<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 13, 1999.
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
1999 STOCK INCENTIVE PLAN
(Full Title of the Plan)
CHARLES D. KISSNER
CHAIRMAN OF THE BOARD 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
425 Market Street
San Francisco, CA 94105
- --------------------------------------------------------------------------------
<PAGE>
Calculation of Registration Fee
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Proposed Proposed
Title of Number of Maximum Maximum Amount of
Securities to shares to be Offering Price Aggregate Registration
be Registered Registered Per Share Offering Price Fee
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 2,500,000 $10.8125* $27,031,250 $7,514.69
- ------------------------------------------------------------------------------------------------------------------
</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 10, 1999.
<PAGE>
Part I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The documents containing the information specified in Part I of
Form S-8 (plan information and registrant information and employee plan
annual information) will be sent or given to employees as specified by Rule
428(b)(1) of the Securities Act of 1933, as amended (the "Securities Act").
Such document need not be filed with the Securities and Exchange Commission
either as part of this Registration Statement or as prospectuses or
prospectus supplements pursuant to Rule 424 of the Securities Act. These
documents and the documents incorporated by reference in this Registration
Statement pursuant to Item 3 of Form S-8 (Part II hereof), taken together,
constitute a prospectus that meets the requirements of Section 10(a) of the
Securities Act.
I-1
<PAGE>
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 latest prospectus filed with the SEC on
September 9, 1998, pursuant to Rule 424(b) under the
Securities Act of 1933, as amended (the "Securities Act").
(b) The Registrant's latest Annual Report on Form 10-K for the
fiscal year ended March 31, 1999 filed with the SEC on June
28, 1999 pursuant to Section 13(a) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act").
(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 Exchange 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
II-1
<PAGE>
damages arising from the director's 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 or she 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 or she 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 or her 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 or she 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 or
she had no reasonable cause to believe his or her 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>
ITEM 8. EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
- ------------ -----------
<S> <C>
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 1999 Stock Incentive
Plan.
</TABLE>
ITEM 9. UNDERTAKINGS
A. The undersigned Registrant hereby undertakes: (1) to file,
during any period in which offers or sales are being made, a post-effective
amendment to this Registration Statement (i) to include any prospectus
required by Section 10(a)(3) of the Securities Act, (ii) to reflect in the
prospectus any facts or events arising after the effective date of 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 Exchange Act that are incorporated by reference into this
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; 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
1999 Stock Incentive Plan.
B. The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act, each filing
of the Registrant's annual report pursuant to Section 13(a) or Section 15(d)
of the Exchange Act 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>
C. Insofar as indemnification for liabilities arising under the
Securities 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
Securities Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
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
August 13, 1999.
DIGITAL MICROWAVE CORPORATION
By: /s/ CHARLES D. KISSNER
------------------------------------
Charles D. Kissner
Chairman of the Board and
Chief Executive Officer
II-4
<PAGE>
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.
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 and August 13, 1999
Chief Executive Officer
/s/ RICHARD C. ALBERDING
- --------------------------------------
Richard C. Alberding Director August 13, 1999
/s/ PAUL S. BACHOW
- --------------------------------------
Paul S. Bachow Director August 13, 1999
/s/ JOHN W. COMBS
- --------------------------------------
John W. Combs Director August 13, 1999
/s/ JAMES D. MEINDL
- --------------------------------------
James D. Meindl Director August 13, 1999
/s/ V. FRANK MENDICINO
- --------------------------------------
V. Frank Mendicino Director August 13, 1999
/s/ HOWARD ORINGER
- --------------------------------------
Howard Oringer Director August 13, 1999
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
- -------------------------------------- --------------------------------- -------------------------
<S> <C> <C>
/s/ CARL A. THOMSEN
- --------------------------------------
Carl A. Thomsen Senior Vice President, Chief August 13, 1999
Financial Officer and Secretary
(Principal Financial and Accounting
Officer)
</TABLE>
II-6
<PAGE>
EXHIBIT 5.1
August 13, 1999
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 2,500,000
shares of the Company's common stock, $0.01 par value per share (the "Common
Stock").
As counsel to the Company, we have examined the proceedings taken by
the Company in connection with the reservation of the 2,500,000 additional
shares of the Common Stock to be reserved for issuance under the Company's
1999 Stock Incentive Plan.
It is our opinion that the 2,500,000 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>
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 21, 1999 included in or incorporated by reference in Digital
Microwave Corporation's Form 10-K for the year ended March 31, 1999.
/s/ ARTHUR ANDERSEN LLP
San Jose, California
August 11, 1999
<PAGE>
DIGITAL MICROWAVE CORPORATION
1999 STOCK INCENTIVE PLAN
1. PURPOSES OF THE PLAN. The purposes of this Stock Incentive Plan
are to attract and retain the best available personnel, 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) "AFFILIATE" and "ASSOCIATE" shall have the respective
meanings ascribed to such terms in Rule 12b-2 promulgated under the Exchange
Act.
(c) "APPLICABLE LAWS" means the legal requirements relating to
the administration of stock incentive plans, if any, under applicable
provisions of federal securities laws, state 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.
(d) "AWARD" means the grant of an Option or other right or
benefit under the Plan.
(e) "AWARD AGREEMENT" means the written agreement evidencing
the grant of an Award executed by the Company and the Grantee, including any
amendments thereto.
(f) "BOARD" means the Board of Directors of the Company.
(g) "CAUSE" means, with respect to the termination by the
Company or a Related Entity of the Grantee's Continuous Service, that such
termination is for "Cause" as such term is expressly defined in a
then-effective written agreement between the Grantee and the Company or such
Related Entity, or in the absence of such then-effective written agreement
and definition, is based on, in the determination of the Administrator, the
Grantee's: (i) performance of any act or failure to perform any act in bad
faith and to the detriment of the Company or a Related Entity; (ii)
dishonesty, intentional misconduct or material breach of any agreement with
the Company or a Related Entity; (iii) unauthorized use or disclosure of
confidential information or trade secrets of the Company or a Related Entity
or (iv) commission of a crime involving dishonesty, breach of trust, or
physical or emotional harm to any person.
(h) "CHANGE IN CONTROL" means a change in ownership or control
of the Company effected through either of the following transactions:
(i) the direct or indirect acquisition by any person or
related group of persons (other than an acquisition from or by the Company or
by a Company-sponsored employee benefit plan or by a person that directly or
indirectly controls, is controlled by, or is
1
<PAGE>
under common control with, the Company) of beneficial ownership (within the
meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than
fifty percent (50%) of the total combined voting power of the Company's
outstanding securities pursuant to a tender or exchange offer made directly
to the Company's stockholders which a majority of the Continuing Directors
who are not Affiliates or Associates of the offeror do not recommend such
stockholders accept, or
(ii) 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 are Continuing Directors.
(i) "CODE" means the Internal Revenue Code of 1986, as amended.
(j) "COMMITTEE" means any committee appointed by the Board to
administer the Plan.
(k) "COMMON STOCK" means the common stock of the Company.
(l) "COMPANY" means Digital Microwave Corporation, a Delaware
corporation.
(m) "CONSULTANT" means any person (other than an Employee or a
Director, solely with respect to rendering services in such person's capacity
as a Director) who is engaged by the Company or any Related Entity to render
consulting or advisory services to the Company or such Related Entity.
(n) "CONTINUING DIRECTORS" means members of the Board who
either (i) have been Board members continuously for a period of at least
thirty-six (36) months or (ii) have been Board members for less than
thirty-six (36) months and were elected or nominated for election as Board
members by at least a majority of the Board members described in clause (i)
who were still in office at the time such election or nomination was approved
by the Board.
(o) "CONTINUOUS SERVICE" 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 Service shall not
be considered interrupted in the case of (i) any approved leave of absence,
(ii) transfers 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). An approved leave of absence
shall include sick leave, military leave, or any other authorized personal
leave. 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.
(p) "CORPORATE TRANSACTION" means any of the following
transactions:
2
<PAGE>
(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;
(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; or
(iv) acquisition by any person or related group of
persons (other than the Company or by a Company-sponsored employee benefit
plan) of beneficial ownership (within the meaning of Rule 13d-3 of the
Exchange Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Company's outstanding securities (whether
or not in a transaction also constituting a Change in Control), but excluding
any such transaction that the Administrator determines shall not be a
Corporate Transaction.
(q) "COVERED EMPLOYEE" means an Employee who is a "covered
employee" under Section 162(m)(3) of the Code.
(r) "DIRECTOR" means a member of the Board or the board of
directors of any Related Entity.
(s) "DISABILITY" means that a Grantee would qualify for benefit
payments under the long-term disability policy of the Company or the Related
Entity to which the Grantee provides services regardless of whether the
Grantee is covered by such policy.
(t) "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 or a Related Entity shall not be
sufficient to constitute "employment" by the Company.
(u) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
(v) "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
3
<PAGE>
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 for the
Common Stock of the type described in (i), above, the Fair Market Value
thereof shall be determined by the Administrator in good faith.
(w) "GOOD REASON" means the occurrence after a Corporate
Transaction, Change in Control or a Related Entity Disposition of any of the
following events or conditions unless consented to by the Grantee:
(i) (A) a change in the Grantee's status, title,
position or responsibilities which represents an adverse change from the
Grantee's status, title, position or responsibilities as in effect at any
time within six (6) months preceding the date of a Corporate Transaction,
Change in Control or Related Entity Disposition or at any time thereafter or
(B) the assignment to the Grantee of any duties or responsibilities which are
inconsistent with the Optionee's status, title, position or responsibilities
as in effect at any time within six (6) months preceding the date of a
Corporate Transaction, Change in Control or Related Entity Disposition or at
any time thereafter;
(ii) reduction in the Grantee's base salary to a level
below that in effect at any time within six (6) months preceding the date of
a Corporate Transaction, Change in Control or Related Entity Disposition or
at any time thereafter; or
(iii) requiring the Grantee to be based at any place
outside a 50-mile radius from the Grantee's job location or residence prior
to the Corporate Transaction, Change in Control or Related Entity
Disposition, except for reasonably required travel on business which is not
materially greater than such travel requirements prior to the Corporate
Transaction, Change in Control or Related Entity Disposition.
(x) "GRANTEE" means an Employee, Director or Consultant who
receives an Award pursuant to an Award Agreement under the Plan.
(y) "IMMEDIATE FAMILY" means any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, former spouse, sibling, niece,
nephew, mother-in-law, father-in-law, son-in law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, any
person sharing the Grantee's household (other than a tenant or employee), a
trust in which these persons have more than fifty percent (50%) of the
beneficial interest, a foundation in which these persons (or the Grantee)
control the management of assets, and any other entity in which these persons
(or the Grantee) own more than fifty percent (50%) of the voting interests.
(z) "INCENTIVE STOCK OPTION" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.
4
<PAGE>
(aa) "NON-QUALIFIED STOCK OPTION" means an Option not intended
to qualify as an Incentive Stock Option.
(bb) "OFFICER" means a person who is an officer of the Company
or a Related Entity within the meaning of Section 16 of the Exchange Act and
the rules and regulations promulgated thereunder.
(cc) "OPTION" means an option to purchase Shares pursuant to an
Award Agreement granted under the Plan.
(dd) "PARENT" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(ee) "PERFORMANCE - BASED COMPENSATION" means compensation
qualifying as "performance-based compensation" under Section 162(m) of the
Code.
(ff) "PLAN" means this 1999 Stock Incentive Plan.
(gg) "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.
(hh) "RELATED ENTITY DISPOSITION" means the sale, distribution
or other disposition by the Company, a Parent or a Subsidiary of all or
substantially all of the interests of the Company, a Parent or a Subsidiary
in any Related Entity effected by a sale, merger or consolidation or other
transaction involving that Related Entity or the sale of all or substantially
all of the assets of that Related Entity, other than any Related Entity
Disposition to the Company, a Parent or a Subsidiary.
(ii) "RULE 16B-3" means Rule 16b-3 promulgated under the
Exchange Act or any successor thereto.
(jj) "SHARE" means a share of the Common Stock.
(kk) "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 10, below, the maximum
aggregate number of Shares which may be issued pursuant to all Awards
(including Incentive Stock Options) is two million five hundred thousand
(2,500,000) Shares. The Shares to be issued pursuant to Awards may be
authorized, but unissued, or reacquired Common Stock.
(b) Any Shares covered by an Award (or portion of an Award)
which is forfeited or canceled, expires or is settled in cash, shall be
deemed not to have been issued for purposes of determining the maximum
aggregate number of Shares which may be issued under the Plan. If
5
<PAGE>
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 retained Shares subject to such Award
shall become available for future issuance 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 issuance 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.
4. ADMINISTRATION OF THE PLAN.
(a) PLAN ADMINISTRATOR.
(i) ADMINISTRATION WITH RESPECT TO DIRECTORS AND
OFFICERS. With respect to grants of Awards to Directors or Employees who are
also Officers or Directors of the Company, the Plan shall be administered by
(A) the Board or (B) a Committee designated by the Board, which Committee
shall be constituted in such a manner as to satisfy the Applicable Laws and
to permit such grants and related transactions under the Plan to be exempt
from Section 16(b) of the Exchange Act in accordance with Rule 16b-3. Once
appointed, such Committee shall continue to serve in its designated capacity
until otherwise directed by the Board.
(ii) ADMINISTRATION WITH RESPECT TO CONSULTANTS AND OTHER
EMPLOYEES. With respect to grants of Awards to Employees or Consultants who
are neither Directors nor Officers of the Company, the Plan shall be
administered by (A) the Board or (B) a Committee designated by the Board,
which Committee shall be constituted in such a manner as to satisfy the
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 such Awards and may limit such
authority as the Board determines from time to time.
(iii) ADMINISTRATION WITH RESPECT TO COVERED EMPLOYEES.
Notwithstanding the foregoing, grants of Awards to any Covered Employee
intended to qualify as Performance-Based Compensation shall be made only by a
Committee (or subcommittee of a Committee) which is comprised solely of two
or more Directors eligible to serve on a committee making Awards qualifying
as Performance-Based Compensation. In the case of such Awards granted to
Covered Employees, references to the "Administrator" or to a "Committee"
shall be deemed to be references to such Committee or subcommittee.
(iv) ADMINISTRATION ERRORS. In the event an Award is
granted in a manner inconsistent with the provisions of this subsection (a),
such Award shall be presumptively valid as of its grant date to the extent
permitted by the Applicable Laws.
(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;
6
<PAGE>
(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 Agreements for use under
the Plan;
(v) to determine the terms and conditions of any Award
granted hereunder;
(vi) to amend the terms of any outstanding Award granted
under the Plan, 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 and that any amendment to reduce the exercise price
of any outstanding Option to reflect a reduction in the Fair Market Value per
Share since the grant date of the Option shall not be made without the
approval of the Company's stockholders;
(vii) to construe and interpret the terms of the Plan and
Awards granted pursuant to the Plan, including without limitation, any notice
of Award or Award Agreement, granted pursuant to the Plan;
(viii) 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; and
(ix) to take such other action, not inconsistent with the
terms of the Plan, as the Administrator deems appropriate.
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 or (ii) an Option
with a fixed or variable price related to the Fair Market Value of the Shares
and with an exercise right or vesting provision related to the passage of
time, the occurrence of one or more events, or the satisfaction of
performance criteria or other conditions.
7
<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 date
the Option with respect to such Shares is granted.
(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
stockholder 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) ACQUISITIONS AND OTHER TRANSACTIONS. The Administrator may
issue Awards under the Plan in settlement, assumption or substitution for,
outstanding awards or obligations to grant future awards in connection with
the Company or a Related Entity acquiring another entity, an interest in
another entity or an additional interest in a Related Entity whether by
merger, stock purchase, asset purchase or other form of transaction.
(e) DEFERRAL OF AWARD PAYMENT. The Administrator may establish
one or more programs under the Plan to permit selected Grantees the
opportunity to elect to defer receipt of consideration upon exercise of an
Award, satisfaction of performance criteria, or other event that absent the
election would entitle the Grantee to payment or receipt of Shares or other
consideration under an Award. The Administrator may establish the election
procedures, the timing of such elections, the mechanisms for payments of, and
accrual of interest or other earnings, if any, on amounts, Shares or other
consideration so deferred, and such other terms, conditions, rules and
procedures that the Administrator deems advisable for the administration of
any such deferral program.
(f) AWARD EXCHANGE PROGRAMS. The Administrator may establish
one or more programs under the Plan to permit selected Grantees to exchange
an Award under the Plan for one or more other types of Awards under the Plan
on such terms and conditions as determined by the Administrator from time to
time.
8
<PAGE>
(g) SEPARATE PROGRAMS. The Administrator may establish one or
more separate programs under the Plan for the purpose of issuing particular
forms of Awards to one or more classes of Grantees on such terms and
conditions as determined by the Administrator from time to time.
(h) INDIVIDUAL AWARD LIMIT. The maximum number of Shares with
respect to which Options may be granted to any Employee in any fiscal year of
the Company shall be seven hundred fifty thousand (750,000) Shares. In
connection with an Employee's commencement of Continuous Service, the
Employee may be granted Options for up to an additional seven hundred fifty
thousand (750,000) Shares which shall not count against the limit set forth
in the previous sentence. The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization
pursuant to Section 10, below. To the extent required by Section 162(m) of
the Code or the regulations thereunder, in applying the foregoing limitation
with respect to an Employee, if any Option is canceled, the canceled Option
shall continue to count against the maximum number of Shares with respect to
which Options may be granted to the Employee. For this purpose, the
repricing of an Option shall be treated as the cancellation of the existing
Option and the grant of a new Option.
(i) EARLY EXERCISE. The Award Agreement 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
a Related Entity or to any other restriction the Administrator determines to
be appropriate.
(j) TERM OF AWARD. The term of each Award shall be the term
stated in the Award Agreement, provided, however, that the term of any Award
shall be no more than seven (7) 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.
(k) TRANSFERABILITY OF AWARDS. Incentive Stock Options 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;
provided, however, that the Grantee may designate a beneficiary of the
Grantee's Incentive Stock Option in the event of the Grantee's death on a
beneficiary designation form provided by the Administrator. Other Awards may
be transferred by gift or through a domestic relations order to members of
the Grantee's Immediate Family to the extent provided in the Award Agreement
or in the manner and to the extent determined by the Administrator.
(l) 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
9
<PAGE>
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.
7. AWARD EXERCISE OR PURCHASE PRICE, CONSIDERATION, AND TAXES.
(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; or
(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, 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.
(iii) In the case of Awards intended to qualify as
Performance-Based Compensation, the exercise or purchase price, if any, shall
be not less than one hundred percent (100%) of the Fair Market Value per
Share on the date of grant.
(iv) In the case of other Awards, such price as is
determined by the Administrator.
(v) Notwithstanding the foregoing provisions of this
Section 7(a), in the case of an Award issued pursuant to Section 6(d), above,
the exercise or purchase price for the Award shall be determined in
accordance with the principles of Section 424(a) of the Code.
(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, provided that the portion of the consideration equal to the par
value of the Shares must be paid in cash or other legal consideration
permitted by the Delaware General Corporation Law:
(i) cash or check in U.S. dollars;
10
<PAGE>
(ii) 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);
(iii) with respect to Options, payment through a
broker-dealer sale and remittance procedure pursuant to which the Grantee (A)
shall provide written instructions to a Company designated brokerage firm to
effect the immediate sale of some or all of the purchased Shares and remit to
the Company, out of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate exercise price payable for the
purchased Shares and (B) shall provide written directives to the Company to
deliver the certificates for the purchased Shares directly to such brokerage
firm in order to complete the sale transaction; or
(iv) any combination of the foregoing methods of payment.
(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.
8. EXERCISE OF AWARD.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER.
(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; provided,
however, that no Award shall be exercisable prior to the first anniversary of
the grant date.
(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,
including, to the extent selected, use of the broker-dealer sale and
remittance procedure to pay the purchase price as provided in Section
7(b)(iii) 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 stockholder shall exist with respect to
Shares subject to an Award, notwithstanding the exercise of an Option or
other Award. The Company shall issue (or cause to be issued) such stock
certificate promptly upon exercise of the Award. No adjustment
11
<PAGE>
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 10, below.
(b) EXERCISE OF AWARD FOLLOWING TERMINATION OF CONTINUOUS
SERVICE.
(i) An Award may not be exercised after the termination
date of such Award set forth in the Award Agreement and may be exercised
following the termination of a Grantee's Continuous Service only to the
extent provided in the Award Agreement.
(ii) Where the Award Agreement permits a Grantee to
exercise an Award following the termination of the Grantee's Continuous
Service for a specified period, the Award shall terminate to the extent not
exercised on the last day of the specified period or the last day of the
original term of the Award, whichever occurs first.
(iii) Any Award designated as an Incentive Stock Option to
the extent not exercised within the time permitted by law for the exercise of
Incentive Stock Options following the termination of a Grantee's Continuous
Service shall convert automatically to a Non-Qualified Stock Option and
thereafter shall be exercisable as such to the extent exercisable by its
terms for the period specified in the Award Agreement.
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. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Subject to any
required action by the stockholders 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, the exercise or
purchase price of each such outstanding Award, the maximum number of Shares
with respect to which Options may be granted to any Employee in any fiscal
year of the Company, as well as any other terms that the Administrator
determines require adjustment shall be proportionately adjusted for (i) any
increase or decrease in the number of issued Shares resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification
of the Shares, or similar event affecting the Shares, (ii) any other increase
or decrease in the number of issued Shares effected without receipt of
consideration by the Company, or (iii) as the Administrator may determine in
its discretion, any other transaction with respect to Common Stock to which
Section 424(a) of the Code applies or any similar transaction; provided,
however that conversion of any convertible
12
<PAGE>
securities of the Company shall not be deemed to have been "effected without
receipt of consideration." Such adjustment shall be made by the
Administrator and its determination shall be final, binding and conclusive.
Except as the Administrator determines, 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.
11. CORPORATE TRANSACTIONS/CHANGES IN CONTROL/RELATED ENTITY
DISPOSITIONS. Except as may be provided in an Award Agreement:
(a) In the event of any Corporate Transaction, each Award which
is at the time outstanding under the Plan automatically shall become fully
vested and exercisable and be released from any restrictions on transfer
(other than transfer restrictions applicable to Incentive Stock Options) and
repurchase or forfeiture rights, immediately prior to the specified effective
date of such Corporate Transaction, for all of the Shares at the time
represented by such Award. Effective upon the consummation of the Corporate
Transaction, all outstanding Awards under the Plan shall terminate. However,
all such Awards shall not terminate if the Awards are, in connection with the
Corporate Transaction, assumed by the successor corporation or Parent
thereof. In addition, an outstanding Award under the Plan shall not so fully
vest and be exercisable and released from such limitations if and to the
extent: (i) such Award is, in connection with the Corporate Transaction,
either assumed by the successor corporation or Parent thereof or replaced
with a comparable Award with respect to shares of the capital stock of the
successor corporation or Parent thereof or (ii) such Award is to be replaced
with a cash incentive program of the successor corporation which preserves
the compensation element of such Award existing at the time of the Corporate
Transaction and provides for subsequent payout in accordance with the same
vesting schedule applicable to such Award The determination of Award
comparability above shall be made by the Administrator.
(b) The Administrator shall have the authority, exercisable
either in advance of any actual or anticipated Change in Control or at the
time of an actual Change in Control Disposition and exercisable at the time
of the grant of an Award under the Plan or any time while an Award remains
outstanding, to provide for the full automatic vesting and exercisability of
one or more outstanding unvested Awards under the Plan and the release from
restrictions on transfer and repurchase or forfeiture rights of such Awards
in connection with a Change in Control, on such terms and conditions as the
Administrator may specify. The Administrator also shall have the authority
to condition any such Award vesting and exercisability or release from such
limitations upon the subsequent termination of the Continuous Service of the
Grantee within a specified period following the effective date of the Change
in Control. The Administrator may provide that any Awards so vested or
released from such limitations in connection with a Change in Control shall
remain fully exercisable until the expiration or sooner termination of the
Award.
(c) Effective upon the consummation of a Related Entity
Disposition, for purposes of the Plan and all Awards, the Continuous Service
of each Grantee who is at the time engaged primarily in service to the
Related Entity involved in such Related Entity Disposition
13
<PAGE>
shall be deemed to terminate and each Award of such Grantee which is at the
time outstanding under the Plan automatically shall become fully vested and
exercisable and be released from any restrictions on transfer (other than
transfer restrictions applicable to Incentive Stock Options) and repurchase
or forfeiture rights for all of the Shares at the time represented by such
Award and be exercisable in accordance with the terms of the Award Agreement
evidencing such Award. However, such Continuous Service shall be not be
deemed to terminate if such Award is, in connection with the Related Entity
Disposition, assumed by the successor entity or its Parent. In addition,
such Continuous Service shall not be deemed to terminate and an outstanding
Award under the Plan shall not so fully vest and be exercisable and released
from such limitations if and to the extent: (i) such Award is, in connection
with the Related Entity Disposition, either to be assumed by the successor
entity or its parent or to be replaced with a comparable Award with respect
to interests in the successor entity or its parent or (ii) such Award is to
be replaced with a cash incentive program of the successor entity which
preserves the compensation element of such Award existing at the time of the
Related Entity Disposition and provides for subsequent payout in accordance
with the same vesting schedule applicable to such Award. The determination
of Award comparability above shall be made by the Administrator.
(d) The portion of any Incentive Stock Option accelerated under
this Section 11 in connection with a Corporate Transaction, Change in Control
or Related Entity Disposition shall remain exercisable as an Incentive Stock
Option under the Code only to the extent the $100,000 dollar limitation of
Section 422(d) of the Code is not exceeded. To the extent such dollar
limitation is exceeded, the accelerated excess portion of such Option shall
be exercisable as a Non-Qualified Stock Option.
12. EFFECTIVE DATE AND TERM OF PLAN. The Plan shall become effective
upon the earlier to occur of its adoption by the Board or its approval by the
stockholders of the Company. It shall continue in effect for a term of seven
(7) years unless sooner terminated. Subject to Section 17, below, and
Applicable Laws, Awards may be granted under the Plan upon its becoming
effective.
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 stockholder 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
<PAGE>
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.
15. NO EFFECT ON TERMS OF EMPLOYMENT/CONSULTING RELATIONSHIP. The
Plan shall not confer upon any Grantee any right with respect to the
Grantee's Continuous Service, nor shall it interfere in any way with his or
her right or the Company's right to terminate the Grantee's Continuous
Service at any time, with or without cause.
16. NO EFFECT ON RETIREMENT AND OTHER BENEFIT PLANS. Except as
specifically provided in a retirement or other benefit plan of the Company or
a Related Entity, Awards shall not be deemed compensation for purposes of
computing benefits or contributions under any retirement plan of the Company
or a Related Entity, and shall not affect any benefits under any other
benefit plan of any kind or any benefit plan subsequently instituted under
which the availability or amount of benefits is related to level of
compensation. The Plan is not a "Retirement Plan" or "Welfare Plan" under
the Employee Retirement Income Security Act of 1974, as amended.
17. STOCKHOLDER APPROVAL. The grant of Incentive Stock Options under
the Plan shall be subject to approval by the stockholders of the Company
within twelve (12) months before or after the date the Plan is adopted
excluding Incentive Stock Options issued in substitution for outstanding
Incentive Stock Options pursuant to Section 424(a) of the Code. Such
stockholder approval shall be obtained in the degree and manner required
under Applicable Laws. The Administrator may grant Incentive Stock Options
under the Plan prior to approval by the stockholders, but until such approval
is obtained, no such Incentive Stock Option shall be exercisable. In the
event that stockholder approval is not obtained within the twelve (12) month
period provided above, all Incentive Stock Options previously granted under
the Plan shall be exercisable as Non-Qualified Stock Options.
15
