<PAGE>
As filed with the Securities and Exchange Commission on July ___, 1999
Registration No. 333-______
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8 REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
HYBRID NETWORKS, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 77-02520931
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
6409 GUADALUPE MINES ROAD
SAN JOSE, CA 95120-5000
(Address of Principal Executive Offices, including Zip Code)
1999 STOCK OPTION PLAN
1999 OFFICER STOCK OPTION PLAN
(Full Title of the Plans)
CARL S. LEDBETTER
CHIEF EXECUTIVE OFFICER
HYBRID NETWORKS, INC.
6409 GUADALUPE MINES ROAD
SAN JOSE, CA 95120-5000
(408) 323-6255
(Name, Address and Telephone Number of Agent For Service)
COPIES TO:
Edwin N. Lowe, Esq.
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, CA 94306
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ---------------------------------------- ----------------- ---------------------- ---------------------- ---------------
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TO BE OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION
TITLE OF SECURITIES TO BE REGISTERED REGISTERED SHARE PRICE FEE
- ---------------------------------------- ----------------- ---------------------- ---------------------- ---------------
<S> <C> <C> <C> <C>
Common Stock, $0.001 par value 614,045 (1) $ 2.50 (2) $1,535,113 (2) $427
Common Stock, $0.001 par value 1,885,955 (3) $ 0.50 (4) $ 942,978 (4) $262
- ---------------------------------------- ----------------- ---------------------- ---------------------- ---------------
TOTAL 2,500,000 $689
- ---------------------------------------- ----------------- ---------------------- ---------------------- ---------------
</TABLE>
(1) Shares available for grant as of July 9, 1999 under the 1999 Stock
Option Plan and the 1999 Officer Stock Option Plan.
(2) Estimated as of July 8, 1999 pursuant to Rule 457(a) solely for the
purpose of calculating the registration fee.
(3) Shares subject to outstanding options as of July 9, 1999 under the
1999 Stock Option Plan and the 1999 Officer Stock Option Plan.
(4) Weighted average per share exercise price for such outstanding options
pursuant to Rule 457(h)(1).
<PAGE>
HYBRID NETWORKS, INC.
REGISTRATION STATEMENT ON FORM S-8
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed with the Securities and Exchange
Commission (the "Commission") are incorporated herein by reference:
(a) The Registrant's annual report on Form 10-K for the year ended
December 31, 1998, that contains audited financial statements of
the Registrant for the years ended December 31, 1998, 1997 and
1996.
(b) The Registrant's quarterly report on Form 10-Q for the three
months ended March 31, 1999.
(c) The description of the Registrant's Common Stock contained in the
Registrant's Registration Statement on Form 8-A filed under
Section 12(g) of the Exchange Act, including any amendment or
report filed for the purpose of updating such description.
All documents subsequently filed by Registrant 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 registered hereby
have been sold or which deregisters all securities then remaining unsold, shall
be deemed incorporated by reference herein and to be a part hereof from the date
of the filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
The validity of the shares of Common Stock offered hereby will be
passed upon for the Registrant by Fenwick & West LLP, Palo Alto, California.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS AND LIMITATION OF LIABILITY.
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 to the Registrant or its
stockholders for monetary damages for breach of fiduciary duty as a director,
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 to the fullest extent permitted by the Delaware General Corporation
Law; (ii) the Registrant may, in its discretion, indemnify other officers,
employees and agents as set forth in the Delaware General Corporation Law; (iii)
upon receipt of an undertaking to repay such advances if indemnification is
determined to be unavailable, the Registrant is required to advance expenses, as
incurred, to its directors in connection with defending a civil or criminal
action, suit or proceeding (except if the agent is a party to an action, suit or
proceeding brought by the corporation and approved by a majority of the Board of
Directors which alleges willful misappropriation of corporate assets by such
agent, disclosure of confidential information in violation of such agent's
fiduciary or contractual obligations to the corporation or any willful and
deliberate breach in bad faith of such agent's duty to the corporation or its
stockholders); and (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
<PAGE>
employees and agents.
The Registrant's policy is to enter into indemnity agreements
with each of its directors and executive officers. The indemnity agreements
provide that directors and executive officers will be indemnified and held
harmless to the fullest possible extent permitted by law including against
all expenses (including attorneys' fees), judgments, fines and settlement
amounts actually and reasonably incurred by them in any action, suit or
proceeding, including any derivative action by or in the right of the
Registrant, on account of their services as directors or 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
claims (i) initiated by the indemnified party and not by way of defense,
except with respect to a proceeding authorized by the Board of Directors and
successful proceedings brought to enforce a right to indemnification under
the Indemnity Agreement, the charter documents or any other statute or law or
otherwise although indemnification may be provided by the Company in specific
cases if the Board of Directors finds it appropriate, (ii) for any amounts
paid in settlement of a proceeding unless the Registrant consents in advance
in writing to such settlement, (iii) on account of any suit in which judgment
is rendered against the indemnified party for an accounting of profits made
from the purchase or sale by the indemnified party of securities of the
Registrant pursuant to the provisions of Section 16(b) of the Securities
Exchange Act of 1934 and related laws, (iv) on account of conduct by a
director which is finally adjudged to have been in bad faith or conduct that
the director did not reasonably believe to be in, or not opposed to, the best
interests of the Registrant, (v) on account of any criminal action or
proceeding arising out of conduct that the director had reasonable cause to
believe was unlawful or (vi) if a final decision by a court having
jurisdiction in the matter shall determine that such indemnification is not
lawful.
The indemnity 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 Certificate of Incorporation, the Bylaws, the indemnity
agreement or otherwise, to be indemnified for such expenses. The indemnity
agreement provides that it is not exclusive of any rights a director or
executive officer may have under the Certificate of Incorporation, Bylaws, other
agreements, any majority-in-interest vote of the stockholders or vote of
disinterested directors, the Delaware law or otherwise.
The indemnification provision in the Bylaws, and the indemnity
agreements entered into between the Registrant and its directors and executive
officers, may be sufficiently broad to permit indemnification of the
Registrant's executive officers and directors for liabilities arising under the
Securities Act of 1933, as amended.
As authorized by the Registrant's Bylaws, the Registrant, with
approval by the Board, expects to purchase director and officer liability
insurance.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
- -------------- --------------------------------------------------------------
<S> <C>
4.01 Form of Registrant's Amended and Restated Certificate of
Incorporation (incorporated herein by reference to Exhibit
3.03 of the Registrant's Registration Statement on Form S-1,
Registration No. 333-36001 originally filed with the
Commission on September 19, 1997, as subsequently amended (the
"Form S-1")).
<PAGE>
4.02 Form of Registrant's Amended and Restated Bylaws (incorporated
herein by reference to Exhibit 3.05 of the Form S-1).
4.03 Registrant's 1999 Stock Option Plan.
4.04 Registrant's 1999 Officer Stock Option Plan.
5.01 Opinion of Fenwick & West LLP.
23.01 Consent of Fenwick & West LLP (included in Exhibit 5.01).
23.02 Consent of Independent Auditors.
23.03 Consent of Independent Accountants.
24.01 Power of Attorney (see page 6).
</TABLE>
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:
(a) to include any prospectus required by Section 10(a)(3) of
the Securities Act;
(b) 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; and
(c) 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 (1)(a) and (1)(b) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by Registrant pursuant to Section 13 or Section 15(d) of the Exchange
Act that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the 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, 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 therein, and the
offering of such securities at that time
<PAGE>
shall be deemed to be the initial BONA FIDE offering thereof.
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 provisions discussed in Item 6
hereof, or otherwise, the Registrant has been advised that in the opinion of
the Commission such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
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 hereby, 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.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of San Jose, State of California, on
this 9th day of July, 1999.
HYBRID NETWORKS, INC.
By: /s/ CARL S. LEDBETTER
------------------------
Carl S. Ledbetter
Chief Executive Officer and Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that each individual whose signature
appears below constitutes and appoints Carl S. Ledbetter and Judson W.
Goldsmith, and each of them, his or her true and lawful attorneys-in-fact and
agents with full power of substitution, for him or her and in his or her name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement on Form
S-8, and to file the same with all exhibits thereto and all documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as he or she
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or his or her or their substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
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>
PRINCIPAL EXECUTIVE OFFICER:
/s/ CARL S. LEDBETTER Chief Executive Officer and Chairman July 9, 1999
- ------------------------------------ of the Board of Directors
Carl S. Ledbetter
PRINCIPAL FINANCIAL OFFICER:
/s/ JUDSON W. GOLDSMITH Vice President, Finance and July 9, 1999
- ------------------------------------ Administration, Treasurer and
Judson W. Goldsmith Chief Financial Officer and Secretary
PRINCIPAL ACCOUNTING OFFICER:
/s/ THARA EDSON
- ------------------------------------ Corporate Controller July 9, 1999
Thara Edson
ADDITIONAL DIRECTORS
/s/ JAMES R. FLACH
- ------------------------------------ Director July 9, 1999
James R. Flach
/s/ STEPHEN E. HALPRIN
- ------------------------------------ Director July 9, 1999
Stephen E. Halprin
/s/ GARY M. LAUDER
- ------------------------------------ Director July 9, 1999
Gary M. Lauder
/s/ DOUGLAS M. LEONE
- ------------------------------------ Director July 9, 1999
Douglas M. Leone
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
- -------------- ----------------------------------------------------------------------------------------------------
<S> <C>
4.01 Form of Registrant's Amended and Restated Certificate of Incorporation (incorporated herein by
reference to Exhibit 3.03 of the Registrant's Registration Statement on Form S-1, Registration No.
333-36001 originally filed with the Commission on September 19, 1997, as subsequently amended
(the "Form S-1")).
4.02 Form of Registrant's Amended and Restated Bylaws (incorporated herein by reference to Exhibit
3.05 of the Form S-1).
4.03 Registrant's 1999 Stock Option Plan.
4.04 Registrant's 1999 Officer Stock Option Plan.
5.01 Opinion of Fenwick & West LLP.
23.01 Consent of Fenwick & West LLP (included in Exhibit 5.01).
23.02 Consent of Independent Auditors.
23.03 Consent of Independent Accountants
24.01 Power of Attorney (see page 6).
</TABLE>
<PAGE>
EXHIBIT 4.03
HYBRID NETWORKS, INC.
1999 STOCK OPTION PLAN
AS ADOPTED AS OF MAY 5, 1999
1. PURPOSE. The purpose of this Plan is to provide incentives to
attract, retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company by offering them an
opportunity to participate in the Company's future performance through awards
of Options. CAPITALIZED TERMS NOT DEFINED IN THE TEXT ARE DEFINED IN SECTION
20 HEREOF.
2. SHARES SUBJECT TO THE PLAN.
2.1 NUMBER OF SHARES AVAILABLE. Subject to Sections 2.2 and 15
hereof, the total number of Shares reserved and available for grant and issuance
pursuant to this Plan will be 1,500,000 Shares. Subject to Sections 2.2 and 15
hereof, Shares will again be available for grant and issuance in connection with
future Awards under this Plan to the extent such Shares: (a) cease to be subject
to issuance upon exercise of an Option, other than due to exercise of such
Option; or (b) are subject to an Award that otherwise terminates without Shares
being issued. At all times the Company will reserve and keep available a
sufficient number of Shares as will be required to satisfy the requirements of
all Awards granted under this Plan.
2.2 ADJUSTMENT OF SHARES. In the event that the number of
outstanding shares of the Company's Common Stock is changed by a stock dividend,
recapitalization, stock split, reverse stock split, subdivision, combination,
reclassification or similar change in the capital structure of the Company
without consideration, then (a) the number of Shares reserved for issuance under
this Plan and (b) the Exercise Prices of and number of Shares subject to
outstanding Options, subject to any required action by the Board or the
stockholders of the Company and compliance with applicable securities laws;
provided, however, that fractions of a Share will not be issued but will either
be paid in cash at Fair Market Value of such fraction of a Share or will be
rounded down to the nearest whole Share, as determined by the Committee.
3. ELIGIBILITY. Awards may be granted only to employees (including
officers and directors who are also employees) of the Company or of a Parent or
Subsidiary of the Company who meet the suitability standards set forth below in
this Section 3. A person may be granted more than one Award under this Plan. To
be eligible to receive options under this Plan, a person must meet the following
suitability standards: Such person must either (a) be an officer or director of
the Company, (b) have a pre-existing personal or business relationship with the
Company or any of its officers, directors or controlling persons or (c) by
reason of such person's business or financial experience or the business or
financial experience of such person's professional advisor who is unaffiliated
with and who is not compensated by the Company or any affiliate or selling agent
of the Company, directly or indirectly, could be reasonably assumed to protect
such person's own interests in connection with the Options. The foregoing
suitability standards are intended to comply, and shall be interpreted in a
manner consistent with, the excemption from qualification under the California
securities laws provided by Section 25102(f) of the California Corporations Code
and the regulations thereunder.
4. ADMINISTRATION.
4.1 COMMITTEE AUTHORITY. This Plan will be administered by the
Committee or by the Board acting as the Committee. Subject to the general
purposes, terms and conditions of this Plan, and to the direction of the Board,
the Committee will have full power to implement and carry out this Plan. Without
limitation, the Committee will have the authority to:
(a) construe and interpret this Plan, any Stock Option
Agreement and any other agreement or document executed
pursuant to this Plan;
<PAGE>
(b) prescribe, amend and rescind rules and regulations
relating to this Plan or any Award;
(c) select persons to receive Awards;
(d) determine the form and terms of Awards;
(e) determine the number of Shares or other consideration
subject to Awards;
(f) determine whether Awards will be granted singly, in
combination with, in tandem with, in replacement of, or
as alternatives to, other Awards under this Plan or
awards under any other incentive or compensation plan
of the Company or any Parent or Subsidiary of the
Company;
(g) grant waivers of Plan or Award conditions;
(h) determine the vesting, exercisability and payment of
Awards;
(i) correct any defect, supply any omission, or reconcile
any inconsistency in this Plan, any Award, any Stock
Option Agreement or any Exercise Agreement; and
(j) make all other determinations necessary or advisable
for the administration of this Plan.
4.2 COMMITTEE DISCRETION. Any determination made by the
Committee with respect to any Award will be made in its sole discretion at the
time of grant of the Award or, unless in contravention of any express term of
this Plan or Award, and subject to Section 5.8 hereof, at any later time, and
such determination will be final and binding on the Company and on all persons
having an interest in any Award under this Plan. The Committee may delegate to
one or more officers of the Company the authority to grant an Award under this
Plan.
5. OPTIONS. The Committee may grant Options to eligible persons and
will determine whether such Options will be Incentive Stock Options within the
meaning of the Code ("ISOs") or Nonqualified Stock Options ("NQSOs"), the number
of Shares subject to the Option, the Exercise Price of the Option, the period
during which the Option may be exercised and all other terms and conditions of
the Option, subject to the following:
5.1 FORM OF OPTION GRANT. Each Option granted under this Plan
will be evidenced by a Stock Option Agreement which will expressly identify the
Option as an ISO or an NQSO and will be in such form and contain such provisions
(which need not be the same for each Participant) as the Committee may from time
to time approve, and which will comply with and be subject to the terms and
conditions of this Plan.
5.2 DATE OF GRANT. The date of grant of an Option will be the
date on which the Committee makes the determination to grant such Option, unless
otherwise specified by the Committee. The Stock Option Agreement and a copy of
this Plan will be delivered to the Participant within a reasonable time after
the granting of the Option.
5.3 EXERCISE PERIOD. Options may be exercisable within the
times or upon the events determined by the Committee as set forth in the Stock
Option Agreement governing such Option; provided, however, that no Option will
be exercisable after the expiration of ten years from the date the Option is
granted and provided further that no ISO granted to a person who directly or by
attribution owns more than 10% of the total combined voting power of all classes
of stock of the Company or any Parent or Subsidiary of the Company ("TEN PERCENT
STOCKHOLDER") will be exercisable after the expiration of five years from the
date the ISO is granted. The Committee also may provide for Options to become
exercisable at one time or from time to time, periodically or otherwise, in such
number of Shares or percentage of Shares as the Committee determines.
Notwithstanding the foregoing, Options to Participants who are not officers,
directors or consultants of the Company, or of any Parent or Subsidiary of the
Company, must become exercisable at a rate of at least 20% per year over five
years from the date the Option is granted, subject to earlier termination of the
Option pursuant to Sections 5.6 and 15.
5.4 EXERCISE PRICE. The Exercise Price of an Option will be
determined by the Committee when the Option is granted, provided that: (i) the
Exercise Price of an ISO will not be less than 100% of the Fair Market Value of
the Shares on the date of grant; and (ii) the Exercise Price of any Option
granted to a Ten Percent Stockholder will
<PAGE>
not be less than 110% of the Fair Market Value of the Shares on the date of
grant. Payment for the Shares purchased must be made in accordance with
Section 6 hereof.
5.5 METHOD OF EXERCISE. Options may be exercised only by
delivery to the Company of a written stock option exercise agreement (the
"EXERCISE AGREEMENT") in a form approved by the Committee (which need not be the
same for each Participant), stating the number of Shares being purchased, the
restrictions imposed on the Shares purchased under such Exercise Agreement, if
any, and such representations and agreements regarding Participant's investment
intent and access to information and other matters, if any, as may be required
or desirable by the Company to comply with applicable securities laws, together
with payment in full of the Exercise Price, and any applicable taxes, for the
number of Shares being purchased.
5.6 TERMINATION. Subject to earlier termination pursuant to
Section 15 hereof and notwithstanding the exercise periods set forth in the
Stock Option Agreement, exercise of an Option will always be subject to the
following:
(a) If the Participant is Terminated for any reason except
death, Disability or for Cause, then the Participant
may exercise such Participant's Options only to the
extent that such Options are exercisable upon the
Termination Date and such Options must be exercised by
the Participant, if at all, as to all or some of the
Vested Shares calculated as of the Termination Date,
within three months after the Termination Date (or
within such shorter time period, not less than 30
days, or within such longer time period, not exceeding
five years, as may be determined by the Committee,
with any exercise beyond three months after the
Termination Date deemed to be an ISO), but in any
event no later than the expiration date of the Options.
(b) If the Participant is Terminated because of
Participant's death or Disability (or the Participant
dies within three months after a Termination other
than because of Participant's death or Disability),
then Participant's Options may be exercised only to
the extent that such Options would have been
exercisable by Participant on the Termination Date and
must be exercised by Participant (or Participant's
legal representative or authorized assignee), no later
than 12 months after the Termination Date (or within
such shorter time period, not less than six months, or
within such longer time period, not exceeding five
years, as may be determined by the Committee, with any
such exercise beyond (i) three months after the
Termination Date when the Termination is for any
reason other than the Participant's death or
Disability or (ii) 12 months after the Termination
Date when the Termination is for the Participant's
death or Disability, deemed to be an NQSO), but in any
event no later than the expiration date of the Options.
(c) Notwithstanding the provisions in paragraph 5.6(a)
above, if a Participant is terminated for Cause,
neither the Participant, the Participant's estate nor
such other person who may then hold the Option shall
be entitled to exercise any Option with respect to any
Shares whatsoever, after termination of service,
whether or not after termination of service the
Participant may receive payment from the Company or
Subsidiary for vacation pay, for services rendered
prior to termination, for services rendered for the
day on which termination occurs, for salary in lieu of
notice, or for any other benefits. In making such
determination, the Board shall give the Participant an
opportunity to present to the Board evidence on his
behalf. For the purpose of this paragraph, termination
of service shall be deemed to occur on the date when
the Company dispatches notice or advice to the
Participant that his service is terminated.
5.7 LIMITATIONS ON EXERCISE. The Committee may specify a
reasonable minimum number of Shares that may be purchased on any exercise of an
Option, provided that such minimum number will not prevent Participant from
exercising the Option for the full number of Shares for which it is then
exercisable.
5.8 LIMITATIONS ON ISOs. The aggregate Fair Market Value
(determined as of the date of grant) of Shares with respect to which ISOs are
exercisable for the first time by a Participant during any calendar year (under
<PAGE>
this Plan or under any other incentive stock option plan of the Company,
Parent or Subsidiary of the Company) will not exceed $100,000. If the Fair
Market Value of Shares on the date of grant with respect to which ISOs are
exercisable for the first time by a Participant during any calendar year
exceeds $100,000, then the Options for the first $100,000 worth of Shares to
become exercisable in such calendar year will be ISOs and the Options for the
amount in excess of $100,000 that become exercisable in that calendar year
will be NQSOs. In the event that the Code or the regulations promulgated
thereunder are amended after the Effective Date of this Plan to provide for a
different limit on the Fair Market Value of Shares permitted to be subject to
ISOs, such different limit will be automatically incorporated herein and will
apply to any Options granted after the effective date of such amendment.
5.9 MODIFICATION, EXTENSION OR RENEWAL. The Committee may
modify, extend or renew outstanding Options and authorize the grant of new
Options in substitution therefor, provided that any such action may not, without
the written consent of a Participant, impair any of such Participant's rights
under any Option previously granted. Any outstanding ISO that is modified,
extended, renewed or otherwise altered will be treated in accordance with
Section 424(h) of the Code. The Committee may reduce the Exercise Price of
outstanding Options without the consent of Participants affected by a written
notice to them; provided, however, that the Exercise Price may not be reduced
below the minimum Exercise Price that would be permitted under Section 5.4
hereof for Options granted on the date the action is taken to reduce the
Exercise Price.
5.10 NO DISQUALIFICATION. Notwithstanding any other provision
in this Plan, no term of this Plan relating to an ISO will be interpreted,
amended or altered, nor will any discretion or authority granted under this Plan
be exercised, so as to disqualify this Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any ISO under
Section 422 of the Code.
6. PAYMENT FOR SHARE PURCHASES.
6.1 PAYMENT. Payment for Shares purchased pursuant to this
Plan may be made in cash (by check) or, where expressly approved for the
Participant by the Committee and, where permitted by law, by any of the means
set forth below:
(a) by cancellation of indebtedness of the Company to the
Participant;
(b) by surrender of shares that: (i) either (A) have been
owned by Participant for more than six months and have
been paid for within the meaning of SEC Rule 144 (and,
if such shares were purchased from the Company by use
of a promissory note, such note has been fully paid
with respect to such shares) or (B) were obtained by
Participant in the public market and (ii) are clear of
all liens, claims, encumbrances or security interests;
(c) by tender of a full recourse promissory note having
such terms as may be approved by the Committee and
bearing interest at a rate sufficient to avoid
imputation of income under Sections 483 and 1274 of
the Code; provided, however, that the portion of the
Exercise Price equal to the par value of the Shares
must be paid in cash or other legal consideration
permitted by Delaware General Corporation Law
(Participants who are not employees or directors of
the Company will not be entitled to purchase Shares
with a promissory note unless the note is adequately
secured by collateral other than the Shares);
(d) by waiver of compensation due or accrued to the
Participant for services rendered;
(e) with respect only to purchases upon exercise of an
Option, and provided that a public market for the
Company's stock exists:
(1) through a "same day sale" commitment from the
Participant and a broker-dealer that is a member
of the National Association of Securities
Dealers (an "NASD DEALER") whereby the
Participant irrevocably elects to exercise the
Option and to sell a portion of the Shares so
purchased to pay for the Exercise Price, and
whereby the NASD Dealer irrevocably commits upon
receipt of such Shares to forward the Exercise
Price directly to the Company; or
<PAGE>
(2) through a "margin" commitment from the
Participant and an NASD Dealer whereby the
Participant irrevocably elects to exercise the
Option and to pledge the Shares so purchased to
the NASD Dealer in a margin account as security
for a loan from the NASD Dealer in the amount of
the Exercise Price, and whereby the NASD Dealer
irrevocably commits upon receipt of such Shares
to forward the Exercise Price directly to the
Company; or
(f) by any combination of the foregoing.
6.2 LOAN GUARANTEES. The Committee may help the Participant
pay for Shares purchased under this Plan by authorizing a guarantee by the
Company of a third-party loan to the Participant.
7. WITHHOLDING TAXES.
7.1 WITHHOLDING GENERALLY. Whenever Shares are to be issued
in satisfaction of Awards granted under this Plan, the Company may require
the Participant to remit to the Company an amount sufficient to satisfy
federal, state and local withholding tax requirements prior to the delivery
of any certificate or certificates for such Shares. Whenever, under this
Plan, payments in satisfaction of Awards are to be made in cash, such payment
will be net of an amount sufficient to satisfy federal, state, and local
withholding tax requirements.
7.2 STOCK WITHHOLDING. When, under applicable tax laws, a
Participant incurs tax liability in connection with the exercise or vesting
of any Award that is subject to tax withholding and the Participant is
obligated to pay the Company the amount required to be withheld, the
Committee may in its sole discretion allow the Participant to satisfy the
minimum withholding tax obligation by electing to have the Company withhold
from the Shares to be issued that number of Shares having a Fair Market Value
equal to the minimum amount required to be withheld, determined on the date
that the amount of tax to be withheld is to be determined. All elections by a
Participant to have Shares withheld for this purpose will be made in
accordance with the requirements established by the Committee for such
elections and be in writing in a form acceptable to the Committee.
8. PRIVILEGES OF STOCK OWNERSHIP.
8.1 VOTING AND DIVIDENDS. No Participant will have any of
the rights of a stockholder with respect to any Shares until the Shares are
issued to the Participant. After Shares are issued to the Participant, the
Participant will be a stockholder and have all the rights of a stockholder
with respect to such Shares, including the right to vote and receive all
dividends or other distributions made or paid with respect to such Shares.
The Company will comply with Section 260.140.1 of Title 10 of the California
Code of Regulations with respect to the voting rights of Common Stock.
8.2 FINANCIAL STATEMENTS. The Company will provide
financial statements to each Participant prior to such Participant's purchase
of Shares under this Plan, and to each Participant annually during the period
such Participant has Options outstanding, or as otherwise required under
Section 260.140.46 of Title 10 of the California Code of Regulations.
Notwithstanding the foregoing, the Company will not be required to provide
such financial statements to Participants when issuance is limited to
Participants whose services in connection with the Company assure them access
to equivalent information.
9. TRANSFERABILITY. Options granted under this Plan, and any
interest therein, will not be transferable or assignable by Participant, and
may not be made subject to execution, attachment or similar process,
otherwise than by will or by the laws of descent and distribution or as
determined by the Committee and set forth in the Stock Option Agreement with
respect to Options that are not ISOs. During the lifetime of the Participant
an Option will be exercisable only by the Participant or Participant's legal
representative, and any elections with respect to an Option may be made only
by the Participant or Participant's legal representative unless otherwise
determined by the Committee and set forth in the Stock Option Agreement with
respect to Options that are not ISOs.
10. CERTIFICATES. All certificates for Shares or other securities
delivered under this Plan will be subject to such stock transfer orders, legends
and other restrictions as the Committee may deem necessary or advisable,
including restrictions under any applicable federal, state or foreign securities
law, or any rules, regulations
<PAGE>
and other requirements of the SEC or any stock exchange or automated
quotation system upon which the Shares may be listed or quoted.
11. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a
Participant's Shares, the Committee may require the Participant to deposit
all certificates representing Shares, together with stock powers or other
instruments of transfer approved by the Committee, appropriately endorsed in
blank, with the Company or an agent designated by the Company to hold in
escrow until such restrictions have lapsed or terminated, and the Committee
may cause a legend or legends referencing such restrictions to be placed on
the certificates. Any Participant who is permitted to execute a promissory
note as partial or full consideration for the purchase of Shares under this
Plan will be required to pledge and deposit with the Company all or part of
the Shares so purchased as collateral to secure the payment of Participant's
obligation to the Company under the promissory note; provided, however, that
the Committee may require or accept other or additional forms of collateral
to secure the payment of such obligation and, in any event, the Company will
have full recourse against the Participant under the promissory note
notwithstanding any pledge of the Participant's Shares or other collateral.
In connection with any pledge of the Shares, Participant will be required to
execute and deliver a written pledge agreement in such form as the Committee
will from time to time approve. The Shares purchased with the promissory note
may be released from the pledge on a pro rata basis as the promissory note is
paid.
12. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any time or
from time to time, authorize the Company, with the consent of the respective
Participants, to issue new Awards in exchange for the surrender and
cancellation of any or all outstanding Awards. The Committee may at any time
buy from a Participant an Award previously granted with payment in cash,
shares of Common Stock of the Company or other consideration, based on such
terms and conditions as the Committee and the Participant may agree.
13. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award will
not be effective unless such Award is in compliance with all applicable
federal and state securities laws, rules and regulations of any governmental
body, and the requirements of any stock exchange or automated quotation
system upon which the Shares may then be listed or quoted, as they are in
effect on the date of grant of the Award and also on the date of exercise or
other issuance. Notwithstanding any other provision in this Plan, the Company
will have no obligation to issue or deliver certificates for Shares under
this Plan prior to (a) obtaining any approvals from governmental agencies
that the Company determines are necessary or advisable, and/or (b) compliance
with any exemption, completion of any registration or other qualification of
such Shares under any state or federal law or ruling of any governmental body
that the Company determines to be necessary or advisable. The Company will be
under no obligation to register the Shares with the SEC or to effect
compliance with the exemption, registration, qualification or listing
requirements of any state securities laws, stock exchange or automated
quotation system, and the Company will have no liability for any inability or
failure to do so.
14. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award
granted under this Plan will confer or be deemed to confer on any Participant
any right to continue in the employ of, or to continue any other relationship
with, the Company or any Parent or Subsidiary of the Company or limit in any
way the right of the Company or any Parent or Subsidiary of the Company to
terminate Participant's employment or other relationship at any time, with or
without Cause.
15. CORPORATE TRANSACTIONS.
15.1 ASSUMPTION OR REPLACEMENT OF AWARDS BY SUCCESSOR OR
ACQUIRING CORPORATION. In the event of (a) a dissolution or liquidation of
the Company, (b) a merger or consolidation in which the Company is not the
surviving corporation (other than a merger or consolidation with a
wholly-owned subsidiary, a reincorporation of the Company in a different
jurisdiction, or other transaction in which there is no substantial change in
the stockholders of the Company or their relative stock holdings and the
Awards granted under this Plan are assumed, converted or replaced by the
successor or acquiring corporation, which assumption, conversion or
replacement will be binding on all Participants), (c) a merger in which the
Company is the surviving corporation but after which the stockholders of the
Company immediately prior to such merger (other than any stockholder which
merges with the Company in such merger, or which owns or controls another
corporation which merges, with the Company in such merger) cease to own their
shares or other equity interests in the Company, (d) the sale of all or
substantially all of the assets of the Company or (e) the acquisition, sale
or transfer of more than 50% of the outstanding shares of the
<PAGE>
Company by tender offer or similar transaction, any or all outstanding Awards
may be assumed, converted or replaced by the successor or acquiring
corporation (if any), which assumption, conversion or replacement will be
binding on all Participants. In the alternative, the successor or acquiring
corporation may substitute equivalent Awards or provide substantially similar
consideration to Participants as was provided to stockholders (after taking
into account the existing provisions of the Awards). The successor or
acquiring corporation may also issue, in place of outstanding Shares of the
Company held by the Participant, substantially similar shares or other
property subject to repurchase restrictions and other provisions no less
favorable to the Participant than those which applied to such outstanding
Shares immediately prior to such transaction described in this Section 15.1.
In the event such successor or acquiring corporation (if any) refuses to
assume or substitute Awards, as provided above, pursuant to a transaction
described in this Section 15.1, then notwithstanding any other provision in
this Plan to the contrary, such Awards will expire on such transaction at
such time and on such conditions as the Board will determine; provided,
however, that the Committee may, in its sole discretion, provide that the
vesting of any or all Awards granted pursuant to this Plan will accelerate.
If the Committee exercises such discretion with respect to Options, such
Options will become exercisable in full prior to the consummation of such
event at such time and on such conditions as the Committee determines, and if
such Options are not exercised prior to the consummation of the corporate
transaction, they shall terminate at such time as determined by the Committee.
15.2 OTHER TREATMENT OF AWARDS. Subject to any greater
rights granted to Participants under the foregoing provisions of this Section
15, in the event of the occurrence of any transaction described in Section
15.1 hereof, any outstanding Awards will be treated as provided in the
applicable agreement or plan of merger, consolidation, dissolution,
liquidation or sale of assets.
15.3 ASSUMPTION OF AWARDS BY THE COMPANY. The Company, from
time to time, also may substitute or assume outstanding awards granted by
another company, whether in connection with an acquisition of such other
company or otherwise, by either (a) granting an Award under this Plan in
substitution of such other company's award or (b) assuming such award as if
it had been granted under this Plan if the terms of such assumed award could
be applied to an Award granted under this Plan. Such substitution or
assumption will be permissible if the holder of the substituted or assumed
award would have been eligible to be granted an Award under this Plan if the
other company had applied the rules of this Plan to such grant. In the event
the Company assumes an award granted by another company, the terms and
conditions of such award will remain unchanged (except that the exercise
price and the number and nature of shares issuable upon exercise of any such
option will be adjusted appropriately pursuant to Section 424(a) of the
Code). In the event the Company elects to grant a new Option rather than
assuming an existing option, such new Option may be granted with a similarly
adjusted Exercise Price.
16. ADOPTION OF PLAN. This Plan will become effective on the date
that it is adopted by the Board (the "EFFECTIVE DATE"). If any Options are
ISOs, this Plan will be approved by the stockholders of the Company
(excluding Shares issued pursuant to this Plan), consistent with applicable
laws, within 12 months after the Plan is adopted by the Board (if such
approval is not obtained, the Options will be NQSOs). Upon the Effective
Date, the Committee may grant Options pursuant to this Plan; provided,
however, that the following requirements will be met for any Option that is
an ISO (otherwise the Option will be an NQSO): (a) the Option may not be
exercised prior to initial stockholder approval of this Plan, and (b) any
Option granted pursuant to an increase in the number of Shares subject to
this Plan approved by the Board may not be exercised prior to approval of
such increase by the stockholders of the Company.
17. TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as
provided herein, this Plan will terminate ten years from the Effective Date
or, if earlier, the date of stockholder approval. This Plan and all
agreements hereunder shall be governed by and construed in accordance with
the laws of the State of California excluding that body of law pertaining to
conflict of laws.
18. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time
terminate or amend this Plan in any respect, including without limitation
amendment of any form of Stock Option Agreement or instrument to be executed
pursuant to this Plan; provided, however, that the Board will not, without
the approval of the stockholders of the Company, amend this Plan in any
manner that requires such stockholder approval.
19. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan by
the Board, the submission of this Plan to the stockholders of the Company for
approval, nor any provision of this Plan will be construed as
<PAGE>
creating any limitations on the power of the Board to adopt such additional
compensation arrangements as it may deem desirable, including, without
limitation, the granting of stock options and other equity awards otherwise
than under this Plan, and such arrangements may be either generally
applicable or applicable only in specific cases.
20. DEFINITIONS. As used in this Plan, the following terms will have
the following meanings:
"AWARD" means any award of Options under this Plan.
"BOARD" means the Board of Directors of the Company.
"CAUSE" means Termination because of (a) any willful
material violation by the Participant of any law or regulation applicable to
the business of the Company or a Parent or Subsidiary of the Company, the
Participant's conviction for, or guilty plea to, a felony or a crime
involving moral turpitude, any willful perpetration by the Participant of a
common law fraud, (b) the Participant's commission of an act of personal
dishonesty which involves personal profit in connection with the Company or
any other entity having a business relationship with the Company, (c) any
material breach by the Participant of any provision of any agreement or
understanding between the Company or any Parent or Subsidiary of the Company
and the Participant regarding the terms of the Participant's service as an
employee, director or consultant to the Company or a Parent or Subsidiary of
the Company, including without limitation, the willful and continued failure
or refusal of the Participant to perform the material duties required of such
Participant as an employee, director or consultant of the Company or a Parent
or Subsidiary of the Company, other than as a result of having a Disability,
or a breach of any applicable invention assignment and confidentiality
agreement or similar agreement between the Company and the Participant, (d)
Participant's disregard of the policies of the Company or any Parent or
Subsidiary of the Company so as to cause loss, damage or injury to the
property, reputation or employees of the Company or a Parent or Subsidiary of
the Company or (e) any other misconduct by the Participant which is
materially injurious to the financial condition or business reputation of, or
is otherwise materially injurious to, the Company or a Parent or Subsidiary
of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means the committee appointed by the Board to
administer this Plan, or if no committee is appointed, the Board.
"COMPANY" means Hybrid Networks, Inc., or any successor
corporation.
"DISABILITY" means a disability, whether temporary or
permanent, partial or total, within the meaning of Section 22(e)(3) of the
Code, as determined by the Committee.
"EXERCISE PRICE" means the price at which a holder of an
Option may purchase the Shares issuable upon exercise of the Option.
"FAIR MARKET VALUE" means, as of any date, the value of a
share of the Company's Common Stock determined as follows:
(a) if such Common Stock is then quoted on the Nasdaq
National Market, its closing price on the Nasdaq
National Market on the date of determination as
reported in THE WALL STREET JOURNAL;
(b) if such Common Stock is publicly traded and is then
listed on a national securities exchange, its closing
price on the date of determination on the principal
national securities exchange on which the Common Stock
is listed or admitted to trading as reported in THE
WALL STREET JOURNAL;
(c) if such Common Stock is publicly traded but is not
quoted on the Nasdaq National Market nor listed or
admitted to trading on a national securities exchange,
and if current information about the Company is
publicly available so as to comply with SEC Rule
144(c), the average of the closing bid and asked prices
on the date of determination as reported by THE WALL
STREET JOURNAL (or, if not so reported, as otherwise
reported by any newspaper or other
<PAGE>
source as the Board may determine); or
(d) if none of the foregoing is applicable, by the
Committee in good faith.
"OPTION" means an award of an option to purchase Shares
pursuant to Section 5 hereof.
"PARENT" means any corporation (other than the Company) in
an unbroken chain of corporations ending with the Company if each of such
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain
"PARTICIPANT" means a person who receives an Award under
this Plan
"PLAN" means this Hybrid Networks, Inc. 1999 Stock Option
Plan, as amended from time to time.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as
amended.
"SHARES" means shares of the Company's Common Stock
reserved for issuance under this Plan, as adjusted pursuant to Sections 2 and
15 hereof, and any successor security.
"STOCK OPTION AGREEMENT" means, with respect to each
Option, the signed written agreement between the Company and the Participant
setting forth the terms and conditions of the Award.
"SUBSIDIARY" means any corporation (other than the Company)
in an unbroken chain of corporations beginning with the Company if each of
the corporations other than the last corporation in the unbroken chain owns
stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
"TERMINATION" or "TERMINATED" means, for purposes of this
Plan with respect to a Participant, that the Participant has for any reason
ceased to provide substantial services as (a) an employee, officer, director,
consultant or independent contractor to the Company or a Parent or Subsidiary
or affiliate of the Company, or (b) as a consultant, independent contractor
or advisor to the Board of Directors of the Company. A Participant will not
be deemed to have ceased to provide services in the case of (i) sick leave,
(ii) military leave, or (iii) any other leave of absence approved by the
Committee, provided that such leave is for a period of not more than 90 days
unless reinstatement upon the expiration of such leave is guaranteed by
contract or statute, or unless provided otherwise pursuant to formal policy
adopted from time to time by the Company and issued and promulgated in
writing. In the case of any Participant on (i) sick leave, (ii) military
leave or (iii) an approved leave of absence, the Committee may make such
provisions respecting suspension of vesting of the Award while on leave from
the Company or a Parent or Subsidiary of the Company as it may deem
appropriate, except that in no event may an Option be exercised after the
expiration of the term set forth in the Stock Option Agreement. The Committee
will have sole discretion to determine whether a Participant has ceased to
provide services and the effective date on which the Participant ceased to
provide services (the "TERMINATION DATE").
<PAGE>
EXHIBIT 4.04
HYBRID NETWORKS, INC.
1999 OFFICER STOCK OPTION PLAN
AS ADOPTED JANUARY 26, 1999
1. PURPOSE. The purpose of this Plan is to provide incentives to
attract, retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company by offering them an
opportunity to participate in the Company's future performance through awards
of Options. Capitalized terms not defined in the text are defined in Section
20 hereof.
2. SHARES SUBJECT TO THE PLAN.
2.1 NUMBER OF SHARES AVAILABLE. Subject to Sections 2.2 and 15
hereof, the total number of Shares reserved and available for grant and issuance
pursuant to this Plan will be 1,000,000 Shares. Subject to Sections 2.2 and 15
hereof, Shares will again be available for grant and issuance in connection with
future Awards under this Plan to the extent such Shares: (a) cease to be subject
to issuance upon exercise of an Option, other than due to exercise of such
Option; or (b) are subject to an Award that otherwise terminates without Shares
being issued. At all times the Company will reserve and keep available a
sufficient number of Shares as will be required to satisfy the requirements of
all Awards granted under this Plan.
2.2 ADJUSTMENT OF SHARES. In the event that the number of
outstanding shares of the Company's Common Stock is changed by a stock dividend,
recapitalization, stock split, reverse stock split, subdivision, combination,
reclassification or similar change in the capital structure of the Company
without consideration, then (a) the number of Shares reserved for issuance under
this Plan and (b) the Exercise Prices of and number of Shares subject to
outstanding Options, subject to any required action by the Board or the
stockholders of the Company and compliance with applicable securities laws;
provided, however, that fractions of a Share will not be issued but will either
be paid in cash at Fair Market Value of such fraction of a Share or will be
rounded down to the nearest whole Share, as determined by the Committee.
3. ELIGIBILITY. Awards may be granted only to officers of the Company
or of a Parent or Subsidiary of the Company. A person may be granted more than
one Award under this Plan.
4. ADMINISTRATION.
4.1 COMMITTEE AUTHORITY. This Plan will be administered by the
Committee or the Board acting as the Committee. Subject to the general purposes,
terms and conditions of this Plan, and to the direction of the Board, the
Committee will have full power to implement and carry out this Plan. Without
limitation, the Committee will have the authority to:
(a) construe and interpret this Plan, any Stock Option
Agreement and any other agreement or document
executed pursuant to this Plan;
(b) prescribe, amend and rescind rules and regulations
relating to this Plan or any Award;
(c) select persons to receive Awards;
(d) determine the form and terms of Awards;
(e) determine the number of Shares or other consideration
subject to Awards;
(f) determine whether Awards will be granted singly, in
combination with, in tandem with, in replacement of,
or as alternatives to, other Awards under this Plan
or awards under any other incentive or compensation
plan of the Company or any Parent or Subsidiary of
the
<PAGE>
Company;
(g) grant waivers of Plan or Award conditions;
(h) determine the vesting, exercisability and payment of
Awards;
(i) correct any defect, supply any omission, or reconcile
any inconsistency in this Plan, any Award, any Stock
Option Agreement or any Exercise Agreement; and
(j) make all other determinations necessary or advisable
for the administration of this Plan.
4.2 COMMITTEE DISCRETION. Any determination made by the
Committee with respect to any Award will be made in its sole discretion at the
time of grant of the Award or, unless in contravention of any express term of
this Plan or Award, and subject to Section 5.8 hereof, at any later time, and
such determination will be final and binding on the Company and on all persons
having an interest in any Award under this Plan. The Committee may delegate to
one or more officers of the Company the authority to grant an Award under this
Plan.
5. OPTIONS. The Committee may grant Options to eligible persons and
will determine whether such Options will be Incentive Stock Options within the
meaning of the Code ("ISOs") or Nonqualified Stock Options ("NQSOs"), the number
of Shares subject to the Option, the Exercise Price of the Option, the period
during which the Option may be exercised and all other terms and conditions of
the Option, subject to the following:
5.1 FORM OF OPTION GRANT. Each Option granted under this Plan
will be evidenced by a Stock Option Agreement which will expressly identify the
Option as an ISO or a NQSO and will be in such form and contain such provisions
(which need not be the same for each Participant) as the Committee may from time
to time approve, and which will comply with and be subject to the terms and
conditions of this Plan.
5.2 DATE OF GRANT. The date of grant of an Option will be the
date on which the Committee makes the determination to grant such Option, unless
otherwise specified by the Committee. The Stock Option Agreement and a copy of
this Plan will be delivered to the Participant within a reasonable time after
the granting of the Option.
5.3 EXERCISE PERIOD. Options may be exercisable within the
times or upon the events determined by the Committee as set forth in the Stock
Option Agreement governing such Option; provided, however, that no Option will
be exercisable after the expiration of ten years from the date the Option is
granted and provided further that no ISO granted to a person who directly or by
attribution owns more than 10% of the total combined voting power of all classes
of stock of the Company or any Parent or Subsidiary of the Company ("TEN PERCENT
STOCKHOLDER") will be exercisable after the expiration of five years from the
date the ISO is granted. The Committee also may provide for Options to become
exercisable at one time or from time to time, periodically or otherwise, in such
number of Shares or percentage of Shares as the Committee determines.
5.4 EXERCISE PRICE. The Exercise Price of an Option will be
determined by the Committee when the Option is granted and may not be less than
85% of the Fair Market Value of the Shares on the date of grant, provided that:
(i) the Exercise Price of an ISO will not be less than 100% of the Fair Market
Value of the Shares on the date of grant; and (ii) the Exercise Price of any ISO
granted to a Ten Percent Stockholder will not be less than 110% of the Fair
Market Value of the Shares on the date of grant. Payment for the Shares
purchased must be made in accordance with Section 6 hereof.
5.5 METHOD OF EXERCISE. Options may be exercised only by
delivery to the Company of a written stock option exercise agreement (the
"EXERCISE AGREEMENT") in a form approved by the Committee (which need not be the
same for each Participant), stating the number of Shares being purchased, the
restrictions imposed on the Shares purchased under such Exercise Agreement, if
any, and such representations and agreements regarding Participant's investment
intent and access to information and other matters, if any, as may be required
or desirable by the Company to comply with applicable securities laws, together
with payment in full of the Exercise Price, and any applicable taxes, for the
number of Shares being purchased.
5.6 TERMINATION. Subject to earlier termination pursuant to
Section 15 hereof and notwithstanding the exercise periods set forth in the
Stock Option Agreement, exercise of an Option will always be subject to the
<PAGE>
following:
(a) If the Participant is Terminated for any reason
except death, Disability or for Cause, then the
Participant may exercise such Participant's Options
only to the extent that such Options are exercisable
upon the Termination Date and such Options must be
exercised by the Participant, if at all, as to all or
some of the Vested Shares calculated as of the
Termination Date, within three months after the
Termination Date (or within such shorter time period,
not less than 30 days, or within such longer time
period, not exceeding five years, as may be
determined by the Committee, with any exercise beyond
three months after the Termination Date deemed to be
an ISO), but in any event no later than the
expiration date of the Options.
(b) If the Participant is Terminated because of
Participant's death or Disability (or the Participant
dies within three months after a Termination other
than because of Participant's death or Disability),
then Participant's Options may be exercised only to
the extent that such Options would have been
exercisable by Participant on the Termination Date
and must be exercised by Participant (or
Participant's legal representative or authorized
assignee), no later than 12 months after the
Termination Date (or within such shorter time period,
not less than six months, or within such longer time
period, not exceeding five years, as may be
determined by the Committee, with any such exercise
beyond (a) three months after the Termination Date
when the Termination is for any reason other than the
Participant's death or Disability or (b) 12 months
after the Termination Date when the Termination is
for the Participant's death or Disability, deemed to
be an NQSO), but in any event no later than the
expiration date of the Options.
(c) Notwithstanding the provisions in paragraph 5.6(a)
above, if a Participant is terminated for Cause,
neither the Participant, the Participant's estate nor
such other person who may then hold the Option shall
be entitled to exercise any Option with respect to
any Shares whatsoever, after termination of service,
whether or not after termination of service the
Participant may receive payment from the Company or
Subsidiary for vacation pay, for services rendered
prior to termination, for services rendered for the
day on which termination occurs, for salary in lieu
of notice, or for any other benefits. In making such
determination, the Board shall give the Participant
an opportunity to present to the Board evidence on
his behalf. For the purpose of this paragraph,
termination of service shall be deemed to occur on
the date when the Company dispatches notice or advice
to the Participant that his service is terminated.
5.7 LIMITATIONS ON EXERCISE. The Committee may specify a
reasonable minimum number of Shares that may be purchased on any exercise of an
Option, provided that such minimum number will not prevent Participant from
exercising the Option for the full number of Shares for which it is then
exercisable.
5.8 LIMITATIONS ON ISOs. The aggregate Fair Market Value
(determined as of the date of grant) of Shares with respect to which ISOs are
exercisable for the first time by a Participant during any calendar year (under
this Plan or under any other incentive stock option plan of the Company, Parent
or Subsidiary of the Company) will not exceed $100,000. If the Fair Market Value
of Shares on the date of grant with respect to which ISOs are exercisable for
the first time by a Participant during any calendar year exceeds $100,000, then
the Options for the first $100,000 worth of Shares to become exercisable in such
calendar year will be ISOs and the Options for the amount in excess of $100,000
that become exercisable in that calendar year will be NQSOs. In the event that
the Code or the regulations promulgated thereunder are amended after the
Effective Date of this Plan to provide for a different limit on the Fair Market
Value of Shares permitted to be subject to ISOs, such different limit will be
automatically incorporated herein and will apply to any Options granted after
the effective date of such amendment.
5.9 MODIFICATION, EXTENSION OR REMOVAL. The Committee may
modify, extend or renew outstanding Options and authorize the grant of new
Options in substitution therefor, provided that any such action may not, without
the written consent of a Participant, impair any of such Participant's rights
under any Option previously granted. Any outstanding ISO that is modified,
extended, renewed or otherwise altered will be treated in
<PAGE>
accordance with Section 424(h) of the Code. The Committee may reduce the
Exercise Price of outstanding Options without the consent of Participants
affected by a written notice to them; provided, however, that the Exercise
Price may not be reduced below the minimum Exercise Price that would be
permitted under Section 5.4 hereof for Options granted on the date the action
is taken to reduce the Exercise Price.
5.10 NO DISQUALIFICATION. Notwithstanding any other provision
in this Plan, no term of this Plan relating to an ISO will be interpreted,
amended or altered, nor will any discretion or authority granted under this Plan
be exercised, so as to disqualify this Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any ISO under
Section 422 of the Code.
6. PAYMENT FOR SHARE PURCHASES.
6.1 PAYMENT. Payment for Shares purchased pursuant to this
Plan may be made in cash (by check) or, where expressly approved for the
Participant by the Committee and where permitted by law:
(a) by cancellation of indebtedness of the Company to the
Participant;
(b) by surrender of shares that: (i) either (A) have been
owned by Participant for more than six months and
have been paid for within the meaning of SEC Rule 144
(and, if such shares were purchased from the Company
by use of a promissory note, such note has been fully
paid with respect to such shares) or (B) were
obtained by Participant in the public market and (ii)
are clear of all liens, claims, encumbrances or
security interests.
(c) by tender of a full recourse promissory note having
such terms as may be approved by the Committee and
bearing interest at a rate sufficient to avoid
imputation of income under Sections 483 and 1274 of
the Code; provided, however, that the portion of the
Exercise Price equal to the par value of the Shares
must be paid in cash or other legal consideration
permitted by Delaware General Corporation Law;
(d) by waiver of compensation due or accrued to the
Participant for services rendered;
(e) with respect only to purchases upon exercise of an
Option, and provided that a public market for the
Company's stock exists:
(1) through a "same day sale" commitment from
the Participant and a broker-dealer that is
a member of the National Association of
Securities Dealers (an "NASD DEALER")
whereby the Participant irrevocably elects
to exercise the Option and to sell a portion
of the Shares so purchased to pay for the
Exercise Price, and whereby the NASD Dealer
irrevocably commits upon receipt of such
Shares to forward the Exercise Price
directly to the Company; or
(2) through a "margin" commitment from the
Participant and an NASD Dealer whereby the
Participant irrevocably elects to exercise
the Option and to pledge the Shares so
purchased to the NASD Dealer in a margin
account as security for a loan from the NASD
Dealer in the amount of the Exercise Price,
and whereby the NASD Dealer irrevocably
commits upon receipt of such Shares to
forward the Exercise Price directly to the
Company; or
(f) by any combination of the foregoing.
6.2 LOAN GUARANTEES. The Committee may help the Participant
pay for Shares purchased under this Plan by authorizing a guarantee by the
Company of a third-party loan to the Participant.
7. WITHHOLDING TAXES.
7.1 WITHHOLDING GENERALLY. Whenever Shares are to be issued in
satisfaction of Awards granted under this Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such
<PAGE>
Shares. Whenever, under this Plan, payments in satisfaction of Awards are to
be made in cash, such payment will be net of an amount sufficient to satisfy
federal, state, and local withholding tax requirements.
7.2 STOCK WITHHOLDING. When, under applicable tax laws, a
Participant incurs tax liability in connection with the exercise or vesting of
any Award that is subject to tax withholding and the Participant is obligated to
pay the Company the amount required to be withheld, the Committee may in its
sole discretion allow the Participant to satisfy the minimum withholding tax
obligation by electing to have the Company withhold from the Shares to be issued
that number of Shares having a Fair Market Value equal to the minimum amount
required to be withheld, determined on the date that the amount of tax to be
withheld is to be determined. All elections by a Participant to have Shares
withheld for this purpose will be made in accordance with the requirements
established by the Committee for such elections and be in writing in a form
acceptable to the Committee.
8. PRIVILEGES OF STOCK OWNERSHIP.
8.1 VOTING AND DIVIDENDS. No Participant will have any of the
rights of a stockholder with respect to any Shares until the Shares are issued
to the Participant. After Shares are issued to the Participant, the Participant
will be a stockholder and have all the rights of a stockholder with respect to
such Shares, including the right to vote and receive all dividends or other
distributions made or paid with respect to such Shares. The Company will comply
with Section 260.140.1 of Title 10 of the California Code of Regulations with
respect to the voting rights of Common Stock.
8.2 FINANCIAL STATEMENTS. The company will provide financial
statements to each Participant prior to such Participant's purchase of Shares
under this Plan, and to each Participant annually during the period such
Participant has Options outstanding, or as otherwise required under Section
260.140.46 of Title 10 of the California Code of Regulations. Notwithstanding
the foregoing, the Company will not be required to provide such financial
statements to Participants when issuance is limited to Participants whose
services in connection with the Company assure them access to equivalent
information.
9. TRANSFERABILITY. Options granted under this Plan, and any interest
therein, will not be transferable or assignable by Participant, and may not be
made subject to execution, attachment or similar process, otherwise than by will
or by the laws of descent and distribution or as determined by the Committee and
set forth in the Stock Option Agreement with respect to Options that are not
ISOs. During the lifetime of the Participant an Option will be exercisable only
by the Participant or Participant's legal representative, and any elections with
respect to an Option may be made only by the Participant or Participant's legal
representative unless otherwise determined by the Committee and set forth in the
Stock Option Agreement with respect to Options that are not ISOs.
10. CERTIFICATES. All certificates for Shares or other securities
delivered under this Plan will be subject to such stock transfer orders, legends
and other restrictions as the Committee may deem necessary or advisable,
including restrictions under any applicable federal, state or foreign securities
law, or any rules, regulations and other requirements of the SEC or any stock
exchange or automated quotation system upon which the Shares may be listed or
quoted.
11. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a
Participant's Shares, the Committee may require the Participant to deposit all
certificates representing Shares, together with stock powers or other
instruments of transfer approved by the Committee, appropriately endorsed in
blank, with the Company or an agent designated by the Company to hold in escrow
until such restrictions have lapsed or terminated, and the Committee may cause a
legend or legends referencing such restrictions to be placed on the
certificates. Any Participant who is permitted to execute a promissory note as
partial or full consideration for the purchase of Shares under this Plan will be
required to pledge and deposit with the Company all or part of the Shares so
purchased as collateral to secure the payment of Participant's obligation to the
Company under the promissory note; provided, however, that the Committee may
require or accept other or additional forms of collateral to secure the payment
of such obligation and, in any event, the Company will have full recourse
against the Participant under the promissory note notwithstanding any pledge of
the Participant's Shares or other collateral. In connection with any pledge of
the Shares, Participant will be required to execute and deliver a written pledge
agreement in such form as the Committee will from time to time approve. The
Shares purchased with the promissory note may be released from the pledge on a
pro rata basis as the promissory note is paid.
<PAGE>
12. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any time or
from time to time, authorize the Company, with the consent of the respective
Participants, to issue new Awards in exchange for the surrender and cancellation
of any or all outstanding Awards. The Committee may at any time buy from a
Participant an Award previously granted with payment in cash, shares of Common
Stock of the Company or other consideration, based on such terms and conditions
as the Committee and the Participant may agree.
13. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award will not
be effective unless such Award is in compliance with all applicable federal and
state securities laws, rules and regulations of any governmental body, and the
requirements of any stock exchange or automated quotation system upon which the
Shares may then be listed or quoted, as they are in effect on the date of grant
of the Award and also on the date of exercise or other issuance. Notwithstanding
any other provision in this Plan, the Company will have no obligation to issue
or deliver certificates for Shares under this Plan prior to (a) obtaining any
approvals from governmental agencies that the Company determines are necessary
or advisable, and/or (b) compliance with any exemption, completion of any
registration or other qualification of such Shares under any state or federal
law or ruling of any governmental body that the Company determines to be
necessary or advisable. The Company will be under no obligation to register the
Shares with the SEC or to effect compliance with the exemption, registration,
qualification or listing requirements of any state securities laws, stock
exchange or automated quotation system, and the Company will have no liability
for any inability or failure to do so.
14. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award granted
under this Plan will confer or be deemed to confer on any Participant any right
to continue in the employ of, or to continue any other relationship with, the
Company or any Parent or Subsidiary of the Company or limit in any way the right
of the Company or any Parent or Subsidiary of the Company to terminate
Participant's employment or other relationship at any time, with or without
Cause.
15. CORPORATE TRANSACTIONS.
15.1 ASSUMPTION OR REPLACEMENT OF AWARDS BY SUCCESSOR OR
ACQUIRING CORPORATION. In the event of (a) a dissolution or liquidation of the
Company, (b) a merger or consolidation in which the Company is not the surviving
corporation (other than a merger or consolidation with a wholly-owned
subsidiary, a reincorporation of the Company in a different jurisdiction, or
other transaction in which there is no substantial change in the stockholders of
the Company or their relative stock holdings and the Awards granted under this
Plan are assumed, converted or replaced by the successor or acquiring
corporation, which assumption, conversion or replacement will be binding on all
Participants), (c) a merger in which the Company is the surviving corporation
but after which the stockholders of the Company immediately prior to such merger
(other than any stockholder which merges with the Company in such merger, or
which owns or controls another corporation which merges, with the Company in
such merger) cease to own their shares or other equity interests in the Company,
(d) the sale of all or substantially all of the assets of the Company or (e) the
acquisition, sale or transfer of more than 50% of the outstanding shares of the
Company by tender offer or similar transaction, any or all outstanding Awards
may be assumed, converted or replaced by the successor or acquiring corporation
(if any), which assumption, conversion or replacement will be binding on all
Participants. In the alternative, the successor or acquiring corporation may
substitute equivalent Awards or provide substantially similar consideration to
Participants as was provided to stockholders (after taking into account the
existing provisions of the Awards). The successor or acquiring corporation may
also issue, in place of outstanding Shares of the Company held by the
Participant, substantially similar shares or other property subject to
repurchase restrictions and other provisions no less favorable to the
Participant than those which applied to such outstanding Shares immediately
prior to such transaction described in this Section 15.1. In the event such
successor or acquiring corporation (if any) refuses to assume or substitute
Awards, as provided above, pursuant to a transaction described in this Section
15.1, then notwithstanding any other provision in this Plan to the contrary,
such Awards will expire on such transaction at such time and on such conditions
as the Board will determine; provided, however, that the Committee may, in its
sole discretion, provide that the vesting of any or all Awards granted pursuant
to this Plan will accelerate. If the Committee exercises such discretion with
respect to Options, such Options will become exercisable in full prior to the
consummation of such event at such time and on such conditions as the Committee
determines, and if such Options are not exercised prior to the consummation of
the corporate transaction, they shall terminate at such time as determined by
the Committee.
<PAGE>
15.2 OTHER TREATMENT OF AWARDS. Subject to any greater rights
granted to Participants under the foregoing provisions of this Section 15, in
the event of the occurrence of any transaction described in Section 15.1 hereof,
any outstanding Awards will be treated as provided in the applicable agreement
or plan of merger, consolidation, dissolution, liquidation or sale of assets.
15.3 ASSUMPTION OF AWARDS BY THE COMPANY. The Company, from
time to time, also may substitute or assume outstanding awards granted by
another company, whether in connection with an acquisition of such other company
or otherwise, by either (a) granting an Award under this Plan in substitution of
such other company's award or (b) assuming such award as if it had been granted
under this Plan if the terms of such assumed award could be applied to an Award
granted under this Plan. Such substitution or assumption will be permissible if
the holder of the substituted or assumed award would have been eligible to be
granted an Award under this Plan if the other company had applied the rules of
this Plan to such grant. In the event the Company assumes an award granted by
another company, the terms and conditions of such award will remain unchanged
(except that the exercise price and the number and nature of shares issuable
upon exercise of any such option will be adjusted appropriately pursuant to
Section 424(a) of the Code). In the event the Company elects to grant a new
Option rather than assuming an existing option, such new Option may be granted
with a similarly adjusted Exercise Price.
16. ADOPTION OF PLAN. This Plan will become effective on the date that
it is adopted by the Board (the "EFFECTIVE DATE"). If any Options are ISOs, this
Plan will be approved by the stockholders of the Company (excluding Shares
issued pursuant to this Plan), consistent with applicable laws, within 12 months
after the Plan is adopted by the Board (if such approval is not obtained, the
Options will be NQSOs). Upon the Effective Date, the Committee may grant Options
pursuant to this Plan; provided, however, that the following requirements will
be met for any Option that is an ISO (otherwise the Option will be an NQSO): (a)
the Option may not be exercised prior to initial stockholder approval of this
Plan, and (b) any Option granted pursuant to an increase in the number of Shares
subject to this Plan approved by the Board may not be exercised prior to
approval of such increase by the stockholders of the Company.
17. TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as provided
herein, this Plan will terminate ten years from the Effective Date or, if
earlier, the date of stockholder approval. This Plan and all agreements
hereunder shall be governed by and construed in accordance with the laws of the
State of California excluding that body of law pertaining to conflict of laws.
18. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time
terminate or amend this Plan in any respect, including without limitation
amendment of any form of Stock Option Agreement or instrument to be executed
pursuant to this Plan; provided, however, that the Board will not, without the
approval of the stockholders of the Company, amend this Plan in any manner that
requires such stockholder approval.
19. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan by
the Board nor any provision of this Plan will be construed as creating any
limitations on the power of the Board to adopt such additional compensation
arrangements as it may deem desirable, including, without limitation, the
granting of stock options and other equity awards otherwise than under this
Plan, and such arrangements may be either generally applicable or applicable
only in specific cases.
20. DEFINITIONS. As used in this Plan, the following terms will have
the following meanings:
"AWARD" means any award of Options under this Plan.
"BOARD" means the Board of Directors of the Company.
"CAUSE" means Termination because of (i) any willful material
violation by the Participant of any law or regulation applicable to the business
of the Company or a Parent or Subsidiary of the Company, the Participant's
conviction for, or guilty plea to, a felony or a crime involving moral
turpitude, any willful perpetration by the Participant of a common law fraud,
(ii) the Participant's commission of an act of personal dishonesty which
involves personal profit in connection with the Company or any other entity
having a business relationship with the Company, (iii) any material breach by
the Participant of any provision of any agreement or understanding between the
Company or any Parent or Subsidiary of the Company and the Participant regarding
the terms of the Participant's
<PAGE>
service as an employee, director or consultant to the Company or a Parent or
Subsidiary of the Company, including without limitation, the willful and
continued failure or refusal of the Participant to perform the material
duties required of such Participant as an employee, director or consultant of
the Company or a Parent or Subsidiary of the Company, other than as a result
of having a Disability, or a breach of any applicable invention assignment
and confidentiality agreement or similar agreement between the Company and
the Participant, (iv) Participant's disregard of the policies of the Company
or any Parent or Subsidiary of the Company so as to cause loss, damage or
injury to the property, reputation or employees of the Company or a Parent or
Subsidiary of the Company, or (v) any other misconduct by the Participant
which is materially injurious to the financial condition or business
reputation of, or is otherwise materially injurious to, the Company or a
Parent or Subsidiary of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means the committee appointed by the Board to
administer this Plan, or if no committee is appointed, the Board.
"COMPANY" means Hybrid Networks, Inc., or any successor
corporation.
"DISABILITY" means a disability, whether temporary or
permanent, partial or total, as determined by the Committee.
"EXERCISE PRICE" means the price at which a holder of an
Option may purchase the Shares issuable upon exercise of the Option.
"FAIR MARKET VALUE" means, as of any date, the value of a
share of the Company's Common Stock determined as follows:
(a) if such Common Stock is then quoted on the Nasdaq
National Market, its closing price on the Nasdaq
National Market on the date of determination as
reported in THE WALL STREET JOURNAL;
(b) if such Common Stock is publicly traded and is then
listed on a national securities exchange, its closing
price on the date of determination on the principal
national securities exchange on which the Common
Stock is listed or admitted to trading as reported in
THE WALL STREET JOURNAL;
(c) if such Common Stock is publicly traded but is not
quoted on the Nasdaq National Market nor listed or
admitted to trading on a national securities
exchange, the closing bid price on the date of
determination as reported by THE WALL STREET JOURNAL
(or, if not so reported, as otherwise reported by any
newspaper or other source as the Board may
determine); or
(d) if none of the foregoing is applicable, by the
Committee in good faith.
"OPTION" means an award of an option to purchase Shares
pursuant to Section 5 hereof.
"PARENT" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if each of such
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain
"PARTICIPANT" means a person who receives an Award under this
Plan
"PLAN" means this Hybrid Networks, Inc. 1999 Officer Stock
Option Plan, as amended from time to time.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" means shares of the Company's Common Stock reserved
for issuance under this Plan, as
<PAGE>
adjusted pursuant to Sections 2 and 15 hereof, and any successor security.
"STOCK OPTION AGREEMENT" means, with respect to each Option,
the signed written agreement between the Company and the Participant setting
forth the terms and conditions of the Award.
"SUBSIDIARY" means any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
"TERMINATION" or "TERMINATED" means, for purposes of this Plan
with respect to a Participant, that the Participant has for any reason ceased to
provide substantial services as (i) an employee, officer, director, consultant
or independent contractor to the Company or a Parent or Subsidiary or affiliate
of the Company, or (ii) as a consultant, independent contractor or advisor to
the Board of Directors of the Company. A Participant will not be deemed to have
ceased to provide services in the case of (i) sick leave, (ii) military leave,
or (iii) any other leave of absence approved by the Committee, provided that
such leave is for a period of not more than 90 days unless reinstatement upon
the expiration of such leave is guaranteed by contract or statute, or unless
provided otherwise pursuant to formal policy adopted from time to time by the
Company and issued and promulgated in writing. In the case of any Participant on
(i) sick leave, (ii) military leave or (iii) an approved leave of absence, the
Committee may make such provisions respecting suspension of vesting of the Award
while on leave from the Company or a Parent or Subsidiary of the Company as it
may deem appropriate, except that in no event may an Option be exercised after
the expiration of the term set forth in the Stock Option Agreement. The
Committee will have sole discretion to determine whether a Participant has
ceased to provide services and the effective date on which the Participant
ceased to provide services (the "TERMINATION DATE").
<PAGE>
EXHIBIT 5.01
[Fenwick & West LLP Letterhead]
July 9, 1999
Hybrid Networks, Inc.
6409 Guadalupe Mines Road
San Jose, CA 95120-5000
Gentlemen/Ladies:
At your request, we have examined the Registration Statement on Form
S-9 (the "Registration Statement") to be filed by you with the Securities and
Exchange Commission (the "Commission") on or about July 12, 1999 in connection
with the registration under the Securities Act of 1933, as amended, of an
aggregate of 2,500,000 shares of your Common Stock (the "Stock"), subject to
issuance by you upon the exercise of stock options granted or to be granted by
you under your 1999 Stock Option Plan and your 1999 Officer Stock Option Plan.
(The plans referred to above are collectively referred to in this letter as the
"Plans.") In rendering this opinion, we have examined the following:
(1) your annual report on Form 10-K for the year ended December
31, 1998 and your quarterly report on Form 10-K for the three
months ended March 31, 1999, both of which were filed with the
Commission on June 14, 1999, together with the exhibits filed
as a part thereof;
(2) your registration statement on Form 8-A (File Number
000-23289) filed with the Commission on October 30, 1997;
(3) the Registration Statement, together with the Exhibits filed
as a part thereof, including the Plans.
(4) the stock option grant and exercise agreements under the Plans;
(5) the Prospectuses prepared in connection with the Registration
Statement;
(6) the minutes of meetings and actions by written consent of the
stockholders and Board of Directors that are contained in your
minute books that are in our possession;
(7) the stock records that you have provided to us; and
(8) a Management Certificate addressed to us and dated of even
date herewith executed by the Company containing factual and
other representations.
In our examination of documents for purposes of this opinion, we have
assumed, and
<PAGE>
express no opinion as to, the genuineness of all signatures on original
documents, the authenticity of all documents submitted to us as originals,
the conformity to originals of all documents submitted to us as copies the
legal capacity of all natural persons executing the same, the lack of any
undisclosed terminations, modifications, waivers or amendments to any
documents reviewed by us and the due execution and delivery of all documents
where due execution and delivery are prerequisites to the effectiveness
thereof.
As to matters of fact relevant to this opinion, we have relied solely
upon our examination of the documents referred to above and have assumed the
current accuracy and completeness of the information obtained from records
included in the documents referred to above. We have made no independent
investigation or other attempt to verify the accuracy of any of such
information or to determine the existence or nonexistence of any other
factual matters; HOWEVER, we are not aware of any facts that would lead us to
believe that the opinion expressed herein is not accurate.
Based upon the foregoing, it is our opinion that the 2,500,000 shares of
Stock that may be issued and sold by you upon the exercise of stock options
granted or to be granted under the Plans, when issued and sold in accordance
with the applicable plan and stock option agreements to be entered into
thereunder, and in the manner referred to in the relevant Prospectus
associated with the Registration Statement, will be validly issued, fully
paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to all references to us, if any, in the
Registration Statement, the Prospectus constituting a part thereof and any
amendments thereto.
This opinion speaks only as of its date and is intended solely for your
use as an exhibit to the Registration Statement for the purpose of the above
sale of the Stock and is not to be relied upon for any other purpose.
Very truly yours,
/s/ Fenwick & West LLP
FENWICK & WEST LLP
<PAGE>
EXHIBIT 23.02
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration
Statement on Form S-8 of Hybrid Networks, Inc., of our report dated April 23,
1999, except for the last two paragraphs of Note 16 which are as of May 5, 1999,
relating to the balance sheets as of December 31, 1998 and 1997 and the related
statements of operations, shareholders' equity and cash flows and financial
statement schedule for the years then ended, which reports appear in the
December 31, 1998 annual report on Form 10-K of Hybrid Networks.
/s/ HEIN + ASSOCIATES LLP
HEIN + ASSOCIATES LLP
Certified Public Accountants
Orange, California
July 8, 1999
<PAGE>
EXHIBIT 23.03
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration
statement on Form S-8 of our report dated August 28, 1997 relating to the
financial statements, which appears in the 1998 Annual Report to Stockholders
of Hybrid Networks, Inc., which is incorporated by reference in Hybrid's
Annual Report on Form 10-K for the year ended December 31, 1996. We also
consent to the incorporation by reference of our report dated August 28, 1997
relating to the financial statement schedules, which appears in such Annual
Report on Form 10-K.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
San Jose, California
July 7, 1999
