<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 8, 1998
REGISTRATION STATEMENT NO. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
WAVEPHORE, INC.
(Exact name of registrant as specified in its charter)
INDIANA 86-0491428
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
WAVEPHORE, INC.
3311 NORTH 44TH STREET
PHOENIX, ARIZONA 85018
(602) 952-5500
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices and place of business)
1998 EMPLOYEE INCENTIVE PLAN
(Full Title of Plans)
DAVID E. DEEDS, CHIEF EXECUTIVE OFFICER
WAVEPHORE, INC.
3311 NORTH 44TH STREET
PHOENIX, ARIZONA 85018
(602) 952-5500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
COPY TO:
DOUGLAS J. REICH, ESQ.
WAVEPHORE, INC.
3311 NORTH 44TH STREET
PHOENIX, ARIZONA 85018
(602) 952-5500
-----------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Maximum Maximum
Amount Offering Aggregate Amount of
Title of Securities to be Price Per Offering Registration
to be Registered Registered(1) Share Price Fee
---------------- ------------ ----- ----- ---
<S> <C> <C> <C> <C>
Common Shares.......... 4,000,000 $ 8.344(2) $33,376,000(2) $ 9,279
</TABLE>
================================================================================
(footnotes on following page)
<PAGE> 2
(1) In the event of a stock split, stock dividend, or similar transaction
involving Common Shares of the Company, in order to prevent dilution, the
number of shares registered shall be automatically increased to cover the
additional shares in accordance with Rule 416(a) under the Securities Act of
1933, as amended.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) and (h), and based upon the average of the high and
low sales prices of the Common Shares on December 7, 1998, as reported by
the Nasdaq Stock Market.
2
<PAGE> 3
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Document(s) containing the information specified by Part I of Form S-8
will be sent or given to participants in the 1998 Employee Incentive Plan of
WavePhore, Inc. as specified in Rule 428(b)(1) under the Securities Act of 1933,
as amended (the "Act"), and are not being filed with the Commission, either as
part of this Registration Statement or as Prospectuses or Prospectus Supplements
pursuant to Rule 424 under the Act, pursuant to the instructions to Part I. Such
documents and the documents incorporated by reference pursuant to Item 3 of Part
II of this Registration Statement, taken together, constitute a Prospectus that
meets the requirements of Section 10(a) of the Act.
3
<PAGE> 4
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents have been filed by the Company with the Securities
and Exchange Commission pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and are incorporated herein by reference:
(a) Annual Report on Form 10-K for the fiscal year ended December 31, 1997;
(b) Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998,
June 30, 1998 and September 30, 1998.
(c) All other reports filed with the Commission by the Company pursuant to
Section 13(a) or 15(d) of the Exchange Act since December 31, 1997;
(d) Description of the Company's Common Shares as set forth under the
caption "Description of Capital Shares - Common Shares" contained in
the Prospectus included in Amendment No. 2 to the Company's
Registration Statement on Form S-1 (Registration No. 33-79316) filed
with the Commission on September 15, 1994, which was incorporated by
reference in Item 1 of the Company's Registration Statement on Form
8-A, as filed with the Commission on September 26, 1994, and all
amendments or reports filed for the purpose of updating such
description.
All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective
amendment which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to be a part hereof
from the date of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
4
<PAGE> 5
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Unless limited by a
corporation's articles of incorporation, the Indiana Business Corporation Law
(the "IBCL") requires that a corporation indemnify a director who was wholly
successful, on the merits or otherwise, in the defense of any proceeding to
which the director was a party because the director is or was a director of the
corporation against reasonable expenses incurred by the director in connection
with the proceeding. The IBCL permits a corporation to indemnify an individual
made a party to a proceeding because the individual is or was a director against
liability incurred in the proceeding if: (1) the individual's conduct was in
good faith; and (2) the individual reasonably believed: (A) in the case of
conduct in the individual's official capacity with the corporation, that the
individual's conduct was in its best interest; and (B) in all other cases, that
the individual's conduct was at least not opposed to its best interests; and (3)
in the case of any criminal proceeding, the individual either: (A) had
reasonable cause to believe the individual's conduct was lawful; or (B) had no
reasonable cause to believe the individual's conduct was unlawful. Unless a
corporation's articles of incorporation provide otherwise, an officer of the
corporation, whether or not a director, is entitled to mandatory and
court-ordered indemnification to the same extent as a director; and the
corporation may indemnify an officer, employee or agent of the corporation,
whether or not a director, to the same extent as a director, and to the extent,
consistent with public policy, that may be provided by its articles of
incorporation, bylaws, general or specific action of its board of directors, or
contract. The indemnification provisions of the IBCL are not exclusive of any
rights to indemnification that a person may have under the corporation's
articles of incorporation or bylaws, a resolution of the board of directors or
of the shareholders, or any other authorization, whenever adopted, after notice,
by a majority vote of all of the voting shares then issued and outstanding.
The IBCL provides that a director is not liable for any action taken as a
director, or any failure to take any action, unless: (1) the director has
breached or failed to perform the duties of the director's office in compliance
with Section 23-1-35-1 of the IBCL; and (2) the breach or failure to perform
constitutes willful misconduct or recklessness. Section 23-1-35-1 of the IBCL
provides that a director shall, based upon the facts then known to the director,
discharge the duties as a director, including the director's duties as a member
of a committee: (1) in good faith; (2) with the care an ordinarily prudent
person in a like position would exercise under similar circumstances; and (3) in
a manner the director reasonably believes to be in the best interests of the
corporation. In discharging the director's duties, a director is entitled to
rely upon information, opinions, reports, or statements, including financial
statements and other financial data, if prepared or presented by: (1) one or
more officers or employees of the corporation whom a director reasonably
believes to be reliable and competent in the matters presented; (2) legal
counsel, public accountants, or other persons as to matters the director
reasonably believes are within the person's professional or expert competence;
or (3) a committee of the board of directors of which the director is not a
member if the director reasonably believes the committee merits confidence. A
director is not acting in good faith if the director has knowledge concerning
the matter in question that makes reliance otherwise permitted by the foregoing
provisions unwarranted. A director may, in considering the best interests of a
corporation, consider the affects of any action on shareholders, employees,
suppliers, and customers of the corporation,
5
<PAGE> 6
and communities in which offices or other facilities of the corporation are
located, and any other factors the director considers pertinent.
The Company's Articles of Incorporation provide that the corporation shall
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, whether
civil, criminal, administrative or investigative (including any action or suit
by or in the right of the corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the corporation or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise, to
the maximum extent permitted under the IBCL. Such indemnification shall not be
deemed exclusive of any other rights to which those indemnified may be entitled
under any statute, bylaw, agreement, vote of shareholders or disinterested
directors, or otherwise.
The Company's Code of Bylaws provides that the corporation shall indemnify
any individual who is or was a director or officer of the corporation, or is or
was serving at the request of the corporation as a director, officer, partner or
trustee of another foreign or domestic corporation, partnership, joint venture,
trust, employee benefit plan or enterprise whether or not for profit, against
liability and expenses, including attorneys fees, incurred by him in any action,
suit or proceeding, whether civil, criminal, administrative, investigative, and
whether formal or informal, in which he has made or threatened to be made a
party by reason of being or having been in any such capacity, or arising out of
his status a such, except (i) in the case of any action, suit, or proceeding
terminated by judgment, order or conviction, in relation to matters as to which
he is adjudged to have breached or failed to perform the duties of his office
and the breach or failure to perform constituted willful misconduct or
recklessness; and (ii) in any other situation, in relation to matters as to
which it is found by a majority of a committee composed of all directors not
involved in the matter in controversy (whether or not a quorum) that the person
breached or failed to perform the duties of his office and the breach or failure
to perform constituted willful misconduct or recklessness.
The directors and officers of the Company are covered by an insurance
policy indemnifying against certain liabilities, including liabilities under the
Securities Act of 1933, as amended (the "Act"), in certain circumstances.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
4.1 Restated Articles of Incorporation (incorporated by reference to
Exhibit 4 to the
6
<PAGE> 7
Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1994).
4.2 Articles of Amendment to the Company's Articles of Incorporation
dated December 27, 1995 (incorporated by reference to Exhibit 3 to
the Company's Current Report on Form 8-K dated December 27, 1995).
4.3 Articles of Amendment to the Company's Articles of Incorporation
dated February 7, 1996 (incorporated by reference to Exhibit 4.3 to
the Company's Registration Statement No. 333-1198 on Form S-3).
4.4 Articles of Amendment to the Company's Articles of Incorporation
dated July 23, 1997 (incorporated by reference to Exhibit 3.1 to the
Company's Current Report on Form 8-K filed on August 1, 1997).
4.5 Restated Code of Bylaws (incorporated by reference to Exhibit 4.2 to
the Company's Registration Statement No. 33-80343 on Form S-8).
5 Opinion of Barnes & Thornburg regarding legality.
10.1 1998 Employee Incentive Plan
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Barnes & Thornburg (included in Exhibit 5).
ITEM 9. UNDERTAKINGS.
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 to include any material
information with respect to the plan of distribution not previously disclosed in
the registration statement or any material change to such information in the
registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof;
(3) To remove from registration by means of a post-effective amendment any
of the
7
<PAGE> 8
securities being registered which remain unsold at the termination of the
offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's Annual Report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange of 1934 (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the 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 Act and will be governed by the final adjudication of
such issue.
8
<PAGE> 9
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 Phoenix, State of Arizona, on December 3, 1998.
WAVEPHORE, INC.
By:/s/ David E. Deeds
------------------------------------
David E. Deeds, Chairman,
Chief Executive Officer and President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ David E. Deeds Chairman of the Board, Chief December 3, 1998
- ----------------------- Executive Officer and President
David E. Deeds (Principal Executive Officer)
/s/ R. Glenn Williamson Executive Vice President, Chief December 3, 1998
- ----------------------- Operating Officer and
R. Glenn Williamson Director
/s/ Kenneth D. Swenson Executive Vice President, December 3, 1998
- ----------------------- Chief Financial Officer,
Kenneth D. Swenson Treasurer (Principal Financial
Officer and Principal Accounting
Officer) and Director
/s/ C. Roland Haden
- -----------------------
C. Roland Haden Director December 3, 1998
/s/ Glenn Scolnik Director December 3, 1998
- -----------------------
Glenn Scolnik
/s/ J. Robert Collins Director December 3, 1998
- ---------------------
J. Robert Collins
</TABLE>
9
<PAGE> 1
EXHIBIT 5
WAVEPHORE, INC. December 4, 1998
3311 North 44th Street
Phoenix, Arizona 85018
Re: Registration of Common Shares on Form S-8
Gentlemen:
You have requested our opinion in connection with the Registration
Statement on Form S-8 (the "Registration Statement") of WavePhore, Inc., an
Indiana corporation (the "Corporation"), relating to the offer and sale of up to
4,000,000 shares of the Common Stock, no par value per share, of the Corporation
(the "Common Shares") under the WavePhore, Inc. 1998 Employee Incentive Plan
(the "Plan"). In connection with your request, we have made such examination of
the corporate records and proceedings of the Corporation and considered such
questions of law and taken such further action as we deemed necessary or
appropriate to enable us to render this opinion.
Based upon such examination, we are of the opinion that, when the Common
Shares have been duly issued pursuant to the Plan and the purchase price (if
any) therefor has been paid as described in the Plan and when the Corporation
has complied with the Securities Act of 1933, as amended, and with the
securities laws of the State of Indiana and all other jurisdictions in which
Common Shares are to be issued pursuant to the exercise of stock options or
stock appreciation rights or the issuance of restricted stock or stock bonuses
granted under the Plan, the Common Shares will be legally issued, fully paid and
nonassessable.
This opinion letter is limited to the current federal laws of the United
States and the current internal laws of the state of Indiana (without giving
effect to any conflict of law principles thereof) and we have not considered,
and express no opinion on, the laws of any other jurisdiction. This opinion
letter is dated and speaks as of the date of delivery.
We consent to the filing of this opinion as Exhibit 5 to the Registration
Statement. In giving this consent, however, we do not admit that we are in the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended, or the Rules and Regulations of the Securities and
Exchange Commission thereunder.
Very truly yours,
/s/ Barnes & Thornburg
<PAGE> 1
EXHIBIT 10.1
WAVEPHORE, INC.
-------------------------
1998 EMPLOYEE INCENTIVE PLAN
-------------------------
1. Purpose of the Plan
The purpose of this WavePhore, Inc. 1998 Employee Incentive Plan ("Plan")
is to create shareholder value. To do so, the Plan provides incentives to
selected employees of the Company and its Subsidiaries, and selected
non-employee consultants and advisors to the Company and its Subsidiaries, who
are not Executive Officers or Directors of WavePhore, Inc., and who contribute,
and are expected to contribute, materially to its success. The Plan also
provides a means of rewarding outstanding performance and enhances the interest
of such persons in the Company's success and development by providing them a
proprietary interest in the Company. Further, the Plan is designed to enhance
the Company's ability to maintain a competitive position in attracting and
retaining qualified personnel necessary for the success and development of the
Company.
2. Definitions
As used in the Plan, the following definitions apply to the terms
indicated below:
(a) "Board of Directors" shall mean the Board of Directors of
WavePhore, Inc.
(b) "Cause," when used in connection with the termination of a
Participant's employment with the Company, for purposes of the Plan, shall
mean the termination of the Participant's employment by the Company on
account of (i) the willful and continued failure by the Participant
substantially to perform his duties and obligations (other than any such
failure resulting from his incapacity due to physical or mental illness)
or (ii) the willful engaging by the Participant in an act or acts which
could reasonably be expected to cause injury to the Company or are
contrary to the best interests of the Company. For purposes of
<PAGE> 2
this Section 2(b), no act, or failure to act, on a Participant's part
shall be considered "willful" unless done, or omitted to be done, by the
Participant in bad faith and without reasonable belief that his action or
omission was in the best interests of the Company.
(c) "Cash Bonus" shall mean an award of a bonus payable in cash
pursuant to Section 13 hereof.
(d) "Change in Control" shall mean:
(i) the acquisition at any time by a "person" or "group"
(as that term is used in Sections 13(d) and 14(d)(2) of the Exchange
Act) (excluding, for this purpose, David E. Deeds, any affiliate of
David E. Deeds, the Company or any Subsidiary or any employee
benefit plan of the Company or any Subsidiary) of beneficial
ownership (as defined in Rule 13d-3 under the Exchange Act) directly
or indirectly, of securities representing 20% or more of the
combined voting power in the election of directors of the
then-outstanding securities of the Company or any successor of the
Company;
(ii) the termination of service as directors, for any
reason other than death, disability or retirement from the Board of
Directors, during any period of two consecutive years or less, of
individuals who at the beginning of such period constituted a
majority of the Board of Directors, unless the election of or
nomination for election of each new director during such period was
approved by a vote of at least two-thirds of the directors still in
office who were directors at the beginning of the period;
(iii) approval by the shareholders of the Company of any
merger or consolidation or statutory share exchange as a result of
which the Common Shares shall be changed, converted or exchanged
(other than a merger or share exchange with a wholly-owned
Subsidiary of the Company), or liquidation of the Company, or any
sale or disposition of 50% or more of the assets or earning power of
the Company; or
(iv) approval by the shareholders of the Company of any
merger, or consolidation, or statutory share exchange to which the
Company is a party as a result of which the persons who were
shareholders of the Company immediately prior to the effective
2
<PAGE> 3
date of the merger, or consolidation, or statutory share exchange
shall have beneficial ownership of less than 50% of the combined
voting power in the election of directors of the surviving
corporation following the effective date of such merger, or
consolidation, or statutory share exchange; provided, however, that
no change in control shall be deemed to have occurred if, prior to
such time as a change in control would otherwise be deemed to have
occurred, the Company's Board of Directors deems otherwise.
(e) "Committee" shall mean the committee appointed by the Board of
Directors from time to time to administer the Plan.
(f) "Common Shares" shall mean WavePhore, Inc. common shares, no par
value per share.
(g) "Company" shall mean WavePhore, Inc., an Indiana corporation,
and each of its Subsidiaries.
(h) "Disability" shall mean a Participant's inability to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or
which has lasted or can be expected to last for a continuous period of not
less than twelve (12) months.
(i) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
(j) "Executive Officer" shall mean the Chief Executive Officer,
Chief Financial Officer, Executive Vice President, Senior Vice
President, Vice President, Treasurer, Secretary, and any person
serving in a similar capacity, of WavePhore, Inc.
(k) the "Fair Market Value" of Common Shares with respect to any day
shall be (i) the closing sales price on the immediately preceding business
day of Common Shares as reported on the principal securities exchange on
which Common Shares are then listed or admitted to trading or (ii) if not
so reported, the average of the closing bid and ask prices on the
immediately preceding business day as reported on the National Association
of Securities Dealers Automated Quotation System or (iii) if not so
reported, as furnished by any member of the National Association of
Securities Dealers, Inc. selected by the Committee. In the event that the
price of Common Shares shall not be so reported, the Fair
3
<PAGE> 4
Market Value of Common Shares shall be determined by the Committee in its
absolute discretion.
(l) "Incentive Award" shall mean an Option, LSAR, Tandem SAR,
Stand-Alone SAR, share of Phantom Stock, Stock Bonus or Cash Bonus granted
pursuant to the terms of the Plan.
(m) "Incentive Stock Option" shall mean an Option which is an
"incentive stock option" within the meaning of Section 422 of the Code.
(n) "Issue Date" shall mean the date established by the Committee on
which certificates representing shares of Restricted Stock shall be issued
by WavePhore, Inc. pursuant to the terms of Section 10(d) hereof.
(o) "LSAR" shall mean a limited stock appreciation right which is
granted pursuant to the provisions of Section 7 hereof and which relates
to an Option. Each LSAR shall be exercisable only upon the occurrence of a
Change in Control and only in the alternative to the exercise of its
related Option.
(p) "Non-Employee Participant" shall mean a Participant who is not
an employee of the Company.
(q) "Non-Qualified Stock Option" shall mean an Option which is not
an Incentive Stock Option and which is identified as a Non-Qualified Stock
Option in the agreement by which it is evidenced.
(r) "Option" shall mean an option to purchase Common Shares of
WavePhore, Inc. granted pursuant to Section 6 hereof. Each Option shall be
identified as a Non-Qualified Stock Option in the agreement by which it is
evidenced.
(s) "Participant" shall mean a person who is eligible to participate
in the Plan and to whom an Incentive Award is granted pursuant to the
Plan, and, upon his death, his successors, heirs, executors and
administrators, as the case may be.
(t) "Person" shall mean a "person," as such term is used in Sections
13(d) and 14(d) of the Exchange Act.
(u) "Phantom Stock" shall mean the right to receive in cash the Fair
Market Value of Common Shares of WavePhore, Inc., which right is
4
<PAGE> 5
granted pursuant to Section 11 hereof and subject to the terms and
conditions contained therein.
(v) "Plan" shall mean the WavePhore, Inc. 1998 Employee Incentive
Plan, as it may be amended from time to time.
(w) "Restricted Stock" shall mean a Common Share which is granted
pursuant to the terms of Section 10 hereof and which is subject to the
restrictions set forth in Section 10(c) hereof for so long as such
restrictions continue to apply to such share.
(x) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(y) "Stand-Alone SAR" shall mean a stock appreciation right granted
pursuant to Section 9 hereof which is not related to any Option.
(z) "Stock Bonus" shall mean a grant of a bonus payable in Common
Shares pursuant to Section 12 hereof.
(aa) "Subsidiary" shall mean any corporation in which at the time of
reference WavePhore, Inc. owns, directly or indirectly, stock comprising
more than fifty percent of the total combined voting power of all classes
of stock of such corporation.
(bb) "Tandem SAR" shall mean a stock appreciation right granted
pursuant to Section 8 hereof which is related to an Option. Each Tandem
SAR shall be exercisable only to the extent its related Option is
exercisable and only in the alternative to the exercise of its related
Option.
(cc) "Vesting Date" shall mean the date established by the Committee
on which a share of Restricted Stock or Phantom Stock may vest.
(dd) "WavePhore, Inc." shall mean WavePhore, Inc., an Indiana
corporation, and its successors.
3. Stock Subject to the Plan
Under the Plan, the Committee may grant to Participants (i) Options, (ii)
LSARs, (iii) Tandem SARs, (iv) Stand-Alone SARs, (v) shares of Restricted Stock,
5
<PAGE> 6
(vi) shares of Phantom Stock, (vii) Stock Bonuses and (viii) Cash Bonuses.
Subject to adjustment as provided in Section 14 hereof, the Committee may
grant Options, Stand-Alone SARs, shares of Restricted Stock, shares of Phantom
Stock and Stock Bonuses under the Plan with respect to a number of Common Shares
that in the aggregate does not exceed 4,000,000 shares. The grant of an LSAR,
Tandem SAR or Cash Bonus shall not reduce the number of Common Shares with
respect to which Options, Stand-Alone SARs, shares of Restricted Stock, shares
of Phantom Stock or Stock Bonuses may be granted pursuant to the Plan.
In the event that any outstanding Option or Stand-Alone SAR expires,
terminates or is canceled for any reason (other than pursuant to Paragraphs
7(b)(2) or 8(b)(3) hereof), the Common Shares subject to the unexercised portion
of such Option or Stand-Alone SAR shall again be available for grants under the
Plan. In the event that an outstanding Option is canceled pursuant to Paragraphs
7(b)(2) or 8(b)(3) hereof by reason of the exercise of an LSAR or a Tandem SAR,
the Common Shares subject to the canceled portion of such Option shall not again
be available for grants under the Plan. In the event that any shares of
Restricted Stock or Phantom Stock, or any Common Shares granted in a Stock Bonus
are forfeited or canceled for any reason, such shares shall again be available
for grants under the Plan.
Common Shares issued under the Plan may be either newly issued shares or
treasury shares, at the discretion of the Committee, and WavePhore, Inc. hereby
reserves 4,000,000 Common Shares for issuance pursuant to the Plan.
4. Administration of the Plan
The Plan shall be administered by a Committee of the Board of Directors
consisting of two or more directors. The Committee shall from time to time
designate the persons who shall be granted Incentive Awards and the amount and
type of such Incentive Awards.
The Committee shall have full authority to administer the Plan, including
authority to interpret and construe any provision of the Plan and the terms of
any Incentive Award issued under it and to adopt such rules and regulations for
administering the Plan as it may deem necessary. Decisions of the Committee
shall be final and binding on all parties.
6
<PAGE> 7
The Committee may, in its absolute discretion (i) accelerate the date on
which any Option or Stand-Alone SAR granted under the Plan becomes exercisable,
(ii) accelerate the Vesting Date or Issue Date, or waive any condition imposed
pursuant to Section 10(b) hereof, with respect to any share of Restricted Stock
granted under the Plan and (iii) accelerate the Vesting Date or waive any
condition imposed pursuant to Section 11(c) hereof, with respect to any share of
Phantom Stock granted under the Plan.
In addition, the Committee may, in its absolute discretion, grant
Incentive Awards to Participants on the condition that such Participants
surrender to the Committee for cancellation such other Incentive Awards
(including, without limitation, Incentive Awards with higher exercise prices) as
the Committee specifies. Notwithstanding Section 3 herein, prior to the
surrender of such other Incentive Awards, Incentive Awards granted pursuant to
the preceding sentence of this Section 4 shall not count against the limits set
forth in such Section 3.
Whether an authorized leave of absence, or absence in military or
government service, shall constitute termination of employment shall be
determined by the Committee.
No member of the Committee shall be liable for any action, omission, or
determination relating to the Plan, and WavePhore, Inc. shall indemnify and hold
harmless each member of the Committee and each other director or employee of the
Company to whom any duty or power relating to the administration or
interpretation of the Plan has been delegated against any cost or expense
(including counsel fees) or liability (including any sum paid in settlement of a
claim with the approval of the Committee) arising out of any action, omission or
determination relating to the Plan, unless, in either case, such action,
omission or determination was taken or made by such member, director or employee
in bad faith and without reasonable belief that it was in the best interests of
the Company.
5. Eligibility
The persons who shall be eligible to receive Incentive Awards pursuant to
the Plan shall be such employees of the Company and non-employee consultants and
advisors to the Company, as the Committee shall select from time to time.
Executive Officers and Directors of WavePhore, Inc. shall not be
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eligible to receive Incentive Awards pursuant to the Plan.
6. Options
Subject to the provisions of the Plan, the Committee may grant Options,
which Options shall be evidenced by agreements in such form as the Committee
shall from time to time approve. Options shall comply with and be subject to the
following terms and conditions:
(a) Identification of Options
All Options granted under the Plan shall be clearly identified in
the agreement evidencing such Options as Non-Qualified Stock Options. No
Incentive Stock Options may be granted under the Plan.
(b) Exercise Price
The exercise price of any Non-Qualified Stock Option granted under
the Plan shall be such price as the Committee shall determine on the date
on which such Non-Qualified Stock Option is granted; provided, that such
price may not be less than the minimum price required by applicable law.
(c) Term and Exercise of Option
(1) Each Option shall be exercisable on such date or dates,
during such period and for such number of Common Shares as shall be
determined by the Committee on the day on which such Option is
granted and set forth in the Option agreement with respect to such
Option; provided, however, that no Option shall be exercisable after
the expiration of ten years from the date such Option was granted;
and, provided, further, that each Option shall be subject to earlier
termination, expiration or cancellation as provided in the Plan.
(2) Each Option shall be exercisable in whole or in part;
provided, that no partial exercise of an Option shall be for an
aggregate exercise price of less than $1,000, unless such partial
exercise is for the last remaining unexercised portion of such
Option. The partial exercise of an Option shall not cause the
expiration, termination or cancellation of the remaining portion
thereof. Upon the partial exercise of an Option, the agreements
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<PAGE> 9
evidencing such Option and any related LSARs and Tandem SARs shall
be returned to the Participant exercising such Option together with
the delivery of the certificates described in Section 6(c)(4)
hereof.
(3) An Option shall be exercised by delivering notice to
WavePhore, Inc.'s principal office, to the attention of its
Secretary, no less than one business day in advance of the effective
date of the proposed exercise. Such notice shall be accompanied by
the agreements evidencing the Option and any related LSARs and
Tandem SARs, shall specify the number of Common Shares with respect
to which the Option is being exercised and the effective date of the
proposed exercise and shall be signed by the Participant. The
Participant may withdraw such notice at any time prior to the close
of business on the business day immediately preceding the effective
date of the proposed exercise, in which case such agreements shall
be returned to him. Payment for Common Shares purchased upon the
exercise of an Option shall be made on the effective date of such
exercise either (i) in cash, by certified check, bank cashier's
check or wire transfer or (ii) subject to the approval of the
Committee, in Common Shares owned by the Participant and valued at
their Fair Market Value on the effective date of such exercise, or
partly in Common Shares with the balance in cash, by certified
check, bank cashier's check or wire transfer. Any payment in Common
Shares shall be effected by the delivery of such shares to the
Secretary of WavePhore, Inc., duly endorsed in blank or accompanied
by stock powers duly executed in blank, together with any other
documents and evidences as the Secretary of WavePhore, Inc. shall
require from time to time.
(4) Any Option granted under the Plan may be exercised by a
broker-dealer acting on behalf of a Participant if (i) the
broker-dealer has received from the Participant or the Company a
fully-and-duly-endorsed agreement evidencing such Option and
instructions signed by the Participant requesting WavePhore, Inc. to
deliver the Common Shares subject to such Option to the
broker-dealer on behalf of the Participant and specifying the
account into which such shares should be deposited, (ii) adequate
provision has been made with respect to the payment of any
withholding taxes due upon such exercise and (iii) the broker-dealer
and the Participant have otherwise complied with Section 220.3(e)(4)
of Regulation T, 12 CFR Part 220.
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<PAGE> 10
(5) Certificates for Common Shares purchased upon the exercise
of an Option shall be issued in the name of the Participant and
delivered to the Participant as soon as practicable following the
effective date on which the Option is exercised.
(d) Effect of Termination of Employment
(1) In the event that the employment of a Participant with the
Company shall terminate for any reason other than retirement at age
60 or later, Cause, Disability or death (i) Options granted to such
Participant, to the extent that they were exercisable at the time of
such termination, shall remain exercisable until the expiration of
one month after such termination, on which date they shall expire,
and (ii) Options granted to such Participant, to the extent that
they were not exercisable at the time of such termination, shall
expire at the close of business on the date of such termination;
provided, however, that no Option shall be exercisable after the
expiration of its term.
(2) In the event that the employment of a Participant with the
Company shall terminate on account of the retirement at age 60 or
later, Disability or death of the Participant (i) Options granted to
such Participant, to the extent that they were exercisable at the
time of such termination, shall remain exercisable until the
expiration of one year after such termination, on which date they
shall expire, and (ii) Options granted to such Participant, to the
extent that they were not exercisable at the time of such
termination, shall expire at the close of business on the date of
such termination; provided, however, that no Option shall be
exercisable after the expiration of its term.
(3) In the event of the termination of a Participant's
employment for Cause, all outstanding Options granted to such
Participant shall expire at the commencement of business on the date
of such termination.
(4) In the event that a Non-Employee Participant ceases to
provide services to the Company, all Options granted to such
Non-Employee Participant shall remain exercisable in accordance with
their terms.
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<PAGE> 11
(e) Acceleration of Exercise Date Upon Change in Control
Upon the occurrence of a Change in Control, each Option granted
under the Plan and outstanding at such time shall become fully and
immediately exercisable and shall remain exercisable until its expiration,
termination or cancellation pursuant to the terms of the Plan.
7. Limited Stock Appreciation Rights
The Committee may grant in connection with any Option granted hereunder
one or more LSARs relating to a number of Common Shares equal to or less than
the number of Common Shares subject to the related Option. An LSAR may be
granted at the same time as, or subsequent to the time that, its related Option
is granted. Each LSAR shall be evidenced by an agreement in such form as the
Committee shall from time to time approve. Each LSAR granted hereunder shall be
subject to the following terms and conditions:
(a) Benefit Upon Exercise
The exercise of an LSAR relating to a Non-Qualified Stock
Option with respect to any number of Common Shares shall entitle the
Participant to a cash payment, for each such share, equal to the
excess of (i) the greater of (A) the highest price per Common Share
paid in the Change in Control in connection with which such LSAR
became exercisable and (B) the Fair Market Value of a Common Share
on the date of such Change in Control over (ii) the exercise price
of the related Option. Such payment shall be paid as soon as
practical, but in no event later than the expiration of five
business days, after the effective date of such exercise.
(b) Term and Exercise of LSARs
(1) An LSAR shall be exercisable only during the period
commencing on the first day following the occurrence of a Change in
Control and terminating on the expiration of sixty days after such
date. Notwithstanding the preceding sentence of this Section 7(b),
in the event that an LSAR held by any Participant who is or may be
subject to the provisions of Section 16(b) of the Exchange Act
becomes exercisable prior to the expiration of six months following
the date on which it is granted, then the LSAR shall also be
exercisable during the period commencing on the first day
immediately following the expiration of such six month period and
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<PAGE> 12
terminating on the expiration of sixty days following such date.
Notwithstanding anything else herein, an LSAR may be exercised only
if and to the extent that the Option to which it relates is
exercisable.
(2) The exercise of an LSAR with respect to a number of Common
Shares shall cause the immediate and automatic cancellation of the
Option to which it relates with respect to an equal number of
shares. The exercise of an Option, or the cancellation, termination
or expiration of an Option (other than pursuant to this Paragraph
(2)), with respect to a number of Common Shares, shall cause the
cancellation of the LSAR related to it with respect to an equal
number of shares.
(3) Each LSAR shall be exercisable in whole or in part;
provided, that no partial exercise of an LSAR shall be for an
aggregate exercise price of less than $1,000, unless such partial
exercise is for the last remaining unexercised portion of such LSAR.
The partial exercise of an LSAR shall not cause the expiration,
termination or cancellation of the remaining portion thereof. Upon
the partial exercise of an LSAR, the agreements evidencing the LSAR,
the related Option and any Tandem SARs related to such Option shall
be returned to the Participant exercising such LSAR together with
the payment described in Paragraph 7(a)(i) or (ii) hereof, as
applicable.
(4) An LSAR shall be exercised by delivering notice to
WavePhore, Inc.'s principal office, to the attention of its
Secretary, no less than one business day in advance of the effective
date of the proposed exercise. Such notice shall be accompanied by
the applicable agreements evidencing the LSAR, the related Option
and any Tandem SARs relating to such Option, shall specify the
number of Common Shares with respect to which the LSAR is being
exercised and the effective date of the proposed exercise and shall
be signed by the Participant. The Participant may withdraw such
notice at any time prior to the close of business on the business
day immediately preceding the effective date of the proposed
exercise, in which case such agreements shall be returned to him.
8. Tandem Stock Appreciation Rights
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The Committee may grant in connection with any Option granted hereunder
one or more Tandem SARs relating to a number of Common Shares equal to or less
than the number of Common Shares subject to the related Option. A Tandem SAR may
be granted at the same time as, or subsequent to the time that, its related
Option is granted. Each Tandem SAR shall be evidenced by an agreement in such
form as the Committee shall from time to time approve. Tandem SARs shall comply
with and be subject to the following terms and conditions:
(a) Benefit Upon Exercise
The exercise of a Tandem SAR with respect to any number of Common
Shares shall entitle a Participant to a cash payment, for each such share,
equal to the excess of (i) the Fair Market Value of a Common Share on the
effective date of such exercise over (ii) the exercise price of the
related Option. Such payment shall be paid as soon as practical, but in no
event later than the expiration of five business days, after the effective
date of such exercise.
(b) Term and Exercise of Tandem SAR
(1) A Tandem SAR shall be exercisable at the same time and to
the same extent (on a proportional basis, with any fractional amount
being rounded down to the immediately preceding whole number) as its
related Option. Notwithstanding the first sentence of this Paragraph
8(b)(1), a Tandem SAR shall not be exercisable at any time that an
LSAR related to the Option to which the Tandem SAR is related is
exercisable.
(2) Notwithstanding the first sentence of Paragraph 8(b)(1)
hereof, the Committee may, in its absolute discretion, grant one or
more Tandem SARs which shall not become exercisable unless and until
the Participant to whom such Tandem SAR is granted is, in the
determination of the Committee, subject to Section 16(b) of the
Exchange Act and which shall cease to be exercisable if and at the
time that the Participant ceases, in the determination of the
Committee, to be subject to such Section 16(b).
(3) The exercise of a Tandem SAR with respect to a number of
Common Shares shall cause the immediate and automatic cancellation
of its related Option with respect to an equal number of shares. The
exercise of an Option, or the
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<PAGE> 14
cancellation, termination or expiration of an Option (other than
pursuant to this Paragraph (3)), with respect to a number of Common
Shares shall cause the automatic and immediate cancellation of its
related Tandem SARs to the extent that the number of Common Shares
subject to such Option after such exercise, cancellation,
termination or expiration is less than the number of shares subject
to such Tandem SARs. Such Tandem SARs shall be canceled in the order
in which they became exercisable.
(4) Each Tandem SAR shall be exercisable in whole or in part;
provided, that no partial exercise of a Tandem SAR shall be for an
aggregate exercise price of less than $1,000, unless such partial
exercise is for the last remaining unexercised portion of such
Tandem SAR. The partial exercise of a Tandem SAR shall not cause the
expiration, termination or cancellation of the remaining portion
thereof. Upon the partial exercise of a Tandem SAR, the agreements
evidencing such Tandem SAR, its related Option and LSARs relating to
such Option shall be returned to the Participant exercising such
Tandem SAR together with the payment described in Section 8(a)
hereof.
(5) A Tandem SAR shall be exercised by delivering notice to
WavePhore, Inc.'s principal office, to the attention of its
Secretary, no less than one business day in advance of the effective
date of the proposed exercise. Such notice shall be accompanied by
the applicable agreements evidencing the Tandem SAR, its related
Option and any LSARs related to such Option, shall specify the
number of Common Shares with respect to which the Tandem SAR is
being exercised and the effective date of the proposed exercise and
shall be signed by the Participant. The Participant may withdraw
such notice at any time prior to the close of business on the
business day immediately preceding the effective date of the
proposed exercise, in which case such agreements shall be returned
to him.
9. Stand-Alone Stock Appreciation Rights
Subject to the provisions of the Plan, the Committee may grant Stand-Alone
SARs, which Stand-Alone SARs shall be evidenced by agreements in such form as
the Committee shall from time to time approve. Stand-Alone SARs shall comply
with and be subject to the following terms and conditions:
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<PAGE> 15
(a) Exercise Price
The exercise price of any Stand-Alone SAR granted under the Plan
shall be determined by the Committee at the time of the grant of such
Stand-Alone SAR.
(b) Benefit Upon Exercise
The exercise of a Stand-Alone SAR with respect to any number of
Common Shares prior to the occurrence of a Change in Control shall entitle
a Participant to a cash payment, for each such share, equal to the excess
of (i) the Fair Market Value of a Common Share on the exercise date over
(ii) the exercise price of the Stand-Alone SAR. The exercise of a
Stand-Alone SAR with respect to any number of Common Shares upon or after
the occurrence of a Change in Control shall entitle a Participant to a
cash payment, for each such share, equal to the excess of (i) the greater
of (A) the highest price per Common Share paid in connection with such
Change in Control and (B) the Fair Market Value of a Common Share on the
date of such Change in Control over (ii) the exercise price of the
Stand-Alone SAR. Such payments shall be paid as soon as practical, but in
no event later than five business days, after the effective date of the
exercise.
(c) Term and Exercise of Stand-Alone SARs
(1) Each Stand-Alone SAR shall be exercisable on such date or
dates, during such period and for such number of Common Shares as
shall be determined by the Committee and set forth in the
Stand-Alone SAR agreement with respect to such Stand-Alone SAR;
provided, however, that no Stand-Alone SAR shall be exercisable
after the expiration of ten years from the date such Stand-Alone SAR
was granted; and, provided, further, that each Stand-Alone SAR shall
be subject to earlier termination, expiration or cancellation as
provided in the Plan.
(2) Each Stand-Alone SAR may be exercised in whole or in part;
provided, that no partial exercise of a Stand-Alone SAR shall be for
an aggregate exercise price of less than $1,000, unless such partial
exercise is for the last remaining unexercised portion of such
Stand-Alone SAR. The partial exercise of a Stand-Alone SAR
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<PAGE> 16
shall not cause the expiration, termination or cancellation of the
remaining portion thereof. Upon the partial exercise of a
Stand-Alone SAR, the agreement evidencing such Stand-Alone SAR shall
be returned to the Participant exercising such Stand-Alone SAR
together with the payment described in Section 9(b) hereof.
(3) A Stand-Alone SAR shall be exercised by delivering notice
to WavePhore, Inc.'s principal office, to the attention of its
Secretary, no less than one business day in advance of the effective
date of the proposed exercise. Such notice shall be accompanied by
the applicable agreement evidencing the Stand-Alone SAR, shall
specify the number of Common Shares with respect to which the
Stand-Alone SAR is being exercised and the effective date of the
proposed exercise and shall be signed by the Participant. The
Participant may withdraw such notice at any time prior to the close
of business on the business day immediately preceding the effective
date of the proposed exercise, in which case the agreement
evidencing the Stand-Alone SAR shall be returned to him.
(d) Effect of Termination of Employment
(1) In the event that the employment of a Participant with the
Company shall terminate for any reason other than retirement at age
60 or later, Cause, Disability or death (i) Stand-Alone SARs granted
to such Participant, to the extent that they were exercisable at the
time of such termination, shall remain exercisable until the
expiration of one month after such termination, on which date they
shall expire, and (ii) Stand-Alone SARs granted to such Participant,
to the extent that they were not exercisable at the time of such
termination, shall expire at the close of business on the date of
such termination; provided, however, that no Stand-Alone SAR shall
be exercisable after the expiration of its term.
(2) In the event that the employment of a Participant with the
Company shall terminate on account of the retirement at age 60 or
later, Disability or death of the Participant (i) Stand-Alone SARs
granted to such Participant, to the extent that they were
exercisable at the time of such termination, shall remain
exercisable until the expiration of one year after such termination,
on which date they shall expire, and (ii) Stand-Alone SARs granted
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<PAGE> 17
to such Participant, to the extent that they were not exercisable at
the time of such termination, shall expire at the close of business
on the date of such termination; provided, however, that no
Stand-Alone SAR shall be exercisable after the expiration of its
term.
(3) In the event of the termination of a Participant's
employment for Cause, all outstanding Stand-Alone SARs granted to
such Participant shall expire at the commencement of business on the
date of such termination.
(4) In the event that a Non-Employee Participant ceases to
provide services to the Company, all Stand-Alone SARs granted to
such Non-Employee Participant shall remain exercisable in accordance
with their terms.
(e) Acceleration of Exercise Date Upon Change in Control
Upon the occurrence of a Change in Control, each Stand-Alone SAR
granted under the Plan and outstanding at such time shall become fully and
immediately exercisable and shall remain exercisable until its expiration,
termination or cancellation pursuant to the terms of the Plan.
10. Restricted Stock
Subject to the provisions of the Plan, the Committee may grant shares of
Restricted Stock. Each grant of shares of Restricted Stock shall be evidenced by
an agreement in such form as the Committee shall from time to time approve. Each
grant of shares of Restricted Stock shall comply with and be subject to the
following terms and conditions:
(a) Issue Date and Vesting Date
At the time of the grant of shares of Restricted Stock, the
Committee shall establish an Issue Date or Issue Dates and a Vesting Date
or Vesting Dates with respect to such shares. The Committee may divide
such shares into classes and assign a different Issue Date and/or Vesting
Date for each class. Except as provided in Sections 10(c) and 10(f)
hereof, upon the occurrence of the Issue Date with respect to a share of
Restricted Stock, a share of Restricted Stock shall be issued in
accordance with the provisions of Section 10(d) hereof. Provided that all
conditions to the vesting of a share of Restricted Stock imposed pursuant
to Section 10(b) hereof are satisfied, and except as provided in Sections
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10(c) and 10(f) hereof, upon the occurrence of the Vesting Date with
respect to a share of Restricted Stock, such share shall vest and the
restrictions of Section 10(c) hereof shall cease to apply to such share.
(b) Conditions to Vesting
At the time of the grant of shares of Restricted Stock, the
Committee may impose such restrictions or conditions, not inconsistent
with the provisions hereof, to the vesting of such shares as it, in its
absolute discretion deems appropriate. By way of example and not by way of
limitation, the Committee may require, as a condition to the vesting of
any class or classes of shares of Restricted Stock, that the Participant
or the Company achieve certain performance criteria, such criteria to be
specified by the Committee at the time of the grant of such shares.
(c) Restrictions on Transfer Prior to Vesting
Prior to the vesting of a share of Restricted Stock, no transfer of
a Participant's rights with respect to such shares, whether voluntary or
involuntary, by operation of law or otherwise, shall vest the transferee
with any interest or right in or with respect to such share, but
immediately upon any attempt to transfer such rights, such share, and all
of the rights related thereto, shall be forfeited by the Participant and
the transfer shall be of no force or effect.
(d) Issuance of Certificates
(1) Except as provided in Sections 10(c) or 10(f) hereof,
reasonably promptly after the Issue Date with respect to shares of
Restricted Stock, WavePhore, Inc. shall cause to be issued a stock
certificate, registered in the name of the Participant to whom such
shares were granted, evidencing such shares; provided, that
WavePhore, Inc. shall not cause to be issued such a stock
certificate unless it has received a stock power duly endorsed in
blank with respect to such shares. Each such stock certificate shall
bear the following legend:
"The transferability of this certificate and the shares
of stock represented hereby are subject to the restrictions,
terms and conditions (including forfeiture and restrictions
against transfer) contained in the WavePhore, Inc. 1998
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Employee Incentive Plan and an Agreement entered into between
the registered owner of such shares and WavePhore, Inc. A copy
of the Plan and Agreement is on file in the office of the
Secretary of WavePhore, Inc."
Such legend shall not be removed from the certificate
evidencing such shares until such shares vest pursuant to the terms
hereof.
(2) Each certificate issued pursuant to Paragraph 10(d)(1)
hereof, together with the stock powers relating to the shares of
Restricted Stock evidenced by such certificate, shall be deposited
by the Company with a custodian designated by the Company. The
Company shall cause such custodian to issue to the Participant a
receipt evidencing the certificates held by it which are registered
in the name of the Participant.
(e) Consequences Upon Vesting
Upon the vesting of a share of Restricted Stock pursuant to
the terms hereof, the restrictions of Section 10(c) hereof shall cease to
apply to such share. Reasonably promptly after a share of Restricted Stock
vests pursuant to the terms hereof, WavePhore, Inc. shall cause to be
issued and delivered to the Participant to whom such shares were granted,
a certificate evidencing such share, free of the legend set forth in
Paragraph 10(d)(1) hereof, together with any other property of the
Participant held by the custodian pursuant to Section 14(b) hereof.
(f) Effect of Termination of Employment
(1) In the event that the employment of a Participant with the
Company shall terminate for any reason other than Cause prior to the
vesting of shares of Restricted Stock granted to such Participant, a
proportion of such shares, to the extent not forfeited or canceled
on or prior to such termination pursuant to any provision hereof,
shall vest on the date of such termination. The proportion referred
to in the preceding sentence shall be determined by the Committee at
the time of the grant of such shares of Restricted Stock and may be
based on the achievement of any conditions imposed by the Committee
with respect to such shares pursuant to Section 10(b). Such
proportion may be equal to zero.
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<PAGE> 20
(2) In the event of the termination of a Participant's
employment for Cause, all shares of Restricted Stock granted to such
Participant which have not vested as of the date of such termination
shall immediately be forfeited.
(3) In the event that a Non-Employee Participant ceases to
provide services to the Company all shares of Restricted Stock
granted to such Non-Employee Participant shall vest in accordance
with the terms of the grant.
(g) Effect of Change in Control
Upon the occurrence of a Change in Control, all shares of
Restricted Stock which have not theretofore vested (including those with
respect to which the Issue Date has not yet occurred), or been canceled or
forfeited pursuant to any provision hereof, shall immediately vest.
11. Phantom Stock
Subject to the provisions of the Plan, the Committee may grant shares of
Phantom Stock. Each grant of shares of Phantom Stock shall be evidenced by an
agreement in such form as the Committee shall from time to time approve. Each
grant of shares of Phantom Stock shall comply with and be subject to the
following terms and conditions:
(a) Vesting Date
At the time of the grant of shares of Phantom Stock, the
Committee shall establish a Vesting Date or Vesting Dates with respect to
such shares. The Committee may divide such shares into classes and assign
a different Vesting Date for each class. Provided that all conditions to
the vesting of a share of Phantom Stock imposed pursuant to Section 11(c)
hereof are satisfied, and except as provided in Section 11(d) hereof, upon
the occurrence of the Vesting Date with respect to a share of Phantom
Stock, such share shall vest.
(b) Benefit Upon Vesting
Upon the vesting of a share of Phantom Stock, a Participant
shall be entitled to receive in cash, within 30 days of the date on which
such share vests, an amount in cash in a lump sum equal to the sum of
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<PAGE> 21
(i) the Fair Market Value of a Common Share of the Company on the date on
which such share of Phantom Stock vests and (ii) the aggregate amount of
cash dividends paid with respect to a Common Share of the Company during
the period commencing on the date on which the share of Phantom Stock was
granted and terminating on the date on which such share vests.
(c) Conditions to Vesting
At the time of the grant of shares of Phantom Stock, the
Committee may impose such restrictions or conditions, not inconsistent
with the provisions hereof, to the vesting of such shares as it, in its
absolute discretion deems appropriate. By way of example and not by way of
limitation, the Committee may require, as a condition to the vesting of
any class or classes of shares of Phantom Stock, that the Participant or
the Company achieve certain performance criteria, such criteria to be
specified by the Committee at the time of the grant of such shares.
(d) Effect of Termination of Employment
(1) In the event that the employment of a Participant with the
Company shall terminate for any reason other than Cause prior to the
vesting of shares of Phantom Stock granted to such Participant, a
proportion of such shares, to the extent not forfeited or canceled
on or prior to such termination pursuant to any provision hereof,
shall vest on the date of such termination. The proportion referred
to in the preceding sentence shall be determined by the Committee at
the time of the grant of such shares of Phantom Stock and may be
based on the achievement of any conditions imposed by the Committee
with respect to such shares pursuant to Section 11(c). Such
proportion may be equal to zero.
(2) In the event of the termination of a Participant's
employment for Cause, all shares of Phantom Stock granted to such
Participant which have not vested as of the date of such termination
shall immediately be forfeited.
(3) In the event that a Non-Employee Participant ceases to
provide services to the Company, all shares of Phantom Stock granted
to such Non-Employee Participant shall vest in accordance
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with the terms of the grant.
(e) Effect of Change in Control
Upon the occurrence of a Change in Control, all shares of
Phantom Stock which have not theretofore vested, or been canceled or
forfeited pursuant to any provision hereof, shall immediately vest.
12. Stock Bonuses
Subject to the provisions of the Plan, the Committee may grant Stock
Bonuses in such amounts as it shall determine from time to time. A Stock Bonus
shall be paid at such time and subject to such conditions as the Committee shall
determine at the time of the grant of such Stock Bonus. Certificates for Common
Shares granted as a Stock Bonus shall be issued in the name of the Participant
to whom such grant was made and delivered to such Participant as soon as
practicable after the date on which such Stock Bonus is required to be paid.
13. Cash Bonuses
Subject to the provisions of the Plan, the Committee may grant, in
connection with any grant of Restricted Stock or Stock Bonus or at any time
thereafter, a cash bonus, payable promptly after the date on which the
Participant is required to recognize income for federal income tax purposes in
connection with such Restricted Stock or Stock Bonus, in such amounts as the
Committee shall determine from time to time; provided however, that in no event
shall the amount of a Cash Bonus exceed 50% of the Fair Market Value of the
related shares of Restricted Stock or Stock Bonus on such date. A Cash Bonus
shall be subject to such conditions as the Committee shall determine at the time
of the grant of such Cash Bonus.
14. Adjustment Upon Changes in Common Shares
(a) Shares Available for Grants
In the event of any change in the number of Common Shares
outstanding by reason of any stock dividend or split, recapitalization,
merger, consolidation, combination or exchange of shares or similar
corporate change, the maximum aggregate number of Common Shares with
respect to which the Committee may grant Options, Stand-Alone SARs, shares
of Restricted Stock, shares of Phantom Stock and Stock
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Bonuses shall be appropriately adjusted by the Committee. In the event of
any change in the number of Common Shares outstanding by reason of any
other event or transaction, the Committee may, but need not, make such
adjustments in the number and class of Common Shares with respect to which
Options, Stand-Alone SARs, shares of Restricted Stock, shares of Phantom
Stock and Stock Bonuses may be granted as the Committee may deem
appropriate.
(b) Outstanding Restricted Stock and Phantom Stock
Unless the Committee in its absolute discretion otherwise
determines, any securities or other property (including dividends paid in
cash) received by a Participant with respect to a share of Restricted
Stock, the Issue Date with respect to which occurs prior to such event,
but which has not vested as of the date of such event, as result of any
dividend, stock split, recapitalization, merger, consolidation,
combination, exchange of shares or otherwise will not vest until such
share of Restricted Stock vests, and shall be promptly deposited with the
custodian designated pursuant to Paragraph 10(d)(2) hereof.
The Committee may, in its absolute discretion, adjust any grant of
shares of Restricted Stock, the Issue Date with respect to which has not
occurred as of the date of the occurrence of any of the following events,
or any grant of shares of Phantom Stock, to reflect any dividend, stock
split, recapitalization, merger, consolidation, combination, exchange of
shares or similar corporate change as the Committee may deem appropriate
to prevent the enlargement or dilution of rights of Participants under the
grant.
(c) Outstanding Options, LSARs, Tandem SARs and Stand-Alone
SARs--Certain Increases or Decreases in Issued Shares Without
Consideration
Subject to any required action by the shareholders of WavePhore,
Inc., in the event of any increase or decrease in the number of issued
Common Shares resulting from a subdivision or consolidation of Common
Shares or the payment of a stock dividend (but only on the Common Shares),
the Committee shall proportionally adjust the number of Common Shares
subject to each outstanding Option, LSAR, Tandem SAR and Stand-Alone SAR,
and the exercise price per Common Share of each such Option, LSAR, Tandem
SAR and Stand-Alone SAR.
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(d) Outstanding Options, LSARs, Tandem SARs and Stand-Alone
SARs--Certain Mergers
Subject to any required action by the shareholders of WavePhore,
Inc., in the event that WavePhore, Inc. shall be the surviving corporation
in any merger or consolidation (except a merger or consolidation as a
result of which the holders of Common Shares receive securities of another
corporation), each Option, LSAR, Tandem SAR and Stand-Alone SAR
outstanding on the date of such merger or consolidation shall pertain to
and apply to the securities which a holder of the number of Common Shares
subject to such Option, LSAR, Tandem SAR or Stand-Alone SAR would have
received in such merger or consolidation.
(e) Outstanding Options, LSARs, Tandem SARs and Stand-Alone
SARs--Certain Other Transactions
In the event of (i) a dissolution or liquidation of WavePhore, Inc.,
(ii) a sale of all or substantially all of WavePhore, Inc.'s assets, (iii)
a merger or consolidation involving WavePhore, Inc. in which WavePhore,
Inc. is not the surviving corporation or (iv) a merger or consolidation
involving WavePhore, Inc. in which WavePhore, Inc. is the surviving
corporation but the holders of Common Shares receive securities of another
corporation and/or other property, including cash, the Committee shall, in
its absolute discretion, have the power to:
(i) cancel, effective immediately prior to the
occurrence of such event, each Option (including each LSAR and
Tandem SAR related thereto) and Stand-Alone SAR outstanding
immediately prior to such event (whether or not then exercisable),
and, in full consideration of such cancellation, pay to the
Participant to whom such Option or Stand-Alone SAR was granted an
amount in cash, for each Common Share subject to such Option or
Stand-Alone SAR, respectively, equal to the excess of (A) the value,
as determined by the Committee in its absolute discretion, of the
property (including cash) received by the holder of a Common Share
as a result of such event over (B) the exercise price of such Option
or Stand-Alone SAR; or
(ii) provide for the exchange of each Option (including
any related LSAR or Tandem SAR) and Stand-Alone SAR outstanding
immediately prior to such event (whether or not then exercisable)
for an option on or stock appreciation right with
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respect to, as appropriate, some or all of the property for which such
Option or Stand-Alone SAR is exchanged and, incident thereto, make an
equitable adjustment as determined by the Committee in its absolute
discretion in the exercise price of the option or stock appreciation
right, or the number of shares or amount of property subject to the option
or stock appreciation right or, if appropriate, provide for a cash payment
to the Participant to whom such Option or Stand-Alone SAR was granted in
partial consideration for the exchange of the Option or Stand-Alone SAR.
(f) Outstanding Options, LSARs, Tandem SARs and Stand-Alone
SARs--Other Changes
In the event of any change in the capitalization of WavePhore, Inc.
or corporate change other than those specifically referred to in Section
14(c), (d) or (e) hereof, the Committee may, in its absolute discretion,
make such adjustments in the number and class of shares subject to
Options, LSARs, Tandem SARs or Stand-Alone SARs outstanding on the date on
which such change occurs and in the per share exercise price of each such
Option, LSAR, Tandem SAR and Stand-Alone SAR as the Committee may consider
appropriate to prevent dilution or enlargement of rights.
(g) No Other Rights
Except as expressly provided in the Plan, no Participant shall
have any rights by reason of any subdivision or consolidation of shares of
stock of any class, the payment of any dividend, any increase or decrease
in the number of shares of stock of any class or any dissolution,
liquidation, merger or consolidation of WavePhore, Inc. or any other
corporation. Except as expressly provided in the Plan, no issuance by
WavePhore, Inc. of shares of stock of any class, or securities
convertible, into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to the number of
Common Shares subject to an Incentive Award or the exercise price of any
Option, LSAR, Tandem SAR or Stand-Alone SAR.
15. Rights as a Stockholder
No person shall have any rights as a stockholder with respect to any
Common Shares covered by or relating to any Incentive Award granted
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pursuant to this Plan until the date of the issuance of a stock certificate with
respect to such shares. Except as otherwise expressly provided in Section 14
hereof, no adjustment to any Incentive Award shall be made for dividends or
other rights for which the record date occurs prior to the date such stock
certificate is issued.
16. No Special Employment Rights; No Right to Incentive Award
Nothing contained in the Plan or any Incentive Award shall confer upon any
Participant any right with respect to the continuation of his employment by the
Company or interfere in any way with the right of the Company, subject to the
terms of any separate employment agreement to the contrary, at any time to
terminate such employment or to increase or decrease the compensation of the
Participant from the rate in existence at the time of the grant of an Incentive
Award.
No person shall have any claim or right to receive an Incentive Award
hereunder. The Committee's granting of an Incentive Award to a Participant at
any time shall neither require the Committee to grant an Incentive Award to such
Participant or any other Participant or other person at any time nor preclude
the Committee from making subsequent grants to such Participant or any other
Participant or other person.
17. Securities Matters
(a) The Company shall be under no obligation to effect the
registration pursuant to the Securities Act of any Common Shares to be
issued hereunder or to effect similar compliance under any state laws.
Notwithstanding anything herein to the contrary, the Company shall not be
obligated to cause to be issued or delivered any certificates evidencing
Common Shares pursuant to the Plan unless and until the Company is advised
by its counsel that the issuance and delivery of such certificates is in
compliance with all applicable laws, regulations of governmental authority
and the requirements of any securities exchange on which Common Shares are
traded. The Committee may require, as a condition of the issuance and
delivery of certificates evidencing Common Shares pursuant to the terms
hereof, that the recipient of such shares make such covenants, agreements
and representations, and that such certificates bear such legends, as the
Committee, in its sole discretion, deems necessary or desirable.
(b) The exercise of any Option granted hereunder shall only be
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effective at such time as counsel to the Company shall have determined
that the issuance and delivery of Common Shares pursuant to such exercise
is in compliance with all applicable laws, regulations of governmental
authority and the requirements of any securities exchange on which Common
Shares are traded. The Company may, in its sole discretion, defer the
effectiveness of any exercise of an Option granted hereunder in order to
allow the issuance of shares of Common stock pursuant thereto to be made
pursuant to registration or an exemption from the registration or other
methods for compliance available under federal or state securities laws.
The Company shall inform the Participant in writing of its decision to
defer the effectiveness of the exercise of an Option granted hereunder.
During the period that the effectiveness of the exercise of an Option has
been deferred, the Participant may, by written notice, withdraw such
exercise and obtain the refund of any amount paid with respect thereto.
18. Withholding Taxes
(a) Cash Remittance
Whenever Common Shares are to be issued upon the exercise of an
Option, the occurrence of the Issue Date or Vesting Date with respect to a
share of Restricted Stock or the payment of a Stock Bonus, the Company
shall have the right to require the Participant to remit to the Company in
cash an amount sufficient to satisfy federal, state and local withholding
tax requirements, if any, attributable to such exercise, occurrence or
payment prior to the delivery of any certificate or certificates for such
shares. In addition, upon the exercise of an LSAR, Tandem SAR or
Stand-Alone Sar, the grant of a Cash Bonus or the making of a payment with
respect to a share of Phantom Stock, the Company shall have the right to
withhold from any cash payment required to be made pursuant thereto an
amount sufficient to satisfy the federal, state and local withholding tax
requirements.
(b) Stock Remittance
At the election of the Participant, subject to the approval of the
Committee, when Common Shares are to be issued upon the exercise of an
Option, the occurrence of the Issue Date or the Vesting Date with respect
to a share of Restricted Stock or the grant of a Stock Bonus, in lieu of
the remittance required by Section 18(a) hereof, the Participant may
tender to the Company a number of Common Shares determined by
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such Participant, the Fair Market Value of which at the tender date the
Committee determines to be sufficient to satisfy the federal, state and
local withholding tax requirements, if any, attributable to such exercise,
occurrence or grant and not greater than the Participant's estimated total
federal, state and local tax obligations associated with such exercise,
occurrence or grant.
(c) Stock Withholding
At the election of the Participant, subject to the approval of the
Committee, when Common Shares are to be issued upon the exercise of an
Option, the occurrence of the Issue Date or the Vesting Date with respect
to a share of Restricted Stock or the grant of a Stock Bonus, in lieu of
the remittance required by Section 18(a) hereof, the Company shall
withhold a number of such shares determined by such Participant, the Fair
Market Value of which at the exercise date the Committee determines to be
sufficient to satisfy the federal, state and local withholding tax
requirements, if any, attributable to such exercise, occurrence or grant
and is not greater than the Participant's estimated total federal, state
and local tax obligations associated with such exercise, occurrence or
grant.
19. Amendment of the Plan
The Plan will have no fixed termination date, but may be terminated at any
time by the Board of Directors. Incentive Awards outstanding as of the date of
any such termination will not be affected or impaired by the termination of the
Plan. The Board of Directors may amend, alter, or discontinue the Plan, but no
amendment, alteration or discontinuation shall be made which would impair the
rights of a Participant with respect to an Incentive Award without the
Participant's consent.
20. No Obligation to Exercise
The grant to a Participant of an Option, LSAR, Tandem SAR or Stand-Alone
SAR shall impose no obligation upon such Participant to exercise such Option,
LSAR, Tandem SAR or Stand-Alone SAR.
21. Nontransferability
Unless the Committee provides otherwise, (i) no right or interest of a
Participant in any Incentive Award may be pledged, encumbered, or
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hypothecated to or in favor of any party other than the Company or a Subsidiary,
or shall be subject to any lien, obligation, or liability of such Participant to
any other party other than the Company or a Subsidiary, and (ii) no Incentive
Award shall be assignable or transferable by a Participant other than by will or
the laws of descent and distribution.
22. Expenses and Receipts
The expenses of the Plan shall be paid by the Company. Any proceeds
received by the Company in connection with any Incentive Award will be used for
general corporate purposes.
23. Suspension or Termination of Incentive Award
In addition to the remedies of the Company elsewhere provided for herein,
if the Committee reasonably believes that a Participant has committed an act of
misconduct as described in this Section, the Committee may suspend the
Participant's rights to exercise any Incentive Award pending a determination by
the Board of Directors. If the Board of Directors determines a Participant has
committed an act of misconduct, including, but not limited to, embezzlement,
fraud, dishonesty, nonpayment of any obligation owed to the Company, breach of
fiduciary duty or deliberate disregard of the Company's rules resulting in loss,
damage or injury to the Company, or a Participant makes an unauthorized
disclosure of any Company trade secret or confidential information, engages in
any conduct constituting unfair competition, induces any Company customer to
breach a contract with the Company, induces any principal for whom the Company
acts as agent to terminate such agency relationship, or has failed to comply
with of the terms and conditions of the Plan or any agreement executed by such
Participant evidencing an Incentive Award, unless such failure has been remedied
by such Participant within 10 days after having been notified of such failure by
the Committee, neither the Participant nor his or her estate, executors,
administrators, or heirs, shall be entitled to exercise any Incentive Award
whatsoever. In making such determination, the Board of Directors shall act
fairly and shall give the Participant an opportunity to appear and present
evidence on his or her behalf at a hearing before a committee of the Board of
Directors.
24. Effective Date of Plan
The Plan shall be effective as of November 19, 1998.
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EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to the 1998 Employee Incentive Plan of WavePhore, Inc. of our
report dated January 28, 1998, with respect to the consolidated financial
statements of WavePhore, Inc. included in its Annual Report (Form 10-K) for the
year ended December 31, 1997, filed with the Securities and Exchange Commission.
Ernst & Young LLP
Phoenix, Arizona
December 3, 1998
