<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 2, 1998
REGISTRATION NO. 333-_______
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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RACOTEK, INC.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
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DELAWARE 41-1636021
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(State of Incorporation) (I.R.S. Employer Identification No.)
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7301 OHMS LANE, SUITE 200
MINNEAPOLIS, MINNESOTA 55439
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(Address of principal executive offices)
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1998 NON-OFFICER STOCK OPTION PLAN
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(Full title of the plans)
MICHAEL A. FABIASCHI
PRESIDENT, CHIEF EXECUTIVE OFFICER AND ACTING CHIEF FINANCIAL OFFICER
RACOTEK, INC.
7301 OHMS LANE, SUITE 200
MINNEAPOLIS, MINNESOTA 55439
(612) 832-9800
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(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------
Copies to:
MICHAEL J. SULLIVAN, ESQ.
COOLEY GODWARD LLP
FIVE PALO ALTO SQUARE
PALO ALTO, CALIFORNIA 94306
(650) 843-5000
------------------
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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- ----------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES OFFERING PRICE PER AGGREGATE OFFERING
TO BE REGISTERED AMOUNT TO BE SHARE (1) PRICE (1) AMOUNT OF
REGISTERED REGISTRATION FEE
------------------- ------------ ------------------ ------------------ ----------------
<S> <C> <C> <C> <C>
Stock Options and
Common Stock (par
value $0.01)
2,500,000 $1.625 - $1.9375 $4,558,281.25 $1,344.69
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(c), (h)(1) based upon (i) $1.625,
the exercise price of 913,500 stock options outstanding and (ii) $1.9375,
the closing sales price of the Registrant's Common Stock on August 27,
1998 as reported on the Nasdaq National Market, for 1,586,500 shares
reserved for issuance pursuant to the 1998 Non-Officer Stock Option Plan.
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- ----------------------------------------------------------------------------------------------------
</TABLE>
ii.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Racotek, Inc. (the "Company") with
the Securities and Exchange Commission are incorporated by reference into
this Registration Statement:
(a) The Company's annual report on Form 10-K for the year ended
December 31, 1997, filed pursuant to Sections 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
(b) The Company's quarterly reports on Form 10-Q for the periods
ended March 31, 1998 and June 30, 1998.
(c) The description of the Company's Common Stock which is
contained in a registration statement filed under the Exchange Act, including
any amendment or report filed for the purpose of updating such description.
All reports and other documents subsequently filed by the Company
pursuant to Sections 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 herein and to be a
part of this registration statement from the date of the filing of such
reports and documents.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by Section 145 of the Delaware General Corporation Law,
the Registrant's Certificate of Incorporation includes a provision that
eliminates the personal liability of its directors for monetary damages for
breach or alleged breach of their duty of care, except for liability (i) for
any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174
of the Delaware General Corporation Law or (iv) for any transaction from
which the director derived an improper personal benefit. In addition, as
permitted by Section 145 of the Delaware General Corporation Law, the Bylaws
of the Registrant provide that (i) the Registrant is required to indemnify
its directors and officers and persons serving in such capacities in other
business enterprises (including, for example, subsidiaries of the Registrant)
at the Registrant's request to the fullest extent permitted by the Delaware
General Corporation Law including those circumstances in which
indemnification would otherwise be discretionary; (ii) the Registrant may, in
its discretion, indemnify employees and agents where indemnification is not
required by law; (iii) upon receipt of an undertaking by the indemnitee to
repay all amounts advanced and if it is ultimately determined that such
indemnitee is not entitled to indemnification, the Registrant is required to
advance expenses, as incurred, to its directors and officers in connection
with defending a proceeding; (iv) the rights conferred in the Bylaws are not
exclusive and the Registrant is authorized to enter into indemnification
agreements with its directors, officers and employees; and (v) the Registrant
may not retroactively amend the Bylaw provisions in a way that is adverse to
such directors, officers and employees.
The Registrant's policy is to enter into indemnification agreements with
each of its directors and executive officers that provide the maximum indemnity
allowed to directors and executive officers by Section 145 of the Delaware
General Corporation Law and the Registrant's Bylaws, as well as certain
procedural protections. In addition, the indemnification agreements provide
that directors and executive officers will be indemnified to the fullest
possible extent not prohibited by law against all expenses including attorneys'
fees and settlement amounts paid or incurred by them in any action or
proceeding, including any derivative action by or in the right of the
Registrant, on account of their services as directors or executive officers of
the Registrant or as directors or officers of any other company or enterprise
when they are serving in such capacities at the request of the Registrant. The
Registrant will not be obligated pursuant to the agreements to indemnify or
advance expenses to an indemnified party with respect to proceedings or
1.
<PAGE>
claims initiated by the indemnified party and not by way of defense, except
with respect to proceeds specifically authorized by the Board of Directors or
brought to enforce a right to indemnification under the indemnification
agreement, the Registrant's Bylaws or any statute or law. Under the
agreements, the Registrant is not obligated to indemnify the indemnified
party (i) for any amounts paid in settlement of a proceeding unless the
Registrant consents to such settlement; (ii) for any amounts paid in
settlement of a proceeding unless the Registrant consents in advance to such
settlement; and (iii) if a final decision by a court having jurisdiction in
the matter shall determine that such indemnification is not lawful.
The indemnification agreement requires a director or executive officer
to reimburse the Registrant for all expenses advanced only to the extent it
is ultimately determined that the director or executive officer is not
entitled, under Delaware law, the Registrant's Bylaws, the indemnification
agreement or otherwise to be indemnified for such expenses. The
indemnification agreement provides that it is not exclusive of any rights a
director or executive officer may have under the Certificate of
Incorporation, the Registrant's Bylaws, other agreements, any
majority-in-interest vote of the stockholders or vote of disinterested
directors, Delaware law, or otherwise.
The indemnification provision in the Registrant's Bylaws, and the
indemnification agreements entered into between the Registrant and its
directors and executive officers, may be sufficiently broad to permit
indemnification of the officers and directors for liabilities arising under
the Securities Act of 1933, as amended (the "Securities Act").
The indemnification agreements require the Registrant to maintain
director and officer liability insurance to the extent reasonably available.
As authorized by the Registrant's Bylaws, the Registrant, with approval by
the Board, has purchased director and officer liability insurance.
EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
<S> <C>
5 Opinion of Counsel.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Counsel is contained in Exhibit 5 to this Registration
Statement.
24 Power of Attorney is contained on the signature page II-1.
99.1 1998 Non-Officer Stock Option Plan.
</TABLE>
2.
<PAGE>
UNDERTAKINGS
1. The undersigned registrant hereby undertakes:
(a) 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 the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) (Section 230.424(b) of this chapter) if, in the aggregate,
the changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement;
PROVIDED, HOWEVER, that paragraphs (a)(i) and (a)(ii) do 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 issuer
pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference herein.
(b) 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 herein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
2. 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 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be
a new registration statement relating to the securities offered herein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
3. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the 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 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.
3.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-8 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Minneapolis, State of
Minnesota, on August 31, 1998.
RACOTEK, INC.
BY /S/ MICHAEL A. FABIASCHI
-----------------------------------------
MICHAEL A. FABIASCHI
PRESIDENT, CHIEF EXECUTIVE OFFICER AND
ACTING CHIEF FINANCIAL OFFICER
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Michael A. Fabiaschi, his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.
II-1.
<PAGE>
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 dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Michael A. Fabiaschi President, Chief August 31, 1998
- ------------------------------------ Executive Officer,
Michael A. Fabiaschi Acting Chief Financial
Officer and Director
(Principal Executive
Officer and Principal
Financial and Accounting
Officer)
/s/ Joseph B. Costello Director August 31, 1998
- ------------------------------------
Joseph B. Costello
/s/ Dixon R. Doll Director August 31, 1998
- ------------------------------------
Dixon R. Doll
/s/ James L. Osborn Director August 31, 1998
- ------------------------------------
James L. Osborn
</TABLE>
II-2.
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<S> <C>
5 Opinion of Counsel.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Counsel is contained in Exhibit 5 to this
Registration Statement.
24 Power of Attorney is contained on the signature
page II-1.
99.1 1998 Non-Officer Stock Option Plan.
</TABLE>
<PAGE>
EXHIBIT 5
August 31, 1998
Racotek, Inc.
7301 Ohms Lane, Suite 200
Minneapolis, MN 55439
Ladies and Gentlemen:
I am counsel to Racotek, Inc. (the "Company") and am rendering this opinion
with respect to certain matters in connection with the filing by the Company
of a Registration Statement on Form S-8 (the "Registration Statement") with
the Securities and Exchange Commission covering the offering of up to
2,500,000 shares of the Company's Common Stock, $0.01 par value, (the
"Shares") pursuant to its 1998 Non-Officer Stock Option Plan (the "Plan").
In connection with this opinion, I have examined the Registration Statement
and related Prospectus, the Company's Certificate of Incorporation and
By-laws, as amended, and such other documents, records, certificates,
memoranda and other instruments as I deem necessary as a basis for this
opinion.
On the basis of the foregoing, and in reliance thereon, I am of the opinion
that the Shares, when sold and issued in accordance with the Plan, the
Registration Statement and related Prospectus, will be validly issued, fully
paid, and nonassessable (except as to shares issued pursuant to certain
deferred payment arrangements, which will be fully paid and nonassessable
when such deferred payments are made in full).
I consent to the filing of this opinion as an exhibit to the Registration
Statement.
Sincerely,
RACOTEK, INC.,
By: /s/ Ian Nemerov
---------------
Ian Nemerov
Secretary and Attorney
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration on Form S-8
of our report dated January 12, 1998, on our audits of the financial
statements and financial statement schedule of Racotek, Inc.
PRICEWATERHOUSECOOPERS LLP
Minneapolis, Minnesota
August 28, 1998
<PAGE>
EXHIBIT 99.1
RACOTEK, INC.
1998 NON-OFFICER STOCK OPTION PLAN
AS ADOPTED EFFECTIVE ON JANUARY 10, 1998
AMENDED FEBRUARY 13, 1998
STOCKHOLDER APPROVAL NOT REQUIRED
1. PURPOSES.
(a) The purpose of the Plan is to provide a means by which selected
Employees and Consultants who are not Officers or members of the Board of
Directors may be given an opportunity to benefit from increases in value of
the common stock of the Company ("Common Stock") through the granting of
Nonstatutory Stock Options. Only Nonstatutory Stock Options may be granted
hereunder.
(b) The Company, by means of the Plan, seeks to retain the services of
persons who are now Employees or Consultants who are not Officers or members
of the Board of Directors, to secure and retain the services of such new
Employees and Consultants and to provide incentives for such persons to exert
maximum efforts for the success of the Company and its Affiliates.
2. DEFINITIONS. AS USED HEREIN, THE FOLLOWING DEFINITIONS SHALL APPLY:
(a) "AFFILIATE" shall mean any parent corporation or subsidiary
corporation, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f) respectively, of the Code, or such other parent
corporation or subsidiary corporation designated by the Board.
(b) "BOARD" shall mean the Committee, if one has been appointed, or the
Board of Directors, if no Committee is appointed.
(c) "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Company.
(d) "CAUSE" shall mean willful conduct that is materially harmful to
the business of the Company, any Affiliate of the Company, or any successors
thereto.
(e) "CHANGE IN CONTROL" shall mean the consummation of any one of the
following events: (i) a sale of all or substantially all of the assets of
the Company; (ii) a merger or consolidation in which the Company is not the
surviving corporation (other than a transaction the principal purpose of
which is to change the state of the Company's incorporation or a transaction
in which the voting securities of the Company are exchanged for beneficial
ownership of at least fifty percent (50%) of the voting securities of the
controlling acquiring corporation); (iii) a merger or consolidation in which
the Company is the surviving corporation and less than fifty percent (50%) of
the voting securities of the Company which are outstanding immediately after
the consummation of such transaction are beneficially owned, directly or
indirectly, by the persons who owned such voting securities immediately prior
to such transaction; (iv) any
<PAGE>
transaction or series of related transactions after which any person (as such
term is used in Section 13(d)(3) of the Exchange Act), other than any
employee benefit plan (or related trust) sponsored or maintained by the
Company or any subsidiary of the Company, becomes the beneficial owner of
voting securities of the Company representing fifty percent (50%) or more of
the combined voting power of all of the voting securities of the Company; or
(v) the liquidation or dissolution of the Company.
(f) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(g) "COMMITTEE" shall mean the Committee appointed by the Board of
Directors in accordance with paragraph (a) of Section 4 of the Plan, if one
is appointed.
(h) "COMMON STOCK" shall mean the Common Stock of the Company.
(i) "COMPANY" shall mean Racotek, Inc., a Delaware corporation.
(j) "CONSULTANT" shall mean any consultants, independent contractors or
advisers to the Company or an Affiliate (provided that such persons render
bona fide services not in connection with the offering and sale of securities
in capital raising transactions) excluding officers and directors of the
Company and stockholders beneficially owning 10% or more of the Company's
Common Stock.
(k) "CONTINUOUS SERVICE AS AN EMPLOYEE OR CONSULTANT" shall mean the
absence of any interruption or termination of service to the Company, an
Affiliate, or any successors thereto, whether as an Employee or Consultant.
The Board or the Chief Executive Officer of the Company may determine, in
that party's sole discretion, whether Continuous Service as an Employee or
Consultant shall be considered interrupted in the case of: (i) any leave of
absence approved by the Board or the Chief Executive Officer of the Company,
including sick leave, military leave, or any other personal leave; or (ii)
transfers between the Company, Affiliates or their successors.
(l) "EMPLOYEE" shall mean any person employed by the Company or by any
Affiliate, excluding officers and directors of the Company and stockholders
beneficially owning 10% or more of the Company's Common Stock.
(m) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
(n) "FAIR MARKET VALUE" means, as of any date, the value of the Common
Stock of the Company determined as follows:
(i) If the Common Stock is listed on any established stock
exchange, or traded on the Nasdaq National Market or the Nasdaq SmallCap
Market, the Fair Market Value of a share of Common Stock shall be the closing
sales price for such stock (or the closing bid, if no sales were reported) as
quoted on such exchange or market (or the exchange or market with the
greatest volume of trading in Common Stock) on the trading day prior to the
day of
2
<PAGE>
determination, as reported in the Wall Street Journal or such other source as
the Board deems reliable;
(ii) In the absence of such markets for the Common Stock, the Fair
Market Value shall be determined in good faith by the Board.
(o) "GOOD REASON" shall mean that any one of the following actions has
been taken without the Optionee's express written consent and such action has
not been promptly reversed within thirty (30) days following written notice
from the Optionee to the recipient of such Optionee's services: (i) a
material reduction in the Optionee's job responsibilities given the
Optionee's prior position and responsibilities with the Company; (ii) any
reduction in the Optionee's compensation and aggregate benefits as in effect
immediately prior to such reduction; (iii) relocation of the Optionee's
workplace to a facility or location more than twenty-five (25) miles from the
Optionee's workplace immediately prior to such relocation; or (iv) any
purported termination of the Optionee's Continuous Service as an Employee or
Consultant which is not effected by reason of death, disability, or Cause.
(p) "NONSTATUTORY STOCK OPTION" shall mean an Option not intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code and the regulations promulgated thereunder.
(q) "OFFICER" shall mean a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder and any other Employees of the Company
whom the Board or the Committee classifies as "Officer" in its sole
discretion.
(r) "OPTION" shall mean a Nonstatutory Stock Option granted pursuant to
the Plan.
(s) "OPTION AGREEMENT" shall mean a written agreement between the
Company and an Optionee evidencing the terms and conditions of an individual
Option grant. Each Option Agreement shall be subject to the terms and
conditions of the Plan.
(t) "OPTIONED STOCK" shall mean the Common Stock subject to an Option.
(u) "OPTIONEE" shall mean an Employee or Consultant who receives an
Option.
(v) "PLAN" shall mean this 1998 Non-Officer Stock Option Plan.
(w) "SHARE" shall mean a share of Common Stock, as adjusted in
accordance with Section 11 of the Plan.
3. STOCK SUBJECT TO THE PLAN.
Subject to the provisions of Section 11 of the Plan, the maximum
aggregate number of Shares which may be optioned and sold under the Plan is
two million five hundred thousand (2,500,000) shares of Common Stock. The
Shares may be authorized, but unissued, or
3
<PAGE>
reacquired Common Stock. If an Option should expire or become unexercisable
for any reason without having been exercised in full, the unpurchased Shares
which were subject thereto shall, unless the Plan shall have been terminated,
become available for future grant under the Plan.
4. ADMINISTRATION OF THE PLAN.
(a) PROCEDURE. The Plan shall be administered by the Board of
Directors. The Board of Directors may appoint a Committee consisting of not
less than two members of the Board of Directors to administer the Plan on
behalf of the Board of Directors, subject to such terms and conditions as the
Board of Directors may prescribe. Once appointed, the Committee shall
continue to serve until otherwise directed by the Board of Directors. From
time to time, the Board of Directors may increase the size of the Committee
and appoint additional members thereof, remove members (with or without
cause), and appoint new members in substitution therefor, fill vacancies
however caused and remove all members of the Committee, and thereafter
directly administer the Plan. Notwithstanding anything in this Section 4 to
the contrary, at any time the Board of Directors or the Committee may
delegate to a committee of one or more members of the Board of Directors the
authority to grant Options to all Employees and Consultants or any portion or
class thereof.
(b) POWERS OF THE BOARD. Subject to the provisions of the Plan, the
Board shall have such authority with regard to the Plan and the options as
determined by the Board of Directors, including the authority, in its
discretion: (i) to grant options under the Plan, provided, however, that only
nonstatutory options may be granted under the Plan; (ii) to determine, upon
review of relevant information and in accordance with Section 8(c) of the
Plan, the Fair Market Value of the Common Stock; (iii) to determine the
exercise price per share of Options to be granted, which exercise price shall
be determined in accordance with Section 8(a) of the Plan; (iv) to determine
the Employees or Consultants to whom, and the time or times at which, Options
shall be granted and the number of Shares to be represented by each Option,
provided that no Options may be granted to persons who are neither Employees
nor Consultants; (v) to interpret the Plan; (vi) to prescribe, amend and
rescind rules and regulations relating to the Plan; (vii) to determine the
terms and provisions of each Option granted (which need not be identical) in
accordance with the Plan, and, with the consent of the holder thereof with
respect to any adverse change, modify or amend each Option; (viii) to
accelerate or defer (the latter with the consent of the Optionee) the
exercise date and vesting of any Option; (ix) to authorize any person to
execute on behalf of the Company any instrument required to effectuate the
grant of an Option previously granted by the Board; and (x) to make all other
determinations deemed necessary or advisable for the administration of the
Plan.
(c) EFFECT OF BOARD'S DECISION. All decisions, determinations and
interpretations of the Board shall be final and binding on all Optionees and
any other holders of any Options granted under the Plan.
5. ELIGIBILITY.
Options may be granted only to Employees or Consultants as defined in
Section 2 hereof. An Employee or Consultant who has been granted an Option
may, if he or she is otherwise
4
<PAGE>
eligible, be granted an additional Option or Options. Notwithstanding the
foregoing, no Employee who is an Officer of the Company or who is a member of
the Board of Directors shall be entitled to receive the grant of an Option
under the Plan.
The Plan shall not confer upon any Optionee any right with respect to
continuation of employment or consulting with the Company, nor shall it
interfere in any way with the Optionee's right or the Company's right to
terminate the Optionee's employment at any time or the Optionee's consulting
for the Company pursuant to the terms of the Consultant's agreement with the
Company.
6. TERM OF THE PLAN.
The Plan shall become effective upon its adoption by the Board of
Directors. It shall continue in effect until terminated under Section 13 of
the Plan.
7. TERM OF OPTION.
The term of each Option shall be ten (10) years from the date of grant
thereof or such shorter term as may be provided in the Option Agreement.
8. EXERCISE PRICE, CONSIDERATION AND VESTING.
(a) EXERCISE PRICE. The per Share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be no less than 85% of the
Fair Market Value per Share on the date of grant.
(b) CONSIDERATION. The consideration to be paid for the Shares to be
issued upon exercise of an Option, including the method of payment, shall be
determined by the Board and may consist entirely of (i) cash or check; (ii)
promissory note (except that payment of the Common Stock's "par value," as
defined in the Delaware General Corporation Law, shall not be made by
deferred payment); (iii) other shares of the Common Stock of the Company
having a Fair Market Value on the date of surrender equal to the aggregate
exercise price of the Shares as to which the Option shall be exercised,
including by delivering to the Company an attestation of ownership of owned
and unencumbered shares of the Common Stock of the Company in a form approved
by the Company; (iv) payment pursuant to a program developed under Regulation
T as promulgated by the Federal Reserve Board which, prior to the issuance of
Common Stock, results in either the receipt of cash (or check) by the Company
or the receipt of irrevocable instructions to pay the aggregate exercise
price to the Company from the sales proceeds; (v) any combination of such
methods of payment; or (vi) such other consideration and method of payment
for the issuance of Shares to the extent permitted under applicable law. In
making its determination as to the type of consideration to accept, the Board
shall consider if acceptance of such consideration may be reasonably expected
to benefit the Company.
(c) VESTING. The total number of Shares subject to an Option may, but
need not, be allotted in periodic installments (which may, but need not, be
equal). The Option Agreement may provide that, from time to time during each
of such installment periods, the Option may
5
<PAGE>
become exercisable ("vest") with respect to some or all of the Shares
allotted to that period, and may be exercised with respect to some or all of
the Shares allotted to such period and/or any prior period as to which the
Option became vested but was not fully exercised. The Option may be subject
to such other terms and conditions on the time or times when it may be
exercised (which may be based on performance or other criteria) as the Board
may deem appropriate. The provisions of this Section 8(c) are subject to any
Option provisions governing the minimum number of Shares as to which an
Option may be exercised.
9. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any Option
granted hereunder shall be exercisable at such times and under such
conditions as determined by the Board, including performance criteria with
respect to the Company and/or the Optionee, and as shall be permissible under
the terms of the Plan.
An Option 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 Option by the person entitled to exercise the Option and full payment for
the Shares with respect to which the Option is exercised has been received by
the Company. Full payment may, as authorized by the Board, consist of any
consideration and method of payment allowable under Section 8(c) of the Plan.
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 the Optioned
Stock, notwithstanding the exercise of the Option. No adjustment will be
made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 11 of the
Plan. An Option may not be exercised for a fraction of a Share.
Exercise of an Option in any manner shall result in a decrease in
the number of Shares which thereafter may be available, both for purposes of
the Plan and for sale under the Option, by the number of Shares as to which
the Option is exercised.
The Option may, but need not, include a provision whereby the
Optionee may elect at any time while an Employee or Consultant (or while an
officer or director of the Company) to exercise the Option as to any part or
all of the shares subject to the Option, subject to a repurchase right in
favor of the Company on such terms as the Board shall establish.
(b) TERMINATION OF SERVICE AS AN EMPLOYEE OR CONSULTANT. If an
Optionee's Continuous Service as an Employee or Consultant ceases for any
reason other than death or disability, the Optionee may, but only within
ninety (90) days (or such other period of time as is determined by the Board)
after the date the Optionee's Continuous Service as an Employee or Consultant
ceases, exercise the Option to the extent that the Optionee was entitled to
exercise it at the date of such termination. To the extent that the Optionee
was not entitled to exercise the Option at the date of such termination, or
if the Optionee does not exercise such Option (which the Optionee was
entitled to exercise) within the time specified herein, the Option shall
terminate.
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(c) DEATH OF OPTIONEE. In the event of the death during the term of
the Option of an Optionee who is at the time of his or her death an Employee
or Consultant and who shall have been in Continuous Service as an Employee or
Consultant since the date of grant of the Option or in the event of the death
of an Optionee within ninety (90) days following the termination of the
Optionee's Continuous Service as an Employee or Consultant for any other
reason, the Option may be exercised at any time within twelve (12) months (or
such other period of time as is determined by the Board) following the date
of death by the Optionee's estate or by a person who acquired the right to
exercise the Option by bequest or inheritance, to the extent that the
Optionee was entitled to exercise it at the date of such termination. To the
extent that the Optionee was not entitled to exercise the Option at the date
of such termination, or if the Option is not exercised (to the extent the
Optionee was entitled to exercise) within the time specified herein, the
Option shall terminate.
(d) DISABILITY OF OPTIONEE. In the event of the disability of an
Optionee during the term of the Option who is at the time of his or her
disability an Employee or Consultant and who shall have been in Continuous
Service as an Employee or Consultant since the date of grant of the Option,
the Optionee may, but only within twelve (12) months (or such other period of
time as is determined by the Board) after the date the Optionee ceases to be
an Employee or Consultant on account of such disability, exercise the Option
to the extent that the Optionee was entitled to exercise it at the date of
such termination. To the extent that the Optionee was not entitled to
exercise the Option at the date of such termination, or if the Optionee does
not exercise such Option (which the Optionee was entitled to exercise) within
the time specified herein, the Option shall terminate.
(e) WITHHOLDING. To the extent provided by the terms of the Option
Agreement, the Optionee may satisfy any federal, state or local tax
withholding obligation relating to the exercise of such Option by any of the
following means or by a combination of such means: (i) tendering a cash
payment; (ii) authorizing the Company to withhold Shares from the Shares
otherwise issuable to the Optionee as a result of the exercise of the Option;
or (iii) delivering to the Company owned and unencumbered shares of the
Common Stock of the Company.
10. TRANSFERABILITY OF OPTIONS.
Except as otherwise expressly provided in the terms of the Option
Agreement, the Option 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
Optionee, only by the Optionee. Notwithstanding the foregoing, the Optionee
may, by delivering written notice to the Company, in a form satisfactory to
the Company, designate a third party who, in the event of the death of the
Optionee, shall thereafter be entitled to exercise the Option.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER; CHANGE IN CONTROL.
(a) The number of Shares covered by each outstanding Option, and the
number of Shares which have been authorized for issuance under the Plan but
as to which no Options have yet been granted or which have been returned to
the Plan upon cancellation or expiration of an
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Option, as well as the price per Share covered by each such outstanding
Option, shall be proportionately adjusted for any increase or decrease in the
number of issued shares of Common Stock resulting from a stock split or the
payment of a stock dividend with respect to the Common Stock or any other
increase or decrease in the number of issued shares of Common Stock effected
without receipt of consideration by the Company; provided, however, that
conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration." Such adjustments
shall be made by the Board, whose determination in that respect shall be
final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or
price of shares of Common Stock subject to an Option.
(b) In the event of a Change in Control, then: (i) any surviving or
acquiring corporation shall assume Options outstanding under the Plan or
shall substitute similar options (including an option to acquire the same
consideration paid to stockholders in the transaction described in this
Section 11) for those outstanding under the Plan, or (ii) in the event any
surviving or acquiring corporation refuses to assume such Options or to
substitute similar options for those outstanding under the Plan, (A) with
respect to Options held by persons then performing services as Employees or
Consultants, the vesting of such Options and the time during which such
Options may be exercised shall be accelerated prior to such event and the
Options terminated if not exercised after such acceleration and at or prior
to such event, and (B) with respect to any other Options outstanding under
the Plan, such Options shall be terminated if not exercised prior to such
event. If a Change in Control becomes effective before January 10, 2000, in
conjunction with which an Optionee's Option is assumed or substituted, and
such Optionee's Continuous Service as an Employee or Consultant is terminated
within the twelve (12) months following the effective date of such Change in
Control by the Optionee for Good Reason or by the Company or its successor
for a reason other than Cause, death or disability, then such assumed or
substituted Option shall immediately become fully vested, and exercisable and
any repurchase right under the Plan with respect to Shares acquired by such
Optionee under such Option shall lapse.
12. TIME OF GRANTING OPTIONS.
The date of grant of an Option shall, for all purposes, be the date on
which the Board makes the determination granting such Option. Notice of the
determination shall be given to each Employee or Consultant to whom an Option
is so granted within a reasonable time after the date of such grant.
13. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may amend or terminate the
Plan from time to time in such respects as the Board may deem advisable.
(b) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or
termination of the Plan shall not impair Options already granted, and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated unless mutually agreed otherwise
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between the Optionee and the Board, which agreement must be in writing and
signed by the Optionee and the Company.
14. CONDITIONS UPON ISSUANCE OF SHARES.
The Company may require any Optionee, or any person to whom an Option is
transferred under Section 10, as a condition of exercising any such Option,
(1) to give written assurances satisfactory to the Company as to the
Optionee's knowledge and experience in financial and business matters and/or
to employ a purchaser representative reasonably satisfactory to the Company
who is knowledgeable and experienced in financial and business matters, and
that he or she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Option; and (2) to
give written assurances satisfactory to the Company stating that such person
is acquiring the Shares subject to the Option for such person's own account
and not with any present intention of selling or otherwise distributing the
Shares. The foregoing requirements, and any assurances given pursuant to
such requirements, shall be inoperative if (i) the issuance of the Shares
upon the exercise of the Option has been registered under a then currently
effective registration statement under the Securities Act of 1933, as
amended, or (ii) as to any particular requirement, a determination is made by
counsel for the Company that such requirement need not be met in the
circumstances under the then applicable securities laws. The Company may
require the Optionee to provide such other representations, written
assurances or information which the Company shall determine is necessary,
desirable or appropriate to comply with applicable securities and other laws
as a condition of granting an Option to such Optionee or permitting the
Optionee to exercise such Option. The Company may, upon advice of counsel to
the Company, place legends on stock certificates issued under the Plan as
such counsel deems necessary or appropriate in order to comply with
applicable securities laws, including, but not limited to, legends
restricting the transfer of the shares.
15. RESERVATION OF SHARES.
The Company, during the term of this Plan, will at all times reserve and
keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.
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.
16. OPTION AGREEMENT.
Options shall be evidenced by written Option Agreements in such form or
forms as the Board or the Committee shall approve.
17. EFFECTIVE DATE.
The Plan shall become effective on January 12, 1998.
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