U.S. WIRELESS CORPORATION
2694 Bishop Drive
San Ramon CA 94583
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS To Be Held on
November 12, 1997
To the Shareholders of
U.S. WIRELESS CORPORATION
NOTICE IS HEREBY GIVEN that an Annual Meeting of Shareholders of U.S.
WIRELESS CORPORATION (the "Corporation") will be held at the Corporation's
offices located at 2694 Bishop Drive, San Ramon, California, on November 12,
1997, at 10:00 a.m. Pacific time, for the following purposes:
1. To elect four (4) Directors to the Corporation's Board of Directors to
hold office for a period of one year or until their successors are duly elected
and qualified;
2. To ratify the proposal to approve the Corporation's Senior Management
Incentive Plan; and
3. To ratify the proposal to approve the Ratification Of The Proposal to
Approve Amendments to the Corporation's Certificate of Incorporation and By-Laws
Regarding the Indemnification Rights of the Corporation's Directors and
Executive Officers
4. To ratify a proposal to merge Labyrinth Communication Technologies
Group, Inc., into the Corporation.
5. To transact such other business as properly may be brought before the
meeting or an adjournment thereof.
The close of business on August 13, 1997 has been fixed as the record
date for the determination of shareholders entitled to notice of, and to vote
at, the meeting and any adjournment thereof.
You are cordially invited to attend the meeting. Whether or not you
plan to attend, please complete, date, and sign the accompanying proxy, and
return it promptly in the enclosed envelope to assure that your shares are
represented at the meeting. If you do attend, you may revoke any prior proxy and
vote your shares in person if you wish to do so. Any prior proxy automatically
will be revoked if you execute the accompanying proxy or if you notify the
Secretary of the Corporation, in writing, prior to the Annual Meeting of
Shareholders.
By order of the Board of Directors
David S. Klarman, Secretary
Dated: October 17, 1997
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, AND SIGN
THE ENCLOSED PROXY, AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER TO
ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF MAILED IN
THE UNITED STATES.
<PAGE>
U.S. WIRELESS CORPORATION
2694 Bishop Drive
San Ramon CA 94583
PROXY STATEMENT
FOR
Annual Meeting of Stockholders
To Be Held on November 12, 1997
This proxy statement and the accompanying form of proxy were mailed on
October 17, 1997 to the stockholders of record (as of August 13, 1997) of U.S.
Wireless Corporation, a Delaware corporation (the "Corporation"), in connection
with the solicitation of proxies by the Board of Directors of the Corporation
for use at the Annual Meeting to be held on November 12, 1997 and at any
adjournment thereof.
SOLICITATION, VOTING, AND REVOCABILITY OF PROXIES
Shares of the Corporation's common stock, par value $.001 per share
(the "Common Stock"), represented by an effective proxy in the accompanying form
will, unless contrary instructions are specified in the proxy, be voted FOR (i)
the election of four (4) persons nominated by the Board of Directors as
directors (ii) the ratification of the proposal to approve the Corporation's
Senior Management Incentive Plan (iii) the ratification of the proposal to
approve amendments to the Corporation's Certificate of Incorporation and By-Laws
regarding the Indemnification Rights of the Corporation's Directors and
Executive Officers and (iv) to ratify a proposal to merge Labyrinth
Communication Technologies Group, Inc., into the Corporation.
Any such proxy may be revoked at any time before it is voted. A
stockholder may revoke this proxy by notifying the Secretary of the Corporation,
either in writing prior to the Annual Meeting or in person at the Annual
Meeting, by submitting a proxy bearing a later date or by voting in person at
the Annual Meeting. An affirmative vote of a plurality of the shares of Common
Stock present, in person or represented by proxy at the Annual Meeting and
entitled to vote thereon is required to elect the Directors. A stockholder
voting through a proxy who abstains with respect to the election of Directors is
considered to be present and entitled to vote on the election of Directors at
the meeting, and his abstention is, in effect, a negative vote; however, a
stockholder (including a broker) who does not give authority to a proxy to vote
or who withholds authority to vote on the election of Directors shall not be
considered present and entitled to vote on the election of Directors. A
stockholder voting through a proxy who abstains with respect to approval of any
other matter to come before the meeting is considered to be present and entitled
to vote on that matter, and his abstention is, in effect, a negative vote;
however, a stockholder (including a broker) who does not give authority to a
proxy to vote or who withholds authority to vote on any such matter shall not be
considered present and entitled to vote thereon.
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<PAGE>
The Corporation will bear the cost of the solicitation of proxies by
the Board of Directors. The Board of Directors may use the services of its
Executive Officers and certain Directors to solicit proxies from stockholders in
person and by mail, telegram, and telephone. Arrangements may also be made with
brokers, fiduciaries, custodians, and nominees to send proxies, proxy
statements, and other material to the beneficial owners of the Common Stock held
of record by such persons, and the Corporation may reimburse them for reasonable
out-of-pocket expenses incurred by them in so doing.
The Annual Report on Form 10-KSB for the fiscal year ended March 31,
1997 including audited financial statements and the quarterly report for the
quarter ended June 30, 1997, accompanies this proxy statement.
The principal executive offices of the Corporation are located at 2694
Bishop Drive, San Ramon CA 94583; the Corporation's telephone number is (510)
830-8801.
Independent Public Accountants
The Board of Directors of the Corporation has selected Haskell & White
LLP, Certified Public Accountants, as independent accountants of the Corporation
for the fiscal year ending March 31, 1997. Shareholders are not being asked to
approve such selection because such approval is not required. The audit services
provided by Haskell & White LLP consist of examination of financial statements,
services relative to filings with the Securities and Exchange Commission, and
consultation in regard to various accounting matters. Representatives of Haskell
& White LLP are expected to be present at the meeting and will have the
opportunity to make a statement if they so desire and answer appropriate
questions.
VOTING SECURITIES AND SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The securities entitled to vote at the meeting are the Common Stock, par
value $.01 per share. The presence, in person or by proxy, of a majority of
shares entitled to vote will constitute a quorum for the meeting. Each share of
Common Stock entitles its holder to one vote on each matter submitted to the
stockholders. The close of business on October 13, 1997 has been fixed as the
record date for the determination of stockholders entitled to notice of, and to
vote at, the meeting and any adjournment thereof. At that date, 7,325,245 shares
of Common Stock were outstanding. Voting of the shares of Common Stock is on a
non-cumulative basis.
The following table sets forth information as of September 30, 1997 with
respect to the beneficial ownership of shares of Common Stock by (i) each person
(including any "group" as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended) known by the Corporation to be the
owner of more than 5% of the outstanding shares of Common Stock; (ii) each
Director; and (iii) all Officers and Directors as a group. Except to the extent
indicated in the footnotes to the following table, each of the individuals
listed below possesses sole voting power with respect to the shares of Common
Stock listed opposite his name.
3
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Name and Address Amount and % of outstanding]
of Beneficial Owner Nature of shares owned
Beneficial Ownership
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Dr. Oliver Hilsenrath
c/o U.S. Wireless Corp. 3,750,000( 42.2%
2694 Bishop Drive, Suite 213 1)
San Ramon, CA 94583
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
United Textiles & Toys Corporation
378,758 5.1%
448 West 16th Street
New York, New York 10011
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
David Tamir (2)
c/o U.S. Wireless Corp. -- --
2694 Bishop Drive, Suite 213
San Ramon, CA 94583
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
Regina Gindin (2)
c/o U.S. Wireless Corp.
2694 Bishop Drive, Suite 213 -- --
San Ramon, CA 94583
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
Galit Capital Limited
(3) 1,071,880 14.5%
Tortola, British Virgin Islands
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
Zoe Arbel Trust (3)
Tortola, British Virgin Islands 500,000 6.8%
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
Amir Overseas Capital Limited(
3) 750,000 10.1%
Tortola, British Virgin Islands
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
Officers and Directors as a group
(4 persons) (1) - (2) 3,750,000 42.2%
- -------------------------------------------------------------------------------------------------------------------
-------------------
</TABLE>
*Less than 1%.
(1) Includes 1,500,000 shares of Common Stock issuable upon the exercise of
an option granted pursuant to Dr. Hilsenrath's employment agreement. (2) Does
not include stock options to purchase an aggregate of 100,000 shares of Common
Stock which vest 1/3 each
5
<PAGE>
year from grant, non of which are presently vested or exercisable.
(3)
Mr. Arbel, a former Officer and Director of the Corporation, exercised
options granted pursuant to an employment
agreement and thereafter transferred said shares to the referenced
companies. Mr. Arbel denies beneficial ownership of these shares.
Certain Reports
No person, who during the fiscal year ended March 31, 1997 was a
Director, Officer, or beneficial owner of more than ten percent of the
Corporation's Common Stock (which is the only class of securities of the
Corporation registered under Section 12 of the Securities Exchange Act of 1934
(the "Act") (a "Reporting Person"), failed to file on a timely basis reports
required by Section 16 of the Act during the most recent fiscal year or prior
years. The foregoing is based solely upon a review by the Corporation of (i)
Forms 3 and 4 during the most recent fiscal year as furnished to the Corporation
under Rule 16a-3(d) under the Act; (ii) Forms 5 and amendments thereto furnished
to the Corporation with respect to its most recent fiscal year; and (iii) any
representation received by the Corporation from any reporting person that no
Form 5 is required, except as described herein.
It is expected that the following will be considered at the meeting and
that action will be taken thereon:
I. ELECTION OF DIRECTORS
The Board of Directors currently consists of three members elected for
a term of one year or until their successors are duly elected and qualified.
An affirmative vote of a plurality of the shares of Common Stock,
present in person or represented by proxy, at the Annual Meeting and entitled to
vote thereon is required to elect the Directors. All proxies received by the
Board of Directors will be voted for the election as Directors of the nominees
listed below if no direction to the contrary is given. In the event any nominee
is unable to serve, the proxy solicited hereby may be voted, in the discretion
of the proxies, for the election of another person in his stead. The Board of
Directors knows of no reason to anticipate this will occur.
The following table sets forth, as of September 30, 1997, the four
nominees for election as Directors of the Corporation:
<TABLE>
<CAPTION>
Position with Corporation; Director
Name Principal Occupation and Age Since
<S> <C> <C>
Dr. Oliver Hilsenrath President, CEO and Director; 40 1996
Regina Gindin Director; __ 1996
David Tamir Director, __ 1996
Dennis B. Francis Consultant, Director, 46 *
</TABLE>
* Nominee standing for election to the board of directors.
The Directors of the Corporation are elected annually by the
stockholders, and the Officers of the Corporation are appointed annually by the
Board of Directors. Vacancies on the Board of Directors may be filled by the
remaining Directors. Each current Director and Officer will hold office until
the next annual meeting of stockholders or until his successor is elected and
qualified.
Dr. Oliver Hilsenrath has been the President and Chief Executive
Officer and a Director of the Corporation since July 31, 1996. Since their
inceptions, Dr. Hilsenrath has been the Chief Executive Officer, President, and
a Director of both Labyrinth and Mantra. From 1992 through 1996, he was a Senior
Vice President, General Manager, and co-founder of Geotek Communications, Inc.,
an international wireless carrier with networks in the United States, United
Kingdom, and Germany. Dr. Hilsenrath received his Ph.D. in information theory
from Technion-Polytechnical Institute of Israel. He has worked in the wireless
communications industry for twenty years.
David Tamir has been a Director of the Corporation since August 1996.
Since September 1995, Mr. Tamir has been the General Manager of GeoNet Israel
Limited, a subsidiary of Geotek Communications, Inc. From July 1992 to September
1995, Mr. Tamir was the President of Powerspectrum Technology Limited, a
subsidiary of Geotek Communications, Inc., a cellular-wireless communications
corporation. Prior thereto, from 1990 to 1992, Mr. Tamir was a representative of
RAFAEL, the defense branch of the Israeli government. Mr. Tamir received BS and
MS degrees in Electrical Engineering from Technion, the Israel Institute of
Technology in Haifa, and an MBA degree from Hebrew University.
Regina Gindin has been a Director of the Corporation since August 1996.
Since August 1994, Ms. Gindin has been an independent consultant for RBG
Associates, a consulting firm which provides management consulting services for
strategic business planning. From 1993 to August 1994, Ms. Gindin was the Senior
Vice President of Strategic Management and Corporate Communications for Conner
Peripherals, Inc. ("Conner"), computer peripheral manufacturer. Prior thereto,
from 1992 to 1993, Ms. Gindin was the acting Chief Financial Officer of such
corporation and prior to that, from 1988 to 1992, she was the Vice President of
Strategic Planning and Corporate Communications. Ms. Gindin received her MBA in
Business Administration from the Wharton School of Finance, University of
Pennsylvania. She is a Director of The American Jewish World Service. Ms. Gindin
is also an advisor to the marketing department of the Wharton School of Finance.
Dennis B. Francis has been a consultant to the Corporation since December
1996, providing technical support services. Mr. Francis has been an Executive
Vice-President and Chief Technology Officer of Vanguard Cellular Systems, Inc.,
a cellular communications service provider, since __________, 19__. Mr. Francis
is the current
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<PAGE>
chairman of the Nortel Technology Officers Council and has served on the
CTIA Chief Technology Officers Council for four years. Mr. Francis graduated
from the University of Texas at Arlington, Texas with a Bachelors of Science in
Industrial Engineering.
The Corporation has agreed to indemnify its Officers and Directors with
respect to certain liabilities including liabilities which may arise under the
Securities Act of 1933. Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to Directors, Officers, and controlling
persons of the Corporation pursuant to any charter, provision, by-law, contract,
arrangement, statute or otherwise, the Corporation has been advised that in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Corporation of expenses incurred or
paid by a Director, Officer, or controlling person of the Corporation in the
successful defense of any such action, suit, or proceeding) is asserted by such
Director, Officer, or controlling person of the Corporation in connection with
the Securities being registered, the Corporation will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act. The Corporation will be
governed by the final adjudication of such issue.
Board Meetings, Committees, and Compensation
During the fiscal year ended March 31, 1997, one meeting of the Board
of Dire tors was held by telephonic conference. Action was taken on fifteen (15)
occasions by unanimous written consents of the Board of Directors which consents
were obtained in lieu of meetings. The Corporation does not pay its Directors
for attendance at meetings of the Board of Directors or committee meetings.
The Board of Directors recommends that you vote "FOR" the nominees for
Directors.
EXECUTIVE COMPENSATION
Summary of Cash and Certain Other Compensation
The following provides certain information concerning all Plan and
Non-Plan (as defined in Item 402 (a)(ii) of Regulation S-B) compensation awarded
to, earned by, or paid by the Corporation during the year ended March 31, 1997
to each of the named Executive Officers of the Corporation.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation
(a) (b) (c) (d) (e) (f)
Other
Name and Principal Options/ Annual
Position Year(1) Salary($) Bonus($) SARS Compensation
<S> <C> <C> <C> <C>
Dr. Oliver Hilsenrath 1997 106,667(2) - 1,500,000(3) $5,572(4)
President
Chief Executive Officer
David Klarman 1997 70,000 - 150,000( 5) --
General Counsel and Secretary
Dr. Mati Wax 1997 66,667 - 100,000( 6) --
Chief Technology Officer
- -----------------------------
</TABLE>
(1) No compensation was paid to any officer of the Corporation prior to
July 31, 1996.
(2) Reflects the portion of the year worked based on salaries of $160,000,
$120,000, and $100,000 for Dr. Hilsenrath, Mr. Klarman, and Dr. Wax,
respectively.
(3) Pursuant to his employment agreement, Dr. Hilsenrath receive an option
to purchase1,500,000 shares of Common
Stock at $2.00 per share.
(4) Includes (i) the payment of $509 per month for automobile allowance,
and (ii) the payment of approximately $1,500 per annum for a life insurance and
disability policy for the benefit of Dr. Hilsenrath's beneficiaries. See
"Employment and Consulting Agreements."
(5) In August 1996, the Corporation granted Mr. Klarman the option to
purchase 150,000 shares of the Corporation's Common Stock at an exercise price
of $2.00 per share subject to a vesting schedule. See "Employment and Consulting
Agreements."
(6) In July 1996, the Corporation granted Dr. Wax the option to purchase
100,000 shares of the Company's Common Stock at an exercise price of $2.00 per
share pursuant to a vesting schedule. See "Employment and Consulting Agreement."
The Company also issued Dr. Wax 50,000 restricted shares of Labyrinth's Common
Stock.
<PAGE>
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
(Individual Grants)
====================================================================================================================================
Individual Grants
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
% of Total
# of Securities Options/SAR's
underlying Granted Exercise or
Options/SAR's Employees in Base
Name Granted (1) Fiscal Year Price ($/SH) Expiration Date
- ---- ------------ ------------ ------------- ---------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dr. Oliver Hilsenrath 1,500,000 56.8 $2.00 06/30/01
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
David Klarman 150,000 5.7 $2.00 08/30/01
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
Dr. Mati Wax 100,000 3.8 $2.00 07/06/01
====================================================================================================================================
</TABLE>
The following table contains information with respect to employees of
the Corporation concerning options held as of March 31, 1997.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISE IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
====================================================================================================================================
(a) (b) (c) (d) (e)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Value of
Number of Unexercised
Unexercised In-The-Money
Options/SAR's at Options/SAR's
Shares FY-End (#) at FY-End ($)
Acquired on Value Realized Exercisable/ Exercisable/
Name Exercise (#) ($) Unexercisable Unexercisable (1)
- ---- ------------ --- ------------- -----------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Dr. Oliver Hilsenrath - - 1,500,000/0 3,000,000/0
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
David Klarman - - 0/150,000 0/300,000
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
Dr. Mati Wax - - 0/100,000 0/200,000
====================================================================================================================================
</TABLE>
10
<PAGE>
(1) Based upon the closing price for the Common Stock on March 31, 1997
($4.00), as reported by a market maker.
Employment and Consulting Agreements
In April 1997, the Corporation amended the five year employment
agreement it entered with Dr. Hilsenrath in July 1996. As amended, Dr.
Hilsenrath remains the Chief Executive Officer and President of the Corporation
and the President and sole Director of both Labyrinth and Mantra. The agreement,
as amended, provides for an annual salary of $160,000 and increases of 15% per
annum for each year of its five year term. Upon execution, the Corporation
granted Dr. Hilsenrath an option to purchase 1,500,000 shares of Common Stock at
an exercise price of $2.00 per share. The Corporation provides Dr. Hilsenrath
with an automobile allowance. In addition, the Corporation shall maintain during
the full term hereof and at its sole cost and expense, a policy of life
insurance on the life of Dr. Hilsenrath in the face amount of $1,000,000 payable
to his designee. This policy shall include provisions for the payment of up to
18 months salary to Dr. Hilsenrath in the event that Dr. Hilsenrath is disabled.
Upon the conclusion of this agreement, all right, title, and interest in the
policy shall be transferred to Dr. Hilsenrath, and Dr. Hilsenrath shall be
responsible for any premiums due after such transfer. The agreement restricts
Dr. Hilsenrath from competing with the Corporation for a period of two years
after the termination of his employment. The agreement provides for severance
compensation to be paid to Dr. Hilsenrath if his employment with the Corporation
is terminated or if there is a decrease in responsibilities or duties following
a change in control of the Corporation. The severance compensation shall be made
in one payment equal to three times the aggregate annual compensation paid to
Dr. Hilsenrath during the preceding calendar year. In the event the Corporation
wishes to obtain Key Man life insurance on the life of Dr. Hilsenrath, Dr.
Hilsenrath agrees to cooperate with the Corporation in completing any
applications necessary to obtain such insurance and in promptly submitting to
such physical examinations and furnishing such information as any proposed
insurance carrier may request.
In August 1996, the Corporation entered into a three year employment
agreement with Mr. Klarman pursuant to which Mr. Klarman is to receive a salary
of $120,000 per annum and an option to purchase 150,000 shares of the
Corporation's Common Stock at an exercise price of $2.00 per share, subject to a
three year vesting schedule. The employment agreement provides that Mr. Klarman
will be General Counsel to and Secretary of the Corporation. The agreement also
acknowledges that Mr. Klarman shall have the right to represent non-competing
companies during the term of the agreement.
In July 1996, Dr. Mati Wax entered into a three year employment
agreement with the Corporation whereby as Chief Technology Officer of same, Dr.
Wax is to receive a salary of $100,000 per annum, the option to purchase 100,000
shares of the Corporation's Common Stock at an exercise price of $2.00 per
share, subject to a three year vesting schedule, and 50,000 restricted shares of
Labyrinth's common stock, subject to a three year vesting schedule.
In June 1996, the Corporation entered into a five year employment
agreement with Ilan Arbel pursuant to which Mr. Arbel was to be Vice President
of Business Development, a non-executive officer position, upon the
Corporation's consummation of the acquisitions of Labyrinth and Mantra. Mr.
Arbel's sole compensation was the grant of options to purchase 1,000,000 shares
of Common Stock at $1.00 per share for a period of five years and
11
<PAGE>
2,250,000 shares at $1.33 per share, exercisable until December 31, 1996. In
July 1996 Mr. Arbel, exercised his option to purchase 1,000,000 shares at $1.00
in full. Mr. Arbel exercised the remaining options in August and December 1996.
Pursuant to an S-8 registration statement, 1,000,000 shares were transferred.
The S-8 registration statement has been amended to deregister the sale of the
remaining shares, all of which were issued with restrictive legends.
Between July 1996 and December 1997, the Corporation entered into
consulting agreements with individuals and entities within the investment
banking and cellular communications industries. These consultants have been
instrumental in the raising of capital for the Corporation and have been engaged
to provide expertise in the area of cellular communications. The consultants are
to initiate and facilitate relationships with companies operating within the
investment banking and cellular communications industries. In addition, they
seek to coordinate the development of purchasers for the Corporation's products
and the co-development of business ventures for the possible combination and
joint development of technologies within the communication industry. The
Corporation has granted options to purchase an aggregate of 1,450,000 shares of
the Corporation's Common Stock at exercise prices ranging from $2.00 to $4.00
per share. Some of the options granted have been subject to vesting schedules.
In addition, an aggregate of $100,000 is being paid to a consultant for services
rendered in the business developmen t and capitalization of the Corporation. No
other compensation was issued to these consultants; however, certain consulting
agreements have provisions for fees to be paid in the event that transactions
are consummated by the Corporation based on relationships initiated by such
consultants.
Stock Option Plan
During 1993, the Corporation adopted the Corporation's 1993 Stock
Option Plan ("the Plan"). The Board believes that the Plan is desirable to
attract and retain executives and other key employees of outstanding ability.
Under the Plan, options to purchase an aggregate of not more than 37,500 shares
of Common Stock may be granted from time to time to key employees, Officers,
Directors, advisors, and independent consultants to the Corporation and its
subsidiaries. In August 1997 the board of directors voted to eliminate this
plan, there being no options currently outstanding.
The Board of Directors is charged with the administration of the Plan
and is generally empowered to interpret the Plan, prescribe rules and
regulations relating thereto, determine the terms of the option agreements,
amend same with the consent of the Optionee(s), determine the employees to whom
options are to be granted, and determine the number of shares subject to each
option and the exercise price thereof. The per share exercise price for
incentive stock options ("ISO's") will not be less than 100% of the fair market
value of a share of the Common Stock on the date the option is granted (110% of
fair market value on the date of grant of an ISO if the optionee owns more than
10% of the Common Stock of the Corporation).
Options will be exercisable for a term determined by the Board which
will not be less than one year. Options may be exercised only while the original
grantee has a relationship with the Corporation or with a subsidiary of the
Corporation, which latter relationship confers eligibility to be granted
options, or at the sole discretion of the Board, within ninety days after the
original grantee's termination. In the event of termination due to retirement,
the Optionee,
12
<PAGE>
with the consent of the Board, shall have the right to exercise his option at
any time during the thirty-six month period following such retirement. Options
may be exercised up to thirty-six months after the death or total and permanent
disability of an Optionee. In the event of certain basic changes in the
Corporation, including a change in control of the Corporation as defined in the
Plan, in the discretion of the Board, each option may become fully and
immediately exercisable. ISO's are not transferable other than by will or by the
laws of descent and distribution. Options may be exercised during the holder's
lifetime only by the holder or his guardian or legal representative.
Options granted pursuant to the Plan may be designated as ISO's with
the attendant tax benefits provided therefor pursuant to Sections 421 and 422A
of the Internal Revenue Code of 1986. Accordingly, the Plan provides that the
aggregate fair market value (determined at the time an ISO is granted) of the
Common Stock subject to ISO's exercisable for the first time by an employee
during any calendar year (under all plans of the Corporation and its
subsidiaries) may not exceed $100,000. The Board may modify, suspend, or
terminate the Plan, provided, however, that certain material modifications
affecting the Plan must be approved by the shareholders, and any change in the
Plan that may adversely affect an Optionee's rights under an option previously
granted under the Plan requires the consent of the Optionee.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In June 1996, the Corporation's Board of Directors, pursuant to the
consent of the then majority stockholder of the Corporation, distributed ("the
Spin-off Distribution") the shares of common stock of Playco owned by the
Corporation. In addition, the Corporation, as majority stockholder of Playco,
prior to, but in contemplation of the Spin-off Distribution, authorized the
conversion of Playco's Series D Preferred Stock owned by the Corporation into
1,157,028 shares of Playco's common stock. This conversion was based on the
average closing bid price ($1.21) of Playco's shares for the ninety day period
from March 1, 1996 to May 31, 1996.
In June 1996, European Ventures Corp. ("EVC"), a British Virgin Islands
corporation of which Moses Mika at the time was the sole Officer, Director, and
stockholder, acquired 3,106,005 shares of the Corporation's Common Stock, par
value $.01, in exchange for 400,000 shares of common stock of Multimedia
Concepts International, Inc. ("Media"), a Delaware Corporation. The Corporation
had the right either to pay $1,800,000 for the shares or to transfer 400,000
shares of Media to the Corporation. Mr. Mika is the father of Mr. Arbel, the
former President and Chief Executive Officer of the Corporation. The shares of
Common Stock issued to EVC were not eligible for the Spin-off Distribution of
the Playco shares referred to herein. In April 1997, the Corporation and EVC
entered into an agreement to rescind the transaction, and EVC returned 2,706,006
shares to the Corporation in exchange for the 400,000 shares of Media. This
transaction was consummated in May 1997.
13
<PAGE>
See "Executive Compensation-Employment and Consulting Agreements" for a
discussion of the compensation arrangements the Corporation has with its
Executive Officers and consultants.
II. RATIFICATION OF THE PROPOSAL TO APPROVE THE CORPORATION'S
SENIOR MANAGEMENT INCENTIVE PLAN
General
The Corporation's Board of Directors has unanimously adopted the
Corporation's Senior Management Incentive Plan (the "Management Plan"), subject
to approval by the Corporation's stockholders. Approval of the Management Plan
requires the affirmative vote of a majority of the outstanding shares of Common
Stock represented and voting in person or by proxy at the Annual Meeting or any
adjournment thereof.
The following is a summary of the principal features of the Management
Plan an is qualified by and subject to the actual provisions of the Management
Plan, a copy of which is annexed hereto as Appendix "A."
Purpose and Eligibility
The purpose of the Management Plan is to provide an incentive to key
management employees whose present and potential contributions to the
Corporation and its Subsidiaries are or will be important to the success of the
Corporation by affording them an opportunity to acquire a proprietary interest
in the Corporation. It is intended that this purpose will be effected through
the issuance of (i) incentive stock rights, (ii) stock options, (iii) stock
appreciation rights (iv) limited stock appreciation rights and (v) restricted
shares (collectively, such options, rights and restricted shares are referred to
herein as "Awards"). Awards may be made or granted to key management employees
of the Corporation or its Subsidiaries who are deemed to have the potential to
have a significant effect on the future success of the Corporation (such
eligible persons being referred to herein as "Eligible Participants"). The term
"management employees" shall include executive officers, key employees,
consultants and advisors of the Corporation or of a Subsidiary. A director of
the Corporation or of any Subsidiary who is not also an employee of the
Corporation or of one of its Subsidiaries will not be eligible to receive any
Awards under the Management Plan.
Securities Subject to Management Plan
No more than 500,000 shares of Common Stock may be issued under the
Management Plan. The number of shares of Common Stock available to individuals
under the Management Plan in general, as well as the number of shares for which
issued or unissued options may be exercised, and the exercise price per share of
such options, will be proportionately adjusted to reflect stock splits, stock
dividends, and similar capital stock transactions.
Administration, Amendment, and Termination
The Management Plan shall be administered by the Board of Directors or by a
Committee of the Board of Directors (the "Committee"), if one is appointed for
this purpose. Committee members shall serve for such term as the Board of
Directors may in each case determine and shall be subject to removal at any time
by the Board of Directors. Members
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of the Board of Directors who are either eligible for Awards or have been
granted Awards may not vote on any matters affecting the administration of the
Management Plan or the grant of any Award pursuant to the Management Plan.
Grants under the Management Plan may be made until September 24, 2007.
The affirmative vote of the holders of a majority of the shares of the
Corporation's Common Stock issued and outstanding on the record date is required
to approve this proposal. The Directors and Officers of the Corporation and
other principal shareholders owning of record, beneficially, directly and
indirectly, an aggregate of approximately __________ shares of the Corporation's
Common Stock constituting approximately ____% of such shares outstanding on the
record date, have agreed to vote in favor of approval of this proposal;
therefor, the proposal shall be approved at the meeting.
The Board of Directors recommends that you vote "FOR" this Proposal.
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III. THE RATIFICATION OF THE PROPOSAL TO APPROVE AMENDMENTS TO THE
CORPORATION S CERTIFICATE OF INCORPORATION AND BY-LAWS REGARDING THE
INDEMNIFICATION RIGHTS OF THE CORPORATION'S DIRECTORS AND EXECUTIVE OFFICERS
The Corporation's board of directors and management have determined
that in order to retain key management employees and members to the
Corporation's board of directors, the Corporation needed to amend its
indemnification provisions for its executive officers and directors to provide
indemnification to the limits allowable by the laws of the state of Delaware,
the Corporation's state of incorporation. In order to accomplish this the board
has approved an amendment to Article EIGTH of its certificate of Incorporation
and the addition of Article XII to its By-laws, as annexed hereto as Appendix B.
The Corporation's certificate of incorporation currently provides that the
directors of the Corporation would be indemnified as to monetary breeches of
fiduciary duties which involve (i) a duty of loyalty (ii) acts or omission not
in good faith or which involve intentional misconduct or a knowing violation of
law (iii) liability for unlawful payment of dividends or unlawful stock purchase
or redemption by the Corporation or (iv) a transaction from which the director
derived an improper personal benefit. The Corporation desires to alter the
indemnification provisions contained in its certificate of incorporation to
include executive officers of the Corporation and to provide indemnification to
the fullest extent allowable under the Delaware General Corporation Law
("DGCL"), as established within the applicable Delaware statutory framework.
Section 145 of the Delaware General Corporation Law provides in
general that a corporation may indemnify an officer and/or director from civil
and criminal liability by reason of the fact that such person was an officer
and/or director of the corporation against all fees expenses, judgments, fines
and amounts paid in settlement actually and reasonably incurred in connection
with an actual or threatened action, suit or proceeding if the officer/director
acted in good faith and in a manner her reasonably believed to be in or not
opposed to be in the best interests of the corporation, and with respect to any
criminal proceeding that the person had no reasonable cause to believe that his
conduct was unlawful.
Stockholder approval is required in order to amend the Corporation's
certificate of incorporation. The indemnification agreements are a response to
(i) the increasing hazard of litigation directed against directors and officers
and the expense of such litigation, (ii) the limited availability of adequate
and reasonably priced directors' and officers' liability insurance and (iii) the
potential inability of the Corporation to continue to attract and retain
qualified directors and officers in light of the foregoing circumstances. The
Corporation's board of directors believes that enacting the provisions stated
herein, it is in the best interests of the Corporation and its stockholders, by
strengthening the Corporation's ability to attract and retain the services of
knowledgeable and experienced persons to serve as directors and officers of the
Corporation.
Section 144 of the DGCL provides that no transaction between a
corporation and one or more of its directors is either void or voidable because
such director or directors are parties to such transaction if the material facts
as to the transaction and as the such director's interest are disclosed or known
to the stockholders and such transaction is approved in good faith by the vote
of the stockholders. The Corporation believes that the indemnification provision
submitted herein are just and reasonable to the Corporation and its
stockholders. If approved by the stockholders, these provisions will not be void
or voidable and the Corporation's stockholders may not later assert a claim that
the indemnification provisions are invald due to improper authorization.
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The Securities and Exchange Commission has expressed its opinion that
indemnification of directors, officers and controlling persons of a corporation
against liabilities arising under the Securities Act of 1933, as amended (the
"Act"), is against public policy as expressed under the Act and is, therefore,
unenforceable.
The Corporation is not aware of any pending or threatened claims or
any litigation or proceeding which may result in a claim for indemnification by
any director or officer of the Corporation. The Corporation does not presently
have directors' and officers' liability insurance, nor does it presently intend
to obtains such insurance.
The affirmative vote of the holders of a majority of the shares of the
Corporation's Common Stock issued and outstanding on the record date is required
to approve this proposal. The Directors and Officers of the Corporation and
other principal shareholders owning of record, beneficially, directly and
indirectly, an aggregate of approximately __________ shares of the Corporation's
Common Stock constituting approximately ____% of such shares outstanding on the
record date, have agreed to vote in favor of approval of this proposal;
therefor, the proposal shall be approved at the meeting.
The Board of Directors recommends that you vote "FOR" this Proposal.
IV. RATIFICATION OF THE PROPOSAL TO MERGE LABYRINTH
COMMUNCIATION TECHNOLOGIES GROUP, INC. INTO THE CORPORATION
The Corporation's board of directors has determined that it is in the
best interests of the Corporation to merge Labyrinth Communication Technologies
Group, Inc. ("Labyrinth"), into the Corporation whereby, the Corporation would
be the surviving company. The Corporation presently the parent company and 51%
owner of the outstanding shares of Labyrinth. The Corporation proposes to offer
to issue an aggregate of 4,300,000 shares of Common Stock to the Labyrinth
stockholders, pro rata, for the remaining 49% of shares of Labyrinth. The
Corporation shall effect this transaction by offering 8 shares of the
Corporation's Common Stock for each share of Labyrinth's common stock
outstanding.
Management has recently undertaken discussions with members of the
investment banking community to raise additional capital for the Corporation's
activities. The Corporation is attempting to raise $10,000,000 to $20,000,000 in
order to complete its research and development of the RadioCamera, enable the
manufacture and roll out of the RadioCamera in its first major market and for
developing a version of the RadioCamera for the PCS standard. The Corporation
was informed that its corporate structure was inefficient, suggesting that the
Corporation and Labyrinth be combined into one company. The Corporation adhered
to this advice and decided on the formula described below for accomplishing this
combination.
The Corporation's evaluation of Labyrinth, a private corporation, is in
principal based on an analysis of the Corporation's current structure. The
Corporation is a holding company with two 51% owned subsidiaries, Labyrinth and
Mantra Technologies, Inc. ("Mantra"). The Corporation has an option to purchase
the remaining
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49% of Mantra from its stockholders for 1,000,000 shares of Common Stock,
subject to the terms of an option agreement executed when Mantra was acquired by
Labyrinth. As the Corporation currently has approximately 7.3 Million shares of
Common Stock outstanding, an apportionment of the value of such shares between
Labyrinth and Mantra needed to be formulated in order to for the Corporation to
determine how many shares should be exchanged for the 49% of Labyrinth. The
Corporation determined that the apportionment should be as follows: (i) the
Mantra ownership is 1,000,000 shares (ii) the value of the control of Labyrinth
and Mantra as well as the value of the public vehicle in terms of obtaining
strategic partners, raising capital, hiring senior management employees, and
providing basic administrative services including credit facilities, was
apportioned as 1,000,000 shares (iii) the $3,000,000 of cash owned by the
Corporation is apportioned 1,000,000 shares (based on a 25% discount on the
average current market price of $4.00 per share) and (iv) the apportionment of
4,300,000 shares for 49% of Labyrinth.
The Corporation shall provide the stockholders of Labyrinth with an
"Exchange Offer", whereby said stockholders would have the right to receive 8
shares of the Corporation's Common Stock for each share of Labyrinth's common
stock. In the event that 100% of the Labyrinth stockholders do not agree to the
Exchange Offer, the transaction shall not be consummated.
In addition, the Corporation determined that there needed to be
limitations on the distribution of the Corporation's shares to the Labyrinth
stockholders. The Corporation decided that the initial investment in Labyrinth,
in both funding and management, was done in a private company with only the
potential for liquidity in such ownership, when and if, Labyrinth became a
commercial success. Therefore, as a part to the Exchange Offer the Labyrinth
stockholders will be required to execute restricted share agreements with
respect to the shares received in the exchange, whereby, the shares acquired
will be subject to a vesting schedule, as follows; (i) 30% of the shares
received shall vest one year from issuance (ii) an additional 30% shall vest
upon the successful completion and operation of the RadioCamera in the first
major market, being either New York, Los Angeles, San Francisco, Washington,
D.C., Chicago, Philadelphia or Boston and (iii) the remaining 40% vesting when
the Corporation reaches sales of $15,000,000. The Corporation structured this
schedule on what it believed was a viable and reasonable basis in which the
Labyrinth stockholders would have expected liquidity in there ownership when
they became owners of shares in a private corporation. In addition to and
independent of the vesting schedule reference above the shares owned by the
executive officers of Labyrinth shall be subject to the vesting schedules
referenced in their employment agreements, which provide for 1/3 vesting in each
of their three years of employment.
The Corporation shall distribute Exchange Offers to the Labyrinth
stockholders upon approval of this proposal by a majority of the Corporation's
stockholders and shall give the Labyrinth stockholders 30 days to accept the
Exchange Offer.
The affirmative vote of the holders of a majority of the shares of the
Corporation's Common Stock issued and outstanding on the record date is required
to approve this proposal. The Directors and Officers of the Corporation and
other principal shareholders owning of record, beneficially, directly and
indirectly, an aggregate of approximately __________ shares of the Corporation's
Common Stock constituting approximately ____% of such shares outstanding on the
record date, have agreed to vote in favor of approval of this proposal;
therefor, the proposal shall be approved at the meeting.
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FINANCIAL INFORMATION
A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL
YEAR ENDED MARCH 31, 1997 WAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
AND WILL BE FURNISHED WITHOUT THE ACCOMPANYING EXHIBITS TO STOCKHOLDERS, WITHOUT
CHARGE, UPON WRITTEN REQUEST THEREFOR SENT TO DAVID S. KLARMAN, SECRETARY, U.S.
WIRELESS CORPORATION, 2694 BISHOP DRIVE, SAN RAMON CA 94583. EACH SUCH REQUEST
MUST SET FORTH A GOOD FAITH REPRESENTATION THAT AS OF AUGUST 13, 1997, THE
PERSON MAKING THE REQUEST WAS THE BENEFICIAL OWNER OF SHARES OF THE
CORPORATION'S COMMON STOCK ENTITLED TO VOTE AT THE ANNUAL MEETING OF
STOCKHOLDERS.
V. OTHER BUSINESS
As of the date of this proxy statement, the only business which the
Board of Directors intends to present, and knows that others will present, at
the Annual Meeting is that herein set forth. If any other matter is properly
brought before the Annual Meeting or any adjournments thereof, it is the
intention of the persons named in the accompanying form of proxy to vote the
proxy on such matters in accordance with their judgment.
Shareholder Proposals
Proposals of shareholders intended to be presented at the
Corporation's 1998 Annual Meeting of Shareholders must be received by the
Corporation on or prior to June 1, 1998 to be eligible for inclusion in the
Corporation's proxy statement and form of proxy to be used in connection with
the 1998 Annual Meeting of Shareholders.
By Order of the Board of Directors,
David S. Klarman
Secretary
October 17, 1997
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE AND RETURN
YOUR PROXY PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF IT IS
MAILED IN THE UNITED STATES OF AMERICA.
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Appendix A
SENIOR MANAGEMENT INCENTIVE PLAN OF
U.S. WIRELESS CORPORATION
1. PURPOSE OF THE PLAN
The purpose of the Senior Management Incentive Plan (the "Management
Plan") of U.S. Wireless Corporation (the "Corporation") is to provide an
incentive to key management employees whose present and potential contributions
to the Corporation and/or its Subsidiaries (as such term is defined in Section 2
below) are, or will be, important to the success of the Corporation by affording
said employees an opportunity to acquire a proprietary interest in the
Corporation. It is intended that this purpose will be effected through the
issuance of (i) incentive stock rights; (ii) stock options; (iii) stock
appreciation rights; (iv) limited stock appreciation rights; and (v) shares of
Common Stock, $.001 par value per share, of the Corporation ("Common Stock")
subject to restrictions on disposition ("restricted shares") (collectively, such
options, rights and restricted shares are referred to herein as "Awards"). Stock
options which qualify as "Incentive Stock Options" under Section 422A of the
Internal Revenue Code of 1986, as it hereafter may be amended (the "Code"), may
be granted under the Management Plan. Such options are sometimes referred to
collectively as "ISOs." Options which do not qualify as ISOs ("non-ISOs") may
also be granted under the Plan.
2. ELIGIBILITY
Awards may be made or granted to those key management employees of the
Corporation and/or its Subsidiaries who are deemed to have the potential to have
a significant effect on the future success of the Corporation (such eligible
persons being referred to herein as "Eligible Participants"). The term
"management employees" shall include executive officers, key employees, and
consultants of the Corporation and/or its Subsidiaries. A Director of the
Corporation, and/or any of its Subsidiaries, who is not also an employee of the
Corporation, and/or of one of its Subsidiaries, will not be eligible to receive
any Awards under the Management Plan. No ISO shall be granted to an employee
who, at the time the option is granted, owns stock possessing more than 10% of
the total combined voting power of all classes of capital stock of the employer
Corporation (as such term is used in the Code) or any Parent or Subsidiary of
the employer Corporation, provided, however, that an ISO may be granted to such
an employee if at the time such ISO is granted, the option price is at least one
hundred ten percent (110%) of the fair market value of stock subject to the ISO
on the date of grant (as determined pursuant to Subsection 8(a) hereof) and such
ISO is by its terms not exercisable after the expiration of five (5) years from
the date such option is granted. The exercise price of the non-ISOs may not be
less than 85% of the fair market value of the Common Stock on the date of grant.
The terms "Subsidiary" and "Parent") as used herein shall have the meanings
given them in Section 425 of the Code. Awards may be made to executive personnel
who hold, or have held, options, rights, or shares under the Management Plan or
under any other plans of the Corporation.
3. STOCK SUBJECT TO THE PLAN
The shares that may be issued upon exercise of options and rights and
which may be issued as restricted shares under the Management Plan shall not
exceed in the aggregate 500,000 shares of the Common Stock, as adjusted to give
effect to the anti-dilution provisions contained in Section 12 hereof. Such
shares may be authorized and unissued shares, or shares purchased by the
Corporation and reserved for issuance under the Management Plan. If a stock
option or incentive stock right for any reason expires or is terminated without
having been exercised in full, or if shares restricted are repurchased by the
Corporation in accordance with the terms thereof, those shares relating to an
unexercised stock option or incentive stock rights or shares which have been
repurchased shall again become available for grant and/or sale under the
Management Plan.
4. AWARDS UNDER THE PLAN
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Awards under the Management Plan may be of five types: "incentive stock
rights," "stock options," "stock appreciation rights," "limited stock
appreciation rights," and "restricted shares." "Incentive stock rights" are
composed of incentive stock units which give the holder the right to receive,
without payment of cash or property to the Corporation, shares of Common Stock,
subject to the terms, conditions, and restrictions described in Section 7
hereof. An option, including an ISO, is a right to purchase Common Stock in
accordance with Section 8 hereof. A "stock appreciation right" is a right given
to the holder of a stock option to receive, upon surrender of all or a portion
of his stock option without payment of cash or property to the Corporation, a
number of shares of Common Stock and/or cash determined pursuant to a formula in
accordance with Section 9 hereof. A "limited stock appreciation right" is a
right given to a holder of a stock option to receive, upon the occurrence of
certain events generally constituting a change in control of the Corporation, a
number of shares of Common Stock and/or cash upon surrender of all or a portion
of his stock option without the payment of cash or property to the Corporation,
in accordance with Section 10 hereof. "Restricted shares" are shares of Common
Stock which, following issuance, are nontransferable and subject to substantial
risk of forfeiture until specific conditions based on continuing employment or
achievement of preestablished performance objectives are met, in accordance with
Section 11 hereof. All references to "cash" herein shall mean "cash or certified
check. "
5. ADMINISTRATION
(a) Procedure. The Management Plan shall be administered by the Board
of Directors or by a Committee of the Board of Directors (the "Committee"), if
one is appointed for this purpose. Committee members shall serve for such term
as the Board of Directors may in each case determine and shall be subject to
removal at any time by the Board of Directors. Members of the Board of Directors
who are either eligible for Awards or have been granted Awards may not vote on
any matters affecting the administration of the Management Plan or the grant of
any Award pursuant to the Management Plan.
(b) Powers of the Board or Committee. As used herein, except as the
Committee's powers are specifically limited in Sections 5, 6, 20, and 21 hereof,
reference to the Board of Directors shall mean such Board or the Committee,
whichever is then acting with respect to the Management Plan. Subject to the
provisions of the Management Plan, the Board of Directors shall have the
authority in its discretion: (i) to determine, upon review of relevant
information, the fair market value of the Common Stock; (ii) to determine the
exercise price per share of stock options to be granted; (iii) to determine the
Eligible Participants to whom, and time or times at which, Awards shall be
granted and the number of shares to be issuable upon exercise of each stock
option or right sold pursuant to restricted stock purchase agreements; (iv) to
construe and interpret the Management Plan; (v) to prescribe, amend, and rescind
rules and regulations relating to the Management Plan; (vi) to determine the
terms and provisions of each Award (which need not be identical); and (vii) to
make all other determinations necessary to or advisable for the administration
of the Management Plan. Notwithstanding the foregoing, in the event any employee
of the Corporation or of any of its Subsidiaries granted an Award under the
Management Plan is, at the time of such grant, a member of the Board of
Directors of the Corporation, the grant of such Award shall, in the event the
Board of Directors at the time such Award is granted is not deemed to satisfy
the requirement of Rule 16(b)-3(b)(2)(i) or (ii) promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), be subject to
the approval of an auxiliary committee consisting of not less than three persons
all of whom qualify as "disinterested persons" within the meaning of Rule
16(b)-3(d)(3) promulgated under the Exchange Act. In the event the Board of
Directors deems it impractical to form a committee of disinterested persons, the
Board of Directoaward under the Management Plan.
6. DURATION OF THE PLAN
The Management Plan shall become effective upon the approval of the
requisite vote of the stockholders of the Corporation, and upon the approvals,
if required, of any other public authorities. The Management Plan shall remain
in effect for a term of ten (10) years from the date of adoption by the Board
unless sooner terminated under Section 20 hereof. Notwithstanding any of the
foregoing to the contrary, the Board of Directors (but not the Committee) shall
have the authority to amend the Management Plan pursuant to Section 20 hereof;
provided, however, that Awards already made shall remain in full force and
effect as if the Management Plan had not been amended or terminated.
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7. INCENTIVE STOCK RIGHTS
The Board of Directors, in its discretion, may grant to Eligible
Participants incentive stock rights composed of incentive stock units. Incentive
stock rights shall be granted pursuant to incentive stock rights agreements in
such form, and not inconsistent with the Management Plan, as the Board of
Directors shall approve from time to time and shall include substantially the
following terms and conditions as determined by the Board of Directors:
(a) Incentive Stock Units. An incentive stock rights agreement shall
specify the number of incentive stock units to which it pertains. Each incentive
stock unit shall be equivalent to one share of Common Stock. Each incentive
stock unit shall entitle the holder thereof to receive, subject to the lapse of
the incentive periods (as hereinafter defined), without payment of cash or
property to the Corporation, one share of Common Stock in consideration for
services performed by the Eligible Participant for the Corporation or for any
one of its Subsidiaries.
(b) Incentive Period. The holder of incentive stock rights shall be
entitled to receive shares of Common Stock only after the lapse of such
incentive periods and in such manner, as shall be fixed in the discretion of the
Board of Directors at the time of grant of such incentive stock rights. (Such
period so fixed is herein referred to as an "incentive period"). To the extent
the holder of incentive stock rights receives shares of Common Stock on the
lapse of an incentive period, an equivalent number of incentive stock units
subject to such rights shall be deemed to have been discharged.
(c) Termination by Reason of Death or Disability. In the event that the
recipient of incentive stock rights ceases to be employed by the Corporation
and/or by any of its Subsidiaries during an incentive period, due to death or
permanent disability (as determined by the Board of Directors), the holder of
incentive stock rights or, in the case of the death of the holder, the personal
representatives, heirs, or legatees of such holder shall be entitled to receive
a number of shares equal to an amount determined by multiplying the total number
of incentive stock units applicable to such incentive period by a fraction, the
numerator of which shall be the number of full calendar months between the date
of grant of the incentive stock rights and the date of such termination and the
denominator of which shall be the number of full calendar months between the
date of grant and the date such incentive period for such units would, but for
such termination, have lapsed. For purposes of this Subsection 7(c), this shall
constitute a lapse of the incentive period with respect to the number of
incentive stock units equal to the number of shares issued. Units upon which the
incentive period do not lapse pursuant to the foregoing sentence shall terminate
and be null and void on the date on which the recipient ceases to be employed by
the Corporation and/or by any of its Subsidiaries.
(d) Termination for Any Other Reason. In the event that the employment,
by the Corporation or by any of its Subsidiaries, of the recipient to whom
incentive stock rights have been issued under the Management Plan terminates for
any reason (including dismissal by the Corporation or by any of its
Subsidiaries, with or without cause) other than death or permanent disability,
such rights as to which the incentive period has not lapsed shall terminate and
be null and void on termination of the relationship.
(e) Issuance of Shares. Upon the lapse of an incentive period, the
Corporation shall deliver to the holder of the related incentive stock unit a
certificate or certificates representing the number of shares of Common Stock
equal to the number of incentive stock units with respect to which an incentive
period has lapsed. The Corporation shall pay all applicable transfer or issue
taxes.
8. OPTIONS
Options shall be evidenced by stock option agreements in such form, and
not inconsistent with the Management Plan, as the Board of Directors shall
approve from time to time, which agreements shall contain in substance the
following terms and conditions:
(a) Option Price; Number of Shares. The option price, which shall be
approved by the Board of Directors, shall in no event be less than one hundred
percent (100%) in the case of ISOs, except with respect to 10% stockholders
whereby the price shall be
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110%, and in the case of non-ISOs, eighty-five percent (85%) of the fair market
value of the Corporation's Common Stock at the time the option is granted. The
fair market value of the Common Stock, for the purposes of the Management Plan,
shall mean: (i) if the Common Stock is traded on a national securities exchange
or on the NASDAQ National Market System ("NMS"), the per share closing price of
the Common Stock on the principal securities exchange on which it is listed or
on NMS, as the case may be, on the date of grant (or if there is no closing
price for such date of grant, then the last preceding business day on which
there was a closing price); or (ii) if the Common Stock is traded in the
over-the-counter market and quotations are published on the NASDAQ quotation
system (but not on NMS), the closing bid price of the Common Stock on the date
of grant as reported by NASDAQ (or if there are no closing bid prices for such
date of grant, then the last preceding business day on which there was a closing
bid price); or (iii) if the Common Stock is traded in the over-the-counter
market but bid quotations are not published on NASDAQ, the closing bid price per
share for the Common Stock as furnished by a broker-dealer which regularly
furnishes price quotations for the Common Stock.
The option agreement shall specify the total number of shares to which
it pertains and whether such options are ISOs or are not ISOs. With respect to
ISOs granted under the Management Plan, the aggregate fair market value
(determined at the time an ISO is granted) of the shares of Common Stock with
respect to which ISOs are exercisable for the first time by such employee during
any calendar year shall not exceed $100,000 under all plans of the employer
Corporation or its Parent or Subsidiaries.
(b) Waiting Period and Exercise Dates. At the time an option is
granted, the Board of Directors will determine the terms and conditions to be
satisfied before shares may be purchased, including the dates on which shares
subject to the option may first be purchased. (The period from the date of grant
of an option until the date on which such option may first be exercised is
referred to herein as the "waiting period.") At the time an option is granted,
the Board of Directors shall fix the period within which it may be exercised
which shall not be less than one (1) year nor, for an ISO, more than ten (10)
years (not more than 5 years for 10% stockholders) from the date of grant or,
for a non-ISO, for more than thirteen (13) years from the date of grant. (Any of
such periods is referred to herein as the "exercise period.")
(c) Form and Time of Payment. Stock purchased pursuant to an option
agreement shall be paid for at the time of purchase either in (i) cash or by
certified check or, in the discretion of the Board of Directors, as set forth in
the stock option agreement; (ii) through the delivery of shares of Common Stock;
or (iii) in a combination of the methods described above. Upon receipt of
payment, the Corporation shall, without transfer or issue tax to the option
holder or other person entitled to exercise the option, delivered to the option
holder (or such other person) a certificate or certificates for the shares so
purchased.
(d) Effect of Termination or Death. In the event that an option holder
ceases to be an employee of the Corporation or of any of its Subsidiaries for
any reason other than permanent disability (as determined by the Board of
Directors) or death, any option, including any unexercised portion thereof,
which was otherwise exercisable on the date of termination, shall expire unless
exercised within a period of three months from the date on which the option
holder ceases to be so employed, but in no event after the expiration of the
exercise period, provided, however, that if the Board of Directors shall
determine that an option holder shall have been discharged for cause, options
granted and not yet exercised shall terminate immediately and be null and void
as of the date of discharge. In the event of the death of an option holder
during this three month period, the option shall be exercisable by his or her
personal representatives, heirs, or legatees to the same extent that the option
holder could have exercised the option if he had not died, for the three months
from the date of death, but in no event after the expiration of the exercise
period. In the event of the permanent disability of an option holder while an
employee of the Corporation or of any of its Subsidiaries, any option granted to
such employee shall be exercisable for twelve (12) months after the date of
permanent disability, but in no event after the expiration of the exercise
period. In the event of the death of an option holder while an employee of the
Corporation or of any of its Subsidiaries, or during the twelve (12) month
period after the date of permanent disability of the option holder, that portion
of the option which had become exercisable on the date of death shall be
exercisable by his or her personal representatives, heirs, or legatees at any
time prior to the expiration of one (1) year from the date of the death of the
option holder, but in no event after the expiration of the exercise period.
Except arovide otherwise, in the event an option holder ceases to be an employee
of the Corporation or of any of its Subsidiaries for any reason, including
death, prior to the lapse of the waiting period, his option shall terminate and
be null and void.
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(e) Other Provisions. Each option granted under the Management Plan may
contain such other terms, provisions, and conditions not inconsistent with the
Management Plan as may be determined by the Board of Directors.
9. STOCK APPRECIATION RIGHTS
The Board of Directors may grant, in its discretion, stock appreciation
rights to the holder of any stock option under the Management Plan. Such rights
shall be granted pursuant to a stock appreciation rights agreement in such form,
and not inconsistent with the Management Plan, as the Board of Directors shall
approve from time to time (and which may be incorporated in the stock option
agreement governing the terms of the related option) and shall include
substantially the following terms and conditions as the Board of Directors shall
determine:
(a) Grant. Each right shall relate to a specific option granted under
the Management Plan and shall be granted to the option holder either
concurrently with the grant of such option or at such later time as determined
by the Board of Directors.
(b) Exercise. A stock appreciation right shall entitle an option holder
to receive, without payment of cash or property to the Corporation, a number of
shares of Common Stock, cash, or a combination thereof in the amount determined
pursuant to Subsection 9(c) below. The Board of Directors shall determine
whether such payment shall be made in Common Stock, cash, or a combination
thereof. Unless otherwise determined by the Board of Directors, a right shall be
exercisable to no greater extent nor upon any more favorable conditions than its
related option is exercisable under Subsection 8(b) hereof. An option holder
wishing to exercise a right in accordance with this Subsection 9(b) shall give
written notice of such exercise to the Corporation, which notice shall state
that the holder of the right elects to exercise the right and the number of
shares in respect of which the right is being exercised. The effective date of
exercise of a right shall be the date on which the Corporation shall have
received such notice. Upon receipt of such notice, the Corporation shall (i)
deliver to the option holder or other person entitled to exercise the right, a
certificate or certificates representing such shares; and/or (ii) pay cash to
the option holder or other person entitled to exercise the right. The
Corporation shall pay all applicable transfer or issue taxes. Notwithstanding
the provisions of this section, no stock appreciation right may be exercised
within a period of six months on the date of grant of such stock appreciation
right and no stock appreciation right granted with respect to an ISO may be
exercised unless the fair market value of the Common Stock on the date of
exercise exceeds the exercise price of the ISO.
(c) Number of Shares or Amount of Cash. The number of shares which
shall be issued pursuant to the exercise of a stock appreciation right shall be
determined by dividing (i) that portion, as elected by the option holder, of the
total number of shares which the option holder is eligible to purchase pursuant
to Subsection 8(b) hereof (and as adjusted pursuant to Section 12 hereof),
multiplied by the amount (if any) by which the fair market value (as determined
in accordance with Subsection 8(a) hereof) of a share of Common Stock on the
exercise date exceeds the option exercise price of the related option; by (ii)
the fair market value of a share of Common Stock on the exercise date. In lieu
of issuing shares of Common Stock on the exercise of a right, the Board of
Directors may elect to pay the cash equivalent of the fair market value on the
exercise date of any or all of the shares which would otherwise be issuable on
exercise of the right. No fractional shares shall be issued under this
Subsection 9(c). In lieu of fractional shares, the option holder shall be
entitled to receive a cash adjustment equal to the same fraction of the fair
market value per share of Common Stock on the date of exercise.
(d) Effect of Exercise. Upon the exercise of stock appreciation rights,
the related option shall be considered to have been exercised to the extent of
the number of shares of Common Stock with respect to which such stock
appreciation rights are exercised and shall be considered to have been exercised
to that extent for purposes of determining the number of shares of Common Stock
available for the grant of options under the Management Plan. Upon the exercise
or termination of the related option, the stock appreciation rights with respect
to such related option shall be considered to have been exercised or terminated
to the extent of the number of shares of Common Stock with respect to which the
related option was so exercised or terminated.
(e) Effect of Termination or Death. In the event that an option holder
ceases to be an employee or consultant of the Corporation or of any of its
Subsidiaries for any reason, his stock appreciation rights shall be exercisable
only to the extent and upon the conditions that their related options are
exercisable under Subsection 8(d).
10. LIMITED STOCK APPRECIATION RIGHTS
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The Board of Directors may grant, in its discretion, limited stock
appreciation rights ("Limited Rights") to the holder of any option with respect
to all or a portion of the shares subject to such option. Such Limited Rights
shall be granted pursuant to an agreement in such form, and not inconsistent
with the Management Plan, as the Board of Directors shall approve from time to
time (and which may be incorporated in the stock option agreement governing the
terms of the related option) and shall include substantially the following terms
and conditions as the Board shall determine:
(a) Grants. A Limited Right may be granted concurrently with the grant of
the related option or at such later time as determined by the Board of
Directors.
(b) Exercise. Unless otherwise determined by the Board of Directors, a
Limited Right may be exercised only during the period (a) beginning on the first
day following any one of (i) the date of approval by the stockholders of the
Corporation of an Approved Transaction (as defined in Subsection 10(e) below),
(ii) the date of a Control Purchase (as defined in Subsection 10(e) below) or
(iii) the date of a Board Change (as defined in Subsection 10(e) below); and (b)
ending on the thirtieth day (or such other date specified in the stock option
agreement) following such date (such period herein referred to as the "Limited
Right Exercise Period"). Each Limited Right shall be exercisable during the
Limited Right Exercise Period only to the extent the related option is then
exercisable and in no event after the termination of the related option. Limited
Rights granted under the Management Plan shall be exercisable in whole or in
part by notice to the Corporation. Such notice shall state that the holder of
the Limited Rights elects to exercise the Limited Rights and the number of
shares in respect of which the Limited Rights are being exercised. The effective
date of exercise of a Limited Right shall be deemed to be the date on which the
Corporation shall have received such notice.
(c) Amount Paid Upon Exercise. Upon the exercise of Limited Rights, the
holder shall receive in cash an amount equal to the excess of (i) the fair
market value (as determined pursuant to Subsection 8(a) above), on the date of
exercise of such Limited Rights, of each share of Common Stock with respect to
which such Limited Right shall have been exercised; over (ii) the exercise price
per share of Common Stock subject to the related option.
(d) Effect of Exercise. Upon the exercise of Limited Rights, the
related option shall be considered to have been exercised to the extent of the
number of shares of Common Stock with respect to which such Limited Rights are
exercised and shall be considered to have been exercised to that extent for
purposes of determining the number of shares of Common Stock available for the
grant of options under the Management Plan. Upon the exercise or termination of
the related option, the Limited Rights with respect to such related option shall
be considered to have been exercised or terminated to the extent of the number
of shares of Common Stock with respect to which the related option was so
exercised or terminated.
(e) Definitions. For purposes of this Section 10:
(i) An "Approved Transaction" shall mean (A) any consolidation
or merger of the Corporation in which the Corporation is not the continuing or
surviving corporation or pursuant to which shares of Common Stock would be
converted into cash, securities, or other property, other than a merger of the
Corporation in which the holders of Common Stock immediately prior to the merger
have the same proportionate ownership of common stock of the surviving
corporation immediately after the merger; or (B) any sale, lease, exchange, or
other transfer (in one transaction or a series of related transactions) of all,
or substantially all, of the assets of the Corporation; or (C) the adoption of
any plan or proposal for the liquidation or dissolution of the Corporation.
(ii) A "Control Purchase" shall mean circumstances in which
any person (as such term is defined in Sections 13(d)(3) and 14(d)(2) of the
Exchange Act), corporation, or other entity (other than the Corporation or any
employee benefit plan sponsored by the Corporation or any of its Subsidiaries)
(A) shall purchase any Common Stock of the Corporation (or securities
convertible into the Corporation's Common Stock) for cash, securities, or any
other consideration pursuant to a tender offer or exchange offer, without the
prior consent of the Board of Directors; or (B) shall become the "beneficial
owner" (as such term is defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Corporation representing twenty-five percent
(25%) or more
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of the combined voting power of the then outstanding securities of the
Corporation ordinarily (and apart from rights accruing under special
circumstances) having the right to vote in the election of Directors (calculated
as provided in paragraph (d) of such Rule 13d-3 in the case of rights to acquire
the Corporation's securities).
(iii) A "Board Change" shall mean circumstances in which,
during any period of two consecutive years or less, individuals, who at the
beginning of such period constitute the entire Board, shall cease for any reason
to constitute a majority thereof unless the election, or the nomination for
election by the Corporation's stockholders, of each new Director was approved by
a vote of at least a majority of the Directors then still in office.
11. RESTRICTED SHARES
The Board of Directors may authorize, in its discretion, the issuance
of restricted shares of Common Stock to Eligible Participants pursuant to
restricted share agreements in such form, and not inconsistent with the
Management Plan, as the Board of Directors shall approve from time to time. Any
amount of restricted shares issued shall be subject to the following terms:
(a) Restricted Period and Price. The Board of Directors shall prescribe
restrictions, terms, and conditions, including but not limited to the period
("restricted period") during which the holder must continue to render services
to the Corporation in order to retain the restricted shares, in addition to
those provided in the Management Plan. The Board shall determine the price, if
any, to be paid by the holder for the restricted shares. Upon forfeiture of any
restricted shares, any amount paid by the holder shall be repaid in full by the
Corporation.
(b) Issuance of Restricted Shares. Restricted shares, when issued, will
be represented by a stock certificate or certificates registered in the name of
the holder to whom such restricted shares shall have been awarded. During the
restricted period, certificates representing the restricted shares and any
securities constituting retained distributions (as defined below in Subsection
11(c)) shall bear a restrictive legend to the effect that ownership of the
restricted shares, and the enjoyment of all rights appurtenant thereto, are
subject to the restrictions, terms, and conditions provided in the Management
Plan and the applicable restricted shares agreement. Such certificates shall be
deposited by such holder with the Corporation, together with stock powers or
other instruments of assignment, each endorsed in blank, which will permit
transfer to the Corporation of all or any portion of the restricted shares and
any retained distributions that shall be forfeited or that shall not become
vested in accordance with the Management Plan and the applicable restricted
shares agreement.
(c) Rights With Respect to Restricted Shares. Restricted shares shall
constitute issued and outstanding shares of Common Stock for all corporate
purposes. The holder will have the right to vote such restricted shares, to
receive and retain all regular cash dividends and such other distributions as
the Board may in its sole discretion designate, pay, or distribute on such
restricted shares, and to exercise all other rights, powers, and privileges of a
holder of Common Stock with respect to such restricted shares, with the
exception that (i) the holder will not be entitled to delivery of the stock
certificate or certificates representing such restricted shares until the
restricted period shall have expired and unless all other vesting requirements
with respect thereto shall have been fulfilled; (ii) the Corporation will retain
custody of the stock certificate or certificates representing the restricted
shares during the restricted period; (iii) other than regular cash dividends and
such other distributions as the Board may in its sole discretion designate, the
Corporation will retain custody of all distributions ("retained distributions")
made or declared with respect to the restricted shares (and such retained
distributions will be subject to the same restrictions, terms, and conditions as
are applicable to the restricted shares) until such time, if ever, as the
restricted shares with respect to which such retained distributions shall have
been made, paid, or declared shall have become vested, and such retained
distributions shall not bear interest or be segregated in separate accounts;
(iv) the holder may not sell, assign, transfer, pledge, exchange, encumber, or
dispose of the restricted shares or any retained distributions during the
restricted period; and (v) a breach of any restrictions, terms, or conditions
provided in the Management Plan or established by the Board with respect to any
restricted shares or retained distributions will cause a forfeiture of such
restricted shans with respect thereto.
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(d) Completion of Restricted Period. On the last day of the restricted
period with respect to each Award of restricted shares, and upon the
satisfaction of any other applicable restrictions, terms, and conditions, all or
part of such restricted shares shall become vested, and any retained
distributions with respect to such restricted shares shall become vested. Unless
the Administrator determines otherwise, any such restricted shares and retained
distributions that shall not have become vested upon the termination of
employment of the holder shall be forfeited to the Corporation, and the holder
shall not thereafter have any rights (including dividend and voting rights) with
respect to such restricted shares and retained distributions that shall have
been so forfeited, provided, however, that if a holder shall die, become totally
disabled, or be terminated by the Corporation without cause during a restricted
period with respect to any restricted shares, then, unless the restricted share
agreement relating to such shares provides otherwise, the restricted period
applicable to each Award of restricted shares to such holder shall be deemed to
have expired and all such restricted shares and retained distributions shall
become vested.
12. RECAPITALIZATION
In the event that dividends are payable in Common Stock or in the event
there are splits, subdivisions, or combinations of shares of Common Stock, the
number of shares available under the Management Plan shall be increased or
decreased proportionately, as the case may be, and the number of shares
delivered upon the exercise thereafter of any stock option or stock appreciation
right, upon distribution pursuant to incentive stock rights theretofore granted
or issued pursuant to restricted share agreements theretofore entered into,
shall be increased or decreased proportionately, as the case may be, without
change in the aggregate purchase price (where applicable).
13. ACCELERATION
Notwithstanding any contrary waiting period in any stock option
agreement, any incentive period in any incentive stock rights agreement, or any
restricted period with respect to any restricted shares issued pursuant to any
restricted shares agreement or in the Management Plan, but subject to any
determination by the Board of Directors to provide otherwise at the time such
Award is granted or subsequent thereto, each outstanding option granted under
the Management Plan shall, except as otherwise provided in the stock option
agreement, become exercisable in full for the aggregate number of shares covered
thereby, and each share issuable upon lapse of an incentive period or each share
issued pursuant to a restricted share agreement, except as otherwise provided in
the incentive stock rights agreement or restricted share agreement, as the case
may be, shall vest unconditionally on the first day following the occurrence of
any of the following: (a) the approval by the stockholders of the Corporation of
an Approved Transaction; (b) a Control Purchase; or (c) a Board Change.
14. CONTINUATION OF RELATIONSHIP; LEAVE OF ABSENCE
(a) Nothing in the Management Plan or any Award made hereunder shall
interfere with, or limit in any way, the right of the Corporation or of any of
its Subsidiaries to terminate any Eligible Participant's employment at any time,
nor confer upon any Eligible Participant any right to continue any such
relationship with the Corporation or any of its Subsidiaries.
(b) For purposes of the Management Plan, (i) a transfer of a recipient
of options, rights, or restricted shares hereunder from the Corporation to one
of its Subsidiaries or vice versa, or from one Subsidiary to another; or (ii) a
leave of absence duly authorized by the Corporation shall not be deemed a
termination of employment or a break in the incentive, waiting, exercise, or
restricted period, as the case may be. In the case of any employee on an
approved leave of absence, the Board of Directors may make such provisions with
respect to continuance of stock rights, options, or restricted shares previously
granted while on leave from the employ of the Corporation or one of its
Subsidiaries as it may deem equitable.
15. GENERAL RESTRICTION
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Each Award made under the Management Plan shall be subject to the
requirement that, if at any time the Board of Directors shall determine, in its
sole and subjective discretion, that (i) the registration, qualification, or
listing of the shares subject to such Award upon a securities exchange or under
any state or federal law; or (ii) the consent or approval of any government
regulatory body is necessary or desirable as a condition of, or in connection
with, the granting or exercise of such Award, the Corporation shall not be
required to issue such shares unless such registration, qualification, listing,
consent, or approval shall have been effected or obtained free of any conditions
not acceptable to the Board of Directors. Nothing in the Management Plan or any
agreement or grant hereunder shall obligate the Corporation to effect any such
registration, qualification, or listing.
16. RIGHTS AS A STOCKHOLDER
The holder of a stock option, incentive stock right, or limited stock
appreciation right shall have no rights as a stockholder with respect to any
shares covered by the stock option, incentive stock right, stock appreciation
right, or limited stock appreciation right, as the case may be, until the date
of issuance of a stock certificate to him for such shares related to the
exercise or discharge thereof. No adjustment shall be made for the dividends or
other rights for which the record date is prior to the date such stock
certificate is issued.
17. NONASSIGNABILITY OF AWARDS
No incentive stock right, stock option, stock appreciation right, or
limited stock appreciation right shall be assignable or transferable by an
Eligible Participant except by will or by the laws of descent and distribution,
and during the lifetime of an Eligible Participant, such incentive stock rights,
stock options, stock appreciation rights, or limited stock appreciation rights
may only be exercised by him.
18. WITHHOLDING TAXES
Whenever under the Management Plan shares are to be issued in
satisfaction of stock options, incentive stock rights, stock appreciation
rights, or limited stock appreciation rights granted thereunder, or pursuant to
restricted share agreements, the Corporation shall have the right to require the
Eligible Participant to remit to the Corporation an amount sufficient to satisfy
federal, state, and local withholding tax requirements prior to the delivery of
any certificate or certificates for such shares or at such later time as when
the Corporation may determine that such taxes are due. Whenever under the
Management Plan payments are to be made in cash, such payments shall be net of
an amount sufficient to satisfy federal, state, and local withholding tax
requirements.
19. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Management Plan by the Board of Directors
nor any provision of the Management Plan shall be construed as creating any
limitations on the power of the Board (but not the Committee) to adopt such
additional compensation agreements as it may deem desirable, including, without
limitation, the granting of stock options otherwise than under the Management
Plan, and such arrangements may be either generally applicable or applicable
only in specific cases.
20. AMENDMENT, SUSPENSION, OR TERMINATION OF THE PLAN
The Board of Directors (but not the Committee) may at any time amend,
alter, suspend, or discontinue the Management Plan, but no amendment,
alteration, suspension, or discontinuation which would impair the rights of any
recipient of a stock option, incentive stock right, limited stock appreciation
right, or restricted share under any agreement theretofore entered into
hereunder, shall be made without such recipient's consent. No amendment,
alteration, suspension, or discontinuation shall be made which, without the
requisite vote of the stockholders of the Corporation approving such action,
would:
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(a) except as is provided in Section 12 of the Management Plan, increase
the total number of shares of stock reserved for the purposes of the Management
Plan; or
(b) extend the duration of the Management Plan; or
(c) materially increase the benefits accruing to participants under the
Management Plan; or
(d) change the category of persons who can be Eligible Participants under
the Management Plan. Without limiting the foregoing, the Board of Directors may,
any time or from time to time, authorize the Corporation, without the consent of
the respective recipients, to issue new options or rights in exchange for the
surrender and cancellation of any or all outstanding options or rights.
21. LIMITATIONS ON EXERCISE.
Notwithstanding anything to the contrary contained in the Management
Plan, any agreement evidencing any Award hereunder may contain such provisions
as the Board deems appropriate to ensure that the penalty provisions of Section
4999 of the Code, or any successor thereto, will not apply to any stock or cash
received by the holder from the Corporation.
22. GOVERNING LAW
The Management Plan shall be governed by, and construed in accordance
with, the laws of the State of Delaware.
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Appendix B
1. Amendment to Certificate of Incorporation
2. Amendment to By-laws.
Certificate of Amendment of
Certificate of Incorporation
of U.S. Wireless Corporation
Under Section 242 of the Delaware Corporation Law:
The Undersigned, for the purpose of amending the Certificate of
Incorporation of U.S. Wireless Corporation, does hereby certify and set forth:
FIRST: The name of the Corporation is: U.S. WIRELESS CORPORATION
SECOND: The Certificate of Incorporation was filed by the Department of
State on 12th day of February, 1993.
THIRD: The amendment to the Certificate of Incorporation of the Corporation
effected by this Certificate of Amendment is to amend the indemnification
provisions of "Article Eighth," so that, as amended, said Article shall read as
follows:
EIGHTH.
A director of the Corporation shall not be liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except to the extent such exemption from liability or limitation thereof is not
permitted under Delaware General Corporation Law as the same exists or may
hereinafter be amended. Any repeal or modification of this Article EIGHTH shall
not adversely affect any right or protection of a director of the corporation
existing hereunder with respect to any act or omission occurring prior to such
repeal or modification.
FOURTH:
The amendment to the Articles of Incorporation of the Corporation
set forth above was adopted at the Annual Meeting of the Corporation's
stockholders on the 12th day of November, 1997.
IN WITNESS WHEROF, the undersigned President of this Corporation has
executed this Certificate of Amendment on this 12th day of November, 1997.
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U.S. WIRELESS CORPORATION
Dr. Oliver Hilsenrath
President
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Amendment to By-Laws
ARTICLE VIII - INDEMNIFICATION OF DIRECTORS,
OFFICERS AND EMPLOYEES
Except to the extent expressly prohibited by the Delaware Corporation
Law, the corporation shall indemnify each person made or threatened to be made a
party to any action or proceeding, whether civil or criminal, by reason of the
fact that such person or such person's testator or intestate is or was a
director, officer or employee of the corporation, or serves or served at the
request of the corporation, any other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise in any capacity, against
judgment, fines, penalties, amounts paid in settlement and reasonable expenses,
including attorneys' fees, incurred in connection with such action or
proceeding, or any appeal therein, provided that no such indemnification shall
be made if a judgment or other final adjudication adverse to such person
establishes that his or her acts were committed in bad faith or were the result
of active and deliberate dishonesty and were material to the cause of action so
adjudicated, or that he or she personally gained in fact a financial profit or
other advantage to which he or she was not legally entitled, and provided
further that no such indemnification shall be required with respect to any
settlement or other non-adjudicated disposition of any threatened or pending
action or proceeding unless the corporation has given its prior consent to such
settlement or other disposition.
The corporation may advance or promptly reimburse upon request any
person entitled to indemnification hereunder for all expenses, including
attorneys' fees, reasonably incurred in defending any action or proceeding in
advance of the final disposition thereof upon receipt of an undertaking by or on
behalf of such person to repay such amount if such person is ultimately found
not to be entitled to indemnification or, where indemnification is granted, to
the extent the expenses so advanced or reimbursed exceed the amount to which
such person is entitled, provided, however, that such person shall cooperate in
good faith with any request by the corporation that common counsel be utilized
by the parties to an action or proceeding who are similarly situated unless to
do so would be inappropriate due to actual or potential differing interests
between or among such parties.
Nothing herein shall limit or affect any right of any person otherwise
than hereunder to indemnification or expenses, including attorneys' fees, under
any statute, rule, regulation, certificate of incorporation, by-law, insurance
policy, contract or otherwise.
Anything in these by-laws to the contrary notwithstanding, no
elimination of this by-law, and no amendment of this by-law adversely affecting
the right of any person to indemnification or advancement of expenses hereunder
shall be effective until the 60th day following notice to such person or such
action, and no elimination of or amendment to this by-law shall deprive any
person of his or her rights hereunder arising out of alleged or actual
occurrences, acts or failures to act prior to such 60th day.
The corporation shall not, except by elimination or amendment of this
by-law in a manner consistent with the preceding paragraph, take any corporate
action or enter into any agreement which prohibits, or otherwise limits the
rights of any person to, indemnification in accordance with the provisions of
this by-law. The indemnification
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of any person provided by this by-law shall continue after such person has
ceased to be a director, officer or employee of the corporation and shall inure
to the benefit of such person's heirs, executors, administrators and legal
representatives.
The corporation is authorized to enter into agreements with any of its
directors, officers or employees extending rights to indemnification and
advancement of expenses to such person to the fullest extent permitted by
applicable law, but the failure to enter into any such agreement shall not
affect or limit the rights of such person pursuant to this by-law, it being
expressly recognized hereby that all directors, officers and employees of the
corporation, by serving as such after the adoption hereof, are acting in
reliance hereon and that the corporation is estopped to contend otherwise.
In case any provision in this by-law shall be determined at any time to
be unenforceable in any respect, the other provisions shall not in any way be
affected or impaired thereby, and the affected provision shall be given the
fullest possible enforcement in the circumstances, it being the intention of the
corporation to afford indemnification and advancement of expenses to its
directors, officers and employees, acting in such capacities or in the other
capacities mentioned herein, to the fullest extent permitted by law.
For purposes of this by-law, the corporation shall be deemed to have
requested a person to serve an employee benefit plan where the performance by
such person of his or her duties to the corporation also imposes duties on, or
otherwise involves services by, such person to the plan or participants or
beneficiaries of the plan, and excise taxes assessed on a person with respect to
an employee benefit plan pursuant to applicable law shall be considered
indemnifiable expenses. For purposes of this by-law, the term "corporation"
shall include any legal successor to the corporation, including any corporation
which acquires all or substantially all of the assets of the corporation in one
or more transactions.
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