuable under the Plan
be withheld by the Corporation in satisfaction of the withholding taxes incurred
in connection with the exercise of an outstanding option under the Plan, then
the number of shares of Common Stock available for issuance under the Plan shall
be reduced by the gross number of shares for which the option is exercised, and
not by the net number of shares of Common Stock actually issued to the holder of
such option.
C. Should any change be made to the Common Stock issuable under the
Plan by reason of any stock split, stock dividend, recapitalization, combination
of shares, exchange of shares or other change affecting the outstanding Common
Stock as a class without the Corporation's receipt of consideration, then
appropriate adjustments shall be made to (i) the maximum number and/or class of
securities issuable under the Plan and (ii) the number and/or class of
securities and price per share in effect under each option outstanding under the
Plan. Such adjustments to the outstanding options are to be effected in a manner
which shall preclude the enlargement or dilution of rights and benefits under
those options. The adjustments determined by the Plan Administrator shall be
final, binding and conclusive.
2
<PAGE> 3
ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
I. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the Discretionary Grant Program shall be
authorized by action of the Plan Administrator and shall be Non-Statutory
Options. Each granted option shall be evidenced by one or more instruments in
the form approved by the Plan Administrator; provided, however, that each such
instrument shall comply with the terms and conditions specified below.
A. Exercise Price.
1. The exercise price per share of Common Stock subject to a
Non-Statutory Option shall be fixed by the Plan Administrator and in no event
shall be less than eighty-five percent (85%) of the Fair Market Value of such
Common Stock on the grant date.
2. The exercise price shall become immediately due upon
exercise of the option and shall be payable in one of the alternative forms
specified below:
(i) full payment in cash or check made payable to the
Corporation's order,
(ii) full payment in shares of Common Stock held for
the requisite period necessary to avoid a charge to the Corporation's earnings
for financial reporting purposes and valued at Fair Market Value on the date the
option is exercised,
(iii) full payment in a combination of shares of
Common Stock held for the requisite period necessary to avoid a charge to the
Corporation's earnings for financial reporting purposes and valued at Fair
Market Value on the date the option is exercised and cash or check made payable
to the Corporation's order, or
(iv) to the extent the option is exercised for vested
shares, full payment through a broker-dealer sale and remittance procedure
pursuant to which the Optionee shall provide concurrent irrevocable written
instructions (I) to a Corporation-designated brokerage firm to effect the
immediate sale of the purchased shares and remit to the Corporation, out of the
sales proceeds available on the settlement date, sufficient funds to cover the
aggregate exercise price payable for the purchased shares plus all applicable
Federal, state and local income and employment taxes required to be withheld by
the Corporation in connection with such purchase and (II) to the Corporation to
deliver the certificates for the purchased shares directly to such brokerage
firm in order to complete the sale transaction.
B. Term and Exercise of Options. Each option shall be exercisable at
such time or times, during such period and for such number of shares as shall be
determined by the Plan Administrator and set forth in the instrument evidencing
such option. No option shall, however, have a maximum term in excess of ten
3
<PAGE> 4
(10) years. During the lifetime of the Optionee, the option, together with any
stock appreciation rights pertaining to such option, shall be exercisable only
by the Optionee and shall not be assignable or transferable except for a
transfer of the option effected by will or by the laws of descent and
distribution following the Optionee's death, except as the Plan Administrator
may otherwise provide.
C. Termination of Service.
1. Except to the extent otherwise expressly authorized by the
Plan Administrator, no Optionee shall have more than a thirty-six (36)-month
period measured from the date of such individual's cessation of Service in which
to exercise his or her outstanding options under the Plan.
2. Any option exercisable in whole or in part by the Optionee
at the time of death may be subsequently exercised by the personal
representative of the Optionee's estate or by the person or persons to whom the
option is transferred pursuant to the Optionee's will or in accordance with the
laws of descent and distribution. However, no such option shall remain
exercisable for more than thirty-six (36) months after the date of the
Optionee's death.
3. Under no circumstances shall any such option be exercisable
after the specified expiration date of the option term.
4. During the applicable post-Service exercise period, the
option may not be exercised in the aggregate for more than the number of shares
(if any) in which the Optionee is vested at the time of his or her cessation of
Service. Upon the expiration of the limited post-Service exercise period or (if
earlier) upon the specified expiration date of the option term, each such option
shall terminate and cease to remain outstanding with respect to any vested
shares for which the option has not otherwise been exercised. However, each
outstanding option shall immediately terminate and cease to remain outstanding,
at the time of the Optionee's cessation of Service, with respect to any shares
for which the option is not otherwise at that time exercisable or in which the
Optionee is not otherwise vested.
5. Should the Optionee's Service be terminated for Misconduct,
all outstanding options held by that individual shall terminate immediately and
cease to remain outstanding.
6. The Plan Administrator shall have complete discretion,
exercisable either at the time the option is granted or at any time while the
option remains outstanding:
- to permit one or more options to be exercised not
only with respect to the number of vested shares of Common Stock for
which each such option is exercisable at the time of the Optionee's
cessation of Service but also with respect to one or more subsequent
installments of vested shares for which the option would otherwise have
become exercisable had such cessation of Service not occurred,
4
<PAGE> 5
- to extend the period of time for which the option
is to remain exercisable following the Optionee's cessation of Service
or death from the limited period otherwise in effect for that option to
such greater period of time as the Plan Administrator shall deem
appropriate, but in no event beyond the specified expiration date of
the option term.
D. Stockholder Rights. An Optionee shall have none of the rights of a
stockholder with respect to any option shares until such individual shall have
exercised the option and paid the exercise price for the purchased shares.
E. Repurchase Rights. The shares of Common Stock acquired under this
Discretionary Grant Program may be subject to repurchase by the Corporation in
accordance with the following provisions:
1. The Plan Administrator shall have the discretion to grant
options which are exercisable for unvested shares of Common Stock. Should the
Optionee cease Service while holding any unvested shares purchased under such
options, then the Corporation shall have the right to repurchase any or all of
those unvested shares at the exercise price paid per share. The terms and
conditions upon which such repurchase right shall be exercisable (including the
period and procedure for exercise and the appropriate vesting schedule for the
purchased shares) shall be established by the Plan Administrator and set forth
in the instrument evidencing such repurchase right.
2. All of the Corporation's outstanding repurchase rights
shall automatically terminate, and all shares subject to such terminated rights
shall immediately vest in full, upon the occurrence of a Corporate Transaction,
except to the extent: (i) any such repurchase right is expressly assigned to the
successor corporation (or parent thereof) in connection with the Corporate
Transaction or (ii) such accelerated vesting is precluded by other limitations
imposed by the Plan Administrator at the time the repurchase right is issued.
3. The Plan Administrator shall have the discretionary
authority, exercisable either before or after the Optionee's cessation of
Service, to cancel the Corporation's outstanding repurchase rights with respect
to one or more shares purchased or purchasable by the Optionee under the Plan
and thereby accelerate the vesting of such shares in whole or in part at any
time.
II. CORPORATE TRANSACTIONS/CHANGES IN CONTROL/HOSTILE TAKE-OVER
A. In the event of any Corporate Transaction, each outstanding option
shall automatically accelerate so that each such option shall, immediately prior
to the specified effective date for such Corporate Transaction, become fully
exercisable with respect to the total number of shares of Common Stock at the
time subject to such option and may be exercised for all or any portion of such
shares. However, an outstanding option shall not so accelerate if and to the
extent: (i) such option is, in connection with the Corporate Transaction, either
to be assumed by the successor corporation or parent thereof or to be replaced
with a comparable option to purchase shares of the capital stock of the
successor corporation or parent thereof, (ii) such option is to be replaced
5
<PAGE> 6
with a cash incentive program of the successor corporation which preserves the
option spread existing at the time of the Corporate Transaction and provides for
subsequent payout in accordance with the same vesting schedule applicable to
such option or (iii) the acceleration of such option is subject to other
limitations imposed by the Plan Administrator at the time of the option grant.
The determination of option comparability under clause (i) above shall be made
by the Plan Administrator, and its determination shall be final, binding and
conclusive.
B. The Plan Administrator shall have the discretionary authority,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to provide for the automatic acceleration of one or
more outstanding options upon the occurrence of a Corporate Transaction, whether
or not those options are to be assumed or replaced in the Corporate Transaction.
Alternatively, the Plan Administrator shall have the authority to provide for
the subsequent acceleration of any outstanding options which do not otherwise
accelerate at the time of the Corporate Transaction, or the subsequent
termination of any of the Corporation's outstanding repurchase rights which do
not otherwise terminate at the time of the Corporate Transaction, should the
Optionee's Service terminate through an Involuntary Termination effected within
a designated period following the effective date of such Corporate Transaction.
C. Immediately following the consummation of the Corporate Transaction,
all outstanding options shall terminate, except to the extent assumed by the
successor corporation or its parent company.
D. Each outstanding option under this Discretionary Grant Program that
is assumed in connection with the Corporate Transaction or is otherwise to
continue in effect shall be appropriately adjusted, immediately after such
Corporate Transaction, to apply and pertain to the number and class of
securities which would have been issued to the option holder, in consummation of
such Corporate Transaction, had such person exercised the option immediately
prior to such Corporate Transaction. Appropriate adjustments shall also be made
to the exercise price payable per share, provided the aggregate exercise price
payable for such securities shall remain the same. In addition, the class and
number of securities available for issuance under the Plan on both an aggregate
and per individual basis following the consummation of the Corporate Transaction
shall be appropriately adjusted.
E. The Plan Administrator shall have the discretionary authority,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to provide for the automatic acceleration of one or
more outstanding options (and the termination of one or more of the
Corporation's outstanding repurchase rights) upon the occurrence of a Change in
Control. The Plan Administrator shall also have full power and authority to
condition any such option acceleration (and the termination of any outstanding
repurchase rights) upon the subsequent termination of the Optionee's Service
through an Involuntary Termination effected within a specified period following
the Change in Control.
F. Any options accelerated in connection with the Change in Control
shall remain fully exercisable until the expiration or sooner termination of the
option term.
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<PAGE> 7
G. The grant of options shall in no way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.
III. STOCK APPRECIATION RIGHTS
A. The Plan Administrator shall have full power and authority,
exercisable in its sole discretion, to grant to selected Optionees Tandem Stock
Appreciation Rights ("Tandem Rights").
B. The following terms and conditions shall govern the grant and
exercise of Tandem Rights:
1. One or more Optionees may be granted the Tandem Right,
exercisable upon such terms and conditions as the Plan Administrator
may establish, to elect between the exercise of the underlying stock
option for shares of Common Stock and the surrender of that option in
exchange for a distribution from the Corporation in an amount equal to
the excess of (i) the Fair Market Value (on the option surrender date)
of the number of shares in which the Optionee is at the time vested
under the surrendered option (or surrendered portion thereof) over (ii)
the aggregate exercise price payable for such vested shares.
2. No such option surrender shall be effective unless it is
approved by the Plan Administrator. If the surrender is so approved,
then the distribution to which the Optionee shall accordingly become
entitled may be made in shares of Common Stock valued at Fair Market
Value on the option surrender date, in cash, or partly in shares and
partly in cash, as the Plan Administrator shall in its sole discretion
deem appropriate.
3. If the surrender of an option is rejected by the Plan
Administrator, then the Optionee shall retain whatever rights the
Optionee had under the surrendered option (or surrendered portion
thereof) on the option surrender date and may exercise such rights at
any time prior to the later of (i) five (5) business days after the
receipt of the rejection notice or (ii) the last day on which the
option is otherwise exercisable in accordance with the terms of the
instrument evidencing such option, but in no event may such rights be
exercised more than ten (10) years after the date of the option grant.
ARTICLE THREE
MISCELLANEOUS
I. LOANS OR INSTALLMENT PAYMENTS
A. The Plan Administrator may, in its discretion, assist any Optionee
in the exercise of one or more options granted to such Optionee under the
Discretionary Grant Program, including the satisfaction of any Federal, state
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and local income and employment tax obligations arising therefrom, by (i)
authorizing the extension of a loan from the Corporation to such Optionee or
(ii) permitting the Optionee to pay the exercise price or purchase price for the
acquired shares in installments over a period of years. The terms of any loan or
installment method of payment (including the interest rate and terms of
repayment) shall be upon such terms as the Plan Administrator specifies in the
applicable option agreement or otherwise deems appropriate under the
circumstances. Loans or installment payments may be authorized with or without
security or collateral. However, the maximum credit available to the Optionee
may not exceed the exercise price of the acquired shares (less the par value of
such shares) plus any Federal, state and local income and employment tax
liability incurred by the Optionee in connection with the acquisition of such
shares.
B. The Plan Administrator may, in its absolute discretion, determine
that one or more loans extended under this financial assistance program shall be
subject to forgiveness by the Corporation in whole or in part upon such terms
and conditions as the Plan Administrator may deem appropriate.
II. AMENDMENT OF THE PLAN AND AWARDS
The Plan Administrator has complete authority to amend or modify the
Plan (or any component thereof) in any or all respects whatsoever. However, no
such amendment or modification shall adversely affect rights and obligations
with respect to stock options or stock appreciation rights at the time
outstanding under the Plan, unless the Optionee consents to such amendment.
III. TAX WITHHOLDING
A. The Corporation's obligation to deliver shares of Common Stock upon
the exercise of stock options or stock appreciation rights under the Plan shall
be subject to the satisfaction of all applicable Federal, state and local income
tax and employment tax withholding requirements.
B. The Plan Administrator may, in its discretion, provide any or all
holders of Non-Statutory Options with the right to use shares of Common Stock in
satisfaction of all or part of the Federal, state and local income and
employment tax liabilities (the "Taxes") incurred by such holders in connection
with the exercise of their options or the vesting of their shares. Such right
may be provided to any such holder in either or both of the following formats:
-Stock Withholding: The holder of the Non-Statutory Option may
be provided with the election to have the Corporation withhold, from the shares
of Common Stock otherwise issuable upon the exercise of such Non-Statutory
Option or the vesting of such shares, a portion of those shares with an
aggregate Fair Market Value equal to the percentage of the Taxes (up to one
hundred percent (100%)) specified by such holder.
-Stock Delivery: The holder of the Non-Statutory Option may be
provided with the election to deliver to the Corporation, at the time the
Non-Statutory Option is exercised or the shares vest, one or more shares of
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Common Stock previously acquired by such individual (other than in connection
with the option exercise or share vesting triggering the Taxes) with an
aggregate Fair Market Value equal to the percentage of the Taxes (up to one
hundred percent (100%)) specified by such holder.
IV. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares
pursuant to option grants under the Plan shall be used for general corporate
purposes.
V. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any option or stock
appreciation right under the Plan, and the issuance of Common Stock upon the
exercise of the stock options and stock appreciation rights granted hereunder
shall be subject to the Corporation's procurement of all approvals and permits
required by regulatory authorities having jurisdiction over the Plan, the stock
options and stock appreciation rights granted under it and the Common Stock
issued pursuant to it.
B. No shares of Common Stock or other assets shall be issued or
delivered under this Plan unless and until there shall have been compliance with
all applicable requirements of Federal and state securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any securities exchange on which the Common Stock is then listed for trading.
VI. NO EMPLOYMENT/SERVICE RIGHTS
Neither the action of the Corporation in establishing the Plan, nor any
action taken by the Plan Administrator hereunder, nor any provision of the Plan
shall be construed so as to grant any individual the right to remain in the
Service of the Corporation (or Subsidiary) for any period of specific duration,
and the Corporation (or any Subsidiary retaining the services of such
individual) may terminate such individual's Service at any time and for any
reason, with or without cause.
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GLOSSARY
The following definitions shall be in effect under the Plan:
CHANGE IN CONTROL: a change in ownership or control of the Corporation
effected through any of the following transactions:
- the direct or indirect acquisition by any person or related
group of persons (other than the Corporation or a person that directly
or indirectly controls, is controlled by, or is under common control
with, the Corporation) of beneficial ownership (within the meaning of
Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made
directly to the Corporation's stockholders which the Board does not
recommend such stockholders to accept, or
- a change in the composition of the Board over a period of
thirty-six (36) months or less such that a majority of the Board
members (rounded up to the next whole number) ceases, by reason of one
or more contested elections for Board membership, to be comprised of
individuals who either (a) have been Board members continuously since
the beginning of such period or (b) have been elected or nominated for
election as Board members during such period by at least a majority of
the Board members described in clause (a) who were still in office at
the time such election or nomination was approved by the Board.
CODE: the Internal Revenue Code of 1986, as amended.
COMMITTEE: a committee of two (2) or more Board members appointed by
the Board to administer the Plan.
CORPORATE TRANSACTION: any of the following stockholder-approved
transactions to which the Corporation is a party:
- a merger or consolidation in which the Corporation is not
the surviving entity, except for a transaction the principal purpose of
which is to change the state in which the Corporation is incorporated,
- a sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation
or dissolution of the Corporation, or
- any reverse merger in which the Corporation is the surviving
entity but in which securities possessing more than fifty percent (50%)
of the total combined voting power of the Corporation's outstanding
securities are transferred to a person or persons different from the
persons holding those securities immediately prior to such merger.
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EMPLOYEE: an individual who performs services while in the employ of
the Corporation or one or more Subsidiaries, subject to the control and
direction of the employer entity not only as to the work to be performed but
also as to the manner and method of performance.
FAIR MARKET VALUE: the closing selling price per share on the date in
question on the NASDAQ National Market. If there is no reported closing selling
price for the Common Stock on the date in question, then the Fair Market Value
shall be the closing selling price on the last preceding date for which such
quotation exists.
HOSTILE TAKE-OVER: a change in ownership of the Corporation effected
through the following transaction:
- the direct or indirect acquisition by any person or related
group of persons of securities possessing more than fifty percent (50%)
of the total combined voting power of the Corporation's outstanding
securities pursuant to a tender or exchange offer made directly to the
Corporation's stockholders which the Board does not recommend such
stockholders to accept, and
- more than fifty percent (50%) of the acquired securities are
accepted from holders other than the officers and directors of the
Corporation subject to the short-swing profit restrictions of Section
16 of the 1934 Act.
INVOLUNTARY TERMINATION: the termination of the Service of any Optionee
which occurs by reason of:
- such individual's involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or
- such individual's voluntary resignation following (A) a
change in his or her position with the Corporation which materially
reduces his or her level of responsibility, (B) a reduction in his or
her level of compensation (including base salary, fringe benefits and
any non-discretionary and objective-standard incentive payment or bonus
award) by more than five percent (5%) or (C) a relocation of such
individual's place of employment by more than fifty (50) miles,
provided and only if such change, reduction or relocation is effected
by the Corporation without the individual's consent.
MISCONDUCT: the commission of any act of fraud, embezzlement or
dishonesty by the Optionee, any unauthorized use or disclosure by such
individual of confidential information or trade secrets of the Corporation or
any Parent or Subsidiary, or any other intentional misconduct by such individual
adversely affecting the business or affairs of the Corporation in a material
manner. The foregoing definition shall not be deemed to be inclusive of all the
acts or omissions which the Corporation or any Parent or Subsidiary may consider
as grounds for the dismissal or discharge of any Optionee or other individual in
the Service of the Corporation.
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NEWLY ISSUED SHARES: shares of Common Stock drawn from the
Corporation's authorized but unissued shares of Common Stock.
1934 ACT: the Securities and Exchange Act of 1934, as amended.
NON-STATUTORY OPTION: a stock option not intended to meet the
requirements of Code Section 422.
OPTIONEE: any person to whom an option is granted under the
Discretionary Grant Program in effect under the Plan.
PARENT: each corporation (other than the Corporation) in an unbroken
chain of corporations ending with the Corporation, provided each such
corporation (other than the Corporation) in the unbroken chain owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in any other corporation in such
chain.
PERMANENT DISABILITY OR PERMANENTLY DISABLED: the inability of the
Optionee to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment expected to result in death
or to be of continuous duration of twelve (12) months or more.
PLAN ADMINISTRATOR: the committee of two (2) or more Board members
appointed by the Board to administer the Discretionary Option Grant Program.
SERVICE: the provision of services on a periodic basis to the
Corporation or any Parent or Subsidiary in the capacity of an Employee, except
to the extent otherwise specifically provided in the applicable stock option
agreement.
SUBSIDIARY: each corporation (other than the Corporation) in an
unbroken chain of corporations beginning with the Corporation, provided each
such corporation (other than the last corporation) in the unbroken chain owns,
at the time of the determination, stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock in any other
corporation in such chain.
TAKE-OVER PRICE: the greater of (i) the Fair Market Value per share of
Common Stock on the date the option is surrendered to the Corporation in
connection with a Hostile Take-Over or (ii) the highest reported price per share
of Common Stock paid by the tender offer in effecting such Hostile Take-Over.
However, if the surrendered option is an Incentive Option, the Take-Over Price
shall not exceed the clause (i) price per share.
TREASURY SHARES: shares of Common Stock reacquired by the Corporation
and held as treasury shares.
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