<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 18, 1998.
REGISTRATION NO. 333-______
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
DSP GROUP, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 94-2683643
(State or Other Jurisdiction (I.R.S. Employer Identification No.)
of Incorporation or Organization)
3120 SCOTT BOULEVARD, SANTA CLARA, CA 95054
Address of Principal Executive Offices) (Zip Code)
DSP GROUP, INC.
1998 NON-OFFICER EMPLOYEE STOCK OPTION PLAN
(Full Title of the Plan)
Eliyahu Ayalon
PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR
DSP GROUP, INC.
3120 SCOTT BOULEVARD
SANTA CLARA, CA 95054
(Name and Address of Agent For Service)
408/986-4300
(Telephone Number, Including Area Code,
of Agent For Service)
With a copy to:
Bruce Alan Mann, Esq.
Morrison & Foerster LLP
425 Market Street
San Francisco, CA 94105
- --------------------------------------------------------------------------------
<PAGE>
Calculation of Registration Fee
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Proposed Maximum Proposed Maximum
Title of Securities to Number of shares to Offering Price Per Aggregate Offering Amount of
be Registered be Registered Share Price Registration Fee
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 950,000 $18.1875* $17,278,125 $4,803.32
- -------------------------------------------------------------------------------
</TABLE>
* Calculated solely for purposes of this offering under Rule 457(h) of the
Securities Act of 1933 on the basis of the average of the high and low price per
share of DSP Group, Inc.'s Common Stock on the Nasdaq National Market on
December 14, 1998.
<PAGE>
Part I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The documents containing the information specified in Part I of Form
S-8 (plan information and registrant information and employee plan annual
information) will be sent or given to employees as specified by Rule 428(b)(1)
of the Securities Act of 1933, as amended (the "Securities Act"). Such document
need not be filed with the Securities and Exchange Commission either as part of
this Registration Statement or as prospectuses or prospectus supplements
pursuant to Rule 424 of the Securities Act. These documents and the documents
incorporated by reference in this Registration Statement pursuant to Item 3 of
Form S-8 (Part II hereof), taken together, constitute a prospectus that meets
the requirements of Section 10(a) of the Securities Act.
<PAGE>
Part II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
DSP Group, Inc. (the "Registrant") hereby incorporates by reference
into this Registration Statement the following documents previously filed with
the Securities and Exchange Commission (the "SEC").
(a) The Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998 filed with the SEC on March 31, 1998,
which includes audited financials for the Registrant's latest
fiscal year.
(b) The Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1998 filed with the SEC on May 13, 1998.
(c) The Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 1998 filed with the SEC on August 14,
1998.
(d) The Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 1998 filed with the SEC on November
16, 1998.
(e) The Registrant's Registration Statement No. 001-13065 on Form 8-A
filed with the SEC on June 6, 1997, in which there is described
the terms, rights and provisions applicable to the Registrant's
outstanding Common Stock.
All reports and definitive proxy or information statements filed
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934 (the "1934 Act") after the date of this Registration Statement and prior to
the filing of a post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all securities then remaining
unsold shall be deemed to be incorporated by reference into this Registration
Statement and to be a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any subsequently filed document which also is deemed to
be incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES
Not Applicable.
II-1
<PAGE>
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not Applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant's Restated Certificate of Incorporation limits the
liability of directors to the maximum extent permitted by Delaware law. Delaware
law provides that directors of a corporation will not be personally liable for
monetary damages for breach of their fiduciary duties as directors, except
liability for (i) any breach of their duty of loyalty to the corporation or its
stockholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) unlawful payments of
dividends or unlawful stock repurchases or redemption, or (iv) any transaction
from which the director derived an improper personal benefit.
The Registrant's Bylaws provide that the Registrant shall indemnify
its directors and executive officers and may indemnify its other officers and
employees and other agents to the fullest extent permitted by law. The
Registrant believes that indemnification under its Bylaws covers at least
negligence and gross negligence on the part of indemnified parties. The
Registrant's Bylaws also permit it to secure insurance on behalf of any officer,
director, employee or other agent for any liability arising out of his or her
actions in such capacity, regardless of whether the Bylaws would permit
indemnification.
The Registrant has entered into agreements to indemnify its
directors and executive officers, in addition to indemnification provided for
in the Registrant's Bylaws. These agreements, among other things, indemnify
the Registrant's directors and executive officers for certain expenses
(including attorneys' fees), judgments, fines and settlement amounts incurred
by any such person in any action or proceeding, including any action by or in
the right of the Registrant, arising out of such person's services as a
director or executive officer of the Registrant, any subsidiary of the
Registrant or any other company or enterprise to which the person provides
services at the request of the Registrant.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
ITEM 8. EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
5.1 Opinion of Morrison & Foerster LLP as to the legality of the
securities being registered.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Almagor & Co. CPA (ISR), Independent Auditors.
II-2
<PAGE>
23.3 Consent of Morrison & Foerster LLP (contained in the opinion
of counsel filed as Exhibit 5.1 to this Registration
Statement).
24.1 Power of Attorney (set forth on the signature page of this
Registration Statement).
99.1 DSP Group, Inc. 1998 Non-Officer Employee Stock Option Plan.
</TABLE>
ITEM 9. UNDERTAKINGS
A. The undersigned Registrant hereby undertakes: (1) to file,
during any period in which offers or sales are being made, a post-effective
amendment to this Registration Statement (i) to include any prospectus
required by Section 10(a)(3) of the Securities Act of 1933, as amended (the
"1933 Act"), (ii) to reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
Registration Statement, and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information in this
Registration Statement, provided, however, that clauses (1)(i) and (1)(ii)
shall not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed with or furnished to the SEC by the Registrant pursuant to Section 13
or Section 15(d) of the 1934 Act that are incorporated by reference into this
Registration Statement; (2) that, for the purpose of determining any
liability under the 1933 Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof; and (3) to remove from
registration by means of a post-effective amendment any of the securities
being registered which remain unsold upon the termination of the Registrant's
1998 Non-Officer Employee Stock Option Plan.
B. The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the 1933 Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
1934 Act that is incorporated by reference into this Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the
1933 Act may be permitted to directors, officers or controlling persons of the
Registrant pursuant to the indemnity provisions summarized in Item 6 above, or
otherwise, the Registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has
II-3
<PAGE>
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 1933 Act and will be governed by the final
adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Santa Clara, State of California, on December 18,
1998.
DSP GROUP, INC.
By: /s/ ELIYAHU AYALON
-------------------------------------
Eliyahu Ayalon
President, Chief Executive Officer
and Director
II-4
<PAGE>
POWER OF ATTORNEY AND ADDITIONAL SIGNATURES
Each person whose signature appears below constitutes and appoints
Eliyahu Ayalon, Igal Kohavi and Avi Basher, and each of them, his true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments to this Registration Statement,
including post-effective amendments, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do so and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or their substitutes, may lawfully do or
cause to be done by virtue thereof.
Further, pursuant to the requirements of the Securities Act of
1933, this Registration Statement has been signed by the following persons in
the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ IGAL KOHAVI
- -------------------------
Igal Kohavi Chairman of the Board December 18, 1998
/s/ ELIYAHU AYALON
- -------------------------
Eliyahu Ayalon President, Chief Executive Officer December 18, 1998
and Director
/s/ SAMUEL L. KAPLAN
- -------------------------
Samuel L. Kaplan Director December 18, 1998
/s/ MILLARD PHELPS
- -------------------------
Millard Phelps Director December 18, 1998
/s/ YAIR SHAMIR
- -------------------------
Yair Shamir Director December 18, 1998
/s/ AVI BASHER
- -------------------------
Avi Basher Vice President, Finance, Chief December 18, 1998
Financial Officer and Secretary
(Principal Financial Officer and
Principal Accounting Officer)
</TABLE>
II-5
<PAGE>
EXHIBIT 5.1
December 17, 1998
DSP Group, Inc.
3120 Scott Boulevard
Santa Clara, California 95054
Ladies and Gentlemen:
At your request, we have examined the Registration Statement on Form
S-8 to be filed by DSP Group, Inc., a Delaware corporation (the "Company"), with
the Securities and Exchange Commission in connection with the registration under
the Securities Act of 1933, as amended, of 950,000 shares of the Company's
common stock, $0.001 par value per share (the "Common Stock").
As counsel to the Company, we have examined the proceedings taken by
the Company in connection with the reservation of the 950,000 shares of the
Common Stock to be issued pursuant to the Company's 1998 Non-Officer Employee
Stock Option Plan.
It is our opinion that the 950,000 shares of Common Stock which may be
issued and sold by the Company, when issued and sold in the manner referred to
in the Registration Statement, will be legally and validly issued, fully paid
and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to all references to us in the Registration
Statement and any further amendments thereto.
Very truly yours,
/s/ MORRISON & FOERSTER LLP
<PAGE>
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement (Form S-8) pertaining to the 1998 Non-Officer Employee Stock Plan of
DSP Group, Inc. of our reports dated January 23, 1998 (except for Note 9, as to
which the date is January 27, 1998), with respect to the consolidated financial
statements of DSP Group, Inc. incorporated by reference in its Annual Report
(Form 10-K) for the year ended December 31, 1997 and the related financial
statement schedules included therein, filed with the Securities and Exchange
Commission.
/s/ ERNST & YOUNG LLP
San Jose, California
December 16, 1998
<PAGE>
EXHIBIT 23.2
CONSENT OF ALMAGOR & CO. CPA (ISR), INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration
Statement pertaining to the 1998 Non-Officer Employee Stock Plan of our report
dated January 22, 1998, with respect to the financial statements of DSP
Semiconductors, Ltd. as of December 31, 1997 and for the year then ended, which
was incorporated by reference in the Annual Report on Form 10-K for the year
ended December 31, 1997.
However, the financial statements of DSP Semiconductors, Ltd. were not
separately included in the Annual Report on Form 10-K filed with the Securities
and Exchange Commission.
/s/ ALMAGOR & CO.
Almagor & Co.
Certified Public Accountants (Israel)
Tel Aviv, Israel
December 16, 1998
<PAGE>
EXHIBIT 99.1
DSP GROUP, INC.
1998 NON-OFFICER EMPLOYEE STOCK OPTION PLAN
1. PURPOSES OF THE PLAN. The purposes of this Non-Officer Employee
Stock Option Plan are to attract and retain the best available personnel, to
provide additional incentive to Employees (excluding Officers) and to promote
the success of the Company's business.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "ADMINISTRATOR" means the Board or any of the Committees
appointed to administer the Plan.
(b) "AFFILIATE" and "ASSOCIATE" shall have the respective
meanings ascribed to such terms in Rule 12b-2 promulgated under the Exchange
Act.
(c) "APPLICABLE LAWS" means the legal requirements relating to
the administration of stock option plans, if any, under applicable provisions of
federal securities laws, state corporate and securities laws, the Code, the
rules of any applicable stock exchange or national market system, and the rules
of any foreign jurisdiction applicable to Awards granted to residents therein.
(d) "AWARD" means the grant of an Non-Qualified Stock Option or
other right or benefit under the Plan.
(e) "AWARD AGREEMENT" means the written agreement evidencing the
grant of an Award executed by the Company and the Grantee, including any
amendments thereto.
(f) "BOARD" means the Board of Directors of the Company.
(g) "CHANGE IN CONTROL" means a change in ownership or control
of the Company effected through either of the following transactions:
(i) the direct or indirect acquisition by any person or
related group of persons (other than an acquisition from or by the Company or by
a Company-sponsored employee benefit plan or by a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the
Exchange Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Company's outstanding securities pursuant to
a tender or exchange offer made directly to the Company's stockholders which a
majority of the Continuing Directors who are not Affiliates or Associates of the
offeror do not recommend such stockholders accept, or
(ii) a change in the composition of the Board over a
period of twenty-four (24) months or less such that a majority of the Board
members (rounded up to the next
1
<PAGE>
whole number) ceases, by reason of one or more contested elections for Board
membership, to be comprised of individuals who are Continuing Directors.
(h) "CODE" means the Internal Revenue Code of 1986, as amended.
(i) "COMMITTEE" means any committee appointed by the Board to
administer the Plan.
(j) "COMMON STOCK" means the common stock of the Company.
(k) "COMPANY" means DSP Group, Inc., a Delaware corporation.
(l) "CONSULTANT" means any person (other than an Employee or,
solely with respect to rendering services in such person's capacity as a
Director) who is engaged by the Company or any Related Entity to render
consulting or advisory services to the Company or such Related Entity.
(m) "CONTINUING DIRECTORS" means members of the Board who
either (i) have been Board members continuously for a period of at least
twenty-four (24) months or (ii) have been Board members for less than
twenty-four (24) months and were elected or nominated for election as Board
members by at least a majority of the Board members described in clause (i) who
were still in office at the time such election or nomination was approved by the
Board.
(n) "CONTINUOUS SERVICE" means that the provision of services to
the Company or a Related Entity in any capacity of Employee, Director or
Consultant, is not interrupted or terminated. Continuous Service shall not be
considered interrupted in the case of (i) any approved leave of absence, (ii)
transfers between locations of the Company or among the Company, any Related
Entity, or any successor, in any capacity of Employee, Director or Consultant,
or (iii) any change in status as long as the individual remains in the service
of the Company or a Related Entity in any capacity of Employee, Director or
Consultant (except as otherwise provided in the Award Agreement). An approved
leave of absence shall include sick leave, military leave, or any other
authorized personal leave.
(o) "CORPORATE TRANSACTION" means any of the following
transactions:
(i) a merger or consolidation in which the Company is
not the surviving entity, except for a transaction the principal purpose of
which is to change the state in which the Company is incorporated;
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company (including the capital stock of
the Company's subsidiary corporations) in connection with the complete
liquidation or dissolution of the Company;
(iii) any reverse merger in which the Company is the
surviving entity but in which securities possessing more than fifty percent
(50%) of the total combined voting
2
<PAGE>
power of the Company's outstanding securities are transferred to a person or
persons different from those who held such securities immediately prior to
such merger; or
(iv) an acquisition by any person or related group of
persons (other than the Company or by a Company-sponsored employee benefit plan)
of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act)
of securities possessing more than fifty percent (50%) of the total combined
voting power of the Company's outstanding securities (whether or not in a
transaction also constituting a Change in Control), but excluding any such
transaction that the Administrator determines shall not be a Corporate
Transaction.
(p) "DIRECTOR" means a member of the Board or the board of
directors of any Related Entity.
(q) "DISABILITY" means that a Grantee would qualify for benefit
payments under the long-term disability policy of the Company or the Related
Entity to which the Grantee provides services regardless of whether the Grantee
is covered by such policy.
(r) "EMPLOYEE" means any person who is an employee of the
Company or any Related Entity. The payment of a director's fee by the Company
or a Related Entity shall not be sufficient to constitute "employment" by the
Company.
(s) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(t) "FAIR MARKET VALUE" means, as of any date, the value of
Common Stock determined as follows:
(i) Where there exists a public market for the Common
Stock, the Fair Market Value shall be (A) the closing price for a Share for the
last market trading day prior to the time of the determination (or, if no
closing price was reported on that date, on the last trading date on which a
closing price was reported) on the stock exchange determined by the
Administrator to be the primary market for the Common Stock or the Nasdaq
National Market, whichever is applicable or (B) if the Common Stock is not
traded on any such exchange or national market system, the average of the
closing bid and asked prices of a Share on the Nasdaq Small Cap Market for the
day prior to the time of the determination (or, if no such prices were reported
on that date, on the last date on which such prices were reported), in each
case, as reported in THE WALL STREET JOURNAL or such other source as the
Administrator deems reliable; or
(ii) In the absence of an established market for the
Common Stock of the type described in (i), above, the Fair Market Value thereof
shall be determined by the Administrator in good faith.
(u) "GRANTEE" means an Employee who receives an Award pursuant
to an Award Agreement under the Plan.
(v) "NON-QUALIFIED STOCK OPTION" means an Option not intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.
3
<PAGE>
(w) "OFFICER" means a person who is an officer of the Company or
a Related Entity within the meaning of Section 16 of the Exchange Act and the
rules and regulations promulgated thereunder.
(x) "OPTION" means an option to purchase Shares pursuant to an
Award Agreement granted under the Plan.
(y) "PARENT" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(z) "PLAN" means this 1998 Non-Officer Employee Stock Option
Plan.
(aa) "RELATED ENTITY" means any Parent, Subsidiary and any
business, corporation, partnership, limited liability company or other entity in
which the Company, a Parent or a Subsidiary holds a substantial ownership
interest, directly or indirectly.
(bb) "RULE 16b-3" means Rule 16b-3 promulgated under the
Exchange Act or any successor thereto.
(cc) "SHARE" means a share of the Common Stock.
(dd) "SUBSIDIARY" means a "subsidiary corporation," whether now
or hereafter existing, as defined in Section 424(f) of the Code.
(ee) "RELATED ENTITY DISPOSITION" means the sale, distribution
or other disposition by the Company of all or substantially all of the Company's
interests in any Related Entity effected by a sale, merger or consolidation or
other transaction involving that Related Entity or the sale of all or
substantially all of the assets of that Related Entity.
3. STOCK SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 10, below, the maximum
aggregate number of Shares which may be issued pursuant to all Awards is 950,000
Shares. The Shares to be issued pursuant to Awards may be authorized, but
unissued, or reacquired Common Stock.
(b) Any Shares covered by an Award (or portion of an Award)
which is forfeited or canceled, expires or is settled in cash, shall be deemed
not to have been issued for purposes of determining the maximum aggregate number
of Shares which may be issued under the Plan. If any unissued Shares are
retained by the Company upon exercise of an Award in order to satisfy the
exercise price for such Award or any withholding taxes due with respect to such
Award, such retained Shares subject to such Award shall become available for
future issuance under the Plan (unless the Plan has terminated). Shares that
actually have been issued under the Plan pursuant to an Award shall not be
returned to the Plan and shall not become available for future issuance under
the Plan, except that if unvested Shares are forfeited, or repurchased by the
Company at their original purchase price, such Shares shall become available for
future grant under the Plan.
4
<PAGE>
4. ADMINISTRATION OF THE PLAN.
(a) PLAN ADMINISTRATOR.
(i) ADMINISTRATION. The Plan shall be administered by
(A) the Board or (B) a Committee designated by the Board, which Committee shall
be constituted in such a manner as to satisfy the Applicable Laws. Once
appointed, such Committee shall continue to serve in its designated capacity
until otherwise directed by the Board. The Board may authorize one or more
Officers to grant such Awards and may limit such authority as the Board
determines from time to time.
(ii) ADMINISTRATION ERRORS. In the event an Award is
granted in a manner inconsistent with the provisions of this subsection (a),
such Award shall be presumptively valid as of its grant date to the extent
permitted by the Applicable Laws.
(b) POWERS OF THE ADMINISTRATOR. Subject to Applicable Laws and
the provisions of the Plan (including any other powers given to the
Administrator hereunder), and except as otherwise provided by the Board, the
Administrator shall have the authority, in its discretion:
(i) to select the Employees to whom Awards may be
granted from time to time hereunder;
(ii) to determine whether and to what extent Awards are
granted hereunder;
(iii) to determine the number of Shares or the amount of
other consideration to be covered by each Award granted hereunder;
(iv) to approve forms of Award Agreements for use under
the Plan;
(v) to determine the terms and conditions of any Award
granted hereunder;
(vi) to amend the terms of any outstanding Award granted
under the Plan, provided that any amendment that would adversely affect the
Grantee's rights under an outstanding Award shall not be made without the
Grantee's written consent;
(vii) to construe and interpret the terms of the Plan
and Awards granted pursuant to the Plan, including without limitation, any
notice of Award or Award Agreement, granted pursuant to the Plan;
(viii) to establish additional terms, conditions, rules
or procedures to accommodate the rules or laws of applicable foreign
jurisdictions and to afford Grantees favorable treatment under such laws;
provided, however, that no Award shall be granted under any such additional
terms, conditions, rules or procedures with terms or conditions which are
inconsistent with the provisions of the Plan; and
5
<PAGE>
(ix) to take such other action, not inconsistent with
the terms of the Plan, as the Administrator deems appropriate.
(c) EFFECT OF ADMINISTRATOR'S DECISION. All decisions,
determinations and interpretations of the Administrator shall be conclusive and
binding on all persons.
5. ELIGIBILITY. Awards may be granted to Employees, excluding
Officers. An Employee who has been granted an Award may, if otherwise eligible,
be granted additional Awards. Awards may be granted to such Employees
(excluding Officers) who are residing in foreign jurisdictions as the
Administrator may determine from time to time.
6. TERMS AND CONDITIONS OF AWARDS.
(a) CONDITIONS OF AWARD. Subject to the terms of the Plan,
the Administrator shall determine the provisions, terms, and conditions of
each Award including, but not limited to, the Award vesting schedule,
repurchase provisions, rights of first refusal, forfeiture provisions, form
of payment (cash, Shares, or other consideration) upon settlement of the
Award, payment contingencies, and satisfaction of any performance criteria.
The performance criteria established by the Administrator may be based on any
one of, or combination of, increase in share price, earnings per share, total
stockholder return, return on equity, return on assets, return on investment,
net operating income, cash flow, revenue, economic value added, personal
management objectives, or other measure of performance selected by the
Administrator. Partial achievement of the specified criteria may result in a
payment or vesting corresponding to the degree of achievement as specified in
the Award Agreement.
(b) ACQUISITIONS AND OTHER TRANSACTIONS. The Administrator may
issue Awards under the Plan in settlement, assumption or substitution for,
outstanding awards or obligations to grant future awards in connection with the
Company or a Related Entity acquiring another entity, an interest in another
entity or an additional interest in a Related Entity whether by merger, stock
purchase, asset purchase or other form of transaction.
(c) DEFERRAL OF AWARD PAYMENT. The Administrator may establish
one or more programs under the Plan to permit selected Grantees the opportunity
to elect to defer receipt of consideration upon exercise of an Award,
satisfaction of performance criteria, or other event that absent the election
would entitle the Grantee to payment or receipt of Shares or other consideration
under an Award. The Administrator may establish the election procedures, the
timing of such elections, the mechanisms for payments of, and accrual of
interest or other earnings, if any, on amounts, Shares or other consideration so
deferred, and such other terms, conditions, rules and procedures that the
Administrator deems advisable for the administration of any such deferral
program.
(d) SEPARATE PROGRAMS. The Administrator may establish one or
more separate programs under the Plan for the purpose of issuing particular
forms of Awards to one or more classes of Grantees on such terms and conditions
as determined by the Administrator from time to time.
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(e) EARLY EXERCISE. The Award Agreement may, but need not,
include a provision whereby the Grantee may elect at any time while in
Continuous Service to exercise any part or all of the Award prior to full
vesting of the Award. Any unvested Shares received pursuant to such exercise
may be subject to a repurchase right in favor of the Company or a Related Entity
or to any other restriction the Administrator determines to be appropriate.
(f) TERM OF AWARD. The term of each Award shall be the term
stated in the Award Agreement.
(g) TRANSFERABILITY OF AWARDS. Awards shall be transferable to
the extent provided in the Award Agreement.
(h) TIME OF GRANTING AWARDS. The date of grant of an Award
shall for all purposes be the date on which the Administrator makes the
determination to grant such Award, or such other date as is determined by the
Administrator. Notice of the grant determination shall be given to each
Employee to whom an Award is so granted within a reasonable time after the date
of such grant.
7. AWARD EXERCISE OR PURCHASE PRICE, CONSIDERATION, AND TAXES.
(a) EXERCISE OR PURCHASE PRICE. The exercise price for an Award
shall be determined by the Administrator.
(b) CONSIDERATION. Subject to Applicable Laws, the
consideration to be paid for the Shares to be issued upon exercise of an Award
including the method of payment, shall be determined by the Administrator. In
addition to any other types of consideration the Administrator may determine,
the Administrator is authorized to accept as consideration for Shares issued
under the Plan the following, provided that the portion of the consideration
equal to the par value of the Shares must be paid in cash or other legal
consideration permitted by the Delaware General Corporation Law:
(i) cash;
(ii) check;
(iii) delivery of Grantee's promissory note with such
recourse, interest, security, and redemption provisions as the Administrator
determines as appropriate;
(iv) surrender of Shares or delivery of a properly
executed form of attestation of ownership of Shares as the Administrator may
require (including withholding of Shares otherwise deliverable upon exercise of
the Award) which have a Fair Market Value on the date of surrender or
attestation equal to the aggregate exercise price of the Shares as to which said
Award shall be exercised (but only to the extent that such exercise of the Award
would not result in an accounting compensation charge with respect to the Shares
used to pay the exercise price unless otherwise determined by the
Administrator);
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(v) with respect to Options, payment through a
broker-dealer sale and remittance procedure pursuant to which the Grantee (A)
shall provide written instructions to a Company designated brokerage firm to
effect the immediate sale of some or all of the purchased Shares and remit to
the Company, out of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate exercise price payable for the purchased
Shares and (B) shall provide written directives to the Company to deliver the
certificates for the purchased Shares directly to such brokerage firm in order
to complete the sale transaction; or
(vi) any combination of the foregoing methods of
payment.
(c) TAXES. No Shares shall be delivered under the Plan to any
Grantee or other person until such Grantee or other person has made arrangements
acceptable to the Administrator for the satisfaction of any foreign, federal,
state, or local income and employment tax withholding obligations, including,
without limitation, obligations incident to the receipt of Shares. Upon
exercise of an Award, the Company shall withhold or collect from Grantee an
amount sufficient to satisfy such tax obligations.
8. EXERCISE OF AWARD.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER.
(i) Any Award granted hereunder shall be exercisable at
such times and under such conditions as determined by the Administrator under
the terms of the Plan and specified in the Award Agreement.
(ii) An Award shall be deemed to be exercised when
written notice of such exercise has been given to the Company in accordance with
the terms of the Award by the person entitled to exercise the Award and full
payment for the Shares with respect to which the Award is exercised, including,
to the extent selected, use of the broker-dealer sale and remittance procedure
to pay the purchase price as provided in Section 7(b)(v). Until the issuance
(as evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate evidencing
such Shares, no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to Shares subject to an Award,
notwithstanding the exercise of an Option or other Award. The Company shall
issue (or cause to be issued) such stock certificate promptly upon exercise of
the Award. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the stock certificate is issued, except as
provided in the Award Agreement or Section 10, below.
(b) EXERCISE OF AWARD FOLLOWING TERMINATION OF CONTINUOUS
SERVICE.
(i) An Award may not be exercised after the termination
date of such Award set forth in the Award Agreement and may be exercised
following the termination of a Grantee's Continuous Service only to the extent
provided in the Award Agreement.
(ii) Where the Award Agreement permits a Grantee to
exercise an Award following the termination of the Grantee's Continuous Service
for a specified period, the
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Award shall terminate to the extent not exercised on the last day of the
specified period or the last day of the original term of the Award, whichever
occurs first.
(c) BUYOUT PROVISIONS. The Administrator may at any time offer
to buy out for a payment in cash or Shares, an Award previously granted, based
on such terms and conditions as the Administrator shall establish and
communicate to the Grantee at the time that such offer is made.
9. CONDITIONS UPON ISSUANCE OF SHARES.
(a) Shares shall not be issued pursuant to the exercise of an
Award unless the exercise of such Award and the issuance and delivery of such
Shares pursuant thereto shall comply with all Applicable Laws, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
(b) As a condition to the exercise of an Award, the Company may
require the person exercising such Award to represent and warrant at the time of
any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any
Applicable Laws.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Subject to any
required action by the shareholders of the Company, the number of Shares
covered by each outstanding Award, and the number of Shares which have been
authorized for issuance under the Plan but as to which no Awards have yet
been granted or which have been returned to the Plan, the exercise or
purchase price of each such outstanding Award, as well as any other terms
that the Administrator determines require adjustment shall be proportionately
adjusted for (i) any increase or decrease in the number of issued Shares
resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Shares, (ii) any other increase or
decrease in the number of issued Shares effected without receipt of
consideration by the Company, or (iii) as the Administrator may determine in
its discretion, any other transaction with respect to Common Stock to which
Section 424(a) of the Code applies; provided, however that conversion of any
convertible securities of the Company shall not be deemed to have been
"effected without receipt of consideration." Such adjustment shall be made
by the Administrator and its determination shall be final, binding and
conclusive. Except as the Administrator determines, no issuance by the
Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason
hereof shall be made with respect to, the number or price of Shares subject
to an Award.
11. CORPORATE TRANSACTIONS/CHANGES IN CONTROL/RELATED ENTITY
DISPOSITIONS. The Administrator shall have the authority, exercisable either in
advance of any actual or anticipated Corporate Transaction, Change in Control or
Related Entity Disposition or at the time of an actual Corporate Transaction,
Change in Control or Related Entity Disposition and exercisable at the time of
the grant of an Award under the Plan or any time while an Award remains
outstanding, to provide for the full automatic vesting and exercisability of one
or more outstanding unvested Awards under the Plan and the release from
restrictions on transfer and
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repurchase or forfeiture rights of such Awards in connection with a Corporate
Transaction, Change in Control or Related Entity Disposition, on such terms
and conditions as the Administrator may specify. The Administrator also
shall have the authority to condition any such Award vesting and
exercisability or release from such limitations upon the subsequent
termination of the Continuous Service of the Grantee within a specified
period following the effective date of the Corporate Transaction, Change in
Control or Related Entity Disposition. The Administrator may provide that
any Awards so vested or released from such limitations in connection with a
Change in Control or Related Entity Disposition, shall remain fully
exercisable until the expiration or sooner termination of the Award.
Effective upon the consummation of a Corporate Transaction, all outstanding
Awards under the Plan shall terminate unless assumed by the successor company
or its Parent.
12. EFFECTIVE DATE AND TERM OF PLAN. The Plan shall become effective
upon its adoption by the Board. It shall continue in effect for a term of ten
(10) years unless sooner terminated. Subject to Section 16, below, and
Applicable Laws, Awards may be granted under the Plan upon its becoming
effective.
13. AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN.
(a) The Board may at any time amend, suspend or terminate the
Plan. To the extent necessary to comply with Applicable Laws, the Company shall
obtain stockholder approval of any Plan amendment in such a manner and to such a
degree as required.
(b) No Award may be granted during any suspension of the Plan or
after termination of the Plan.
(c) Any amendment, suspension or termination of the Plan
(including termination of the Plan under Section 12, above) shall not affect
Awards already granted, and such Awards shall remain in full force and effect as
if the Plan had not been amended, suspended or terminated, unless mutually
agreed otherwise between the Grantee and the Administrator, which agreement must
be in writing and signed by the Grantee and the Company.
14. RESERVATION OF SHARES.
(a) The Company, during the term of the Plan, will at all times
reserve and keep available such number of Shares as shall be sufficient to
satisfy the requirements of the Plan.
(b) The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares hereunder,
shall relieve the Company of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority shall not have been
obtained.
15. NO EFFECT ON TERMS OF EMPLOYMENT RELATIONSHIP. The Plan shall not
confer upon any Grantee any right with respect to the Grantee's Continuous
Service, nor shall it interfere in any
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way with his or her right or the Company's right to terminate the Grantee's
Continuous Service at any time, with or without cause.
16. NO EFFECT ON RETIREMENT AND OTHER BENEFIT PLANS. Except as
specifically provided in a retirement or other benefit plan of the Company or a
Related Entity, Awards shall not be deemed compensation for purposes of
computing benefits or contributions under any retirement plan of the Company or
a Related Entity, and shall not affect any benefits under any other benefit plan
of any kind or any benefit plan subsequently instituted under which the
availability or amount of benefits is related to level of compensation. The
Plan is not a "Retirement-Plan" or "Welfare Plan" under the Employee Retirement
Income Security Act of 1974, as amended.
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