<PAGE>
As filed with the Securities and Exchange Commission on October 24, 1997
Registration No. 333-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
Form S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------
NETVANTAGE, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 95-4324525
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
201 CONTINENTAL BOULEVARD, SUITE 201
EL SEGUNDO, CALIFORNIA 90245
(Address of principal executive offices) (Zip code)
1994 INCENTIVE AND NONSTATUTORY STOCK OPTION PLAN
1996 INCENTIVE STOCK PLAN
EQUITY INCENTIVE PLAN
(Full title of plans)
-----------------
MR. THOMAS G. IWANSKI
CHIEF FINANCIAL OFFICER, VICE PRESIDENT OF FINANCE AND SECRETARY
NETVANTAGE, INC.
201 CONTINENTAL BOULEVARD, SUITE 201
EL SEGUNDO, CALIFORNIA 90245
(Name and address of agent for service)
(310) 726-4130
(Telephone number, including area code, of agent for service)
-----------------
With a Copy to:
VICTOR A. HEBERT, ESQ.
HELLER EHRMAN WHITE & MCAULIFFE
601 SOUTH FIGUEROA STREET, 40TH FLOOR
LOS ANGELES, CALIFORNIA 90017
(213) 689-0200
-----------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
========================================================================================================
Proposed Proposed
Maximum Maximum Amount of
Title of Securities Amount to Offering Price Aggregate Registration
to be Registered be Registered(1) Per Share(2) Offering Price(2) Fee(2)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A COMMON STOCK,
$.001 PAR VALUE PER SHARE 1,925,000 $9.25 $17,806,250 $5,396
========================================================================================================
</TABLE>
(1) Of which 325,000 shares are attributable to the 1994 Incentive and
Nonstatutory Stock Option Plan, 800,000 shares are attributable to the 1996
Incentive Stock Plan and 800,000 shares are attributable to the Equity
Incentive Plan. Also includes an indeterminate number of additional shares
that may be issued to adjust the number of shares to be issued pursuant to
such employee benefit plans as the result of any future stock split, stock
dividend or similar adjustment of the Registrant's outstanding common
stock.
(2) Estimated solely for the purpose of computing the registration fee pursuant
to Rule 457(c) of the Securities Act of 1933, as amended, based upon the
closing sale price of the Class A Common Stock as reported on the Nasdaq
Stock Market on October 17, 1997.
===============================================================================
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
- ------ ---------------------------------------
All documents filed by Registrant pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), subsequent to the date of the filing of this Registration Statement and
prior to the filing of a post-effective amendment to this Registration Statement
which indicates that all securities offered under this Registration Statement
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 the filing of such documents.
The following documents filed with the Securities and Exchange Commission
(the "Commission") are also incorporated herein by reference:
1. The Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996, filed pursuant to the Exchange Act;
2. The Registrant's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1997, filed pursuant to the Exchange Act; and
3. The Registrant's Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 1997, filed pursuant to the Exchange Act.
The description of the Class A Common Stock contained in Registrant's
Registration Statement on Form 8-A filed with the Commission on May 3, 1995,
under the Exchange Act is also incorporated by reference in this Registration
Statement.
Item 4. Description of Securities.
- ------ -------------------------
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
- ------ --------------------------------------
Not Applicable.
Item 6. Indemnification of Directors and Officers.
- ------ -----------------------------------------
Pursuant to Section 102(b)(7) of the Delaware General Corporation Law
(the "DGCL"), the Registrant's Restated Certificate of Incorporation contains a
provision which eliminates the personal liability of its directors to the
Registrant and its stockholders for monetary damages resulting from breaches of
their fiduciary duty as directors, other than liability for breaches of the duty
of loyalty, acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law,
II-1
<PAGE>
violations under Section 174 of the DGCL or any transaction from which the
director derived an improper personal benefit.
Section 145 of the DGCL permits, and under certain circumstances
requires, Registrant to indemnify its directors, officers, employees and agents
subject to certain conditions and limitations. Registrant's Bylaws contain
provisions to indemnify its directors and officers to the full extent permitted
by applicable law. In addition, Registrant maintains officers' and directors'
liability insurance which insures against certain liabilities that its officers
and directors may incur in such capacities and has entered into indemnification
agreements with such officers and directors.
Item 7. Exemption from Registration Claimed.
- ------ -----------------------------------
Not Applicable.
Item 8. Exhibits.
- ------ --------
4.1 1994 Incentive and Nonstatutory Stock Option Plan
4.2 1996 Incentive Stock Plan
4.3 Equity Incentive Plan
5 Opinion of Heller Ehrman White & McAuliffe
23.1 Consent of Heller Ehrman White & McAuliffe (included in Exhibit
5)
23.2 Consent of Price Waterhouse LLP
24 Power of Attorney of Certain Officers and Directors (included on
Page II-4)
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;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information
set forth in the Registration Statement;
II-2
<PAGE>
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
-----------------
not apply if the registration statement is on Form S-3 or Form S-8
and the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in
the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Securities Exchange Act of 1934) that
is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in El Segundo, California, on October 24, 1997.
NETVANTAGE, INC.
By /s/ STEPHEN R. RIZZONE
______________________________________
Stephen R. Rizzone
Chairman of the Board, President and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints STEPHEN R. RIZZONE and THOMAS G. IWANSKI, or
either of them, his attorneys-in-fact, with full power of substitution, for him
in any and all capacities, to sign any amendments to this Registration
Statement, and to file the same, with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that said attorneys-in-fact, or their substitutes,
may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ STEPHEN R. RIZZONE
________________________ Chairman of the Board, President October 24, 1997
Stephen R. Rizzone and Chief Executive Officer
(Principal Executive Officer)
/s/ THOMAS G. IWANSKI
_________________________ Chief Financial Officer, Vice October 24, 1997
Thomas G. Iwanski President of Finance and
Secretary (Principal Financial
Officer and Principal Accounting
Officer)
/s/ CARLOS A. TOMASZEWSKI
_________________________ Director October 24, 1997
Carlos A. Tomaszewski
/s/ RICHARD N. TINSLEY
__________________________ Director October 24, 1997
Richard N. Tinsley
/s/ JOHN E. MARMAN
__________________________ Director October 24, 1997
John E. Marman
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
Exhibits
- --------
4.1 1994 Incentive and Nonstatutory Stock
Option Plan
4.2 1996 Incentive Stock Plan
4.3 Equity Incentive Plan
5 Opinion of Heller Ehrman White & McAuliffe
23.1 Consent of Heller Ehrman White & McAuliffe
(included in Exhibit 5)
23.2 Consent of Price Waterhouse LLP
24 Power of Attorney of Certain Officers
and Directors (included on Page II-4)
<PAGE>
EXHIBIT 4.1
-----------
NETVANTAGE, INC.
1994 INCENTIVE AND NONSTATUTORY STOCK OPTION PLAN
-------------------------------------------------
1. Purpose
-------
This Incentive and Nonstatutory Stock Option Plan (the "Plan") is intended
to further the growth and financial success of NETVANTAGE, INC., a Delaware
corporation (the "Corporation") by providing additional incentives to selected
employees of and consultants to the Corporation or parent corporation or
subsidiary corporation of the Corporation as those terms are defined in Sections
424(e) and 424(f) of the Internal Revenue Code of 1986, as amended (the "Code")
(such parent corporations and subsidiary corporations hereinafter collectively
referred to as "Affiliates") so that such employees may acquire or increase
their proprietary interest in the Corporation. Stock options granted under the
Plan (hereinafter "Options") may be either "Incentive Stock Options", as defined
in Section 422 of the Code and any regulations promulgated under said Section,
or "Nonstatutory Options" at the discretion of the Board of Directors of the
Corporation (the "Board") and as reflected in the respective written stock
option agreements granted pursuant hereto.
2. Administration
--------------
The Plan shall be administered by the Board; provided however, that the
Board may delegate such administration to a committee of not fewer than two (2)
members (the "Committee"), each of whom is a member of the Board and all of whom
are disinterested persons, as contemplated by Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended ("Rule 16b-3"); and provided
further, that the foregoing requirement for disinterested administration shall
not apply prior to the date of the first registration of any of the securities
of the Corporation under Securities Act of 1933, as amended.
Subject to the provisions of the Plan, the Board and/or the Committee shall
have authority to (a) grant, in its discretion, Incentive Stock Options in
accordance with Section 422 of the Code or Nonstatutory Options; (b) determine
in good faith the fair market value of the stock covered by an Option; (c)
determine which eligible persons shall be granted Options and the number of
shares to be covered thereby and the term thereof; (d) construe and interpret
the Plan; (e) promulgate, amend and rescind rules and regulations relating to
its administration, and correct defects, omissions and inconsistencies in the
Plan or any Option; (f) consistent with the Plan and with the consent of the
optionee, as appropriate, amend any outstanding Option or amend the exercise
date or dates thereof; (g) determine the duration and purpose of leaves of
absence which may be granted to optionholders without constituting termination
of their employment for the purpose of the Plan; and (h) make all other
determinations necessary or advisable for the Plan's administration. The
interpretation and construction by the Board of any provisions of the Plan or of
any Option shall be conclusive and final. No member of the Board or the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any Option.
<PAGE>
3. Eligibility
-----------
The persons who shall be eligible to receive Options shall be key employees
of or consultants to the Corporation or any of its Affiliate ("Optionees"). The
term consultant shall mean any person who is engaged by the Corporation to
render services and is compensated for such services, and any director of the
Corporation whether or not compensated for such services; provided that, if the
Corporation registers any of its securities pursuant to the Securities Exchange
Act of 1934, the term consultant shall thereafter not include directors who are
not compensated for their services or are paid only a director fee by the
Corporation.
(a) Incentive Stock Options. Incentive Stock Options may only be
-----------------------
issued to employees of the Corporation or its Affiliates. Incentive Stock
Options may be granted to officers, whether or not they are directors, but a
director shall not be granted an Incentive Stock Option unless such director is
also an employee of the Corporation. Payment of a director fee shall not be
sufficient to constitute employment by the Corporation. Any grant of option to
an officer or director of the Corporation subsequent to the first registration
of any of the securities of the Corporation under Securities Act of 1933, as
amended, shall comply with the requirements of Rule 16b-3. An optionee may hold
more than one Option.
The Corporation shall not grant an Incentive Stock Option under the
Plan to any employee if such grant would result in such employee holding the
right to exercise for the first time in any one calendar year, under all options
granted to such employee under the Plan or any other stock option plan
maintained by the Corporation or any Affiliate, with respect to shares of stock
having an aggregate fair market value, determined as of the date of the Option
is granted, in excess of $100,000. Should it be determined that an Incentive
Stock Option granted under the Plan exceeds such maximum for any reason other
than a failure in good faith to value the stock subject to such option, the
excess portion of such option shall be considered a Nonstatutory Option. To the
extent the employee holds two (2) or more such options which become exercisable
for the first time in the same calendar year, the foregoing limitation on the
exercise of such option as incentive stock options under the Federal tax laws
shall be applied on the basis of the order in which such options are granted.
If, for any reason, an entire option does not qualify as an Incentive Stock
Option by reason of exceeding such maximum, such option shall be considered a
Nonstatutory Option.
(b) Nonstatutory Option. The provisions of the foregoing Section 3(a)
-------------------
shall not apply to any option designated as a "Nonstatutory Stock Option
Agreement" or which sets forth the intention of the parties that the option be a
Nonstatutory Option.
4. Stock
-----
The stock subject to Options shall be shares of the Corporation's
authorized but unissued or reacquired Class A Common Stock (the "Stock").
(a) Number of Shares. Subject to adjustment as provided in Paragraph
----------------
5(i) of this Plan, the total number of shares of Stock which may be purchased
through exercise of Options granted under this Plan shall not exceed Three
Hundred Twenty-Five Thousand (325,000) shares. If any
2
<PAGE>
Option shall for any reason terminate or expire, any shares allocated thereto
but remaining unpurchased upon such expiration or termination shall again be
available for the grant of Options with respect thereto under this Plan as
though no Option had been granted with respect to such shares.
(b) Reservation of Shares. The Corporation shall reserve and keep
---------------------
available at all times during the term of the Plan such number of shares as
shall be sufficient to satisfy the requirements of the Plan. If, after
reasonable efforts, which efforts shall not include the registration of the Plan
or Options under the Securities Act of 1933, the Corporation is unable to obtain
authority from any applicable regulatory body, which authorization is deemed
necessary by legal counsel for the Corporation for the lawful issuance of shares
hereunder, the Corporation shall be relieved of any liability with respect to
its failure to issue and sell the shares for which such requisite authority was
so deemed necessary unless and until such authority is obtained.
5. Terms and Conditions of Options
-------------------------------
Options granted hereunder shall be evidenced by agreements between the
Corporation and the respective Optionees, in such form and substance as the
Board or Committee shall from time to time approve. Such agreements need not be
identical, and in each case may include such provisions as the Board or
Committee may determine, but all such agreements shall be subject to and limited
by the following terms and conditions:
(a) Number of Shares: Each Option shall state the number of shares to
----------------
which it pertains.
(b) Option Price: Each Option shall state the Option Price, which
------------
shall be determined as follows:
(i) Any Option granted to a person who at the time the Option is
granted owns (or is deemed to own pursuant to Section 424(d) of the Code)
stock possessing more than ten percent (10%) of the total combined voting
power or value of all classes of stock of the Corporation, or of any
Affiliate, ("Ten Percent Holder") shall have an Option Price of no less
than 110% of the fair market value of the Stock as of the date of grant.
(ii) Incentive Stock Options granted to a person who at the time
the Option is granted is not a Ten Percent Holder shall have an Option
Price of no less than 100% of the fair market value of the Stock as of the
date of grant.
(iii) Nonstatutory Options granted to a person who at the time
the Option is granted is not a Ten Percent Holder shall have an Option
Price of no less than 85% of the fair market value of the Stock as of the
date of grant.
For the purposes of this Paragraph 5(b), the fair market value shall
be as determined by the Board, in good faith, which determination shall be
conclusive and binding; provided however, that if there is a public market for
the such Stock, the fair market value per share shall be the average of the bid
and asked prices (or may be the closing price if such Stock is listed on the
Nasdaq National Market System) on the date of grant of the Option, or if listed
on a stock exchange, the closing price on such exchange on such date of grant.
3
<PAGE>
(c) Medium and Time of Payment: The Option exercise price shall
--------------------------
become immediately due upon exercise of the Option and shall be paid in cash or
check made payable to the Corporation. Should the Corporation's outstanding
Stock be registered under Section 12(g) of the Securities Exchange Act of 1934
at the time the Option is exercised, then the exercise price may also be paid as
follows:
(i) in shares of the Corporation's Stock held by the Optionee
for the requisite period necessary to avoid a charge to the Corporation's
earnings for financial reporting purposes and valued at fair market value
on the exercise date, or
(ii) through a special sale and remittance procedure pursuant to
which the Optionee shall concurrently provide irrevocable written
instructions (a) to a Corporation designated brokerage firm to effect the
immediate sale of the purchased shares and remit to the Corporation, out of
the sale proceeds available on the settlement date, sufficient funds to
cover the aggregate exercise price payable for the purchased shares plus
all applicable Federal, state and local income and employment taxes
required to be withheld by the Corporation by reason of such purchase and
(b) to the Corporation to deliver the certificates for the purchased shares
directly to such brokerage firm in order to complete the sale transaction.
At the discretion of the Board, exercisable either at the time of
Option grant or of Option exercise, the exercise price may also be paid (i) by
Optionee's delivery of a promissory note in form and substance satisfactory to
the Corporation and permissible under the California Securities Regulations and
bearing interest at a rate determined by the Board in its sole discretion, but
in no event less than the minimum rate of interest required to avoid the
imputation of compensation income to the Optionee under the Federal tax laws, or
(ii) in such other form of consideration permitted by the California
Corporations Code as may be acceptable to the Board.
(d) Term and Exercise of Options: Any Option granted to an Employee
----------------------------
of the Corporation shall become exercisable over a period of no longer than five
(5) years, and no less than twenty percent (20%) of the shares covered thereby
shall become exercisable annually. No Option shall be exercisable, in whole or
in part, prior to one (1) year from the date it is granted unless the Board
shall specifically determine otherwise, as provided herein. In no event shall
any Option be exercisable after the expiration of ten (10) years from the date
it is granted, and no Incentive Stock Option granted to a Ten Percent Holder
shall, by its terms, be exercisable after the expiration of five (5) years from
the date of the Option. Unless otherwise specified by the Board or the
Committee in the resolution authorizing such option, the date of grant of an
Option shall be deemed to be the date upon which the Board or the Committee
authorizes the granting of such Option.
Each Option shall be exercisable to the nearest whole share, in
installments or otherwise, as the respective option agreements may provide.
During the lifetime of an Optionee, the Option shall be exercisable only by the
Optionee and shall not be assignable or transferable by the Optionee, and no
other person shall acquire any rights therein. To the extent not exercised,
installments (if more than one) shall accumulate, but shall be exercisable, in
whole or in part, only during the period for exercise as stated in the option
agreement, whether or not other installments are then exercisable.
4
<PAGE>
(e) Termination of Status as Employee or Consultant: If Optionee's
-----------------------------------------------
status as an employee or consultant shall terminate for any reason other than
Optionee's disability or death, then the Optionee (or if the Optionee shall die
after such termination, but prior to exercise, Optionee's personal
representative or the person entitled to succeed to the Option) shall have the
right to exercise the portions of any of Optionee's Options which were
exercisable as of the date of such termination, in whole or in part, at any time
within three (3) months after such termination (or in the event of "termination
for good cause" as that term is defined under the California Labor Code and case
law related thereto, such shorter period as the option agreement may specify,
but not less than 30 days) or the remaining term of the Option, whichever is the
lesser; provided, however, that with respect to Nonstatutory Options, the Board
may specify such longer period, not to exceed six (6) months, for exercise
following termination as the Board deems reasonable and appropriate. The Option
may be exercised only with respect to installments that the Optionee could have
exercised at the date of termination of employment. Nothing contained herein or
in any Option granted pursuant hereto shall be construed to affect or restrict
in any way the right of the Corporation to terminate the employment of an
Optionee with or without cause.
(f) Disability of Optionee: If an Optionee is disabled (within the
----------------------
meaning of Section 22(e)(3) of the Code) at the time of termination, the three
(3) month period set forth in Paragraph 5(e) shall be a period, as determined by
the Board and set forth in the Option, of not less than six months nor more than
one year.
(g) Death of Optionee: If an Optionee dies while employed or engaged
-----------------
as a consultant by the Corporation or an Affiliate, the portion of such
Optionee's Option or Options which were exercisable at the date of death may be
exercised, in whole or in part, by the estate of the decedent or by a person
succeeding to the right to exercise such Option or Options, at any time within
(i) a period, as determined by the Board and set forth in the Option, of not
less than six (6) months nor more than one (1) year after Optionee's death,
which period shall not be less, in the case of a Nonstatutory Option, than the
period for exercise following termination, or (ii) during the remaining term of
the Option, whichever is the lesser. The Option may be so exercised only with
respect to installments exercisable at the time of Optionee's death and not
previously exercised by the Optionee.
(h) Nontransferability of Option: No Option shall be transferable by
----------------------------
the Optionee, except by will or by the laws of descent and distribution.
(i) Recapitalization: Subject to any required action by the
----------------
stockholders, the number of shares of Stock covered by each outstanding Option,
and the price per share thereof set forth in each such Option, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Stock of the Corporation resulting from a subdivision or consolidation
of shares or the payment of a stock dividend, or any other increase or decrease
in the number of such shares affected without receipt of consideration by the
Corporation.
Subject to any required action by the stockholders, if the Corporation
shall be the surviving entity in any merger or consolidation, each outstanding
Option thereafter shall pertain to and apply to the securities to which a holder
of shares of Stock equal to the shares subject to the Option would have been
entitled by reason of such merger or consolidation. A dissolution or
liquidation of the Corporation or a merger or consolidation in which the
Corporation is not the
5
<PAGE>
surviving entity shall cause each outstanding Option to terminate on the
effective date of such dissolution, liquidation, merger or consolidation. In
such event, if the entity which shall be the surviving entity does not tender to
Optionee an offer, for which it has no obligation to do so, to substitute for
any unexercised Option a stock option or capital stock of such surviving entity,
as applicable, which on an equitable basis shall provide the Optionee with
substantially the same economic benefit as such unexercised Option, then the
Board may grant to such Optionee, but shall not be obligated to do so, the right
for a period commencing thirty (30) days prior to and ending immediately prior
to such dissolution, liquidation, merger or consolidation or during the
remaining term of the Option, whichever is the lesser, to exercise any unexpired
Option or Options, without regard to the installment provisions of Paragraph
5(d) of this Plan; provided, that any such right granted shall be granted to all
Optionees not receiving an offer to substitute on a consistent basis, and
provided further, that any such exercise shall be subject to the consummation of
such dissolution, liquidation, merger or consolidation.
In the event of a change in the Stock of the Corporation as presently
constituted, which is limited to a change of all of its authorized shares
without par value into the same number of shares with a par value, the shares
resulting from any such change shall be deemed to be the Stock within the
meaning of this Plan.
To the extent that the foregoing adjustments relate to stock or
securities of the Corporation, such adjustments shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided in this Paragraph 5(i), the Optionee shall have no
rights by reason of any subdivision or consolidation of shares of stock of any
class or the payment of any stock dividend or any other increase or decrease in
the number of shares of stock of any class, and the number or price of shares of
Stock subject to any Option shall not be affected by, and no adjustment shall be
made by reason of, any dissolution, liquidation, merger or consolidation, or any
issue by the Corporation of shares of stock of any class or securities
convertible into shares of stock of any class.
The grant of an Option pursuant to the Plan shall not affect in any
way the right or power of the Corporation to make any adjustments,
reclassifications, reorganizations or changes in its capital or business
structure or to merge, consolidate, dissolve, or liquidate or to sell or
transfer all or any part of its business or assets.
(j) Rights as a Stockholder: An Optionee shall have no rights as a
-----------------------
stockholder with respect to any shares covered by an Option until the effective
date of issuance of the shares following exercise of this Option by Optionee.
No adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other rights for which
the record date is prior to the date such stock certificate is issued, except as
expressly provided in Paragraph 5(i) hereof.
(k) Modification, Acceleration, Extension and Renewal of Options:
------------------------------------------------------------
Subject to the terms and conditions and within the limitations of the Plan, the
Board may modify an Option, or once an Option is exercisable, accelerate the
rate at which it may be exercised, and may extend or renew outstanding Options
granted under the Plan or accept the surrender of outstanding Options (to the
6
<PAGE>
extent not theretofore exercised) and authorize the granting of new Options in
substitution for such Options, provided such action is permissible under Section
422 of the Code.
Notwithstanding the foregoing provisions of this Paragraph 5(k),
however, no modification of an Option shall, without the consent of the
Optionee, alter to the Optionee's detriment or impair any rights or obligations
under any Option theretofore granted under the Plan.
(l) Investment Intent: Unless and until the issuance and sale of the
-----------------
shares subject to the Plan are registered under the Securities Act of 1933, as
amended (the "Act") or shall be exempt pursuant to the rules promulgated
thereunder, each Option under the Plan shall provide that the purchases of Stock
thereunder shall be for investment purposes and not with a view to, or for
resale in connection with, any distribution thereof. Further, unless the
issuance and sale of the Stock have been registered under the Act, each Option
shall provide that no shares shall be purchased upon the exercise of such Option
unless and until (i) any then applicable requirements of state and federal laws
and regulatory agencies shall have been fully complied with to the satisfaction
of the Corporation and its counsel, and (ii) if requested to do so by the
Corporation, the person exercising the Option shall (i) give written assurances
as to knowledge and experience of such person (or a representative employed by
such person) in financial and business matters and the ability of such person
(or representative) to evaluate the merits and risks of exercising the Option,
and (ii) execute and deliver to the Corporation a letter of investment intent
and/or such other form related to applicable exemptions from registration, all
in such form and substance as the Corporation may require. If shares are issued
upon exercise of an Option without registration under the Act, subsequent
registration of such shares shall relieve the purchaser thereof of any
investment restrictions or representations made upon the exercise of such
Options.
(m) Exercise Before Exercise Date: At the discretion of the Board,
-----------------------------
the Option may, but need not, include a provision whereby the Optionee may elect
to exercise all or any portion of the Option prior to the stated exercise date
of the Option or any installment thereof. Any shares so purchased prior to the
stated exercise date shall be subject to repurchase by the Corporation upon
termination of Optionee's employment as contemplated by Paragraphs 5(e), 5(f)
and 5(g) hereof prior to the exercise date stated in the Option and such other
restrictions and conditions as the Board or Committee may deem advisable.
(n) Other Provisions: The Option agreements authorized under this
----------------
Plan shall contain such other provisions, including, without limitation,
restrictions upon the exercise of the Options, as the Board or the Committee
shall deem advisable. Shares shall not be issued pursuant to the exercise of an
Option, if the exercise of such Option or the issuance of shares thereunder
would violate, in the opinion of legal counsel for the Corporation, the
provisions of any applicable law or the rules or regulations of any applicable
governmental or administrative agency or body, such as the Act, the Securities
Exchange Act of 1934, the rules promulgated under the foregoing or the rules and
regulations of any exchange upon which the shares of the Corporation are listed.
6. Availability of Information
---------------------------
During the term of the Plan and any additional period during which an
Option granted pursuant to the Plan shall be exercisable, the Corporation shall
make available, upon request, not
7
<PAGE>
later than one hundred and twenty (120) days following the close of each of its
fiscal years such financial and other information regarding the Corporation as
is required by the bylaws of the Corporation and applicable law to be furnished
in an annual report to the stockholders of the Corporation.
7. Effectiveness of Plan; Expiration
---------------------------------
Subject to approval by the stockholders of the Corporation, this Plan shall
be deemed effective as of the date it is adopted by the Board. The Plan shall
expire on April 30, 2002, but such expiration shall not affect the validity of
outstanding Options.
8. Amendment and Termination of the Plan
-------------------------------------
The Board may, insofar as permitted by law, from time to time, with respect
to any shares at the time not subject to Options, suspend or terminate the Plan
or revise or amend it in any respect whatsoever, except that without the
approval of the stockholders of the Corporation, no such revision or amendment
shall (i) increase the number of shares subject to the Plan, (ii) decrease the
price at which Options may be granted, (iii) materially increase the benefits to
Optionees, or (iv) change the class of persons eligible to receive Options under
this Plan; provided, however, no such action shall alter or impair the rights
and obligations under any Option outstanding as of the date thereof without the
written consent of the Optionee thereunder. No Option may be granted while the
Plan is suspended or after it is terminated, but the rights and obligations
under any Option granted while the Plan is in effect shall not be impaired by
suspension or termination of the Plan.
9. Indemnification of Board
------------------------
In addition to such other rights or indemnifications as they may have as
directors or otherwise, and to the extent allowed by applicable law, the members
of the Board and the Committee shall be indemnified by the Corporation against
the reasonable expenses, including attorneys' fees, actually and necessarily
incurred in connection with the defense of any claim, action, suit or
proceeding, or in connection with any appeal thereof, to which they or any of
them may be a party by reason of any action taken, or failure to act, under or
in connection with the Plan or any Option granted thereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by independent legal counsel selected by the Corporation) or paid by them in
satisfaction of a judgment in any such claim, action, suit or proceeding, except
in any case in relation to matters as to which it shall be adjudged in such
claim, action, suit or proceeding that such Board member is liable for
negligence or misconduct in the performance of his or her duties; provided that
within sixty (60) days after institution of any such action, suit or Board
proceeding the member involved shall offer the Corporation, in writing, the
opportunity, at its own expense, to handle and defend the same.
10. Application of Funds
--------------------
The proceeds received by the Corporation from the sale of Stock pursuant to
the exercise of Options will be used for general corporate purposes.
8
<PAGE>
11. No Obligation to Exercise Option
--------------------------------
The granting of an Option shall impose no obligation upon the Optionee to
exercise such Option.
12. Notices
-------
All notice, requests, demands, and other communications pursuant this Plan
shall be in writing and shall be deemed to have been duly given on the date of
service if served personally on the party to whom notice is to be given, or on
the third day following the mailing thereof to the party to whom notice is to be
given, by first class mail, registered or certified, postage prepaid.
* * * * *
The foregoing 1994 Incentive and Nonstatutory Stock Option Plan (the
"Plan") was duly adopted and approved by the Board of Directors of NetVantage, a
California corporation and the Corporation's predecessor, on October 7, 1994,
and approved by the shareholders of NetVantage on October 21, 1994. The Plan
was assumed by the Corporation in connection with a duly approved merger of
NetVantage into the Corporation on December 12, 1994. The Plan was duly
amended, to increase the authorized number of shares under Paragraph 4(a) to a
total of 325,000 shares, by the Board of Directors of the Corporation on June
22, 1995, which amendment was duly approved by the stockholders of the
Corporation on October 24, 1995. The foregoing Plan has been restated to
generally reflect the terms and conditions of the merger and the 1995 amendment.
/s/ THOMAS G. IWANSKI
-------------------------------------
Thomas G. Iwanski, Secretary
9
<PAGE>
EXHIBIT 4.2
-----------
NETVANTAGE, INC.
1996 INCENTIVE STOCK PLAN
-------------------------
1. OBJECTIVES.
The NETVANTAGE, INC. 1996 Incentive Stock Plan (the "Plan") is designed
to retain directors, executives and selected employees and consultants and
reward them for making major contributions to the success of the Company. These
objectives are accomplished by making long-term incentive awards under the Plan
thereby providing Participants with a proprietary interest in the growth and
performance of the Company.
2. DEFINITIONS.
(a) "Board" - The Board of Directors of the Company.
-----
(b) "California Securities Rules" - Chapter 3, Subchapter 2, Subarticle 4
---------------------------
of Article 4 of Title 10 of the Corporate Securities Rules of the Commissioner
of Corporations of the State of California.
(c) "Code" - The Internal Revenue Code of 1986, as amended from time to
----
time.
(d) "Committee" - The Executive Compensation Committee of the Company's
---------
Board, or such other committee of the Board that is designated by the Board to
administer the Plan, composed of not less than two members of the Board all of
whom are disinterested persons, as contemplated by Rule 16b-3 ("Rule 16b-3")
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
(e) "Company" - NETVANTAGE, INC. and its subsidiaries including
-------
subsidiaries of subsidiaries.
(f) "Exchange Act" - The Securities Exchange Act of 1934, as amended from
------------
time to time.
(g) "Fair Market Value" - The fair market value of the Company's issued and
-----------------
outstanding Stock as determined in good faith by the Board or Committee.
(h) "Grant" - The grant of any form of stock option, stock award, or stock
-----
purchase offer, whether granted singly, in combination or in tandem, to a
Participant pursuant to such terms, conditions and limitations as the Committee
may establish in order to fulfill the objectives of the Plan.
(i) "Grant Agreement" - An agreement between the Company and a Participant
---------------
that sets forth the terms, conditions and limitations applicable to a Grant.
(j) "Option" - Either an Incentive Stock Option, in accordance with Section
------
422 of Code, or a Nonstatutory Option, to purchase the Company's Stock that may
be awarded
<PAGE>
to a Participant under the Plan. A Participant who receives an award of an
Option shall be referred to as an "Optionee."
(k) "Participant" - A director, officer, employee or consultant of the
-----------
Company to whom an Award has been made under the Plan.
(l) "Restricted Stock Purchase Offer" - A Grant of the right to purchase a
-------------------------------
specified number of shares of Stock pursuant to a written agreement issued under
the Plan.
(m) "Securities Act" - The Securities Act of 1933, as amended from time to
--------------
time.
(n) "Stock" - Authorized and issued or unissued shares of Class A Common
-----
Stock of the Company.
(o) "Stock Award" - A Grant made under the Plan in stock or denominated in
-----------
units of stock for which the Participant is not obligated to pay additional
consideration.
3. ADMINISTRATION
The Plan shall be administered by the Board, provided however, that the
Board may delegate such administration to the Committee. Subject to the
provisions of the Plan, the Board and/or the Committee shall have authority to
(a) grant, in its discretion, Incentive Stock Options in accordance with Section
422 of the Code, or Nonstatutory Options, Stock Awards or Restricted Stock
Purchase Offers; (b) determine in good faith the fair market value of the Stock
covered by any Grant; (c) determine which eligible persons shall receive Grants
and the number of shares, restrictions, terms and conditions to be included in
such Grants; (d) construe and interpret the Plan; (e) promulgate, amend and
rescind rules and regulations relating to its administration, and correct
defects, omissions and inconsistencies in the Plan or any Grant; (f) consistent
with the Plan and with the consent of the Participant, as appropriate, amend any
outstanding Grant or amend the exercise date or dates thereof; (g) determine the
duration and purpose of leaves of absence which may be granted to Participants
without constituting termination of their employment for the purpose of the Plan
or any Grant; and (h) make all other determinations necessary or advisable for
the Plan's administration. The interpretation and construction by the Board of
any provisions of the Plan or selection of Participants shall be conclusive and
final. No member of the Board or the Committee shall be liable for any action
or determination made in good faith with respect to the Plan or any Grant made
thereunder.
4. ELIGIBILITY
(a) General: The persons who shall be eligible to receive Grants shall be
-------
directors, officers, employees or consultants to the Company. The term
consultant shall mean any person, other than an employee, who is engaged by the
Company to render services and is compensated for such services. An Optionee
may hold more than one Option. Any issuance of a Grant to an officer or
director of the Company subsequent to the first registration of any
2
<PAGE>
of the securities of the Company under the Exchange Act shall comply with the
requirements of Rule 16b-3.
(b) Incentive Stock Options: Incentive Stock Options may only be issued to
-----------------------
employees of the Company. Incentive Stock Options may be granted to officers,
whether or not they are directors, provided they are also employees of the
Company. Payment of a director's fee shall not be sufficient to constitute
employment by the Company.
The Company shall not grant an Incentive Stock Option under the Plan to any
employee if such Grant would result in such employee holding the right to
exercise for the first time in any one calendar year, under all Incentive Stock
Options granted under the Plan or any other plan maintained by the Company, with
respect to shares of Stock having an aggregate fair market value, determined as
of the date of the Option is granted, in excess of $100,000. Should it be
determined that an Incentive Stock Option granted under the Plan exceeds such
maximum for any reason other than a failure in good faith to value the Stock
subject to such option, the excess portion of such option shall be considered a
Nonstatutory Option. To the extent the employee holds two (2) or more such
Options which become exercisable for the first time in the same calendar year,
the foregoing limitation on the exercisability of such Option as Incentive Stock
Options under the Federal tax laws shall be applied on the basis of the order in
which such Options are granted. If, for any reason, an entire Option does not
qualify as an Incentive Stock Option by reason of exceeding such maximum, such
Option shall be considered a Nonstatutory Option.
(c) Nonstatutory Option: The provisions of the foregoing Section 4(b)
-------------------
shall not apply to any Option designated as a "Nonstatutory Option" or which
sets forth the intention of the parties that the Option be a Nonstatutory
Option.
(d) Stock Awards and Restricted Stock Purchase Offers: The provisions of
-------------------------------------------------
this Section 4 shall not apply to any Stock Award or Restricted Stock Purchase
Offer under the Plan.
5. STOCK
(a) Authorized Stock: Stock subject to Grants may be either unissued or
----------------
reacquired Stock.
(b) Number of Shares: Subject to adjustment as provided in Section 6(i) of
----------------
the Plan, the total number of shares of Stock which may be purchased or granted
directly by Options, Stock Awards or Restricted Stock Purchase Offers, or
purchased indirectly through exercise of Options granted under the Plan shall
not exceed 800,000. If any Grant shall for any reason terminate or expire, any
shares allocated thereto but remaining unpurchased upon such expiration or
termination shall again be available for Grants with respect thereto under the
Plan as though no Grant had previously occurred with respect to such shares.
Any shares of Stock issued pursuant to a Grant and repurchased pursuant to the
terms thereof shall be available for future Grants as though not previously
covered by a Grant.
3
<PAGE>
(c) Reservation of Shares: The Company shall reserve and keep available at
---------------------
all times during the term of the Plan such number of shares as shall be
sufficient to satisfy the requirements of the Plan. If, after reasonable
efforts, which efforts shall not include the registration of the Plan or Grants
under the Securities Act, the Company is unable to obtain authority from any
applicable regulatory body, which authorization is deemed necessary by legal
counsel for the Company for the lawful issuance of shares hereunder, the Company
shall be relieved of any liability with respect to its failure to issue and sell
the shares for which such requisite authority was so deemed necessary unless and
until such authority is obtained.
(d) Application of Funds. The proceeds received by the Company from the
---------------------
sale of common Stock pursuant to the exercise of Options or rights under Stock
Purchase Agreements will be used for general corporate purposes.
(e) No Obligation to Exercise. The issuance of a Grant shall impose no
--------------------------
obligation upon the Participant to exercise any rights under such Grant.
6. TERMS AND CONDITIONS OF OPTIONS
Options granted hereunder shall be evidenced by agreements between the
Company and the respective Optionees, in such form and substance as the Board or
Committee shall from time to time approve. The form of Incentive Stock Option
Agreement attached hereto as Exhibit "A" and the three forms of a Nonstatutory
Stock Option Agreement for employees, for directors and for consultants,
attached hereto as Exhibits "B-1," "B-2" and "B3," respectively, shall be deemed
to be approved by the Board. Option agreements need not be identical, and in
each case may include such provisions as the Board or Committee may determine,
but all such agreements shall be subject to and limited by the following terms
and conditions:
(a) Number of Shares: Each Option shall state the number of shares to
----------------
which it pertains.
(b) Exercise Price: Each Option shall state the exercise price, which
--------------
shall be determined as follows:
(i) Any Option granted to a person who at the time the Option is
granted owns (or is deemed to own pursuant to Section 424(d) of the Code)
stock possessing more than ten percent (10%) of the total combined voting
power or value of all classes of stock of the Company, ("Ten Percent
Holder") shall have an exercise price of no less than 110% of the Fair
Market Value of the Stock as of the date of grant; and
(ii) Incentive Stock Options granted to a person who at the time
the Option is granted is not a Ten Percent Holder shall have an exercise
price of no less than 100% of the Fair Market Value of the Class A Common
Stock as of the date of grant.
4
<PAGE>
(iii) Nonstatutory Options granted to a person who at the time
the Option is granted is not a Ten Percent Holder shall have an exercise
price of no less than 85 % of the Fair Market Value of the Stock as of the
date of grant.
For the purposes of this Section 6(b), the Fair Market Value per share
shall be the average of the bid and asked prices (or may be the closing price if
such stock is listed on the Nasdaq National Market System or Small Cap Issue
Market) on the date of grant of the Option, or if listed on a stock exchange,
the closing price on such exchange on such date of grant; provided however, that
if there is no public market for such Stock, the Fair Market Value shall be as
determined by the Board in good faith, which determination shall be conclusive
and binding.
(c) Medium and Time of Payment: The exercise price shall become
--------------------------
immediately due upon exercise of the Option and shall be paid in cash or check
made payable to the Company. Should the Company's outstanding Stock be
registered under Section 12(g) of the Exchange Act at the time the Option is
exercised, then the exercise price may also be paid as follows:
(i) in shares of the Company's Stock held by the Optionee for the
requisite period necessary to avoid a charge to the Company's earnings for
financial reporting purposes and valued at Fair Market Value on the
exercise date, or
(ii) through a special sale and remittance procedure pursuant to
which the Optionee shall concurrently provide irrevocable written
instructions (a) to a Company designated brokerage firm to effect the
immediate sale 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 plus all
applicable Federal, state and local income and employment taxes required to
be withheld by the Company by reason of such purchase and (b) to the
Company to deliver the certificates for the purchased shares directly to
such brokerage firm in order to complete the sale transaction.
At the discretion of the Board, exercisable either at the time of
Option grant or of Option exercise, the exercise price may also be paid (i) by
Optionee's delivery of a promissory note in form and substance satisfactory to
the Company and permissible under the California Securities Rules and bearing
interest at a rate determined by the Board in its sole discretion, but in no
event less than the minimum rate of interest required to avoid the imputation of
compensation income to the Optionee under the Federal tax laws, or (ii) in such
other form of consideration permitted by the California Corporations Code as may
be acceptable to the Board.
(d) Term and Exercise of Options: Any Option granted to an employee
----------------------------
of the Company shall become exercisable over a period of no longer than five (5)
years, and no less than twenty percent (20%) of the shares covered thereby shall
become exercisable annually. No Option shall be exercisable, in whole or in
part, prior to one (1) year from the date it is granted unless the Board shall
specifically determine otherwise, as provided herein. In no event shall
5
<PAGE>
any Option be exercisable after the expiration of ten (10) years from the date
it is granted, and no Incentive Stock Option granted to a Ten Percent Holder
shall, by its terms, be exercisable after the expiration of five (5) years from
the date of the Option. Unless otherwise specified by the Board or the
Committee in the resolution authorizing such option, the date of grant of an
Option shall be deemed to be the date upon which the Board or the Committee
authorizes the granting of such Option.
Each Option shall be exercisable to the nearest whole share, in
installments or otherwise, as the respective Option agreements may provide.
During the lifetime of an Optionee, the Option shall be exercisable only by the
Optionee and shall not be assignable or transferable by the Optionee, and no
other person shall acquire any rights therein. To the extent not exercised,
installments (if more than one) shall accumulate, but shall be exercisable, in
whole or in part, only during the period for exercise as stated in the Option
agreement, whether or not other installments are then exercisable.
(e) Termination of Status as Employee, Consultant or Director: If
---------------------------------------------------------
Optionee's status as an employee shall terminate for any reason other than
Optionee's disability or death, then the Optionee (or if the Optionee shall die
after such termination, but prior to exercise, Optionee's personal
representative or the person entitled to succeed to the Option) shall have the
right to exercise the portions of any of Optionee's Incentive Stock Options
which were exercisable as of the date of such termination, in whole or in part,
not less than 30 days nor more than three (3) months after such termination (or,
in the event of "termination for cause" as that term is defined in Section 2922
of the California Labor Code and case law related thereto, or by the terms of
the Plan or the Option Agreement or an employment agreement, the Option shall
automatically terminate as of the termination of employment as to all shares
covered by the Option).
With respect to Nonstatutory Options granted to employees, directors
or consultants, the Board may specify such period for exercise, not less than 30
days (except that in the case of "termination for cause" or termination of a
director pursuant to Section 302 or 304 of the California Corporations Code, the
Option shall automatically terminate as of the termination of employment or
services as to shares covered by the Option), following termination of
employment or services as the Board deems reasonable and appropriate. The
Option may be exercised only with respect to installments that the Optionee
could have exercised at the date of termination of employment or services.
Nothing contained herein or in any Option granted pursuant hereto shall be
construed to affect or restrict in any way the right of the Company to terminate
the employment or services of an Optionee with or without cause.
(f) Disability of Optionee: If an Optionee is disabled (within the
----------------------
meaning of Section 22(e)(3) of the Code) at the time of termination, the three
(3) month period set forth in Section 6(e) shall be a period, as determined by
the Board and set forth in the Option, of not less than six months nor more than
one year after such termination.
(g) Death of Optionee: If an Optionee dies while employed by, engaged
-----------------
as a consultant to, or serving as a Director of the Company, the portion of such
Optionee's Option which was exercisable at the date of death may be exercised,
in whole or in part, by the estate
6
<PAGE>
of the decedent or by a person succeeding to the right to exercise such Option
at any time within (i) a period, as determined by the Board and set forth in the
Option, of not less than six (6) months nor more than one (1) year after
Optionee's death, which period shall not be more, in the case of a Nonstatutory
Option, than the period for exercise following termination of employment or
services, or (ii) during the remaining term of the Option, whichever is the
lesser. The Option may be so exercised only with respect to installments
exercisable at the time of Optionee's death and not previously exercised by the
Optionee.
(h) Nontransferability of Option: No Option shall be transferable by
----------------------------
the Optionee, except by will or by the laws of descent and distribution.
(i) Recapitalization: Subject to any required action of shareholders,
----------------
the number of shares of Stock covered by each outstanding Option, and the
Exercise price per share thereof set forth in each such Option, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Stock of the Company resulting from a subdivision or consolidation of
shares or the payment of a stock dividend, or any other increase or decrease in
the number of such shares affected without receipt of consideration by the
Company; provided, however, the conversion of any convertible securities of the
Company shall not be deemed to have been "effected" without receipt of
consideration by the Company.
In the event of a proposed dissolution or liquidation of the Company,
a merger or consolidation in which the Company is not the surviving entity, or a
sale of all or substantially all of the assets or capital stock of the Company
(collectively, a "Reorganization"), unless otherwise provided by the Board, this
Option shall terminate immediately prior to such date as is determined by the
Board, which date shall be no later than the consummation of such
Reorganization. In such event, if the entity which shall be the surviving
entity does not tender to Optionee an offer, for which it has no obligation to
do so, to substitute for any unexercised Option a stock option or capital stock
of such surviving of such surviving entity, as applicable, which on an equitable
basis shall provide the Optionee with substantially the same economic benefit as
such unexercised Option, then the Board may grant to such Optionee, in its sole
and absolute discretion and without obligation, the right for a period
commencing thirty (30) days prior to and ending immediately prior to the date
determined by the Board pursuant hereto for termination of the Option or during
the remaining term of the Option, whichever is the lesser, to exercise any
unexpired Option or Options without regard to the installment provisions of
Paragraph 6(d) of the Plan; provided, that any such right granted shall be
granted to all Optionees not receiving an offer to receive substitute options on
a consistent basis, and provided further, that any such exercise shall be
subject to the consummation of such Reorganization.
Subject to any required action of shareholders, if the Company shall
be the surviving entity in any merger or consolidation, each outstanding Option
thereafter shall pertain to and apply to the securities to which a holder of
shares of Class A Common Stock equal to the shares subject to the Option would
have been entitled by reason of such merger or consolidation.
In the event of a change in the Class A Common Stock of the Company as
presently constituted, which is limited to a change of all of its authorized
shares without par
7
<PAGE>
value into the same number of shares with a par value, the shares resulting from
any such change shall be deemed to be the Stock within the meaning of the Plan.
To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive. Except as
expressly provided in this Section 6(i), the Optionee shall have no rights by
reason of any subdivision or consolidation of shares of stock of any class or
the payment of any stock dividend or any other increase or decrease in the
number of shares of stock of any class, and the number or price of shares of
Stock subject to any Option shall not be affected by, and no adjustment shall be
made by reason of, any dissolution, liquidation, merger, consolidation or sale
of assets or capital stock, or any issue by the Company of shares of stock of
any class or securities convertible into shares of stock of any class.
The grant of an Option pursuant to the Plan shall not affect in any
way the right or power of the Company to make any adjustments,
reclassifications, reorganizations or changes in its capital or business
structure or to merge, consolidate, dissolve, or liquidate or to sell or
transfer all or any part of its business or assets.
(j) Rights as a Shareholder: An Optionee shall have no rights as a
-----------------------
shareholder with respect to any shares covered by an Option until the effective
date of the issuance of the shares following exercise of such Option by
Optionee. No adjustment shall be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property) or distributions or other rights
for which the record date is prior to the date such stock certificate is issued,
except as expressly provided in Section 6(i) hereof.
(k) Modification, Acceleration, Extension, and Renewal of Options:
-------------------------------------------------------------
Subject to the terms and conditions and within the limitations of the Plan, the
Board may modify an Option, or, once an Option is exercisable, accelerate the
rate at which it may be exercised, and may extend or renew outstanding Options
granted under the Plan or accept the surrender of outstanding Options (to the
extent not theretofore exercised) and authorize the granting of new Options in
substitution for such Options, provided such action is permissible under Section
422 of the Code and the California Securities Rules. Notwithstanding the
provisions of this Section 6(k), however, no modification of an Option shall,
without the consent of the Optionee, alter to the Optionee's detriment or impair
any rights or obligations under any Option theretofore granted under the Plan.
(l) Exercise Before Exercise Date: At the discretion of the Board,
-----------------------------
the Option may, but need not, include a provision whereby the Optionee may elect
to exercise all or any portion of the Option prior to the stated exercise date
of the Option or any installment thereof. Any shares so purchased prior to the
stated exercise date shall be subject to repurchase by the Company upon
termination of Optionee's employment as contemplated by Section 6(n) hereof
prior to the exercise date stated in the Option and such other restrictions and
conditions as the Board or Committee may deem advisable.
8
<PAGE>
(m) Other Provisions: The Option agreements authorized under the Plan
----------------
shall contain such other provisions, including, without limitation, restrictions
upon the exercise of the Options, as the Board or the Committee shall deem
advisable. Shares shall not be issued pursuant to the exercise of an Option, if
the exercise of such Option or the issuance of shares thereunder would violate,
in the opinion of legal counsel for the Company, the provisions of any
applicable law or the rules or regulations of any applicable governmental or
administrative agency or body, such as the Code, the Securities Act, the
Exchange Act, the California Securities Rules, California Corporations Code, and
the rules promulgated under the foregoing or the rules and regulations of any
exchange upon which the shares of the Company are listed. Without limiting the
generality of the foregoing, the exercise of each Option shall be subject to the
condition that if at any time the Company shall determine that (i) the
satisfaction of withholding tax or other similar liabilities, or (ii) the
listing, registration or qualification of any shares covered by such exercise
upon any securities exchange or under any state or federal law, or (iii) the
consent or approval of any regulatory body, or (iv) the perfection of any
exemption from any such withholding, listing, registration, qualification,
consent or approval is necessary or desirable in connection with such exercise
or the issuance of shares thereunder, then in any such event, such exercise
shall not be effective unless such withholding, listing registration,
qualification, consent, approval or exemption shall have been effected, obtained
or perfected free of any conditions not acceptable to the Corporation.
(n) Repurchase Agreement: The Board may, in its discretion, require
--------------------
as a condition to the grant of an Option hereunder, that an Optionee execute an
agreement with the Company, in form and substance satisfactory to the Board in
its discretion ("Repurchase Agreement"), (i) restricting the Optionee's right to
transfer shares purchased under such Option without first offering such shares
to the Company or another shareholder of the Company upon the same terms and
conditions as provided therein; and (ii) providing that upon termination of
Optionee's employment with the Company, for any reason, the Company (or another
shareholder of the Company, as provided in the Repurchase Agreement) shall have
the right at its discretion (or the discretion of such other shareholders) to
purchase and/or redeem all such shares owned by the Optionee on the date of
termination of his or her employment at a price equal to (A) the fair value of
such shares as of such date of termination, or (B) if such repurchase right
lapses at 20% of the number of shares per year, the original purchase price of
such shares, and upon terms of payment permissible under the California
Securities Rules; provided that in the case of Options or Stock Awards granted
to officers, directors, consultants or affiliates of the Company, such
repurchase provisions may be subject to additional or greater restrictions as
determined by the Board or Committee.
7. STOCK AWARDS AND RESTRICTED STOCK PURCHASE OFFERS
(a) Types of Grants.
---------------
(i) Stock Award. All or part of any Stock Award under the Plan
------------
may be subject to conditions established by the Board or the Committee, and
set forth in the Stock Award Agreement, which may include, but are not
limited to, continuous service with the Company, achievement of specific
business objectives, increases in specified indices, attaining growth rates
and other comparable measurements of Company
9
<PAGE>
performance. Such Awards may be based on Fair Market Value or other
specified valuation. All Stock Awards will be made pursuant to the
execution of a Stock Award Agreement substantially in the form attached
hereto as Exhibit "C".
(ii) Restricted Stock Purchase Offer. A Grant of a Restricted
-------------------------------
Stock Purchase Offer under the Plan shall be subject to such (i) vesting
contingencies related to the Participant's continued association with the
Company for a specified time and (ii) other specified conditions as the
Board or Committee shall determine, in their sole discretion, consistent
with the provisions of the Plan. All Restricted Stock Purchase Offers
shall be made pursuant to a Restricted Stock Purchase Offer substantially
in the form attached hereto as Exhibit "D".
(b) Conditions and Restrictions. Shares of Stock which Participants
---------------------------
may receive as a Stock Award under a Stock Award Agreement or Restricted Stock
Purchase Offer under a Restricted Stock Purchase Offer may include such
restrictions as the Board or Committee, as applicable, shall determine,
including restrictions on transfer, repurchase rights, right of first refusal,
and forfeiture provisions. When transfer of Stock is so restricted or subject
to forfeiture provisions it is referred to as "Restricted Stock". Further, with
Board or Committee approval, Stock Awards or Restricted Stock Purchase Offers
may be deferred, either in the form of installments or a future lump sum
distribution. The Board or Committee may permit selected Participants to elect
to defer distributions of Stock Awards or Restricted Stock Purchase Offers in
accordance with procedures established by the Board or Committee to assure that
such deferrals comply with applicable requirements of the Code including, at the
choice of Participants, the capability to make further deferrals for
distribution after retirement. Any deferred distribution, whether elected by
the Participant or specified by the Stock Award Agreement, Restricted Stock
Purchase Offers or by the Board or Committee, may require the payment be
forfeited in accordance with the provisions of Section 7(c). Dividends or
dividend equivalent rights may be extended to and made part of any Stock Award
or Restricted Stock Purchase Offers denominated in Stock or units of Stock,
subject to such terms, conditions and restrictions as the Board or Committee may
establish.
(c) Cancellation and Rescission of Grants. Unless the Stock Award
-------------------------------------
Agreement or Restricted Stock Purchase Offer specifies otherwise, the Board or
Committee, as applicable, may cancel any unexpired, unpaid, or deferred Grants
at any time if the Participant is not in compliance with all other applicable
provisions of the Stock Award Agreement or Restricted Stock Purchase Offer, the
Plan and with the following conditions:
(i) A Participant shall not render services for any organization
or engage directly or indirectly in any business which, in the judgment of
the chief executive officer of the Company or other senior officer
designated by the Board or Committee, is or becomes competitive with the
Company, or which organization or business, or the rendering of services to
such organization or business, is or becomes otherwise prejudicial to or in
conflict with the interests of the Company. For Participants whose
employment has terminated, the judgment of the chief executive officer
shall be based on the Participant's position and responsibilities while
employed by the Company, the Participant's post-employment responsibilities
and position with the other organization
10
<PAGE>
or business, the extent of past, current and potential competition or
conflict between the Company and the other organization or business, the
effect on the Company's customers, suppliers and competitors and such other
considerations as are deemed relevant given the applicable facts and
circumstances. A Participant who has retired shall be free, however, to
purchase as an investment or otherwise, stock or other securities of such
organization or business so long as they are listed upon a recognized
securities exchange or traded over-the-counter, and such investment does
not represent a substantial investment to the Participant or a greater than
10 percent equity interest in the organization or business.
(ii) A Participant shall not, without prior written authorization
from the Company, disclose to anyone outside the Company, or use in other
than the Company's business, any confidential information or material, as
defined in the Company's Proprietary Information and Invention Agreement or
similar agreement regarding confidential information and intellectual
property, relating to the business of the Company, acquired by the
Participant either during or after employment with the Company.
(iii) A Participant, pursuant to the Company's Proprietary
Information and Invention Agreement, shall disclose promptly and assign to
the Company all right, title and interest in any invention or idea,
patentable or not, made or conceived by the Participant during employment
by the Company, relating in any manner to the actual or anticipated
business, research or development work of the Company and shall do anything
reasonably necessary to enable the Company to secure a patent where
appropriate in the United States and in foreign countries.
(iv) Upon exercise, payment or delivery pursuant to a Grant, the
Participant shall certify on a form acceptable to the Committee that he or
she is in compliance with the terms and conditions of the Plan. Failure to
comply with all of the provisions of this Section 7(c) prior to, or during
the six months after, any exercise, payment or delivery pursuant to a Grant
shall cause such exercise, payment or delivery to be rescinded. The
Company shall notify the Participant in writing of any such rescission
within two years after such exercise, payment or delivery. Within ten days
after receiving such a notice from the Company, the Participant shall pay
to the Company the amount of any gain realized or payment received as a
result of the rescinded exercise, payment or delivery pursuant to a Grant.
Such payment shall be made either in cash or by returning to the Company
the number of shares of Stock that the Participant received in connection
with the rescinded exercise, payment or delivery.
(d) Nonassignability.
----------------
(i) Except pursuant to Section 7(e)(iii) and except as set forth
in Section 7(d)(ii), no Grant or any other benefit under the Plan shall be
assignable or transferable, or payable to or exercisable by, anyone other
than the Participant to whom it was granted.
11
<PAGE>
(ii) Where a Participant terminates employment and retains a
Grant pursuant to Section 7(e)(ii) in order to assume a position with a
governmental, charitable or educational institution, the Board or
Committee, in its discretion and to the extent permitted by law, may
authorize a third party (including but not limited to the trustee of a
"blind" trust), acceptable to the applicable governmental or institutional
authorities, the Participant and the Board or Committee, to act on behalf
of the Participant with regard to such Awards.
(e) Termination of Employment. If the employment or service to the
-------------------------
Company of a Participant terminates, other than pursuant to any of the following
provisions under this Section 7(e), all unexercised, deferred and unpaid Stock
Awards or Restricted Stock Purchase Offers shall be cancelled immediately,
unless the Stock Award Agreement or Restricted Stock Purchase Offer provides
otherwise:
(i) Retirement Under a Company Retirement Plan. When a
------------------------------------------
Participant's employment terminates as a result of retirement in accordance
with the terms of a Company retirement plan, the Board or Committee may
permit Stock Awards or Restricted Stock Purchase Offers to continue in
effect beyond the date of retirement in accordance with the applicable
Grant Agreement and the exercisability and vesting of any such Grants may
be accelerated.
(ii) Resignation in the Best Interests of the Company. When a
------------------------------------------------
Participant resigns from the Company and, in the judgment of the Board or
Committee, the acceleration and/or continuation of outstanding Stock Awards
or Restricted Stock Purchase Offers would be in the best interests of the
Company, the Board or Committee may (i) authorize, where appropriate, the
acceleration and/or continuation of all or any part of Grants issued prior
to such termination and (ii) permit the exercise, vesting and payment of
such Grants for such period as may be set forth in the applicable Grant
Agreement, subject to earlier cancellation pursuant to Section 10 or at
such time as the Board or Committee shall deem the continuation of all or
any part of the Participant's Grants are not in the Company's best
interest.
(iii) Death or Disability of a Participant.
------------------------------------
(1) In the event of a Participant's death, the
Participant's estate or beneficiaries shall have a period up to the
expiration date specified in the Grant Agreement within which to receive or
exercise any outstanding Grant held by the Participant under such terms as
may be specified in the applicable Grant Agreement. Rights to any such
outstanding Grants shall pass by will or the laws of descent and
distribution in the following order: (a) to beneficiaries so designated by
the Participant; if none, then (b) to a legal representative of the
Participant; if none, then (c) to the persons entitled thereto as
determined by a court of competent jurisdiction. Grants so passing shall be
made at such times and in such manner as if the Participant were living.
(2) In the event a Participant is deemed by the Board or
Committee, to be unable to perform his or her usual duties by reason of
mental disorder
12
<PAGE>
or medical condition which does not result from facts which would be
grounds for termination for cause, Grants and rights to any such Grants may
be paid to or exercised by the Participant, if legally competent, or a
committee or other legally designated guardian or representative if the
Participant is legally incompetent by virtue of such disability.
(3) After the death or disability of a Participant, the Board or
Committee may in its sole discretion at any time (A) terminate restrictions
in Grant Agreements; (B) accelerate any or all installments and rights; and
(C) instruct the Company to pay the total of any accelerated payments in a
lump sum to the Participant, the Participant's estate, beneficiaries or
representative - notwithstanding that, in the absence of such termination
of restrictions or acceleration of payments, any or all of the payments due
under the Grant might ultimately have become payable to other
beneficiaries.
(4) In the event of uncertainty as to interpretation of or
controversies concerning this Section 7, the determinations of the Board or
Committee, as applicable, shall be binding and conclusive.
8. INVESTMENT INTENT
All Grants under the Plan are intended to be exempt from registration under
the Securities Act provided by Rule 701 thereunder. Unless and until the
granting of Options or sale and issuance of Stock subject to the Plan are
registered under the Securities Act or shall be exempt pursuant to the rules
promulgated thereunder, each Grant under the Plan shall provide that the
purchases or other acquisitions of Stock thereunder shall be for investment
purposes and not with a view to, or for resale in connection with, any
distribution thereof. Further, unless the issuance and sale of the Stock have
been registered under the Securities Act, each Grant shall provide that no
shares shall be purchased upon the exercise of the rights under such Grant
unless and until (i) all then applicable requirements of state and federal laws
and regulatory agencies shall have been fully complied with to the satisfaction
of the Company and its counsel, and (ii) if requested to do so by the Company,
the person exercising the rights under the Grant shall (A) give written
assurances as to knowledge and experience of such person (or a representative
employed by such person) in financial and business matters and the ability of
such person (or representative) to evaluate the merits and risks of exercising
the Option, and (B) execute and deliver to the Company a letter of investment
intent and/or such other form related to applicable exemptions from
registration, all in such form and substance as the Company may require. If
shares are issued upon exercise of any rights under a Grant without registration
under the Securities Act, subsequent registration of such shares shall relieve
the purchaser thereof of any investment restrictions or representations made
upon the exercise of such rights.
9. AMENDMENT, MODIFICATION, SUSPENSION OR DISCONTINUANCE OF THE PLAN.
The Board may, insofar as permitted by law, from time to time, with
respect to any shares at the time not subject to outstanding Grants, suspend or
terminate the Plan or revise or amend it in any respect whatsoever, except that
without the approval of the shareholders of
13
<PAGE>
the Company, no such revision or amendment shall (i) increase the number of
shares subject to the Plan, (ii) decrease the price at which Grants may be
granted, (iii) materially increase the benefits to Participants, or (iv) change
the class of persons eligible to receive Grants under the Plan; provided,
however, no such action shall alter or impair the rights and obligations under
any Option, or Stock Award, or Restricted Stock Purchase Offer outstanding as of
the date thereof without the written consent of the Participant thereunder. No
Grant may be issued while the Plan is suspended or after it is terminated, but
the rights and obligations under any Grant issued while the Plan is in effect
shall not be impaired by suspension or termination of the Plan.
In the event of any change in the outstanding Stock by reason of a stock
split, stock dividend, combination or reclassification of shares,
recapitalization, merger, or similar event, the Board or the Committee may
adjust proportionally (a) the number of shares of Stock (i) reserved under the
Plan, (ii) available for Incentive Stock Options and Nonstatutory Options and
(iii) covered by outstanding Stock Awards or Restricted Stock Purchase Offers;
(b) the Stock prices related to outstanding Grants; and (c) the appropriate Fair
Market Value and other price determinations for such Grants. In the event of any
other change affecting the Stock or any distribution (other than normal cash
dividends) to holders of Stock, such adjustments as may be deemed equitable by
the Committee, including adjustments to avoid fractional shares, shall be made
to give proper effect to such event. In the event of a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation, the Committee shall be authorized to issue or assume stock options,
whether or not in a transaction to which Section 424(a) of the Code applies, and
other Grants by means of substitution of new Grant Agreements for previously
issued Grants or an assumption of previously issued Grants.
10. TAX WITHHOLDING.
The Company shall have the right to deduct applicable taxes from any
Grant payment and withhold, at the time of delivery or exercise of Options,
Stock Awards or Restricted Stock Purchase Offers or vesting of shares under such
Grants, an appropriate number of shares for payment of taxes required by law or
to take such other action as may be necessary in the opinion of the Company to
satisfy all obligations for withholding of such taxes. If Stock is used to
satisfy tax withholding, such stock shall be valued based on the Fair Market
Value when the tax withholding is required to be made.
11. AVAILABILITY OF INFORMATION.
During the term of the Plan and any additional period during which a
Grant granted pursuant to the Plan shall be exercisable, the Company shall make
available, not later than one hundred and twenty (120) days following the close
of each of its fiscal years, such financial and other information regarding the
Company as is required by the bylaws of the Company and applicable law to be
furnished in an annual report to the shareholders of the Company.
14
<PAGE>
12. NOTICE.
Any written notice to the Company required by any of the provisions of
the Plan shall be addressed to the chief personnel officer or to the chief
executive officer of the Company, and shall become effective when it is received
by the office of the chief personnel officer or the chief executive officer.
13. UNFUNDED PLAN.
Insofar as it provides for Grants, the Plan shall be unfunded.
Although bookkeeping accounts may be established with respect to Participants
who are entitled to Grants or rights thereto under the Plan, any such accounts
shall be used merely as a bookkeeping convenience. The Company shall not be
required to segregate any assets that may at any time be represented by Grants
or rights thereto, nor shall the Plan be construed as providing for such
segregation, nor shall the Company nor the Board nor the Committee be deemed to
be a trustee of any Grants or rights thereto to be granted under the Plan. Any
liability of the Company to any Participant with respect to a grant of Stock or
rights thereto under the Plan shall be based solely upon any contractual
obligations that may be created by the Plan and any Grant Agreement; no such
obligation of the Company shall be deemed to be secured by any pledge or other
encumbrance on any property of the Company. Neither the Company nor the Board
nor the Committee shall be required to give any security or bond for the
performance of any obligation that may be created by the Plan.
14. INDEMNIFICATION OF BOARD.
In addition to such other rights or indemnifications as they may have
as directors or otherwise, and to the extent allowed by applicable law, the
members of the Board and the Committee shall be indemnified by the Company
against the reasonable expenses, including attorneys' fees, actually and
necessarily incurred in connection with the defense of any claim, action, suit
or proceeding, or in connection with any appeal thereof, to which they or any of
them may be a party by reason of any action taken, or failure to act, under or
in connection with the Plan or any Grant granted thereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by independent legal counsel selected by the Company) or paid by them in
satisfaction of a judgment in any such claim, action, suit or proceeding, except
in any case in relation to matters as to which it shall be adjudged in such
claim, action, suit or proceeding that such Board or Committee member is liable
for negligence or misconduct in the performance of his or her duties; provided
that within sixty (60) days after institution of any such action, suit or Board
proceeding the member involved shall offer the Company, in writing, the
opportunity, at its own expense, to handle and defend the same.
15. GOVERNING LAW.
The Plan and all determinations made and actions taken pursuant
hereto, to the extent not otherwise governed by the Code or the securities laws
of the United States, shall be governed by the law of the State of California
and construed accordingly.
15
<PAGE>
16. EFFECTIVE AND TERMINATION DATES.
The Plan shall become effective on the date it is approved by the
holders of a majority of the shares of Stock then outstanding (which date was
June 6, 1996). The Plan shall terminate ten years later, subject to earlier
termination by the Board pursuant to Section 9.
16
<PAGE>
EXHIBIT 4.3
-----------
NETVANTAGE, INC.
EQUITY INCENTIVE PLAN
---------------------
SECTION 1. PURPOSE; DEFINITIONS.
(a) Purpose. The purpose of the Plan is to provide the directors and
-------
selected eligible employees of, and consultants to, NetVantage, Inc., a Delaware
corporation, its subsidiaries and affiliates an opportunity to participate in
the Company's future by offering them an opportunity to acquire stock in the
Company so as to retain, attract and motivate them.
(b) Definitions. For purposes of the Plan, the following terms have the
-----------
following meanings:
(i) "Award" means any award under the Plan, including any Option,
-----
Restricted Stock, Stock Purchase Right or Performance Share Award.
(ii) "Award Agreement" means, with respect to each Award, the signed
---------------
written agreement between the Company and the Plan participant setting forth the
terms and conditions of the Award.
(iii) "Board" means the Board of Directors of the Company.
-----
(iv) "Change in Control" has the meaning set forth in Section 9(a).
-----------------
(v) "Change in Control Price" has the meaning set forth in Section 9(c).
-----------------------
(vi) "Code" means the Internal Revenue Code of 1986, as amended from time
----
to time, and any successor statute.
(vii) "Commission" means the Securities and Exchange Commission and any
----------
successor agency.
(viii) "Committee" means the Committee referred to in Section 2, or the
---------
Board in its capacity as administrator of the Plan in accordance with Section 2.
(ix) "Company" means NetVantage, Inc., a Delaware corporation.
-------
(x) "Disability" means permanent and total disability as determined by the
----------
Committee for purposes of the Plan.
(xi) "Exchange Act" means the Securities Exchange Act of 1934, as amended
------------
from time to time, and any successor statute.
(xii) "Fair Market Value" means as of any given date (a) if the Stock is
-----------------
listed on any established stock exchange or a national market system, either the
closing sale price for the Stock or the closing bid if no sales were reported,
or the average of the bid and ask prices,
1
<PAGE>
as selected by the Committee in its discretion, as quoted on such system or
exchange, as reported in The Wall Street Journal; or (b) in the absence of an
--- ---- ------ -------
established market for the Stock, the fair market value of the Stock as
determined by the Committee in good faith.
(xiii) "Incentive Stock Option" means any Option intended to be and
----------------------
designated as an "incentive stock option" within the meaning of Section 422 of
the Code.
(xiv) "Nonqualified Stock Option" means any Option that is not an
-------------------------
Incentive Stock Option.
(xv) "Option" means an option granted under Section 5.
------
(xvi) "Performance Period" means the period determined by the Committee
------------------
under Section 8(a).
(xvii) "Performance Share" means a share of Stock granted pursuant to a
-----------------
Performance Share Award.
(xiii) "Performance Share Award" means an Award under Section 8.
-----------------------
(xix) "Plan" means this NetVantage, Inc. Equity Incentive Plan, as amended
----
from time to time.
(xx) "Restricted Stock" means an Award of Stock subject to restrictions, as
----------------
more fully described in Section 6.
(xxi) "Restriction Period" means the period determined by the Committee
------------------
under Section 6(b).
(xxii) "Rule 16b-3" means Rule 16b-3 under Section 16(b) of the Exchange
----------
Act, as amended from time to time, and any successor rule.
(xxiii) "Stock" means the Class A Common Stock of the Company, and any
-----
successor security.
(xxiv) "Stock Purchase Right" means an Award granted under Section 7.
--------------------
(xxv) "Subsidiary" has the meaning set forth in Section 424 of the Code.
----------
(xxvi) "Tax Date" means the date defined in Section 10(f).
--------
(xxvii) "Termination" means, for purposes of the Plan, with respect to
-----------
a participant, that (a) if the participant is a director of the Company, he or
she has ceased to be, for any reason, a director and (b) if the participant is
an employee of or consultant to the Company, he or she has ceased to be, for any
reason, employed by, or consulting to, the Company, a subsidi-
2
<PAGE>
ary or an affiliate; provided, that for purposes of this definition, if so
determined by the Committee, Termination shall not include a change in status
from an employee of, to a consultant to the Company or any subsidiary or
affiliate, or vice versa.
SECTION 2. ADMINISTRATION.
(a) Committee. The Plan shall be administered by the Board or, upon
---------
delegation by the Board, by a committee of the Board that will satisfy Rule 16b-
3 and Section 162(m) of the Code, as in effect with respect to the Company from
time to time. In connection with the administration of the Plan, the Committee
shall have the powers possessed by the Board. The Committee may act only by a
majority of its members, except that the Committee may from time to time select
another committee or one or more other persons to be responsible for any matters
so long as the selection comports with the requirements of Section 162(m) of the
Code and Rule 16b-3. The Board at any time may abolish the Committee and revest
in the Board the administration of the Plan.
(b) Authority. The Committee shall grant Awards to directors, eligible
---------
employees and consultants. In particular and without limitation, the Committee,
subject to the terms of the Plan, shall:
(i) select the directors, officers, other key employees and consultants to
whom Awards may be granted;
(ii) determine whether and to what extent Awards are to be granted
under the Plan;
(iii) determine the number of shares to be covered by each Award
granted under the Plan;
(iv) determine the terms and conditions of any Award granted under the
Plan and any related loans to be made by the Company, based upon factors
determined by the Committee; and
(v) determine to what extent and under what circumstances any Award
payments may be deferred by a participant.
(c) Committee Determinations Binding. The Committee may adopt, alter and
--------------------------------
repeal administrative rules, guidelines and practices governing the Plan as it
from time to time shall deem advisable, may interpret the terms and provisions
of the Plan, any Award and any Award Agreement and may otherwise supervise the
administration of the Plan. Any determination made by the Committee pursuant to
the provisions of the Plan with respect to any Award shall be made in its sole
discretion at the time of the grant of the Award or, unless in contravention of
any express term of the Plan or Award, at any later time. All decisions made by
the Committee under the Plan shall be binding on all persons, including the
Company and Plan participants.
3
<PAGE>
SECTION 3. STOCK SUBJECT TO PLAN.
(a) Number of Shares. The total number of shares of Stock reserved and
----------------
available for issuance pursuant to Awards under this Plan shall be 800,000
shares. Such shares may consist, in whole or in part, of authorized and
unissued shares or treasury shares or shares reacquired in private transactions
or open market purchases, but all shares issued under the Plan, regardless of
source, shall be counted against the 800,000 share limitation. If any Option
terminates or expires without being exercised in full or if any shares of Stock
subject to an Award are forfeited, or if an Award otherwise terminates without a
payment being made to the participant in the form of Stock, the shares issuable
under such Option or Award shall again be available for issuance in connection
with Awards. Any Award under this Plan shall be governed by the terms of the
Plan and any applicable Award Agreement.
(b) Adjustments. In the event of any merger, reorganization,
-----------
consolidation, recapitalization, stock dividend, stock split or other change in
corporate structure affecting the Stock, such substitution or adjustments shall
be made in the aggregate number of shares of Stock reserved for issuance under
the Plan, in the number and exercise price of shares subject to outstanding
Options, and in the number of shares subject to other outstanding Awards, as may
be determined to be appropriate by the Committee, in its sole discretion;
provided, however, that the number of shares subject to any Award shall always
be a whole number.
SECTION 4. ELIGIBILITY.
Awards may be granted to directors, officers and other key employees of,
and consultants to, the Company, its subsidiaries and affiliates.
SECTION 5. STOCK OPTIONS.
(a) Types. Any Option granted under the Plan shall be in such form as the
-----
Committee may from time to time approve. The Committee shall have the
authority to grant to any participant Incentive Stock Options, Nonqualified
Stock Options or both types of Options. Incentive Stock Options may be granted
only to employees of the Company, its parent (within the meaning of Section
424(e) of the Code) or Subsidiaries. Any portion of an Option that is not
designated as, or does not qualify as, an Incentive Stock Option shall
constitute a Nonqualified Stock Option.
(b) Terms and Conditions. Options granted under the Plan shall be subject
--------------------
to the following terms and conditions:
(i) Option Term. The term of each Option shall be fixed by the Committee,
-----------
but no Incentive Stock Option shall be exercisable more than ten years after the
date the Option is granted, and no Nonqualified Stock Option shall be
exercisable more than 15 years after the date the Option is granted. If, at the
time the Company grants an Incentive Stock Option, the optionee owns directly or
by attribution stock possessing more than 10 percent of the total combined
voting power of all classes of stock of the Company, or any parent or Subsidiary
of the
4
<PAGE>
Company, the Incentive Stock Option shall not be exercisable more than five
years after the date of grant.
(ii) Grant Date. The Company may grant Options under the Plan at any time
----------
and from time to time before the Plan terminates. The Committee shall specify
the date of grant or, if it fails to, the date of grant shall be the date of
action taken by the Committee to grant the Option. However, if an Option is
approved in anticipation of employment, the date of grant shall be the date the
intended optionee is first treated as an employee for payroll purposes.
(iii) Exercise Price. The exercise price per share of Stock purchasable
--------------
under an Option shall be equal to at least 85 percent of the Fair Market Value
on the date of grant, and in the case of Incentive Stock Options shall be equal
to at least the Fair Market Value on the date of grant; provided, however, that
if, at the time the Company grants an Incentive Stock Option, the optionee owns
directly or by attribution stock possessing more than 10 percent of the total
combined voting power of all classes of stock of the Company, or any parent or
Subsidiary of the Company, then the exercise price shall be not less than 110
percent of the Fair Market Value on the date the Incentive Stock Option is
granted.
(iv) Exercisability. Subject to the other provisions of the Plan, an
--------------
Option shall be exercisable in its entirety at grant or at such times and in
such amounts as are specified in the Award Agreement evidencing the Option. The
Committee, in its absolute discretion, at any time may waive any limitations
respecting the time at which an Option first becomes exercisable, in whole or in
part, including acceleration in connection with a reorganization of the Company
if there is no adverse consequences to the Company therefrom.
(v) Method of Exercise; Payment. To the extent the right to purchase
---------------------------
shares has accrued, Options may be exercised, in whole or in part, from time to
time, by written notice from the optionee to the Company stating the number of
shares being purchased, accompanied by payment of the exercise price for the
shares.
SECTION 6. RESTRICTED STOCK.
(a) Price. The Committee may grant to a participant Restricted Stock. The
-----
grantee shall pay no consideration therefor.
(b) Restrictions. Subject to the provisions of the Plan and the Award
------------
Agreement, during the Restriction Period set by the Committee, commencing with,
and not exceeding ten years from, the date of such Award, the participant shall
not be permitted to sell, assign, transfer, pledge or otherwise encumber shares
of Restricted Stock. Within these limits, the Committee may provide for the
lapse of such restrictions in installments and may accelerate or waive such
restrictions, in whole or in part, based on service, performance or such other
factors or criteria as the Committee may determine.
(c) Dividends. Unless otherwise determined by the Committee, with respect
---------
to dividends on shares of Restricted Stock, dividends payable in cash shall be
automatically rein-
5
<PAGE>
vested in additional Restricted Stock, and dividends payable in Stock shall be
paid in the form of Restricted Stock.
(d) Termination. Except to the extent otherwise provided in the Award
-----------
Agreement and pursuant to Section 6(b), in the event of a Termination during the
Restriction Period, all shares still subject to restriction shall be forfeited
by the participant.
SECTION 7. STOCK PURCHASE RIGHTS.
(a) Price. The Committee may grant Stock Purchase Rights which shall
-----
enable the recipient to purchase Stock at a price equal to not less than 85
percent of its Fair Market Value on the date of grant.
(b) Exercisability. Stock Purchase Rights shall be exercisable for a
--------------
period determined by the Committee not exceeding 30 days from the date of the
grant.
SECTION 8. PERFORMANCE SHARES.
(a) Awards. The Committee shall determine the nature, length and starting
------
date of the Performance Period for each Performance Share Award, which period
shall be at least one year and not more than six years. The consideration
payable by a participant with respect to a Performance Share Award shall be an
amount determined by the Committee in the exercise of the Committee's discretion
at the time of the Award; provided, that the amount of consideration may be zero
and may in no event exceed 50 percent of the Fair Market Value at the time of
grant. The Committee shall determine the performance objectives to be used in
awarding Performance Shares and the extent to which such Performance Shares
have been earned. Performance Periods may overlap and participants may
participate simultaneously with respect to Performance Share Awards that are
subject to different Performance Periods and different performance factors and
criteria. At the beginning of each Performance Period, the Committee shall
determine for each Performance Share Award subject to such Performance Period
the number of shares of Stock (which may consist of Restricted Stock) to be
awarded to the participant at the end of the Performance Period if and to the
extent that the relevant measures of performance for such Performance Share
Award are met. Such number of shares of Stock may be fixed or may vary in
accordance with such performance or other criteria as may be determined by the
Committee. The Committee may provide that (i) amounts equivalent to interest at
such rates as the Committee may determine, or (ii) amounts equivalent to
dividends paid by the Company upon outstanding Stock shall be payable with
respect to Performance Share Awards.
(b) Termination. Except as otherwise provided in the Award Agreement or
-----------
determined by the Committee, in the event of a Termination during a Performance
Period, the participant shall not be entitled to any payment with respect to the
Performance Shares subject to the Performance Period.
(c) Form of Payment. Payment shall be made in the form of cash or whole
---------------
shares of Stock, as the Committee, in its discretion, shall determine.
6
<PAGE>
SECTION 9. CHANGE IN CONTROL.
(a) Definition of "Change in Control". For purposes of Section 9(b), a
--------------------------------
"Change in Control" means the occurrence of any one of the following:
(i) Any "person," as such term is used in Sections 13(d) and 14(d) of the
Exchange Act (other than the Company, a subsidiary, an affiliate, or a Company
employee benefit plan, including any trustee of such plan acting as trustee) is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing 35
percent or more of the combined voting power of the Company's then outstanding
securities;
(ii) The solicitation of proxies (within the meaning of Rule 14a-1(k) under
the Exchange Act and any successor rule) with respect to the election of any
director of the Company where such solicitation is for any candidate who is not
a candidate proposed by a majority of the Board in office prior to the time of
such election; or
(iii) The dissolution or liquidation (partial or total) of the Company or
a sale of assets involving 30 percent or more of the assets of the Company, any
merger or reorganization of the Company whether or not another entity is the
survivor, a transaction pursuant to which the holders, as a group, of all of the
shares of the Company outstanding prior to the transaction hold, as a group,
less than 70 percent of the shares of the Company outstanding after the
transaction, or any other event which the Board determines, in its discretion,
would materially alter the structure of the Company or its ownership.
(b) Impact of Event. In the event of a "Change in Control" as defined in
---------------
Section 9(a), but only if and to the extent so specifically determined by the
Board in its discretion, which determination may be amended or reversed only by
the affirmative vote of a majority of the persons who were directors at the
time such determination was made, acceleration and valuation provisions no more
favorable to participants than the following may apply:
(i) Any Options outstanding as of the date such Change in Control is
determined to have occurred and not then exercisable and vested shall become
fully exercisable and vested.
(ii) The restrictions and limitations applicable to any Restricted Stock
and Stock Purchase Rights shall lapse, and such Restricted Stock shall become
fully vested.
(iii) The value (net of any exercise price) of all outstanding Options,
Restricted Stock and Stock Purchase Rights, unless otherwise determined by the
Committee at or after grant and subject to Rule 16b-3, shall be cashed out on
the basis of the "Change in Control Price," as defined in Section 9(c), as of
the date such Change in Control is determined to have occurred or such other
date as the Board may determine prior to the Change in Control.
7
<PAGE>
(iv) Any outstanding Performance Share Awards shall be vested and paid in
full as if all performance criteria had been met.
(c) Change in Control Price. For purposes of this Section 9, "Change in
-----------------------
Control Price" means the highest price per share paid in any transaction
reported on the National Market System of the National Association of Securities
Dealers, Inc. Automated Quotation System or paid or offered in any bona fide
transaction related to a potential or actual Change in Control of the Company at
any time during the preceding 60-day period as determined by the Board, except
that, in the case of Incentive Stock Options, such price shall be based only on
transactions reported for the date on which the Board decides to cash out such
Options.
SECTION 10. GENERAL PROVISIONS.
(a) Award Grants. Any Award may be granted either alone or in addition to
------------
other Awards granted under the Plan. Subject to the terms and restrictions set
forth elsewhere in the Plan, the Committee shall determine the consideration, if
any, payable by the participant for any Award and, in addition to those set
forth in the Plan, any other terms and conditions of the Awards. The Committee
may condition the grant or payment of any Award upon the attainment of specified
performance goals or such other factors or criteria, including vesting based on
continued service on the Board, employment or consulting, as the Committee
shall determine. Performance objectives may vary from participant to
participant and among groups of participants and shall be based upon such
Company, subsidiary, group or division factors or criteria as the Committee may
deem appropriate, including, but not limited to, earnings per share or return on
equity. The other provisions of Awards also need not be the same with respect
to each recipient. Unless specified otherwise in the Plan or by the Committee,
the date of grant of an Award shall be the date of action by the Committee to
grant the Award. The Committee may also substitute new Options for previously
granted Options, including previously granted Options having higher exercise
prices.
(b) Award Agreement. As soon as practicable after the date of an Award
---------------
grant, the Company and the participant shall enter into a written Award
Agreement identifying the date of grant, and specifying the terms and conditions
of the Award. Options are not exercisable until after execution of the Award
Agreement by the Company and the Plan participant, but a delay in execution of
the Award Agreement shall not affect the validity of the Option grant.
(c) Certificates. All certificates for shares of Stock or other securities
------------
delivered under the Plan shall be subject to such stock transfer orders, legends
and other restrictions as the Committee may deem advisable under the rules,
regulations and other requirements of the Commission, any market in which the
Stock is then traded and any applicable federal, state or foreign securities
law.
(d) Termination. Unless otherwise provided in the applicable Award
-----------
Agreement or by the Committee, in the event of Termination for any reason other
than death, retirement or Disability, Awards held at the date of Termination
(and only to the extent then exercisable or payable, as the case may be) may be
exercised in whole or in part at any time within three
8
<PAGE>
months after the date of Termination, or such lesser period specified in the
Award Agreement (but in no event after the expiration date of the Award), but
not thereafter. If Termination is due to retirement or to death or Disability,
Awards held at the date of Termination (and only to the extent then exercisable
or payable, as the case may be) may be exercised in whole or in part by the
participant in the case of retirement or Disability, by the participant's
guardian or legal representative or by the person to whom the Award is
transferred by will or the laws of descent and distribution, at any time within
one year from the date of Termination or any lesser period specified in the
Award Agreement (but in no event after the expiration of the Award).
(e) Delivery of Purchase Price. If and only to the extent authorized by
--------------------------
the Committee, participants may make all or any portion of any payment due to
the Company
(i) with respect to the consideration payable for an Award,
(ii) upon exercise of an Award, or
(iii) with respect to federal, state, local or foreign tax payable in
connection with an Award, by delivery of (x) cash, (y) check, or (z) any
property other than cash (including a promissory note of the participant or
shares of Stock or securities) so long as, if applicable, such property
constitutes valid consideration for the Stock under, and otherwise complies
with, applicable law. No promissory note under the Plan shall have a term
(including extensions) of more than five years or shall be of a principal amount
exceeding 90 percent of the purchase price paid by the borrower.
(f) Tax Withholding. Unless the Committee permits otherwise, the
---------------
participant shall pay to the Company in cash, promptly when the amount of such
obligations becomes determinable (the "Tax Date"), all applicable federal,
state, local and foreign withholding taxes that the Committee in its discretion
determines to result, (i) from the lapse of restrictions imposed upon an Award,
(ii) upon exercise of an Award, or (iii) from a transfer or other disposition of
shares acquired upon exercise or payment of an Award, or otherwise related to
the Award or the shares acquired in connection with an Award.
A participant who has received an Award or payment under an Award may, to
the extent, if any, authorized by the Committee in its discretion, make an
election to (x) deliver to the Company a promissory note of the participant on
the terms set forth in Section 10(e), or (y) tender any such securities to the
Company to pay the amount of tax that the Committee in its discretion determines
to be required to be withheld by the Company; provided, however, that such
election shall be subject to the disapproval of the Committee.
Any shares or other securities so withheld or tendered shall be valued by
the Committee as of the date they are withheld or tendered; provided, however,
that Stock shall be valued at Fair Market Value on such date. The value of the
shares withheld or tendered may not exceed the required federal, state, local
and foreign withholding tax obligations as computed by the Company.
9
<PAGE>
(g) No Transferability. No Award shall be assignable or otherwise
------------------
transferable by the participant other than by will or by the laws of descent and
distribution. During the life of a participant, an Award shall be exercisable,
and any elections with respect to an Award may be made, only by the participant
or participant's guardian or legal representative.
(h) Adjustment of Awards; Waivers. The Committee may adjust the
-----------------------------
performance goals and measurements applicable to Awards (i) to take into account
changes in law and accounting and tax rules, (ii) to make such adjustments as
the Committee deems necessary or appropriate to reflect the inclusion or
exclusion of the impact of extraordinary or unusual items, events or
circumstances in order to avoid windfalls or hardships, and (iii) to make such
adjustments as the Committee deems necessary or appropriate to reflect any
material changes in business conditions. In the event of hardship or other
special circumstances of a participant and otherwise in its discretion, the
Committee may waive in whole or in part any or all restrictions, conditions,
vesting, or forfeiture with respect to any Award granted to such participant.
(i) Non-Competition. The Committee may condition its discretionary waiver
---------------
of a forfeiture, the acceleration of vesting at the time of Termination of a
participant holding any unexercised or unearned Award, the waiver of
restrictions on any Award, or the extension of the expiration period to a period
not longer than that provided by the Plan upon such participant's agreement (and
compliance with such agreement) (i) not to engage in any business or activity
competitive with any business or activity conducted by the Company and (ii) to
be available for consultations at the request of the Company's management, all
on such terms and conditions (including conditions in addition to (i) and (ii))
as the Committee may determine.
(j) Dividends. The reinvestment of dividends in additional Stock or
---------
Restricted Stock at the time of any dividend payment pursuant to Section 6(c)
shall only be permissible if sufficient shares of Stock are available under
Section 3 for such reinvestment (taking into account then outstanding Awards).
(k) Regulatory Compliance. Each Award under the Plan shall be subject to
---------------------
the condition that, if at any time the Committee shall determine that (i) the
listing, registration or qualification of the shares of Stock upon any
securities exchange or for trading in any securities market or under any state
or federal law, (ii) the consent or approval of any government or regulatory
body or (iii) an agreement by the participant with respect thereto, is necessary
or desirable, then such Award shall not be consummated in whole or in part
unless such listing, registration, qualification, consent, approval or
agreement shall have been effected or obtained free of any conditions not
acceptable to the Committee.
(l) Rights as Shareholder. Unless the Plan or the Committee expressly
---------------------
specifies otherwise, an optionee shall have no rights as a shareholder with
respect to any shares covered by an Award until the stock certificates
representing the shares are actually delivered to the optionee. Subject to
Sections 3(b) and 6(c), no adjustment shall be made for dividends or other
rights for which the record date is prior to the date the certificates are
delivered.
10
<PAGE>
(m) Beneficiary Designation. The Committee, in its discretion, may
-----------------------
establish procedures for a participant to designate a beneficiary to whom any
amounts payable in the event of the participant's death are to be paid.
(n) Additional Plans. Nothing contained in the Plan shall prevent the
----------------
Company, a subsidiary or an affiliate from adopting other or additional
compensation arrangements for its directors, employees and consultants.
(o) No Employment Rights; No Right to Directorship. Neither the adoption
----------------------------------------------
of this Plan nor the grant of any Award hereunder shall (i) confer upon any
employee any right to continued employment nor shall it interfere in any way
with the right of the Company, a subsidiary or an affiliate to terminate the
employment of any employee at any time; or (ii) confer upon any participant any
right with respect to continuation of the participant's membership on the Board
or shall interfere in any way with provisions in the Company's Articles of
Incorporation and Bylaws relating to the election, appointment, terms of office,
and removal of members of the Board.
(p) Rule 16b-3. With respect to persons subject to Section 16 of the
----------
Exchange Act, transactions under this Plan are intended to comply with the
applicable conditions of Rule 16b-3 under the Exchange Act. To the extent any
provision of this Plan or action by the Committee fails to so comply, it shall
be adjusted to comply with Rule 16b-3, to the extent permitted by law and deemed
advisable by the Committee. It shall be the responsibility of persons subject
to Section 16 of the Exchange Act, not of the Company or the Committee, to
comply with the requirements of Section 16 of the Exchange Act; and neither the
Company nor the Committee shall be liable if this Plan or any transaction under
this Plan fails to comply with the applicable conditions of Rule 16b-3, or if
any such person incurs any liability under Section 16 of the Exchange Act.
(q) Governing Law. The Plan and all Awards shall be governed by and
-------------
construed in accordance with the laws of the State of California.
(r) Use of Proceeds. All cash proceeds to the Company under the Plan shall
---------------
constitute general funds of the Company.
(s) Unfunded Status of Plan. The Plan shall constitute an "unfunded" plan
-----------------------
for incentive and deferred compensation. The Committee may authorize the
creation of trusts or arrangements to meet the obligations created under the
Plan to deliver Stock or make payments; provided, however, that unless the
Committee otherwise determines, the existence of such trusts or other
arrangements shall be consistent with the "unfunded" status of the Plan.
(t) Assumption by Successor. The obligations of the Company under the Plan
-----------------------
and under any outstanding Award may be assumed by any successor corporation,
which for purposes of the Plan shall be included within the meaning of
"Company".
11
<PAGE>
(u) Limitation on Award Grants. The Company may not grant Awards under the
--------------------------
Plan for more than 500,000 shares to any one participant over the life of the
Plan.
SECTION 11. AMENDMENTS AND TERMINATION.
The Board may amend, alter or discontinue the Plan or any Award, but no
amendment, alteration or discontinuance shall be made which would impair the
rights of a participant under an outstanding Award without the participant's
consent. No amendment, alteration or discontinuance shall require shareholder
approval except:
(a) an increase in the total number of shares reserved for issuance
pursuant to Awards under the Plan, or
(b) with respect to provisions solely as they relate to Incentive Stock
Options, to the extent required for the Plan to comply with Section 422 of the
Code, or
(c) to the extent required by other applicable laws, rules or regulations,
or
(d) to the extent the Board otherwise concludes that shareholder approval
is advisable.
SECTION 12. EFFECTIVE DATE OF PLAN.
The Plan shall be effective as of May 1, 1997, but all Awards shall be
conditioned upon approval of the Plan (a) at a duly held shareholders' meeting
by the affirmative vote of the holders of a majority of the voting power of the
shares of the Company represented in person or by proxy at the meeting and
entitled to vote thereon, or (b) by an action by written consent of the holders
of a majority of the voting power of the shares of the Company entitled to vote.
SECTION 13. TERM OF PLAN.
No Award shall be granted on or after May 1, 2007, but Awards granted prior
to May 1, 2007 may extend beyond that date.
12
<PAGE>
[LETTERHEAD OF HELLER EHRMAN WHITE & McAULIFFE]
EXHIBIT 5
---------
October 24, 1997
23057-0001
NetVantage, Inc.
201 Continental Boulevard
Suite 201
El Segundo, California 90245
Registration Statement on Form S-8
Ladies and Gentlemen:
We have acted as counsel to NetVantage, Inc., a Delaware corporation
(the "Company"), in connection with the Registration Statement on Form S-8 (the
"Registration Statement") which the Company proposes to file on or about October
24, 1997, for the purpose of registering under the Securities Act of 1933, as
amended, an aggregate of 1,925,000 shares of the Company's Class A Common Stock,
$.001 par value per share (the "Shares"). The Shares are issuable upon exercise
of options granted or to be granted or awards made or to be made under the
Company's 1994 Incentive and Nonstatutory Stock Option Plan, as amended (the
"1994 Plan"), 1996 Incentive Stock Plan (the "1996 Plan") and Equity Incentive
Plan (the "1997 Plan") (the 1994 Plan, 1996 Plan and 1997 Plan, being
collectively referred to as the "Plans").
We have assumed the authenticity of all records, documents and
instruments submitted to us as originals, the genuineness of all signatures,
the legal capacity of natural persons and the conformity to the originals of all
records, documents and instruments submitted to us as copies. We have based our
opinion upon our review of the following records, documents, instruments and
certificates and such additional certificates relating to factual matters as we
have deemed necessary or appropriate for our opinion:
(a) The Restated Certificate of Incorporation, as amended, of the
Company certified by the Secretary of State of the State of
Delaware as of October 22, 1997, and certified to us by an
officer of the Company as being complete and in full force and
effect as of the date of this opinion;
(b) The Bylaws of the Company certified to us by an officer of the
Company as being complete and in full force and effect as of the
date of this opinion;
<PAGE>
NetVantage, Inc.
October 24, 1997
Page 2
(c) A Certificate of the Chief Financial Officer of the Company (i)
attaching records certified to us as constituting all records of
proceedings and actions of the Board of Directors and
stockholders of the Company and its predecessor relating to the
adoption (and, in the case of the 1994 Plan, the amendment) of
the Plans, and (ii) certifying as to certain other factual
matters;
(d) The Registration Statement;
(e) The Plans; and
(f) A letter from Continental Stock Transfer & Trust, the Company's
transfer agent, dated October 23, 1997 as to the number of shares
of Class A Common Stock of the Company outstanding as of October
21, 1997.
This opinion is limited to the Delaware General Corporation Law
(without review of the rules, regulations or case law application to such
statute) and we disclaim any opinion as to the laws of any other jurisdiction.
We further disclaim any opinion as to any statute, rule, regulation, ordinance,
order or other promulgation of any regional or local governmental body or as to
any related judicial or administrative opinion.
Based upon the foregoing and our examination of such questions of law
as we have deemed necessary or appropriate for the purpose of this opinion, and
assuming that (i) the Registration Statement becomes and remains effective
during the period when the Shares are offered and issued, (ii) appropriate
certificates evidencing the Shares will be executed and delivered upon issuance
of the Shares, (iii) the full consideration stated in the Plans is paid for each
Share, and (iv) all applicable securities laws are complied with, it is our
opinion that when issued by the Company, after payment therefor in the manner
provided in the Plans, the Shares will be legally issued, fully paid and
nonassessable.
This opinion is rendered to you in connection with the Registration
Statement and is solely for your benefit. This opinion may not be relied upon
by you for any other purpose, or relied upon by any other person, firm,
corporation or other entity without our prior written consent. We disclaim any
obligation to advise you of any change of law that occurs, or any facts of which
we become aware, after the date of this opinion.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
HELLER EHRMAN WHITE & MCAULIFFE
<PAGE>
EXHIBIT 23.2
------------
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 of our report dated March 31, 1997 appearing on page 15 of
the NetVantage, Inc. Annual Report on Form 10-K for the year ended December 31,
1996.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Costa Mesa, California
October 22, 1997
