sv8
As
filed with the Securities and Exchange Commission on February 5, 2007
Registration No. 333-_________
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
HARRIS STRATEX NETWORKS, INC.
(Exact Name of Registrant as Specified in its Charter)
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Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
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20-5961564
(I.R.S. Employer
Identification Number) |
Research Triangle Park, 637 Davis Drive, Morrisville, North Carolina 27560
(Address of Principal Executive Offices)
Harris Stratex Networks, Inc. 2007 Stock Equity Plan
Stratex Networks, Inc. 2002 Stock Incentive Plan
Stratex Networks, Inc. 1999 Stock Incentive Plan
Stratex Networks, Inc. (formerly known as Digital Microwave Corporation) 1998 Non-Officer Employee Stock Option Plan
Stratex Networks, Inc. (formerly known as Digital Microwave Corporation) 1996 Non-Officer Employee Stock Option Plan
Stratex Networks, Inc. (formerly known as Digital Microwave Corporation) 1994 Stock Incentive Plan
Stratex Networks, Inc. 1990 Innova Stock Option Plan
(Full Title of the Plan)
Guy M. Campbell
Chief Executive Officer
Harris Stratex Networks, Inc.
Research Triangle Park
637 Davis Drive
Morrisville, North Carolina 27560
(Name and Address of Agent for Service)
(919) 717-3250
(Telephone Number, Including Area Code for Agent for Service)
CALCULATION OF REGISTRATION FEE
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Proposed |
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Maximum Offering |
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Proposed |
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Amount of |
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Amount to be |
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Price Per |
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Maximum Aggregate |
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Registration |
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Title of Securities to be Registered |
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Registered (1) |
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Share (2) |
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Offering Price (2) |
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Fee (2) |
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Class A Common Stock, par value
$0.01 per share, issuable under Harris
Stratex Networks, Inc. 2007 Stock Equity
Plan |
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5,000,000 |
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$20.01 |
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$100,050,000.00 |
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$10,705.35 |
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Class A Common Stock, par value $0.01 per
share, issuable upon exercise of options granted under Stratex Networks,
Inc. 2002 Stock Incentive Plan |
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1,448,559 |
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$20.01 |
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$28,985,665.59 |
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$3,101.47 |
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Class A Common Stock, par value $0.01 per
share, issuable upon exercise of options granted under Stratex Networks,
Inc. (formerly known as Digital Microwave
Corporation) 1999 Stock Incentive Plan |
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1,220,156 |
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$20.01 |
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$24,415,321.56 |
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$2,612.44 |
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Class A Common Stock, par value $0.01 per
share, issuable upon exercise of options granted under Stratex Networks,
Inc. (formerly known as Digital Microwave
Corporation) 1998 Stock Option Plan |
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41,571 |
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$20.01 |
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$831,835.71 |
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$89.01 |
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Class A Common Stock, par value $0.01 per
share, issuable upon exercise of options granted under Stratex Networks,
Inc. (formerly known as Digital Microwave
Corporation) 1996 Non-Officer Employee
Stock Option Plan |
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88,770 |
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$20.01 |
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$1,776,287.70 |
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$190.06 |
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Class A Common Stock, par value $0.01 per
share, issuable upon exercise of options granted under Stratex Networks,
Inc. (formerly known as Digital Microwave
Corporation) 1994 Stock Incentive Plan |
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561,090 |
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$20.01 |
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$11,227,410.90 |
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$1,201.33 |
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Class A Common Stock, par value $0.01 per
share, issuable upon exercise of options granted under Stratex Networks,
Inc. 1990 Innova Stock Option Plan |
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550 |
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$20.01 |
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$11,005.50 |
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$1.18 |
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(1) |
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This Registration Statement registers a total of 8,360,696 shares of
Registrants Class A Common Stock, par value $0.01 per share, issuable
pursuant to options and awards granted or to be granted under the
equity plans identified above (the Plans). Pursuant to
Rule 416(a) of the Securities Act of 1933, as amended (the
Securities Act), also registered hereunder are such
additional shares of Registrant's Class A Common Stock, par value
$0.01 per share, presently indeterminable, as may be necessary to
satisfy the antidilution provisions of the Plans. |
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(2) |
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Estimated solely for purposes of calculating the registration fee
pursuant to Rules 457(c) and (h) under the Securities Act, and based upon the average of the high
and low prices of a share of Registrants Class A Common Stock, par
value $0.01 per share, as reported on the NASDAQ Global Market on
January 30, 2007 ($20.01). |
TABLE OF CONTENTS
EXPLANATORY NOTE
In connection with an Amended and Restated Formation, Contribution and Merger Agreement, dated
as of December 18, 2006 (the Agreement), among
Registrant, Harris Corporation, Stratex Merger
Corp., and Stratex Networks, Inc.
(Stratex), as amended on January 26, 2007, Registrants wholly owned subsidiary, Stratex
Merger Corp., merged with and into Stratex on January 26, 2007 (the Merger) with Stratex as the
surviving corporation and renamed as Harris Stratex Networks Operating Corporation, and Harris
simultaneously contributed its Microwave Communications Division
(MCD) and $32.1 million in cash to
Registrant. Pursuant to the terms and conditions of the Agreement, upon the Merger:
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each outstanding option to purchase shares of Stratex Common Stock under each of
the Stratex Networks, Inc. 1990 Innova Stock Option Plan, the Stratex Networks, Inc. (formerly known as Digital Microwave Corporation) 1994
Stock Incentive Plan, the Stratex Networks, Inc. (formerly known as Digital Microwave Corporation) 1996
Non-Officer Employee Stock Option Plan, the Stratex Networks, Inc. (formerly known as Digital Microwave Corporation) 1998 Non-Officer Employee Stock Option
Plan, the Stratex Networks, Inc. 1999 Stock Incentive Plan and the Stratex Networks, Inc. 2002 Stock Incentive Plan (collectively,
the Prior Plans), whether vested or unvested, was converted into an option to
acquire that number of shares of Registrants Class A Common Stock equal to
one-fourth of the number of shares of Stratex Common Stock issuable upon exercise of
the option immediately prior to such conversion at an exercise price per share equal
to four times the exercise price per share of Stratex Common Stock immediately prior
to such conversion and |
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each right of any kind, contingent or accrued, to acquire or receive shares of
Stratex Common Stock or benefits measured by the value of shares of Stratex Common
Stock, and each award of any kind consisting of shares of Stratex Common Stock under
any of the Prior Plans (other than options to purchase Stratex Common Stock), was
converted into the right to acquire, or the right to receive benefits measured by
the value of, that number of shares of Registrants Class A Common Stock equal to
one-fourth of the number of shares of Stratex Common Stock underlying such award
(rounded down to the nearest whole number) immediately prior to such conversion, and
if such award determined such rights by reference to the extent the
value of the shares of Stratex Common Stock exceed a specified reference price, at a reference
price per share of Registrants Class A Common Stock (rounded up to the nearest
whole cent) equal to four times the reference price per share of Stratex Common
Stock. |
Options are subject to rounding to comply with certain legal requirements. Except as provided
above, following the effective time of the Merger, each option and other award to purchase shares
of Registrants Class A Common Stock converted as described above will be governed by the same
terms and conditions of the Prior Plans as were applicable to the option or other award immediately
prior to the effective time of the Merger.
The
Registrant is registering 3,360,696 shares of Registrants
Class A Common Stock issuable upon the exercise of options
granted under the Prior Plans that were previously registered in registration statements filed with the
Securities and Exchange Commission by Stratex.
On
December 28, 2006, the Board of Directors of Registrant adopted, and the sole stockholder of
Registrant approved, the Harris Stratex Networks, Inc. 2007 Stock Equity Plan. This Registration
Statement also registers 5,000,000 shares of Registrants
Class A Common Stock issuable upon the exercise of options
or other awards granted under such
plan.
PART I
All information required by Part I to be contained in the prospectuses is omitted from this
Registration Statement in accordance with Rule 428 under the Securities Act.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents, which have been filed with the Securities and Exchange Commission by
the Company, pursuant to the Securities Act and the Securities Exchange Act of 1934, as amended
(the Exchange Act), as applicable, are hereby incorporated by reference in, and shall be deemed
to be a part of, this Registration Statement:
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(1) |
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Registrants prospectus filed with the Securities and Exchange Commission
on January 8, 2007 pursuant to Rule 424(b) promulgated under the Securities Act
(Registration No. 333-137980), in which there is set
forth the audited financial statements for MCDs fiscal year ended June 30, 2006 and
the unaudited financial statements of MCD for the three months ended September 29,
2006. |
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(2) |
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Registrants Registration Statement on Form S-1
(Registration No. 333-140193), which was filed with the Securities
and Exchange Commission on January 24, 2007, in which there are set forth the (i) consolidated
balance sheets of Stratex as of March 31, 2006 and 2005, and the related
consolidated statements of operations, stockholders equity, and cash flows for each
of the three years in the period ended March 31, 2006, as well as the Report of
Independent Registered Public Accounting Firm, Deloitte & Touche LLP, with respect
to such financial statements, and (ii) the interim financial information for the
three and six months ended September 30, 2006 and 2005. |
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(3) |
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All other reports filed by Registrant pursuant to Section 13(a) or 15(d)
of the Exchange Act since Registrants fiscal year-ended June 30, 2006, which is covered by the prospectus
identified in (1) above. |
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(4) |
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The description of Registrants Class A Common Stock contained in the
Registrants Registration Statement on Form 8-A (Registration No.
001-33278), filed with the Securities and
Exchange Commission on January 26, 2007 pursuant to the Exchange Act, and any
amendment or report filed for the purpose of further updating such description. |
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In addition, all documents subsequently filed by the Registrant pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act, prior to the filing of a post-effective
amendment which indicates that all securities offered have been sold or which deregisters all
securities then remaining unsold under this Registration Statement, shall be deemed to be
incorporated by reference in this Registration Statement and to be a part hereof from the date of
filing of such documents. Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superceded for purposes of
this Registration Statement to the extent that a statement contained herein or in any other
subsequently filed document which also incorporated or is deemed to be incorporated by reference
herein modifies or supercedes such earlier statement. Any statement so modified or superceded shall
not be deemed, except as so modified or superceded, to constitute part of this Registration
Statement.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
The legality of the shares of Common Stock being registered pursuant to this Registration
Statement will be passed upon for the Registrant by Bingham McCutchen LLP.
Item 6. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law provides that a corporation may indemnify
directors and officers as well as other employees and individuals against expenses (including
attorneys fees), judgments, fines and amounts paid in settlement in connection with specified
actions, suits or proceedings, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the corporation a derivative action), if they acted in good faith
and in a manner they reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceedings, had no reasonable cause to
believe their conduct was unlawful.
A similar standard is applicable in the case of derivative actions, except that
indemnification only extends to expenses (including attorneys fees) actually and reasonably
incurred in connection with the defense or settlement of such action, and the statute requires
court approval before there can be any indemnification where the person seeking indemnification has
been found liable to the corporation unless the Delaware Court of Chancery or the court in which
such action or suit was brought shall determine upon application that such person is fairly and
reasonably entitled to indemnity for such expenses which such court shall deem proper. The statute
provides that it is not exclusive of other indemnification that may be granted by a corporations
certificate of incorporation, bylaws, disinterested director vote, stockholder vote, agreement or
otherwise.
The Registrants Amended and Restated Certificate of Incorporation and Amended and Restated
Bylaws provide that the registrant shall indemnify and hold harmless, to the fullest extent
permitted by applicable law, a director or officer of the registrant against all liability and loss
suffered and expenses (including attorneys fees) reasonably incurred by those persons in
connection with any action, suit or proceeding in which they were, are, or threatened to be
involved by virtue of their service as a director or officer of the registrant or their service at
the request of the Registrant as a director, officer, employee or agent of, or in any other
capacity with respect to, another corporation or a partnership, joint venture, trust or
other entity or enterprise. However, with limited exceptions, the Registrant will indemnify
such director or officer seeking indemnification in connection with an action, suit or proceeding
initiated by such director or officer only if the action, suit or proceeding was authorized by the
board of directors of the Registrant. In addition, the Registrants Amended and Restated
Certificate of Incorporation and Amended and Restated Bylaws that provide that the registrant will
pay, in advance of the disposition of any action, suit or proceeding, any reasonable expenses
incurred by such a director or officer subject to such person agreeing to repay any such amounts if
it is judicially determined that such person is not entitled to be indemnified for such expenses.
The indemnification provided by the Amended and Restated Bylaws are not exclusive of any other
rights such persons may have under any bylaws, agreement, vote of stockholders or disinterested
directors or otherwise.
The Registrant maintains insurance on behalf of any person who is or was a director, officer,
employee or agent of the registrant, or is or was serving at the request of the registrant as a
director, officer, employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the Registrant would have the power
to indemnify him against such liability under the provisions of the Registrants Amended and
Restated Certificate of Incorporation and Amended and Restated Bylaws.
The foregoing statements are subject to the detailed provisions of Section 145 of the Delaware
General Corporation Law, the full text of the Amended and Restated Certificate of Incorporation of
the Registrant, which was filed with the Securities and Exchange Commission as Exhibit 3.1 to the Form 8-A (File No. 001-33278) on
January 26, 2007, and the full text of the Amended and Restated
Bylaws of the Registrant, which was
filed with the Securities and Exchange Commission as Exhibit 3.2 to the Form 8-A (File No. 001-33278) on January 26, 2007, each of which
is incorporated by reference.
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Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
The following exhibits are filed as part of or incorporated by reference into this
Registration Statement:
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Amended and Restated Certificate of Incorporation of the Registrant. Incorporated
by reference to Exhibit 3.1 to the Form 8-A (File No. 001-33278) filed on January
26, 2007. |
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4.2 |
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Amended and Restated Bylaws of the Registrant. Incorporated by reference to
Exhibit 3.2 to the Form 8-A (File No. 001-33278) filed on January 26, 2007. |
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4.3 |
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Stratex Networks, Inc. 1990 Innova Stock Option Plan. |
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4.4 |
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Stratex Networks, Inc. (formerly Digital Microwave Corporation) 1994 Stock Incentive Plan. |
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4.5 |
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Stratex Networks, Inc. (formerly Digital Microwave Corporation) 1996 Non-Officer Employee Stock Option Plan. |
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4.6 |
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Stratex Networks, Inc. (formerly Digital Microwave Corporation) 1998 Non-Officer Employee Stock Option Plan. |
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4.7 |
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Stratex Networks, Inc. 1999 Stock Incentive Plan. |
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4.8 |
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Stratex Networks, Inc. 2002 Stock Incentive Plan. |
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4.9 |
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Harris Stratex Networks, Inc. 2007 Stock Equity Plan |
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5.1 |
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Opinion of Bingham McCutchen LLP. |
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23.1 |
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Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm. |
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23.2 |
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Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm. |
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23.3 |
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Consent of Bingham McCutchen LLP (contained in the opinion filed as Exhibit 5.1 to
this Registration Statement). |
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24.1 |
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Power of Attorney (included on the signature pages to this Registration Statement). |
Item 9. Undertakings
The Registrant hereby undertakes:
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(1) |
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To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement 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; |
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(2) |
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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; |
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(3) |
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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; |
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(4) |
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That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrants annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plans 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; and |
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 Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is against public policy
as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such
issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it
has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8, and
has duly caused this registration statement on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of
Morrisville, the State of North Carolina, on January 31, 2007.
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Harris Stratex Networks, Inc.
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By: |
/s/ Guy Campbell
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Name: |
Guy Campbell |
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Title: |
President, Chief Executive Officer and Director |
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POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and
appoints each of Meena Elliott and Juan Otero with full power to act alone, as his or her true and
lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or
her and in his or her name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this registration statement and any subsequent
registration statement filed by the registrant pursuant to Rule 462(b) of the Securities Act of
1933, as amended, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, or their or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
This Power of Attorney may be executed in multiple counterparts, each of which shall be deemed an
original, but which taken together, shall constitute one instrument.
Pursuant
to the requirements of the Securities Act of 1933, this Registration Statement has been
signed below by the following persons in the capacities and on the dates indicated.
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Signature |
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/s/ Guy Campbell
Guy Campbell
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President, Chief Executive
Officer and Director
(Principal Executive Officer)
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January 31 2007 |
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/s/ Sarah A. Dudash
Sarah A. Dudash
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Chief Financial Officer
(Principal Financial Officer)
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January 31 2007 |
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/s/ Robert W. Kamenski
Robert W. Kamenski
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Corporate Controller
(Principal Accounting Officer)
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January 31 2007 |
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/s/ Eric C. Evans
Eric C. Evans
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Director
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January 31 2007 |
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/s/ William A. Hasler
William A. Hasler
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Director
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January 31 2007 |
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/s/ Clifford H. Higgerson
Clifford H. Higgerson
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Director
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January 31 2007 |
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/s/ Charles D. Kissner
Charles D. Kissner
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Director
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January 31 2007 |
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/s/ Howard L. Lance
Howard L. Lance
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Director
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January 31 2007 |
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/s/ Mohsen Sohi
Mohsen Sohi
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Director
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January 31 2007 |
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/s/ James C. Stoffel
James C. Stoffel
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Director
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January 31 2007 |
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/s/ Edward F. Thompson
Edward F. Thompson
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Director
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January 31 2007 |
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EXHIBIT INDEX
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4.1 |
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Amended and Restated Certificate of Incorporation of the Registrant. Incorporated
by reference to Exhibit 3.1 to the Form 8-A (File No. 001-33278) filed on January
26, 2007. |
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4.2 |
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Amended and Restated Bylaws of the Registrant. Incorporated by reference to
Exhibit 3.2 to the Form 8-A (File No. 001-33278) filed on January 26, 2007. |
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4.3 |
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Stratex Networks, Inc. 1990 Innova Stock Option Plan. |
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4.4 |
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Stratex Networks, Inc. (formerly Digital Microwave Corporation) 1994 Stock Incentive Plan. |
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4.5 |
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Stratex Networks, Inc. (formerly Digital Microwave Corporation) 1996 Non-Officer Employee Stock Option Plan. |
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4.6 |
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Stratex Networks, Inc. (formerly Digital Microwave Corporation) 1998 Non-Officer Employee Stock Option Plan. |
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4.7 |
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Stratex Networks, Inc. 1999 Stock Incentive Plan. |
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4.8 |
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Stratex Networks, Inc. 2002 Stock Incentive Plan. |
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4.9 |
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Harris Stratex Networks, Inc. 2007 Stock Equity Plan |
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5.1 |
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Opinion of Bingham McCutchen LLP. |
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23.1 |
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Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm. |
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23.2 |
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Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm. |
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23.3 |
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Consent of Bingham McCutchen LLP (contained in the opinion filed as Exhibit 5.1 to
this Registration Statement). |
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24.1 |
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Power of Attorney (included on the signature pages to this Registration Statement). |
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exv4w3
Exhibit 4.3
1990 INNOVA STOCK OPTION PLAN
This 1990 Innova Stock Option Plan (the Plan) provides for the grant of options to acquire
shares of Common Stock, $0.01 par value (the Common Stock), of INNOVA CORPORATION, a Delaware
corporation (the Company). Stock options granted under this Plan that qualify under Section 422A
of the Internal Revenue Code of 1986, as amended (the Code), are referred to in this Plan as
Incentive Stock Options. Incentive Stock Options and stock options that do not qualify under
Section 422A of the Code (Non-Qualified Stock Options) granted under this Plan are referred to as
Options.
The purposes of this Plan are to retain the services of valued key employees and consultants
of the Company and such other persons as the Plan Administrator shall select in accordance with
Section 3 below, to encourage such persons to acquire a greater proprietary interest in the
Company, thereby strengthening their incentive to achieve the objectives of the shareholders of the
Company, and to serve as an aid and inducement in the hiring of new employees, consultants and
other persons selected by the Plan Administrator.
This Plan shall
be administered by the Board of Directors of the Company (the Board), except
that the Board may, in its discretion, establish a committee composed of members of the Board or
other persons to administer this Plan, which committee (the Committee) may be an executive,
compensation or other committee, including a separate committee especially created for this
purpose. The Committee shall have such of the powers and authority vested in the Board hereunder as
the Board may delegate to it (including the power and authority to interpret any provision of this
Plan or of any Option). The members of any such Committee shall serve at the pleasure of the Board.
The Board, and/or the Committee if one has been established by the Board, are referred to in this
Plan as the Plan Administrator. Following registration of any of the Companys securities under
Section 12 of the Securities Exchange Act of 1934, as amended, no person shall serve as a member
of the Plan Administrator if his or her service would disqualify this Plan from eligibility under
Securities and Exchange Commission Rule 16b-3, as amended from time to time, or any successor rule
or regulatory requirements; provided, that the Plan Administrator shall consist of at least
the minimum number of persons required by Securities and Exchange
Commission Rule 16b-3, as amended,
or any successor rule or regulatory requirements.
Subject to the provisions of this Plan, and with a view to effecting its purpose, the Plan
Administrator shall have sole authority, in its absolute discretion, to (a) construe and interpret
this Plan; (b) define the terms used in this Plan; (c) prescribe, amend and rescind rules and
regulations relating to this Plan; (d) correct any defect, supply any omission or reconcile any
inconsistency in this Plan; (e) determine the individuals to whom Options shall be granted under
this Plan and whether the Option is an Incentive Stock Option or a Non-Qualified Stock Option; (f)
determine the time or times at which Options shall be granted under this Plan; (g) determine the
number of shares of Common Stock subject to each Option, the exercise price of each Option, the
duration of each Option and the times at which each Option shall become exercisable; (h) determine
all other terms and conditions of Options; and (i) make all other determinations necessary or
advisable for the administration of this Plan. All decisions, determinations and interpretations
made by the Plan Administrator shall be binding and conclusive on ail participants in this Plan and
on their legal representatives, heirs and beneficiaries.
Incentive Stock Options may be granted to any individual who, at the time the Option is
granted, is an employee of the Company or any Related Corporation (as defined below) including
employees who are directors of the Company (Employees). Non-Qualified Stock Options may be
granted to Employees and to such other persons or entities other than directors who are not
Employees as the Plan Administrator shall select. Options may be granted in substitution for
outstanding Options of another corporation in connection with the merger, consolidation,
acquisition of property or stock or other reorganization between such other corporation and the
Company or any subsidiary of the Company. Options also may be granted in exchange for outstanding
Options. Any person to whom an Option is granted under this Plan is referred to as an Optionee.
As used in this Plan,
the term Related Corporation, when referring to a subsidiary
corporation, shall mean any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company if, at the time of the granting of the Option, each of the
corporations other than the last corporation in the unbroken chain owns stock possessing 50 percent
or more of the total combined voting power of all classes of stock of one of the other corporations
in such chain. When referring to a parent corporation, the term Related Corporation shall mean
any corporation (other than the Company) in an unbroken chain of corporations ending with the
Company if, at the time of granting of the Option, each of the corporations other than the Company
owns stock possessing 50 percent or more of the total combined voting power of all classes or stock
of one of the other corporations in such chain.
The Plan Administrator is authorized to grant Options to acquire up to a total of 2,000,000
shares of the Companys authorized but unissued, or reacquired, Common Stock. The number of shares
with respect to which Options may be granted hereunder is subject to adjustment as set forth in
Section 5(m) hereof. In the event that any outstanding Option expires or is terminated for any
reason, the shares of Common Stock allocable to the unexercised portion of such Option may again be
subject to an Option to the same Optionee or to a different person eligible under Section 3 of this
Plan.
|
5. |
|
TERMS AND CONDITIONS OF OPTIONS. |
Each Option granted under this Plan shall be evidenced by a written agreement approved by the
Plan Administrator (the Agreement). Agreements may contain such additional provisions, not
inconsistent with this Plan, as the Plan Administrator in its discretion may deem advisable. All
Options also shall comply with the following requirements:
|
(a) |
|
Number of Shares and Type of Option. |
Each Agreement shall state the number of shares of Common Stock to which it pertains and
whether the Option is intended to be an Incentive Stock Option or a Non-Qualified Stock Option. In
the absence of action to the contrary by the Plan Administrator in connection with the grant of an
Option, all Options shall be Non-Qualified Stock Options. The aggregate fair market value
(determined at the Date of Grant, as defined below) of the stock with respect to which Incentive
Stock Options are exercisable for the first time by the Optionee during any calendar year (granted
under this Plan and all other Incentive Stock Option plans of the
Company, a Related Corporation or
a predecessor corporation) shall not exceed $100,000, or such other limit as may
be prescribed by the Code as it may be amended from time to time. Any Option which exceeds the
annual limit shall not be void but rather shall be a Non-Qualified Stock Option.
Each Agreement shall state the date the Plan Administrator has deemed to be the effective date
of the Option for purposes of this Plan (the Date of Grant).
Each Agreement shall state the price per share of Common Stock at which it is exercisable. The
exercise price shall be fixed by the Plan Administrator at whatever price the Plan Administrator
may determine in the exercise of its sole discretion; provided, that the per share exercise
price for any Option granted following the effective date of registration of any of the Companys
securities under Section 12 of the Securities Exchange Act of 1934 shall not be less than the fair
market value per share of the Common Stock at the Date of Grant as determined by the Plan
Administrator in good faith; provided further, that the per share exercise price
for an Incentive Stock Option shall not be less than the fair market value per share of the Common
Stock at the Date of Grant as determined by the Plan Administrator in good faith; provided
further, that with respect to Incentive Stock Options granted to greater-than-10 percent
shareholders of the Company (as determined with reference to Section 424(d) of the Code), the
exercise price per share shall not be less than 110 percent of the fair market value per share of
the Common Stock at the Date of Grant; and, provided further, that Incentive Stock
Options granted in substitution for outstanding Options of another corporation in connection with
the merger, consolidation, acquisition of property or stock or other reorganization involving such
other corporation and the Company or any subsidiary of the Company may be granted with an exercise
price equal to the exercise price for the substituted Option of the other corporation, subject to
any adjustment consistent with the terms of the transaction pursuant to which the substitution is
to occur.
At the time of the
grant of the Option, the Plan Administrator shall designate, subject to
paragraph 5(g) below, the expiration date of the Option, which date shall not be later than 10
years from the Date of Grant in the case of Incentive Stock Options; provided, that the
expiration date of any Incentive Stock Option granted to a greater-than-10 percent shareholder of
the Company (as determined with reference to Section 424(d) of the Code) shall not be later than
five years from the Date of Grant. In the absence of action to the contrary by the Plan
Administrator in connection with the grant of a particular Option, and except in the case of
Incentive Stock Options as described above, all Options granted under this Plan shall expire 20
years from the Date of Grant. Notwithstanding anything contained in this Plan to the contrary, if,
in the opinion of a majority of the Board of Directors of the Company, it is probable that the
Company will consummate one of the transactions listed immediately below within sixty (60) days of
such opinion, then the Company may demand, by written notice, that an Optionee exercise the vested
portion of such Optionees Option in its entirety (including any portion as to which vesting has
been accelerated by the Plan Administrator under Section 5(f) below). Such Optionee shall have
thirty (30) days from the date of such notice to exercise such Optionees Option hereunder; such
Optionees entire Option shall terminate at the end of such 30-day period. The events to which
this demand procedure shall apply are as follows: (i) the consummation of a firmly underwritten
public offering of securities of the Company, registered under the Securities Act of 1933, as
amended, with an aggregate offering price of not less than $10,000,000; or (ii) a Change in
Control of the Company, as defined in Section 5(n)(1) hereof.
No Option shall be exercisable until it has vested. The vesting schedule for each Option shall
be specified by the Plan Administrator at the time of grant of the Option; provided, that
if no vesting schedule is specified at the time of grant, the Option shall vest over 60 months at a
rate of 1/60th per month beginning on the month following the Date of Grant.
|
(f) |
|
Acceleration of Vesting. |
The vesting of one or more outstanding Options may be accelerated by the Plan Administrator at
such times and in such amounts as it shall determine in its sole discretion. The vesting of Options
also shall be accelerated under the circumstances described in Sections 5(m) and 5(n).
Vested Options shall terminate, to the extent not previously exercised, upon the occurrence of
the first of the following events: (i) the expiration of the Option, as designated by the Plan
Administrator in accordance with Section 5(d) above; (ii) the expiration of 90 days from the date
of an Optionees termination of employment or contractual relationship with the Company or any
Related Corporation for any reason whatsoever other than death or Disability (as defined below)
unless, in the case of a Non-Qualified Stock Option, the exercise period is extended by the Plan
Administrator until a date not later than the expiration date of the Option; or (iii) the
expiration of one year from (A) the date of death of the Optionee or (B) cessation of an Optionees
employment or contractual relationship by reason of Disability (as defined below) unless, in the
case of a Non-Qualified Stock Option, the exercise period is extended by the Plan Administrator
until a date not later than the expiration date of the Option. If an Optionees employment or
contractual relationship is terminated by death, any Option held by the Optionee shall be
exercisable only by the person or persons to whom such Optionees rights under such Option shall
pass by the Optionees will or by the laws of descent and distribution of the state or county of
the Optionees domicile at the time of death. Disability shall mean that a person is unable to
engage in any substantial gainful activity by reason of any medically determinable physical or
mental impairment that can be expected to result in death or that has lasted or can be expected to
last for a continuous period of not less than 12 months. The Plan Administrator shall determine
whether an Optionee has incurred a Disability on the basis of medical evidence acceptable to the
Plan Administrator. Upon making a determination of Disability, the Committee shall, for purposes of
this Plan, determine the date of an Optionees termination of employment or contractual
relationship.
Unless accelerated in accordance with Section 5(f) above, unvested Options shall terminate
immediately upon termination of employment of the Optionee by the Company for any reason
whatsoever, including death or Disability. If, in the case of an Incentive Stock Option, an
Optionees relationship with the Company changes (e.g., from an Employee to a non-Employee, such as
a consultant), such change shall not constitute a termination of an Optionees employment with the
Company but rather the Optionees Incentive Stock Option shall automatically be converted into a
Non-Qualified Stock Option.
Options shall be exercisable, either all or in part, at any time after vesting, until
termination. If less than all of the shares included in the vested portion of any Option are
purchased, the remainder may be purchased at any subsequent time prior to the expiration of the
Option term. No portion of any Option for less than 50 shares (as adjusted pursuant to Section
5(m) below) may be exercised; provided, that if the vested portion of any Option is less
than 50 shares, it may be exercised with respect to all shares for which it is vested. Only whole
shares may be issued pursuant to an Option, and to the extent that an Option covers less than one
share, it is unexercisable. Options or portions thereof may be
exercised by giving written notice to
the Company, which notice shall specify the number of shares to be purchased, and be accompanied by
payment in the amount of the aggregate exercise price for the Common Stock so purchased, which
payment shall be in the form specified in Section 5(1) below. The Company shall not be obligated to
issue, transfer or deliver a certificate of Common Stock to any Optionee, or to his personal
representative, until the aggregate exercise price has been paid for all shares for which the
Option shall have been exercised and adequate provision has been made by the Optionee for
satisfaction of any tax withholding obligations associated with such exercise. During the lifetime
of an Optionee, Options are exercisable only by the Optionee.
|
(i) |
|
Payment upon Exercise of Option. |
Upon the exercise of any Option, the aggregate exercise price shall be paid to the Company in
cash or by certified cashiers check. In addition, upon approval of the Plan Administrator, an
Optionee may pay for all or any portion of the aggregate exercise price by (i) delivering to the
Company shares of Common Stock previously held by such Optionee, (ii) having shares withheld from
the amount of shares of Common Stock to be received by the Optionee or (iii) delivery of an
irrevocable subscription agreement obligating the Optionee to take and pay for the shares of Common
Stock to be purchased within one year of the date of such exercise. The shares of Common Stock
received or withheld by the Company as payment for shares of Common Stock purchased upon the
exercise of Options shall have a fair market value at the date of exercise (as determined by the
Plan Administrator) equal to the aggregate exercise price (or portion thereof) to be paid by the
Optionee upon such exercise.
|
(j) |
|
Rights as a Shareholder. |
An Optionee shall have no rights as a shareholder with respect to any shares covered by an
Option until such Optionee becomes a record holder of such shares, irrespective of whether such
Optionee has given notice of exercise. Subject to the provisions of Sections 5(m) and 5(n) hereof,
no rights shall accrue to an Optionee and no adjustments shall be made on account of dividends
(ordinary or extraordinary, whether in cash, securities or other property) or distributions or
other rights declared on, or created in, the Common Stock for which the record date is prior to the
date the Optionee becomes a record holder of the shares of Common Stock covered by the Option,
irrespective of whether such Optionee has given notice of exercise.
Options granted under this Plan and the rights and privileges conferred by this Plan may not
be transferred, assigned, pledged or hypothecated in any manner (whether by operation of law or
otherwise) other than by will or by applicable laws of descent and distribution, and shall not be
subject to execution, attachment or similar process. Upon any attempt to transfer, assign, pledge,
hypothecate or otherwise dispose of any Option or of any right or privilege conferred by this Plan
contrary to the provisions hereof, or upon the sale, levy or any attachment or similar process upon
the rights and privileges conferred by this Plan, such Option shall thereupon terminate and become
null and void.
|
(l) |
|
Securities Regulation and Tax Withholding. |
(1) Shares shall not be issued with respect to an Option unless the exercise of such Option
and the issuance and delivery of such shares shall comply with all relevant provisions of law,
including, without limitation; any applicable state securities laws, the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, the rules and regulations thereunder and
the requirements of any stock exchange upon which such shares may then be listed, and such issuance
shall be further subject to the approval of counsel for the Company with respect to such
compliance, including the availability of an exemption from registration for the issuance and sale
of such shares. The inability of the Company to obtain from any regulatory body the authority
deemed by the Company to be necessary for the lawful issuance and sale of any shares under this
Plan, or the unavailability of an exemption from registration for the issuance and sale of any
shares under this Plan, shall relieve the Company of any liability with respect to the non-issuance
or sale of such shares.
As a condition to the exercise of an Option, the Plan Administrator may require the Optionee
to represent and warrant in writing at the time of such exercise that the shares are being
purchased only for investment and without any then-present intention to sell or distribute such
shares. At the option of the Plan Administrator, a stop-transfer order against such shares may be
placed on the stock books and records of the Company, and a legend indicating that the stock may
not be pledged, sold or otherwise transferred unless an opinion of counsel is provided stating that
such transfer is not in violation of any applicable law or regulation, may be stamped on the
certificates representing such shares in order to assure an exemption from registration. The Plan
Administrator also may require such other documentation as may from time to time be necessary to
comply with federal and state securities laws. THE COMPANY HAS NO OBLIGATION TO UNDERTAKE
REGISTRATION OF OPTIONS OR THE SHARES OF STOCK ISSUABLE UPON THE EXERCISE OF OPTIONS.
(2) As a condition to the exercise of any Option granted under this Plan, the Optionee shall
make such arrangements as the Plan Administrator may require for the satisfaction of any federal,
state or local withholding tax obligations that may arise in connection with such exercise.
(3) The issuance, transfer or delivery of certificates of Common Stock pursuant to the
exercise of Options may be delayed, at the discretion of the Plan Administrator, until the Plan
Administrator is satisfied that the applicable requirements of the federal and state securities
laws and the withholding provisions of the Code have been met.
|
(m) |
|
Stock Dividend. Reorganization or Liquidation. |
(1) If (i) the Company shall at any time be involved in a transaction described in Section
424(a) of the Code (or any successor provision) or any corporate transaction described in the
regulations thereunder; (ii) the Company shall declare a dividend payable in, or shall subdivide or
combine, its Common Stock or (iii) any other event with substantially the same effect shall occur,
the Plan Administrator shall, with respect to each outstanding Option, proportionately adjust the
number of shares of Common Stock and/or the exercise price per share so as to preserve the rights
of the Optionee substantially proportionate to the rights of the Optionee prior to such event, and
to the extent that such action shall include an increase or decrease in the number of shares of
Common Stock subject to outstanding Options, the number of shares available under Section 4 of this
Plan shall automatically be increased or, decreased, as the case may be, proportionately, without
further action on the part of the Plan Administrator, the Company or the Companys shareholders.
(2) If the Company is liquidated or dissolved, the Plan Administrator shall allow the holders
of any outstanding Options to exercise all or any part of the unvested portion of the Options held
by them; provided, however, that such Options must be exercised prior to the
effective date of such liquidation or dissolution. If the Option holders do not exercise their
Options prior to such effective date, each outstanding Option shall terminate as of the effective
date of the liquidation or dissolution.
(3) The foregoing adjustments in the shares subject to Options shall be made by the Plan
Administrator, or by any successor administrator of this Plan, or by the applicable terms of any
assumption or substitution document.
(4) The grant of an Option shall not affect in any way the right or power of the Company to
make adjustments, reclassifications, reorganizations or changes of its capital or business
structure, to merge, consolidate or dissolve, to liquidate or to sell or transfer all or any part
of its business or assets.
|
(n) |
|
Change in Control; Declaration of Extraordinary Dividend. |
(1) Change in Control. Subject to the right of the Company to demand the exercise of
Options under Section 5(d) of this Plan, if at any time there is a Change in Control (as defined
below) of the Company, all Options shall accelerate and become fully vested and immediately
exercisable for the duration of the Option term. For purposes of this subsection (n)(1), Change in
Control shall mean either one of the following: (i) When
any person as such term is used in
sections 13(d) and 14(d) of the Exchange Act (other than the Company, a Subsidiary or a Company
employee benefit plan, including any trustee of such plan acting as trustee) becomes, after the
date of this Plan, the beneficial owner (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 90% or more of the combined
voting power of the Companys then outstanding securities; or (ii) the occurrence of a transaction
requiring shareholder approval, and involving the sale of all or substantially all of the assets of
the Company or the merger of the Company with or into another corporation.
(2) Declaration
of Extraordinary Dividend. If at any time the Company declares an
Extraordinary Dividend (as defined below), all Options shall accelerate and thereupon become fully
vested and immediately exercisable for the duration of the Option term. For purposes of this
subsection (n)(2), Extraordinary Dividend shall mean a cash dividend payable to holders of
record of the Common Stock in an amount in excess of 10% of the then fair market value of the
Companys Common Stock. The fair market value of the Companys Common Stock shall be determined in
good faith by the Board Of Directors of the Company.
This Plan shall be effective as of February 6, 1990. Incentive Stock Options may be granted by
the Plan Administrator from time to time thereafter until February 7, 2000. Non-Qualified Stock
Options may be granted until this Plan is terminated by the Board in its sole discretion.
Termination of this Plan shall not terminate any Option granted prior to such termination. Any
Incentive Stock Options granted by the Plan Administrator prior to the approval of this Plan by a
majority of the shareholders of the Company shall be granted subject to ratification of this Plan
by the shareholders of the Company within 12 months after this Plan is adopted by the Board, and if
shareholder ratification is not obtained, each and every Incentive Stock Option shall become a
Non-Qualified Stock Option.
|
7. |
|
NO OBLIGATIONS TO EXERCISE OPTION. |
The grant of an Option shall impose no obligation upon the Optionee to exercise such Option.
|
8. |
|
NO RIGHT TO OPTIONS OR TO EMPLOYMENT. |
Whether or not any Options are to be granted under this Plan shall be exclusively within the
discretion of the Plan Administrator, and nothing contained in this Plan shall be construed as
giving any person any right to participate under this Plan. The grant of an Option shall in no way
constitute any form of agreement or understanding binding on the Company or any Related
Corporation, express or implied, that the Company or any Related Corporation will employ or
contract with an Optionee for any length of time.
|
9. |
|
STOCK SUBJECT TO SHAREHOLDER AGREEMENT. |
Each Optionee shall
be required, as a condition precedent to such Optionee exercising any
portion of such Optionees Option, to execute and deliver to the Company such Optionees written
agreement to become a party to and be bound by paragraphs 8.7 and 9 of that certain Preferred Stock
Purchase Agreement dated February 20, 1992, provided, that no such execution and delivery
shall be required after the consummation of a firmly underwritten public offering of securities of
the Company, registered under the Securities Act of 1933, as amended, with an aggregate offering
price of not less than $10,000,000.
|
10. |
|
APPLICATION OF FUNDS. |
The proceeds received by the Company from the sale of Common Stock issued upon the exercise of
Options shall be used for general corporate purposes, unless otherwise directed by the Board.
|
11. |
|
INDEMNIFICATION OF PLAN ADMINISTRATOR. |
In addition to all
other rights of indemnification they may have as members of the Board,
members of the Plan Administrator shall be indemnified by the Company for all reasonable expenses
and liabilities of any type or nature, including attorneys fees, incurred in connection with any
action, suit or proceeding to which they or any of them are a party by reason of, or in connection
with, this plan or any Option granted under this Plan, and against all amounts paid by them in
settlement thereof (provided that such settlement is approved by independent legal counsel
selected by the Company), except to the extent that such expenses relate to matters for which it is
adjudged that such Plan Administrator member is liable for willful
misconduct; provided, that within
15 days after the institution of any such action, suit or proceeding, the Plan Administrator
member involved therein shall in writing notify the Company of such action, suit or proceeding, so
that the Company may have the opportunity to make appropriate arrangements to prosecute or defend
the same.
The Plan Administrator may, at any time, modify, amend or terminate this Plan and Options
granted under this Plan; provided, that no amendment with respect to an outstanding Option
shall be made over the objection of the Optionee thereof; and provided further,
that the approval of the holders of a majority of the Companys outstanding shares of voting
capital stock is required within 12 months before or after the adoption by the Plan Administrator
of any amendment that will permit the granting of Options to a class of persons other than those
currently
eligible to receive Options under this Plan or that would cause this Plan to no longer comply
with Securities and Exchange Commission Rule 16b-3, as amended, or any successor rule or other
regulatory requirements. Without limiting the generality of the foregoing, the Plan Administrator
may modify grants to persons who are eligible to receive Options under this Plan who are foreign
nationals or employed outside the United States to recognize differences in local law, tax policy
or custom.
exv4w4
Exhibit 4.4
DIGITAL MICROWAVE CORPORATION
1994 STOCK INCENTIVE PLAN
(As Amended and Restated Effective August 8, 1996; August 5, 1997; March 23,
1998; August 4, 1998; and November 12, 1999)
ARTICLE ONE
GENERAL
I. PURPOSE OF THE PLAN
A. This 1994 Stock Incentive Plan (the Plan) is intended to promote the interests of Digital
Microwave Corporation, a Delaware corporation (the Corporation), by providing (i) key employees
(including officers) of the Corporation (or its Parent or Subsidiary corporations) who are
responsible for the management, growth and financial success of the Corporation, (ii) the
non-employee members of the Corporations Board of Directors (the Board) or the board of
directors of any Parent or Subsidiary corporation and (iii) those consultants and other independent
contractors who provide valuable services to the Corporation (or its Parent or Subsidiary
corporations) with the opportunity to acquire a proprietary interest, or otherwise increase their
proprietary interest, in the Corporation as an incentive for them to remain in the service of the
Corporation (or its Parent or Subsidiary corporations).
B. The Plan became effective upon approval by the Corporations stockholders at the 1994
Annual Meeting held on July 27, 1994. Such date is hereby designated as the Effective Date of the
Plan.
II. STRUCTURE OF THE PLAN
A. Stock Programs. The Plan shall be divided into five separate components:
The Discretionary Option Grant Program under which eligible individuals may, at the
discretion of the Plan Administrator, be granted options to purchase shares of Common Stock in
accordance with the provisions of Article Two.
The Automatic Option Grant Program under which non-employee Board members shall
automatically receive special option grants at periodic intervals to purchase shares of Common
Stock in accordance with the provisions of Article Three.
The Stock Fee Program under which the non-employee Board members may elect to apply all
or a portion of their annual cash retainer fee and meeting fees to the acquisition of shares of
Common Stock in accordance with the provisions of Article Four.
The Salary Reduction Grant Program under which eligible individuals may, pursuant to the
provisions of Article Five, elect to have a portion of their base salary reduced each year in
return for options to purchase shares of Common Stock at an aggregate discount from the Fair
Market Value of the option shares on the grant date equal to the salary reduction amount.
The Stock Issuance Program under which eligible individuals may, pursuant to the
provisions of Article Six, be issued shares of Common Stock directly, through the immediate
purchase of such shares at a price not less than eighty-five percent (85%) of their Fair Market
Value at the time of issuance, as a bonus tied to the performance of services or the
Corporations attainment of financial objectives, or pursuant to the individuals election to
receive such shares in lieu of base salary.
B. General Provisions. Unless the context clearly indicates otherwise, the provisions of
Articles One and Seven shall apply to the Discretionary Option Grant, Automatic Option Grant,
Salary Reduction Grant, Stock Issuance and Stock Fee Programs and shall accordingly govern the
interests of all individuals under the Plan.
C. Glossary. Capitalized terms shall, except as otherwise specifically defined within the
provisions of the Plan, have the meanings assigned to such terms in the Glossary.
1
III. ADMINISTRATION OF THE PLAN
A. The Committee shall have sole and exclusive authority to administer each program
established under the Plan. Members of the Committee shall serve for such period as the Board may
determine and shall be subject to removal by the Board at any time.
B. The Committee as Plan Administrator shall have full power and discretion (subject to the
express provisions of the Plan) to establish such rules and regulations as it may deem appropriate
for the proper administration of each program established under the Plan and to make such
determinations under, and issue such interpretations of, the provisions of each such program and
any outstanding option grants or stock issuances thereunder as it may deem necessary or advisable.
Decisions of the Plan Administrator shall be final and binding on all parties who have an interest
in those programs or any outstanding option or stock issuance thereunder.
C. Service on the Committee shall constitute service as a Board member, and members of the
Committee shall accordingly be entitled to full indemnification and reimbursement as Board members
for their service on the Committee. No member of the Committee shall be liable for any act or
omission made in good faith with respect to the Plan or any option grants or share issuances under
the Plan.
D. Notwithstanding the foregoing provisions of this Part III, the Subcommittee shall have sole
and exclusive authority to administer the participation of Covered Employees in the Discretionary
Option Grant, Salary Reduction Grant and Stock Issuance Programs to the extent necessary to qualify
the grants under such programs as performance-based compensation under Section 162(m) of the
Code. In the case of such grants to Covered Employees, references to the Plan Administrator shall
be deemed to be references to the Subcommittee.
IV. ELIGIBILITY
A. The persons eligible to participate in the Discretionary Option Grant, Salary Reduction
Grant and Stock Issuance Programs are as follows:
officers and other key employees of the Corporation (or any Parent or Subsidiary) who
render services which contribute to the management, growth and financial success of the
Corporation; and
those consultants or other independent contractors who provide valuable services to the
Corporation (or any Parent or Subsidiary).
B. Non-employee Board members shall not be eligible to participate in the Discretionary Option
Grant, Salary Reduction Grant or Stock Issuance Program or in any other stock option, stock
purchase, stock bonus or other stock plan of the Corporation (or its Subsidiaries). Such
non-employee Board members shall, however, be eligible to participate in the Automatic Option Grant
and Stock Fee Programs.
C. The Plan Administrator shall have full authority to determine, (i) with respect to grants
made under the Discretionary Option Grant and Salary Reduction Grant Programs, which eligible
individuals are to receive such grants, the number of shares to be covered by each such grant, the
status of any granted option as either an Incentive Option or a Non-Statutory Option, the time or
times at which each granted option is to become exercisable and the maximum term for which the
option may remain outstanding and (ii) with respect to stock issuances under the Stock Issuance
Program, which eligible individuals are to be selected for participation, the number of shares to
be issued to each selected individual, the vesting schedule (if any) to be applicable to the issued
shares and the consideration to be paid for such shares.
V. STOCK SUBJECT TO THE PLAN
A. Shares of Common Stock shall be available for issuance under the Plan and shall be drawn
from either the Corporations authorized but unissued shares of Common Stock or from reacquired
shares of Common Stock, including shares repurchased by the Corporation on the open market.
The number of shares of Common Stock reserved for issuance over the term of the Plan shall be fixed
at 7,166,660 shares, subject to adjustment as provided below.
2
B. The number of shares of Common Stock available for issuance under the Plan shall
automatically increase on the first trading day of each calendar year during each of the first five
years of the term of the Plan, beginning with the 1995 calendar year, by an amount equal to one
percent (1%) of the shares of Common Stock outstanding on December 31 of the immediately preceding
calendar year; but in no event shall any such annual increase exceed 300,000 shares (as adjusted to
reflect the two-for-one stock split effected in November 1997). None of the additional shares
resulting from such annual increases may be made the subject of Incentive Options granted under the
Plan.
C. No one individual participating in the Plan may be granted stock options, separately
exercisable stock appreciation rights and receive direct stock issuances for more than 750,000
shares in any fiscal year of the Company (subject to adjustment as provided below). In connection
with his or her initial commencement of Service, an individual participating in the Plan may be
granted stock options, separately exercisable stock appreciation rights or receive direct stock
issuances for up to an additional 750,000 shares (subject to adjustment as provided below) which
shall not count against the limit set forth in the previous sentence. To the extent required by
Section 162(m) of the Code or the regulations thereunder, in applying the foregoing limitations, if
any stock option or stock appreciation right is cancelled, the cancelled stock option or stock
appreciation right shall continue to count against the maximum number of shares any individual may
acquire. For this purpose, the repricing of a stock option (or in the case of a stock appreciation
right, the reduction of the base amount on which the stock appreciation is calculated) shall be
treated as the cancellation of the existing stock option or stock appreciation right and the grant
of a new stock option or stock appreciation right.
D. Should one or more outstanding options under this Plan expire or terminate for any reason
prior to exercise in full, then the shares subject to the portion of each option not so exercised
shall be available for subsequent issuance under the Plan. Shares subject to any stock appreciation
rights exercised under the Plan and all share issuances under the Plan (other than issuances in
payment of exercised stock appreciation rights), whether or not the issued shares are subsequently
repurchased by the Corporation pursuant to its repurchase rights under the Plan, shall reduce on a
share-for-share basis the number of shares of Common Stock available for subsequent issuance under
the Plan. In addition, should the exercise price of an outstanding option under the Plan be paid
with shares of Common Stock or should shares of Common Stock otherwise issuable under the Plan be
withheld by the Corporation in satisfaction of the withholding taxes incurred in connection with
the exercise of an outstanding option under the Plan or the vesting of a share issuance under the
Plan, then the number of shares of Common Stock available for issuance under the Plan shall be
reduced by the gross number of shares for which the option is exercised or which vest under the
share issuance, and not by the net number of shares of Common Stock actually issued to the holder
of such option or share issuance.
E. Should any change be made to the Common Stock issuable under the Plan by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other
change affecting the outstanding Common Stock as a class without the Corporations receipt of
consideration, then appropriate adjustments shall be made to (i) the maximum number and/or class of
securities issuable under the Plan, (ii) the maximum number and/or class of securities for which
the share reserve is to increase automatically each year over the first five years of the term of
the Plan, (iii) the maximum number and/or class of securities for which any one individual
participating in the Plan may be granted stock options, separately exercisable stock appreciation
rights and direct stock issuances in the aggregate over the term of the Plan, (iv) the number
and/or class of securities for which automatic option grants are to be subsequently made to each
newly elected or continuing non-employee Board member under the Automatic Option Grant Program and
(v) the number and/or class of securities and price per share in effect under each option
outstanding under the Plan. Such adjustments to the outstanding options are to be effected in a
manner which shall preclude the enlargement or dilution of rights and benefits under those options.
The adjustments determined by the Plan Administrator shall be final, binding and conclusive.
3
ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
I. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the Discretionary Grant Program shall be authorized by action of
the Plan Administrator and may, at the Plan Administrators discretion, be either Incentive Options
or Non-Statutory Options. Individuals who are not Employees may only be granted Non-Statutory
Options. Each granted option shall be evidenced by one or more instruments in the form approved by
the Plan Administrator; provided, however, that each such instrument shall comply with the terms
and conditions specified below. Each instrument evidencing an Incentive Option shall, in addition,
be subject to the provisions of the Plan applicable to such grants.
A. Exercise Price.
1. The exercise price per share shall be fixed by the Plan Administrator in accordance with
the following provisions:
The exercise price per share of Common Stock subject to an Incentive Option shall in no event
be less than one hundred percent (100%) of the Fair Market Value of such Common Stock on the grant
date.
The exercise price per share of Common Stock subject to a Non-Statutory Option shall in no
event be less than one hundred percent (100%) of the Fair Market Value of such Common Stock on the
grant date.
2. The exercise price shall become immediately due upon exercise of the option and shall be
payable in one of the alternative forms specified below:
(i) full payment in cash or check made payable to the Corporations order,
(ii) full payment in shares of Common Stock held for the requisite period necessary to avoid a
charge to the Corporations earnings for financial reporting purposes and valued at Fair Market
Value on the date the option is exercised,
(iii) full payment in a combination of shares of Common Stock held for the requisite period
necessary to avoid a charge to the Corporations earnings for financial reporting purposes and
valued at Fair Market Value on the date the option is exercised and cash or check made payable to
the Corporations order, or
(iv) to the extent the option is exercised for vested shares, full payment through a
broker-dealer sale and remittance procedure pursuant to which the Optionee shall provide concurrent
irrevocable written instructions (I) 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 in connection with such purchase and (II) to the
Corporation to deliver the certificates for the purchased shares directly to such brokerage firm in
order to complete the sale transaction.
B. Term and Exercise of Options. Each option shall be exercisable at such time or times,
during such period and for such number of shares as shall be determined by the Plan Administrator
and set forth in the instrument evidencing such option. No option shall, however, have a maximum
term in excess of ten (10) years.
During the lifetime of the Optionee, each Incentive Option, together with any stock
appreciation rights pertaining to such option, shall be exercisable only by the Optionee and shall
not be assignable or transferable except for a transfer of the option effected by will or by the
laws of descent and distribution following the Optionees death. Any Non-Statutory Option shall be
assignable or transferable to the extent determined by the Plan Administrator and provided in the
agreement evidencing such option. However, any assignee or transferee shall be entitled to exercise
any such Non-Statutory Option or any related
Tandem Rights or Limited Rights in the same manner and only to the same extent as the Optionee
or right holder would have been entitled to exercise such option or such related rights had it not
been transferred and shall be subject to the same restrictions, repurchase rights, and other
limitations that bound the Optionee or right holder, unless otherwise determined by the Plan
Administrator.
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C. Termination of Service.
1. Except to the extent otherwise expressly authorized by the Plan Administrator, no Optionee
shall have more than a thirty-six (36)-month period measured from the date of such individuals
cessation of Service in which to exercise his or her outstanding options under the Plan.
2. Any option exercisable in whole or in part by the Optionee at the time of death may be
subsequently exercised by the personal representative of the Optionees estate or by the person or
persons to whom the option is transferred pursuant to the Optionees will or in accordance with the
laws of descent and distribution. However, no such option shall remain exercisable for more than
thirty-six (36) months after the date of the Optionees death.
3. Under no circumstances shall any such option be exercisable after the specified expiration
date of the option term.
4. Except to the extent otherwise expressly authorized by the Plan Administrator, during the
applicable post-Service exercise period, the option may not be exercised in the aggregate for more
than the number of shares (if any) in which the Optionee is vested at the time of his or her
cessation of Service. Upon the expiration of the limited post-Service exercise period or (if
earlier) upon the specified expiration date of the option term, each such option shall terminate
and cease to remain outstanding with respect to any vested shares for which the option has not
otherwise been exercised. However, each outstanding option shall immediately terminate and cease to
remain outstanding, at the time of the Optionees cessation of Service, with respect to any shares
for which the option is not otherwise at that time exercisable or in which the Optionee is not
otherwise vested, except to the extent otherwise expressly authorized by the Plan Administrator.
5. Should the Optionees Service be terminated for Misconduct, all outstanding options held by
that individual shall terminate immediately and cease to remain outstanding.
6. The Plan Administrator shall have complete discretion, exercisable either at the time the
option is granted or at any time while the option remains outstanding:
to permit one or more options to be exercised not only with respect to the number of
vested shares of Common Stock for which each such option is exercisable at the time of the
Optionees cessation of Service but also with respect to one or more subsequent installments of
vested shares for which the option would otherwise have become exercisable had such cessation of
Service not occurred;
to extend the period of time for which the option is to remain exercisable following the
Optionees cessation of Service or death from the limited period otherwise in effect for that
option to such greater period of time as the Plan Administrator shall deem appropriate, but in
no event beyond the specified expiration date of the option term.
D. Stockholder Rights. An Optionee shall have none of the rights of a stockholder with respect
to any option shares until such individual shall have exercised the option and paid the exercise
price for the purchased shares.
E. Repurchase Rights. The shares of Common Stock acquired under this Discretionary Grant
Program may be subject to repurchase by the Corporation in accordance with the following
provisions:
1. The Plan Administrator shall have the discretion to grant options which are exercisable for
unvested shares of Common Stock. Should the Optionee cease Service while holding any unvested
shares purchased under such options, then the Corporation shall have the right to repurchase
any or all of those unvested shares at the exercise price paid per share. The terms and conditions
upon which such repurchase right shall be exercisable (including the period and procedure for
exercise and the appropriate vesting schedule for the purchased shares) shall be established by the
Plan Administrator and set forth in the instrument evidencing such repurchase right.
5
2. All of the Corporations outstanding repurchase rights shall automatically terminate, and
all shares subject to such terminated rights shall immediately vest in full, upon the occurrence of
a Corporate Transaction, except to the extent: (i) any such repurchase right is expressly assigned
to the successor corporation (or parent thereof) in connection with the Corporate Transaction or
(ii) such accelerated vesting is precluded by other limitations imposed by the Plan Administrator
at the time the repurchase right is issued.
3. The Plan Administrator shall have the discretionary authority, exercisable either before or
after the Optionees cessation of Service, to cancel the Corporations outstanding repurchase
rights with respect to one or more shares purchased or purchasable by the Optionee under the Plan
and thereby accelerate the vesting of such shares in whole or in part at any time.
II. INCENTIVE OPTIONS
The terms and conditions specified below shall be applicable to all Incentive Options granted
under the Plan. Incentive Options may only be granted to individuals who are Employees. Options
which are specifically designated as Non-Statutory Options when issued under the Plan shall not be
subject to such terms and conditions.
A. Dollar Limitation. The aggregate Fair Market Value (determined as of the respective date or
dates of grant) of the Common Stock for which one or more options granted to any Employee under
this Plan (or any other option plan of the Corporation or its Subsidiaries or Parents) may for the
first time become exercisable as incentive stock options under the Federal tax laws during any one
calendar year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). 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 options as incentive
stock options under the Federal tax laws shall be applied on the basis of the order in which such
options are granted. Should the number of shares of Common Stock for which any Incentive Option
first becomes exercisable in any calendar year exceed the applicable One Hundred Thousand Dollar
($100,000) limitation, then the option may nevertheless be exercised in that calendar year for the
excess number of shares as a Non-Statutory Option under the Federal tax laws.
B. 10% Stockholder. If any individual to whom an Incentive Option is granted is the owner of
stock (as determined under Section 424(d) of the Code) possessing ten percent (10%) or more of the
total combined voting power of all classes of stock of the Corporation or any one of its
Subsidiaries or Parents, then the exercise price per share shall not be less than one hundred ten
percent (110%) of the Fair Market Value per share of Common Stock on the grant date and the option
term shall not exceed five (5) years measured from the grant date.
III. CORPORATE TRANSACTIONS/CHANGES IN CONTROL
A. In the event of any Corporate Transaction, each outstanding option shall automatically
accelerate so that each such option shall, immediately prior to the specified effective date for
such Corporate Transaction, become fully exercisable with respect to the total number of shares of
Common Stock at the time subject to such option and may be exercised for all or any portion of such
shares. However, an outstanding option shall not so accelerate if and to the extent: (i) such
option is, in connection with the Corporate Transaction, either to be assumed by the successor
corporation or parent thereof or to be replaced with a comparable option to purchase shares of the
capital stock of the successor corporation or parent thereof, (ii) such option is to be replaced
with a cash incentive program of the successor corporation which preserves the option spread
existing at the time of the Corporate Transaction and provides for subsequent payout in accordance
with the same vesting schedule
applicable to such option or (iii) the acceleration of such option is subject to other
limitations imposed by the Plan Administrator at the time of the option grant. The determination of
option comparability under clause (i) above shall be made by the Plan Administrator, and its
determination shall be final, binding and conclusive.
6
B. The Plan Administrator shall have the discretionary authority, exercisable either at the
time the option is granted or at any time while the option remains outstanding, to provide for the
automatic acceleration of one or more outstanding options upon the occurrence of a Corporate
Transaction, whether or not those options are to be assumed or replaced in the Corporate
Transaction. Alternatively, the Plan Administrator shall have the authority to provide for the
subsequent acceleration of any outstanding options which do not otherwise accelerate at the time of
the Corporate Transaction, or the subsequent termination of any of the Corporations outstanding
repurchase rights which do not otherwise terminate at the time of the Corporate Transaction, should
the Optionees Service terminate through an Involuntary Termination effected within a designated
period following the effective date of such Corporate Transaction.
C. Immediately following the consummation of the Corporate Transaction, all outstanding
options shall terminate, except to the extent assumed by the successor corporation or its parent
company.
D. Each outstanding option under this Discretionary Grant Program that is assumed in
connection with the Corporate Transaction or is otherwise to continue in effect shall be
appropriately adjusted, immediately after such Corporate Transaction, to apply and pertain to the
number and class of securities which would have been issued to the option holder, in consummation
of such Corporate Transaction, had such person exercised the option immediately prior to such
Corporate Transaction. Appropriate adjustments shall also be made to the exercise price payable per
share, provided the aggregate exercise price payable for such securities shall remain the same. In
addition, the class and number of securities available for issuance under the Plan on both an
aggregate and per individual basis following the consummation of the Corporate Transaction shall be
appropriately adjusted.
E. The Plan Administrator shall have the discretionary authority, exercisable either at the
time the option is granted or at any time while the option remains outstanding, to provide for the
automatic acceleration of one or more outstanding options (and the termination of one or more of
the Corporations outstanding repurchase rights) upon the occurrence of a Change in Control. The
Plan Administrator shall also have full power and authority to condition any such option
acceleration (and the termination of any outstanding repurchase rights) upon the subsequent
termination of the Optionees Service through an Involuntary Termination effected within a
specified period following the Change in Control.
F. Any options accelerated in connection with the Change in Control shall remain fully
exercisable until the expiration or sooner termination of the option term.
G. The grant of options shall in no way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.
H. The portion of any Incentive Option accelerated in connection with a Corporate Transaction
or Change in Control shall remain exercisable as an incentive stock option under the Federal tax
laws only to the extent the applicable One Hundred Thousand Dollar limitation is not exceeded. To
the extent such dollar limitation is exceeded, the accelerated portion of such option shall be
exercisable as a Non-Statutory Option under the Federal tax laws.
IV. STOCK APPRECIATION RIGHTS/HOSTILE TAKE-OVER
A. The Plan Administrator shall have full power and authority, exercisable in its sole
discretion, to grant to selected Optionees: (i) Tandem Stock Appreciation Rights (Tandem Rights)
and/or Limited Stock Appreciation Rights (Limited Rights).
7
B. The following terms and conditions shall govern the grant and exercise of Tandem Rights:
1. One or more Optionees may be granted the Tandem Right, exercisable upon such terms and
conditions as the Plan Administrator may establish, to elect between the exercise of the underlying
stock option for shares of Common Stock and the surrender of that option in exchange for a
distribution from the Corporation in an amount equal to the excess of (i) the Fair Market Value (on
the option surrender date) of the number of shares in which the Optionee is at the time vested
under the surrendered option (or surrendered portion thereof) over (ii) the aggregate exercise
price payable for such vested shares.
2. No such option surrender shall be effective unless it is approved by the Plan
Administrator. If the surrender is so approved, then the distribution to which the Optionee shall
accordingly become entitled may be made in shares of Common Stock valued at Fair Market Value on
the option surrender date, in cash, or partly in shares and partly in cash, as the Plan
Administrator shall in its sole discretion deem appropriate.
3. If the surrender of an option is rejected by the Plan Administrator, then the Optionee
shall retain whatever rights the Optionee had under the surrendered option (or surrendered portion
thereof) on the option surrender date and may exercise such rights at any time prior to the later
of (i) five (5) business days after the receipt of the rejection notice or (ii) the last day on
which the option is otherwise exercisable in accordance with the terms of the instrument evidencing
such option, but in no event may such rights be exercised more than ten (10) years after the date
of the option grant.
C. The following terms and conditions shall govern the grant and exercise of Limited Rights:
1. One or more officers of the Corporation subject to the short-swing profit restrictions of
the federal securities laws may, in the Plan Administrators sole discretion, be granted Limited
Rights with respect to their outstanding options.
2. Upon the occurrence of a Hostile Take-Over, each such officer holding one or more options
with such a Limited Right shall have the unconditional right (exercisable for a thirty (30)-day
period following such Hostile Take-Over) to surrender each such option to the Corporation, to the
extent the option is at the time exercisable for fully vested shares of Common Stock. The officer
shall in return be entitled to a cash distribution from the Corporation in an amount equal to the
excess of (i) the Take-Over Price of the vested shares of Common Stock at the time subject to each
surrendered option (or surrendered portion of such option) over (ii) the aggregate exercise price
payable for such vested shares. Such cash distribution shall be made within five (5) days following
the option surrender date.
3. Neither the approval of the Plan Administrator nor the consent of the Board shall be
required in connection with such option surrender and cash distribution. Any unsurrendered portion
of the option shall continue to remain outstanding and become exercisable in accordance with the
terms of the instrument evidencing such grant.
ARTICLE THREE
AUTOMATIC OPTION GRANT PROGRAM
I. ELIGIBILITY
The individuals eligible to receive automatic option grants pursuant to the provisions of this
Automatic Grant Program shall be limited to (i) those individuals who are first elected as
non-employee Board members at the 1994 Annual Meeting of Stockholders, (ii) those individuals who
are first elected or appointed as non-employee Board members after the date of such Annual Meeting,
whether through appointment by the Board or election by the Corporations stockholders, and (iii)
those individuals who are reelected to serve as non-employee Board members at one or more Annual
Stockholder Meetings beginning with the 1995 Annual Meeting. Only individuals who have not been in
the prior Service of the Corporation (or any Parent or Subsidiary) may receive an automatic option
grant under clause (i) or
(ii) above. Any non-employee Board member eligible to participate in the Automatic Grant
Program pursuant to the foregoing criteria is hereby designated an Eligible Director for purposes
of such program.
8
II. TERM OF AUTOMATIC OPTION GRANTS PROGRAM
The Automatic Option Grant Program shall terminate on November 12, 1999. All option grants
under the Automatic Option Grant Program that are outstanding on such date shall thereafter
continue to have force and effect in accordance with the provisions of the instruments evidencing
such grants.
III. TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS
A. Grant Dates. Option grants shall be made on the dates specified below:
1. Each individual first elected as an Eligible Director at the 1994 Annual Stockholders
Meeting shall automatically be granted on the date of such Meeting a Non-Statutory Option to
purchase 30,000 shares of Common Stock (as adjusted to reflect the two-for-one stock split effected
in November 1997).
2. Each individual who first becomes an Eligible Director after the date of the 1994 Annual
Stockholders Meeting but before the date of the 1997 Annual Stockholders Meeting, whether through
election by the Corporations stockholders or appointment by the Board, shall automatically be
granted, at the time of such initial election or appointment, a Non-Statutory Option to purchase
30,000 shares of Common Stock (as adjusted to reflect the two-for-one stock split effected in
November 1997).
3. Each individual who first becomes an Eligible Director on or after the date of the 1997
Annual Stockholders Meeting, whether through election by the Corporations stockholders or
appointment by the Board, but before November 12, 1999, shall automatically be granted, at the time
of such initial election or appointment, a Non-Statutory Option to purchase 42,000 shares of Common
Stock (as adjusted to reflect the two-for-one stock split effected in November 1997).
4. On the date of the 1995 Annual Stockholders Meeting, each individual who is at that time
re-elected as a non-employee Board member and who has not otherwise received any prior automatic
option grants during the two preceding calendar years shall automatically be granted a
Non-Statutory Option to purchase an additional 10,000 shares of Common Stock (as adjusted to
reflect the two-for-one stock split effected in November 1997), provided such individual has served
as a Board member for at least twelve (12) months. On the date of the 1996 Annual Stockholders
Meeting, each such individual who is at that time re-elected as a non-employee Board member shall
automatically be granted a Non-Statutory option to purchase an additional 10,000 shares of Common
Stock (as adjusted to reflect the two-for-one stock split effected in November 1997).
5. On the date of each Annual Stockholders Meeting, beginning with the 1997 Annual Meeting,
that occurs prior to November 12, 1999, each individual who is at that time re-elected as a
non-employee Board member and who has served on the Board for three years shall automatically be
granted each year thereafter a Non-Statutory Option to purchase an additional 14,000 shares of
Common Stock (as adjusted to reflect the two-for-one stock split effected in November 1997).
B. No Limitation. There shall be no limit on the number of such 14,000-share (as adjusted to
reflect the two-for-one stock split effected in November 1997) annual option grants any one
Eligible Director may receive over his or her period of Board service prior to the termination of
the Automatic Option Grant Program on November 12, 1999.
C. Exercise Price. The exercise price per share of Common Stock of each automatic option grant
shall be equal to one hundred percent (100%) of the Fair Market Value per share of Common Stock on
the automatic grant date.
D. Payment. The exercise price shall be payable in any of the alternative forms authorized
under the Discretionary Option Grant Program. To the extent the option is exercised for any
unvested shares,
the Optionee must execute and deliver to the Corporation a stock purchase agreement for those
unvested shares which provides the Corporation with the right to repurchase, at the exercise price
paid per share, any unvested shares held by the Optionee at the time of cessation of Board service
and which precludes the sale, transfer or other disposition of the purchased shares at any time
while those shares remain subject to such repurchase right.
9
E. Option Term. Each automatic grant shall have a maximum term of ten (10) years measured from
the grant date.
F. Exercisability/Vesting. Each automatic grant shall be immediately exercisable for any or
all of the option shares. However, any shares purchased under the option shall be subject to
repurchase by the Corporation, at the exercise price paid per share, upon the Optionees cessation
of Board service prior to vesting in those shares. Each automatic grant shall vest, and the
Corporations repurchase right shall lapse, in a series of three (3) equal and successive annual
installments over the Optionees period of continued service as a Board member, with the first such
installment to vest upon Optionees completion of one (1) year of Board service measured from the
automatic grant date.
G. Transferability. The automatic option grant, together with the limited stock appreciation
right pertaining to such option, shall be fully assignable and transferable notwithstanding any
contrary provision of the agreement evidencing such option and related stock appreciation right;
provided, however, that any assignee or transferee shall be entitled to exercise such option and
any related stock appreciation right in the same manner and only to the same extent as the Optionee
would have been entitled to exercise such option and the related stock appreciation right had it
not been transferred and shall be subject to the same restrictions, repurchase rights, and other
limitations that bound the Optionee, unless otherwise determined by the Plan Administrator.
H. Termination of Board Service.
1. Should the Optionee cease to serve as a Board member for any reason (other than death or
Permanent Disability) while holding one or more automatic option grants, then such individual shall
have a six (6)-month period following the date of such cessation of Board service in which to
exercise each such option for any or all of the option shares in which the Optionee is vested at
the time of such cessation of Board service. However, each such option shall immediately terminate
and cease to remain outstanding, at the time of such cessation of Board service, with respect to
any option shares in which the Optionee is not otherwise at that time vested under such option.
2. Should the Optionee die within six (6) months after cessation of Board service, then any
automatic option grant held by the Optionee at the time of death may subsequently be exercised, for
any or all of the option shares in which the Optionee is vested at the time of his or her cessation
of Board service (less any option shares subsequently purchased by the Optionee prior to death), by
the personal representative of the Optionees estate or by the person or persons to whom the option
is transferred pursuant to the Optionees will or in accordance with the laws of descent and
distribution. The right to exercise each such option shall lapse upon the expiration of the twelve
(12)-month period measured from the date of the Optionees death.
3. Upon the Optionees death or Permanent Disability while serving as a Board member, the
shares of Common Stock at the time subject to each automatic option grant held by the Optionee
shall immediately vest in full (and the Corporations repurchase right with respect to such shares
shall terminate), and the Optionee (or the representative of the Optionees estate or the person or
persons to whom the option is transferred upon the Optionees death) shall have a twelve (12)-month
period following the date of such cessation of Board service in which to exercise such option for
any or all of those vested shares of Common Stock.
4. In no event shall any automatic grant remain exercisable after the expiration date of the
ten (10)-year option term. Upon the expiration of the applicable post-service exercise period
provided above or (if earlier) upon the expiration of the ten (10)-year option term, the automatic
grant shall
terminate and cease to be outstanding for any option shares in which the Optionee was vested
at the time of his or her cessation of Board service but for which such option was not otherwise
exercised.
10
I. Stockholder Rights. The holder of an automatic option grant under this Automatic Grant
Program shall have none of the rights of a stockholder with respect to any shares subject to that
option until such individual shall have exercised the option and paid the exercise price for the
purchased shares.
IV. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. The shares of Common Stock subject to each automatic option grant outstanding at the time
of any Corporate Transaction but not otherwise vested shall automatically vest in full and the
Corporations repurchase right with respect to those shares shall terminate, so that each such
option shall, immediately prior to the specified effective date for the Corporate Transaction,
become fully exercisable for all of the shares of Common Stock at the time subject to that option
and may be exercised for all or any portion of such shares as fully vested shares of Common Stock.
Immediately following the consummation of the Corporate Transaction, all automatic option grants
shall terminate and cease to remain outstanding, except to the extent assumed by the successor
entity or its parent corporation.
B. The shares of Common Stock subject to each automatic option grant outstanding at the time
of any Change in Control but not otherwise vested shall automatically vest in full and the
Corporations repurchase right with respect to those shares shall terminate, so that each such
option shall, immediately prior to the specified effective date for the Change in Control, become
fully exercisable for all of the shares of Common Stock at the time subject to that option and may
be exercised for all or any portion of such shares as fully vested shares of Common Stock. Each
option shall remain so exercisable for all the option shares following the Change in Control until
the expiration or sooner termination of the option term.
C. Upon the occurrence of a Hostile Take-Over, the Optionee shall also have a thirty (30) day
period in which to surrender to the Corporation each automatic option grant held by him or her. The
Optionee shall in return be entitled to a cash distribution from the Corporation in an amount equal
to the excess of (i) the Take-Over Price of the shares of Common Stock at the time subject to the
surrendered option over (ii) the aggregate exercise price payable for such shares. Such cash
distribution shall be paid within five (5) days following the surrender of the option to the
Corporation. Neither the approval of the Plan Administrator nor the consent of the Board shall be
required in connection with such option surrender and cash distribution. The shares of Common Stock
subject to each option surrendered in connection with the Hostile Take-Over shall not be available
for subsequent issuance under the Plan.
D. The automatic option grants outstanding under the Plan shall in no way affect the right of
the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business
structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
ARTICLE FOUR
STOCK FEE PROGRAM
I. ELIGIBILITY
Each individual serving as a non-employee Board member shall be eligible to elect to apply all
or any portion of the annual retainer fee and meeting fees otherwise payable to such individual in
cash on or before December 31, 1999 to the acquisition of shares of Common Stock upon the terms and
conditions of this Stock Fee Program.
II. TERM OF STOCK FEE PROGRAM
The Stock Fee Program shall terminate on December 31, 1999, and no portion of the annual
retainer fee or meeting fees payable to a non-employee Board member after that date shall be used
for the acquisition of shares of Common Stock under the Stock Fee Program.
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III. ELECTION PROCEDURE
A. Filing. The non-employee Board member must make the stock-in-lieu-of-fee election prior to
the start of the calendar year for which the election is to be effective. The first calendar year
for which any such election may be filed shall be the 1995 calendar year and the last year for
which any such election may be filed shall be the 1999 calendar year. The election, once filed,
shall be irrevocable. The election for any upcoming calendar year may be filed at any time prior to
the start of that year, but in no event later than December 31 of the immediately preceding
calendar year. The non-employee Board member may file a standing election to be in effect for two
(2) or more consecutive calendar years or to remain in effect indefinitely until revoked by written
instrument filed with the Plan Administrator at least six (6) months prior to the start of the
first calendar year for which such standing election is no longer to remain in effect.
B. Election Form. The election must be filed with the Plan Administrator on the appropriate
form provided for this purpose. On the election form, the non-employee Board member must indicate
the percentage or dollar amount of his or her annual retainer fee and/or his or her meeting fees to
be applied to the acquisition of shares.
IV. SHARE ISSUANCE
A. Issue Date for Annual Retainer Fee Shares. On the first trading day in January of the
calendar year for which the election is effective, the portion of the annual retainer fee subject
to such election shall automatically be applied to the acquisition of shares of Common Stock by
dividing the elected dollar amount by the Fair Market Value per share of Common Stock on that
trading day. The number of issuable shares shall be rounded down to the next whole share, and the
issued shares shall be held in escrow by the Secretary of the Corporation as partly-paid shares
until the non-employee Board member vests in those shares. The non-employee Board member shall have
full shareholder rights, including voting, dividend and liquidation rights, with respect to all
issued shares held in escrow on his or her behalf, but such shares shall not be assignable or
transferable while they remain unvested.
B. Vesting of Annual Retainer Fee Shares. Upon completion of each calendar month of Board
service during the year for which the election applicable to the annual retainer fee is in effect,
the non-employee Board member shall vest in one-twelfth (1/12) of the issued shares, and the stock
certificate for those shares shall be released from escrow. Immediate vesting in all the issued
shares shall occur in the event (i) the non-employee Board member should die or become Permanently
Disabled during his or her period of Board service or (ii) there should occur a Corporate
Transaction or Change in Control while such individual remains in Board service. Should such
individual cease Board service prior to vesting in one or more monthly installments of the issued
shares, then those unvested shares shall be canceled by the Corporation, and the non-employee Board
member shall not be entitled to any cash payment or other consideration from the Corporation with
respect to the canceled shares and shall have no further shareholder rights with respect to such
shares.
C. Issue Date for Meeting Fee Shares. On the first trading day following any meeting, in a
calendar year for which the election is effective, the portion of the meeting fee subject to such
election shall automatically be applied to the acquisition of shares of Common Stock by dividing
the elected dollar amount by the Fair Market Value per share of Common Stock on that trading day.
The number of issuable shares shall be rounded down to the next whole share, and the shares shall
be issued as soon as practicable to the non-employee Board member.
ARTICLE FIVE
SALARY REDUCTION GRANT PROGRAM
I. ELIGIBILITY
The Plan Administrator shall have plenary authority to select, prior to the start of each
calendar year, the particular key employees who shall be eligible for participation in the Salary
Reduction Grant Program for that calendar year. In order to participate for a particular calendar
year, each selected individual must, prior to the start of that calendar year, file with the Plan
Administrator (or its designate) an irrevocable
authorization directing the Corporation to reduce his or her base salary for that calendar
year by a designated multiple of one percent (1%), but in no event less than five percent (5%).
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The Plan Administrator shall review the filed authorizations and determine whether to approve,
in whole or in part, one or more of those authorizations. To the extent the Plan Administrator
approves one or more authorizations, the individuals who filed those authorizations shall be
granted options under this Salary Reduction Grant Program. Options granted under the Salary
Reduction Grant Program shall be Non-Statutory Options evidenced by instruments in such form as the
Plan Administrator shall from time to time approve; provided, however, that each such instrument
shall comply with and incorporate the terms and conditions specified below.
II. TERMS AND CONDITIONS OF OPTION
A. Exercise Price.
1. The exercise price per share shall be thirty-three and one-third percent (33-1/3%) of the
Fair Market Value per share of Common Stock on the grant date.
2. The exercise price shall become immediately due upon exercise of the option and shall be
payable in any of the alternative forms authorized under the Discretionary Grant Program.
B. Number of Option Shares. The number of shares of Common Stock for which each grant is to be
made to a selected Optionee shall be determined pursuant to the following formula (rounded down to
the nearest whole number):
X = A ÷ (B x 66-2/3%), where
X is the number of option shares,
A is the dollar amount of the approved reduction in the Optionees base salary for
the calendar year, and
B is the Fair Market Value per share of Common Stock on the date of the grant.
C. Term and Exercise of Options.
1. Each option shall have a maximum term of ten (10) years measured from the grant date.
Provided the Optionee continues in Service, the option shall become exercisable for (i) fifty
percent (50%) of the option shares on the last day of June in the calendar year for which the
option is granted and for (ii) the balance of the option shares in a series of six (6) successive
equal monthly installments on the last day of each of the next six (6) calendar months.
2. The option shall be assignable or transferable to the extent determined by the Plan
Administrator and provided in the agreement evidencing such option. However, any assignee or
transferee shall be entitled to exercise the option in the same manner and only to the same extent
as the Optionee would have been entitled to exercise the option had it not been transferred and
shall be subject to the same restrictions, repurchase rights, and other limitations that bound the
Optionee or right holder, unless otherwise determined by the Plan Administrator.
D. Effect of Termination of Service.
1. Should an Optionee cease Service for any reason after his or her outstanding option has
become exercisable in whole or in part, then that option shall remain exercisable, for any or all
of the shares for which the option is exercisable on the date of such cessation of Service, until
the expiration of the ten (10) year option term or any sooner termination in connection with a
Corporate Transaction. Following the Optionees death, such option may be exercised, for any or all
of the shares for which the option is exercisable at the time of the Optionees death, by the
personal representative of the Optionees estate or by the person or persons to whom the option is
transferred pursuant to the Optionees will or in
accordance with the laws of descent and distribution. Such right of exercise shall lapse, and
the option shall terminate, upon the expiration of the ten (10)-year option term or any sooner
termination in connection with a Corporate Transaction.
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2. Should the Optionee die before his or her outstanding option becomes exercisable for any of
the option shares, then the personal representative of the Optionees estate or the person or
persons to whom the option is transferred pursuant to the Optionees will or in accordance with the
laws of descent and distribution shall nevertheless have the right to exercise such option for up
to that number of option shares equal to (i) one-twelfth (1/12) of the total number of option
shares multiplied by (ii) the number of full calendar months which have elapsed between the first
day of the calendar year for which the option is granted and the last day of the calendar month
during which the Optionee ceases Service. Such right of exercise shall lapse, and the option shall
terminate, upon the earliest to occur of (i) the specified expiration date of the option term, (ii)
the termination of the option in connection with a Corporate Transaction or (iii) the third
anniversary of the date of the Optionees death. However, the option shall, with respect to any and
all option shares for which it is not exercisable at the time of the Optionees cessation of
Service, terminate immediately upon such cessation of Service and shall cease to remain outstanding
with respect to those option shares.
3. Should the Optionee become Permanently Disabled and cease by reason thereof to remain in
Service before his or her outstanding option becomes exercisable for any of the option shares, then
the Optionee shall nevertheless have the right to exercise such option for up to that number of
option shares equal to (i) one-twelfth (1/12) of the total number of option shares multiplied by
(ii) the number of full calendar months which elapse between the first day of the calendar year for
which the option is granted and the last day of the calendar month during which the Optionee ceases
Service. Such right of exercise shall lapse, and the option shall terminate, upon the expiration of
the ten (10)-year option term or any sooner termination in connection with a Corporate Transaction.
However, the option shall, with respect to any and all option shares for which it is not
exercisable at the time of the Optionees cessation of Service, terminate immediately upon such
cessation of Service and shall cease to remain outstanding with respect to those option shares.
4. Except to the limited extent specifically provided above, should the Optionee cease for any
reason to remain in Service before his or her outstanding option first becomes exercisable for one
or more option shares, then that option shall immediately terminate upon such cessation of Service
and shall cease to remain outstanding.
E. Stockholder Rights. The Optionee shall have none of the rights of a stockholder with
respect to any option shares until such individual shall have exercised the option and paid the
exercise price for those shares.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. Should any Corporate Transaction occur while the Optionee remains in Service, then each
outstanding option held by such Optionee under this Salary Reduction Program shall become
exercisable, immediately prior to the specified effective date of such Corporate Transaction, for
all of the shares at the time subject to such option and may be exercised for any or all of such
shares as fully-vested shares of Common Stock. Immediately following the consummation of the
Corporate Transaction, each such option shall terminate unless assumed by the successor entity or
its parent corporation.
B. Upon the Involuntary Termination of the Optionees Service following a Change in Control,
each outstanding option held by such Optionee under this Salary Reduction Program shall immediately
become exercisable for all of the shares at the time subject to such option and may be exercised
for any or all of such shares as fully-vested shares of Common Stock. The option shall remain so
exercisable until the expiration of the ten (10)-year option term.
C. Option grants under this Salary Reduction Program shall not affect the Corporations right
to adjust, reclassify, reorganize or change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer any or all of its assets.
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ARTICLE SIX
STOCK ISSUANCE PROGRAM
I. TERMS AND CONDITIONS OF STOCK ISSUANCES
Shares of Common Stock may be issued under the Stock Issuance Program through direct and
immediate purchases without any intervening stock option grants. The issued shares shall be
evidenced by a Stock Issuance Agreement (Issuance Agreement) that complies with the terms and
conditions below.
A. Consideration
1. Newly Issued Shares shall be issued under the Stock Issuance Program for one or more of the
following items of consideration that the Plan Administrator may deem appropriate in each
individual instance:
(i) full payment in cash or check made payable to the Corporations order,
(ii) a promissory note payable to the Corporations order in one or more installments, which
may be subject to cancellation in whole or in part upon terms and conditions established by the
Plan Administrator, or
(iii) past services rendered to the Corporation or any Parent or Subsidiary.
2. Newly Issued Shares must be issued for consideration with a value not less than eighty-five
percent (85%) of the Fair Market Value of such shares at the time of issuance.
3. Treasury Shares may be issued under the Stock Issuance Program for such consideration
(including one or more of the items of consideration specified above) as the Plan Administrator may
deem appropriate, whether such consideration is in an amount less than, equal to or greater than
the Fair Market Value of the Treasury Shares at the time of issuance. Treasury Shares may, in lieu
of any cash consideration, be issued subject to such vesting requirements tied to the Participants
period of future Service or the Corporations attainment of specified performance objectives as the
Plan Administrator may establish at the time of issuance.
4. Shares of Common Stock may also, in the Plan Administrators absolute discretion, be issued
pursuant to an irrevocable election by the Participant to receive a portion of his or her base
salary in shares of Common Stock in lieu of such base salary. Any such issuance shall be effected
in accordance with the following guidelines:
On the first trading day in January of the calendar year for which the election is
effective, the portion of base salary subject to such election shall automatically be applied to
the acquisition of Common Stock by dividing the elected dollar amount by the Fair Market Value
per share of the Common Stock on that trading day. The number of issuable shares shall be
rounded down to the next whole share, and the issued shares shall be held in escrow by the
Secretary of the Corporation as partly-paid shares until the Participant vests in those shares.
The Participant shall have full stockholder rights, including voting, dividend and liquidation
rights, with respect to all issued shares held in escrow on his or her behalf, but such shares
shall not be assignable or transferable while they remain unvested.
Upon completion of each calendar month of Service during the year for which the election
is in effect, the Participant shall vest in one-twelfth (1/12) of the issued shares, and the
stock certificate for those shares shall be released from escrow. All the issued shares shall
immediately vest upon (i) the consummation of a Corporate Transaction or (ii) the Involuntary
Termination of the Participants Service following a Change in Control. Should the Participant
otherwise cease Service prior to vesting in one or more monthly installments of the issued
shares, then those unvested shares shall immediately be surrendered to the Corporation for
cancellation, and the Participant shall not be
entitled to any cash payment or other consideration from the Corporation with respect to
the canceled shares and shall have no further stockholder rights with respect to such shares.
15
B. Vesting Provisions
1. The shares of Common Stock issued under the Stock Issuance Program (other than shares
issued in lieu of salary) may, in the absolute discretion of the Plan Administrator, be fully and
immediately vested upon issuance or may vest in installments over the Participants period of
Service. The elements of the vesting schedule applicable to any unvested shares of Common Stock
issued under the Stock Issuance Program, namely:
(i) the Service period to be completed by the Participant or the performance objectives to be
achieved by the Corporation,
(ii) the number of installments in which the shares are to vest,
(iii) the interval or intervals (if any) which are to lapse between installments, and
(iv) the effect which death, Permanent Disability or other event designated by the Plan
Administrator is to have upon the vesting schedule,
shall be determined by the Plan Administrator and incorporated into the Issuance Agreement executed
by the Corporation and the Participant at the time such unvested shares are issued.
2. The Participant shall have full stockholder rights with respect to any shares of Common
Stock issued to him or her under the Stock Issuance Program, whether or not his or her interest in
those shares is vested. Accordingly, the Participant shall have the right to vote such shares and
to receive any regular cash dividends paid on such shares. Any new, additional or different shares
of stock or other property (including money paid other than as a regular cash dividend) which the
Participant may have the right to receive with respect to his or her unvested shares by reason of
any stock dividend, stock split, recapitalization, combination of shares, exchange of shares or
other change affecting the outstanding Common Stock as a class without the Corporations receipt of
consideration shall be issued, subject to (i) the same vesting requirements applicable to the
Participants unvested shares and (ii) such escrow arrangements as the Plan Administrator shall
deem appropriate.
3. Should the Participant cease to remain in Service while holding one or more unvested shares
of Common Stock under the Stock Issuance Program, then those shares shall be immediately canceled
by the Corporation, and the Participant shall have no further stockholder rights with respect to
those shares. To the extent the canceled shares were previously issued to the Participant for
consideration paid in cash or cash equivalent (including the Participants purchase-money
promissory note), the Corporation shall repay to the Participant the cash consideration paid for
the surrendered shares and shall cancel the unpaid principal balance of any outstanding
purchase-money note of the Participant attributable to such canceled shares. The canceled shares
may, at the Plan Administrators discretion, be retained by the Corporation as Treasury Shares or
may be retired to authorized but unissued share status.
4. The Plan Administrator may in its discretion elect to waive the cancellation of one or more
unvested shares of Common Stock (or other assets attributable thereto) which would otherwise occur
upon the non-completion of the vesting schedule applicable to such shares. Such waiver shall result
in the immediate vesting of the Participants interest in the shares of Common Stock as to which
the waiver applies. Such waiver may be effected at any time, whether before or after the
Participants cessation of Service or the attainment or non-attainment of the applicable
performance objectives.
II. CORPORATE TRANSACTIONS/CHANGE IN CONTROL
A. Upon the occurrence of any Corporate Transaction, all unvested shares of Common Stock at
the time outstanding under this Stock Issuance Program shall immediately vest in full and the
Corporations repurchase rights shall terminate, except to the extent: (i) any such repurchase
right is expressly assigned to the successor corporation (or parent thereof) in connection with the
Corporate Transaction or (ii) such termination is precluded by other limitations imposed in the
Issuance Agreement.
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B. The Plan Administrator shall have the discretionary authority, exercisable at any time
while unvested shares remain outstanding under this Stock Issuance Program, to provide for the
immediate and automatic vesting of those shares in whole or in part upon the occurrence of a Change
in Control. The Plan Administrator shall also have full power and authority to condition any such
accelerated vesting upon the subsequent termination of the Participants Service through an
Involuntary Termination effected within a specified period following the Change in Control.
III. TRANSFER RESTRICTIONS/SHARE ESCROW
A. Unvested shares may, in the Plan Administrators discretion, be held in escrow by the
Corporation until the Participants interest in such shares vests or may be issued directly to the
Participant with restrictive legends on the certificates evidencing such unvested shares. To the
extent an escrow arrangement is utilized, the unvested shares and any securities or other assets
issued with respect to such shares (other than regular cash dividends) shall be delivered in escrow
to the Corporation to be held until the Participants interest in such shares (or other securities
or assets) vests. Alternatively, if the unvested shares are issued directly to the Participant, the
restrictive legend on the certificates for such shares shall read substantially as follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE UNVESTED AND ARE SUBJECT TO (I) CERTAIN TRANSFER
RESTRICTIONS AND (II) CANCELLATION OR REPURCHASE IN THE EVENT THE REGISTERED HOLDER (OR HIS/HER
PREDECESSOR IN INTEREST) CEASES TO REMAIN IN THE CORPORATIONS SERVICE. SUCH TRANSFER
RESTRICTIONS AND THE TERMS AND CONDITIONS OF SUCH CANCELLATION OR REPURCHASE ARE SET FORTH IN A
STOCK ISSUANCE AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED HOLDER (OR HIS/HER
PREDECESSOR IN INTEREST) DATED , A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF
THE CORPORATION.
B. The Participant shall have no right to transfer any unvested shares of Common Stock issued
to him or her under the Stock Issuance Program. For purposes of this restriction, the term
transfer shall include (without limitation) any sale, pledge, assignment, encumbrance, gift, or
other disposition of such shares, whether voluntary or involuntary. Upon any such attempted
transfer, the unvested shares shall immediately be canceled, and neither the Participant nor the
proposed transferee shall have any rights with respect to such canceled shares. However, the
Participant shall have the right to make a gift of unvested shares acquired under the Stock
Issuance Program to the Participants spouse or issue, including adopted children, or to a trust
established for such spouse or issue, provided the transferee of such shares delivers to the
Corporation a written agreement to be bound by all the provisions of the Stock Issuance Program and
the Issuance Agreement applicable to the transferred shares.
ARTICLE SEVEN
MISCELLANEOUS
I. LOANS OR INSTALLMENT PAYMENTS
A. The Plan Administrator may, in its discretion, assist any Optionee or Participant
(including an Optionee or Participant who is an officer of the Corporation), in the exercise of one
or more options granted to such Optionee under the Discretionary Grant Program or the Salary
Reduction Grant Program or the purchase of one or more shares issued to such Participant under the
Stock Issuance Program, including the satisfaction of any Federal, state and local income and
employment tax obligations arising therefrom, by (i) authorizing the extension of a loan from the
Corporation to such Optionee or Participant or (ii) permitting the Optionee or Participant to pay
the exercise price or purchase price for the acquired shares in installments over a period of
years. The terms of any loan or installment method of payment (including the interest rate and
terms of repayment) shall be upon such terms as the Plan Administrator specifies in the applicable
option or issuance agreement or otherwise deems appropriate under the
17
circumstances. Loans or installment payments may be authorized with or without security or
collateral. However, the maximum credit available to the Optionee or Participant may not exceed the
exercise or purchase price of the acquired shares (less the par value of such shares) plus any
Federal, state and local income and employment tax liability incurred by the Optionee or
Participant in connection with the acquisition of such shares.
B. The Plan Administrator may, in its absolute discretion, determine that one or more loans
extended under this financial assistance program shall be subject to forgiveness by the Corporation
in whole or in part upon such terms and conditions as the Plan Administrator may deem appropriate.
II. AMENDMENT OF THE PLAN AND AWARDS
A. The Board has complete and exclusive power and authority to amend or modify the Plan (or
any component thereof) in any or all respects whatsoever. To the extent necessary to comply with
applicable laws or if the Plan Administrator deems it advisable, the Corporation shall obtain
stockholder approval of any Plan amendment in such manner and to such a degree as required.
However, no such amendment or modification shall adversely affect rights and obligations with
respect to stock options, stock appreciation rights or unvested stock issuances at the time
outstanding under the Plan, unless the Optionee or Participant consents to such amendment.
B. Unless approved by the stockholders, the Board (or Plan Administrator) shall not reduce the
exercise price of any outstanding stock option or reduce the base amount on which the appreciation
of any outstanding stock appreciation right is calculated to reflect a reduction in the Fair Market
Value of the Common Stock since the grant date of the stock option or stock appreciation right.
C. Options to purchase shares of Common Stock may be granted under the Discretionary Grant
Program and the Salary Reduction Grant Program and shares of Common Stock may be issued under the
Stock Issuance Program, which are in excess of the number of shares then available for issuance
under the Plan, provided any excess shares actually issued under those programs are held in escrow
until stockholder approval is obtained for a sufficient increase in the number of shares available
for issuance under the Plan. If such stockholder approval is not obtained within twelve (12) months
after the date the first such excess option grants or excess share issuances are made, then (i) any
unexercised excess options shall terminate and cease to be exercisable and (ii) the Corporation
shall promptly refund the purchase price paid for any excess shares actually issued under the Plan
and held in escrow, together with interest (at the applicable short term federal rate) for the
period the shares were held in escrow.
III. TAX WITHHOLDING
A. The Corporations obligation to deliver shares of Common Stock upon the exercise of stock
options or stock appreciation rights or the direct issuance or vesting of such shares under the
Plan shall be subject to the satisfaction of all applicable Federal, state, local and foreign
income tax and employment tax withholding requirements.
B. The Plan Administrator may, in its discretion, provide any holder of Non-Statutory Options
or unvested shares under the Stock Issuance Program with the right to use shares of Common Stock in
satisfaction of all or part of no more than the minimum amount of the Federal, state and local
income and employment tax liabilities required to be withheld from such holder (the Taxes) in
connection with the exercise of their options or the vesting of their shares. Such right may be
provided to any such holder in either or both of the following formats:
Stock Withholding: The holder of the Non-Statutory Option or unvested shares may be
provided with the election to have the Corporation withhold, from the shares of Common Stock
otherwise issuable upon the exercise of such Non-Statutory Option or the vesting of such shares,
a portion of those shares with an aggregate Fair Market Value equal to the percentage of the
Taxes (up to one hundred percent (100%)) specified by such holder.
18
Stock Delivery: The holder of the Non-Statutory Option or the unvested shares may be
provided with the election to deliver to the Corporation, at the time the Non-Statutory Option
is exercised or the shares vest, one or more shares of Common Stock previously acquired by such
individual (other than in connection with the option exercise or share vesting triggering the
Taxes) with an aggregate Fair Market Value equal to the percentage of the Taxes (up to one
hundred percent (100%)) specified by such holder.
IV. EFFECTIVE DATE AND TERM OF PLAN
A. This Plan shall become effective immediately upon approval by the Corporations
stockholders at the 1994 Annual Meeting.
B. The Automatic Option Grant Program shall terminate on November 12, 1999. All option grants
under the Automatic Option Grant Program that are outstanding on such date shall thereafter
continue to have force and effect in accordance with the provisions of the instruments evidencing
such grants.
C. The Stock Fee Program shall terminate on December 31, 1999, and no portion of the annual
retainer fee or meeting fees payable to a non-employee Board member after that date shall be used
for the acquisition of shares of Common Stock under the Stock Fee Program.
D. The Plan shall terminate upon the earlier of (i) April 28, 2004 or (ii) the date on which
all shares available for issuance under the Plan shall have been issued or canceled pursuant to the
exercise of options or stock appreciation rights or the issuance of shares (whether vested or
unvested) under the Plan. If the date of termination is determined under clause (i) above, then all
option grants and unvested stock issuances outstanding on such date shall thereafter continue to
have force and effect in accordance with the provisions of the instruments evidencing such grants
or issuances.
V. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares pursuant to option
grants or stock issuances under the Plan shall be used for general corporate purposes.
VI. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any option or stock appreciation right
under the Plan, the issuance of any shares under the Stock Issuance Program, and the issuance of
Common Stock upon the exercise of the stock options and stock appreciation rights granted hereunder
shall be subject to the Corporations procurement of all approvals and permits required by
regulatory authorities having jurisdiction over the Plan, the stock options and stock appreciation
rights granted under it and the Common Stock issued pursuant to it.
B. No shares of Common Stock or other assets shall be issued or delivered under this Plan
unless and until there shall have been compliance with all applicable requirements of Federal and
state securities laws, including the filing and effectiveness of the Form S-8 registration
statement for the shares of Common Stock issuable under the Plan, and all applicable listing
requirements of any securities exchange on which the Common Stock is then listed for trading.
VII. NO EMPLOYMENT/SERVICE RIGHTS
Neither the action of the Corporation in establishing the Plan, nor any action taken by the
Plan Administrator hereunder, nor any provision of the Plan shall be construed so as to grant any
individual the right to remain in the Service of the Corporation (or Subsidiary) for any period of
specific duration, and the Corporation (or any Subsidiary retaining the services of such
individual) may terminate such individuals Service at any time and for any reason, with or without
cause.
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GLOSSARY
The following definitions shall be in effect under the Plan:
Change in Control: a change in ownership or control of the Corporation effected through any of
the following transactions:
the direct or indirect acquisition by any person or related group of persons (other than
the Corporation or a person that directly or indirectly controls, is controlled by, or is under
common control with, the Corporation) of beneficial ownership (within the meaning of Rule 13d-3
of the 1934 Act) of securities possessing more than fifty percent (50%) of the total combined
voting power of the Corporations outstanding securities pursuant to a tender or exchange offer
made directly to the Corporations stockholders which the Board does not recommend such
stockholders to accept, or
a change in the composition of the Board over a period of thirty-six (36) months or less
such that a majority of the Board members (rounded up to the next whole number) ceases, by
reason of one or more contested elections for Board membership, to be comprised of individuals
who either (a) have been Board members continuously since the beginning of such period or (b)
have been elected or nominated for election as Board members during such period by at least a
majority of the Board members described in clause (a) who were still in office at the time such
election or nomination was approved by the Board.
Code: the Internal Revenue Code of 1986, as amended.
Committee: a committee appointed by the Board to administer the Plan and constituted in such
manner for transactions under the Plan to be exempt from Section 16(b) of the 1934 Act in
accordance with Rule 16b-3 thereunder.
Common Stock: common stock of the Corporation.
Corporate Transaction: any of the following stockholder-approved transactions to which the
Corporation is a party:
a merger or consolidation in which the Corporation is not the surviving entity, except
for a transaction the principal purpose of which is to change the state in which the Corporation
is incorporated,
a sale, transfer or other disposition of all or substantially all of the Corporations
assets in complete liquidation or dissolution of the Corporation, or
any reverse merger in which the Corporation is the surviving entity but in which
securities possessing more than fifty percent (50%) of the total combined voting power of the
Corporations outstanding securities are transferred to a person or persons different from the
persons holding those securities immediately prior to such merger.
Covered Employee: an individual defined as a Covered Employee under Section 162(m) of the
Code and the regulations thereunder.
Employee: an individual who performs services while in the employ of the Corporation or one or
more Parents or Subsidiaries, subject to the control and direction of the employer entity not only
as to the work to be performed but also as to the manner and method of performance.
Fair Market Value: the closing selling price per share on the date in question on the NASDAQ
National Market. If there is no reported closing selling price for the Common Stock on the date in
question, then the Fair Market Value shall be the closing selling price on the last preceding date
for which such quotation exists.
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Hostile Take-Over: a change in ownership of the Corporation effected through the following
transaction:
the direct or indirect acquisition by any person or related group of persons of
securities possessing more than fifty percent(50%) of the total combined voting power of the
Corporations outstanding securities pursuant to a tender or exchange offer made directly to the
Corporation s stockholders which the Board does not recommend such stockholders to accept, and
more than fifty percent (50%) of the acquired securities are accepted from holders other
than the officers and directors of the Corporation subject to the short-swing profit
restrictions of Section 16 of the 1934 Act.
Incentive Option: a stock option which satisfies the requirements of Code Section 422.
Involuntary Termination: the termination of the Service of any Optionee or Participant which
occurs by reason of:
such individuals involuntary dismissal or discharge by the Corporation for reasons other
than Misconduct, or
such individuals voluntary resignation following (A) a change in his or her position
with the Corporation which materially reduces his or her level of responsibility, (B) a
reduction in his or her level of compensation (including base salary, fringe benefits and any
non-discretionary and objective-standard incentive payment or bonus award) by more than five
percent (5%) or (C) a relocation of such individuals place of employment by more than fifty
(50) miles, provided and only if such change, reduction or relocation is effected by the
Corporation without the individuals consent.
Misconduct: the commission of any act of fraud, embezzlement or dishonesty by the Optionee or
Participant, any unauthorized use or disclosure by such individual of confidential information or
trade secrets of the Corporation or any Parent or Subsidiary, or any other intentional misconduct
by such individual adversely affecting the business or affairs of the Corporation in a material
manner. The foregoing definition shall not be deemed to be inclusive of all the acts or omissions
which the Corporation or any Parent or Subsidiary may consider as grounds for the dismissal or
discharge of any Optionee, Participant or other individual in the Service of the Corporation or any
Parent or Subsidiary.
Newly Issued Shares: shares of Common Stock drawn from the Corporations authorized but
unissued shares of Common Stock.
1934 Act: the Securities Exchange Act of 1934, as amended.
Non-Statutory Option: a stock option not intended to meet the requirements of Code Section
422.
Optionee: any person to whom an option is granted under the Discretionary Grant, Automatic
Grant or Salary Reduction Grant Program in effect under the Plan.
Parent: each corporation (other than the Corporation) in an unbroken chain of corporations
ending with the Corporation, provided each such corporation (other than the Corporation) in the
unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock in any other corporation in such chain.
Participant: any person who receives a direct issuance of Common Stock under the Stock
Issuance Program in effect under the Plan.
Permanent Disability or Permanently Disabled: the inability of the Optionee or the Participant
to engage in any substantial gainful activity by reason of any medically determinable physical or
mental impairment expected to result in death or to be of continuous duration of twelve (12) months
or more.
21
Plan Administrator: the committee of two (2) or more non-employee Board members appointed by
the Board to administer the Discretionary Option Grant, the Salary Reduction and the Stock Issuance
Programs.
Service: the provision of services on a periodic basis to the Corporation or any Parent or
Subsidiary in the capacity of an Employee, a non-employee member of the board of directors or an
independent consultant or advisor, except to the extent otherwise specifically provided in the
applicable stock option or stock issuance agreement.
Subcommittee: a subcommittee of the Committee comprised solely of two or more outside
directors within the meaning of Section 162(m) of the Code and the regulations thereunder.
Subsidiary: each corporation (other than the Corporation) in an unbroken chain of corporations
beginning with the Corporation, provided each such corporation (other than the last corporation) in
the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in any other corporation in such
chain.
Take-Over Price: the greater of (i) the Fair Market Value per share of Common Stock on the
date the option is surrendered to the Corporation in connection with a Hostile Take-Over or (ii)
the highest reported price per share of Common Stock paid by the tender offer or in effecting such
Hostile Take-Over. However, if the surrendered option is an Incentive Option, the Take-Over Price
shall not exceed the clause (i) price per share.
Treasury Shares: shares of Common Stock reacquired by the Corporation and held as treasury
shares.
22
exv4w5
Exhibit 4.5
DIGITAL MICROWAVE CORPORATION
1996 NON-OFFICER EMPLOYEE STOCK OPTION PLAN
ARTICLE ONE
GENERAL
A. This 1996 Non-Officer Employee Stock Option Plan (the Plan) is intended to promote the
interests of Digital Microwave Corporation, a Delaware corporation (the Corporation), by
providing key employees (excluding officers) of the Corporation (or its Parent or Subsidiary
corporations) who are responsible for the management, growth and financial success of the
Corporation with the opportunity to acquire a proprietary interest, or otherwise increase their
proprietary interest, in the Corporation as an incentive for them to remain in the service of the
Corporation (or its subsidiary corporations).
B. The Effective Date of the Plan is April 18, 1996.
C. Capitalized terms shall, except as otherwise specifically defined within the provisions of
the Plan, have the meanings assigned to such terms in the Glossary.
II. |
|
ADMINISTRATION OF THE PLAN |
A. The Committee shall have sole and exclusive authority to administer the Discretionary
Option Grant Program. Members of the Committee shall serve for such period as the Corporations
Board of Directors (the Board) may determine and shall be subject to removal by the Board at any
time.
B. The Committee as Plan Administrator shall have full power and discretion (subject to the
express provisions of the Plan) to establish such rules and regulations as it may deem appropriate
for the proper administration of the Discretionary Option Grant Program and to make such
determinations under, and issue such interpretations of, the provisions of such program and any
outstanding option grants thereunder as it may deem necessary or advisable. Decisions of the Plan
Administrator shall be final and binding on all parties who have an interest in the program or any
outstanding option thereunder.
C. Service on the Committee shall constitute service as a Board member, and members of the
Committee shall accordingly be entitled to full indemnification and reimbursement as Board members
for their service on the Committee. No member of the Committee shall be liable for any act or
omission made in good faith with respect to the Plan or any option grants under the Plan.
A. The persons eligible to participate in the Discretionary Option Grant Program are key
employees (other than officers) of the Corporation (or any Parent or Subsidiary) who render
services which contribute to the management, growth and financial success of the Corporation.
B. Non-employee Board members shall not be eligible to participate in the Discretionary Option
Grant Program.
C. The Plan Administrator shall have full authority to determine, with respect to grants made
under the Discretionary Option Grant Program, which eligible individuals are to receive such
grants, the number of shares to be covered by each such grant, the time or times at which each
granted option is to become exercisable and the maximum term for which the option may remain
outstanding.
IV. |
|
STOCK SUBJECT TO THE PLAN |
A. Shares of Common Stock shall be available for issuance under the Plan and shall be drawn
from either the Corporations authorized but unissued shares of Common Stock or from reacquired
shares of Common Stock, including shares repurchased by the Corporation on the open market. The
number of shares of Common Stock reserved for issuance over the term of the Plan shall initially be
fixed at 500,000 shares.
B. Should one or more outstanding options under this Plan expire or terminate for any reason
prior to exercise in full, then the shares subject to the portion of each option not so exercised
shall be available for subsequent issuance under the Plan. Shares subject to any stock
appreciation rights exercised under the Plan, whether or not the issued shares are subsequently
repurchased by the Corporation pursuant to its repurchase rights under the Plan, shall reduce on a
share-for-share basis the number of shares of Common Stock available for subsequent issuance under
the Plan. In addition, should the exercise price of an outstanding option under the Plan be paid
with shares of Common Stock or should shares of Common Stock otherwise issuable under the Plan be
withheld by the Corporation in satisfaction of the withholding taxes incurred in connection with
the exercise of an outstanding option under the Plan, then the number of shares of Common Stock
available for issuance under the Plan shall be reduced by the gross number of shares for which the
option is exercised, and not by the net number of shares of Common Stock actually issued to the
holder of such option.
C. Should any change be made to the Common Stock issuable under the Plan by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other
change affecting the outstanding Common Stock as a class without the Corporations receipt of
consideration, then appropriate adjustments shall be made to (i) the maximum number and/or class of
securities issuable under the Plan and (ii) the number and/or class of securities and price per
share in effect under each option outstanding under the Plan. Such adjustments to the outstanding
options are to be effected in a manner which shall preclude the enlargement or dilution of rights
and benefits under those options. The adjustments determined by the Plan Administrator shall be
final, binding and conclusive.
2
ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
I. |
|
TERMS AND CONDITIONS OF OPTIONS |
Options granted pursuant to the Discretionary Grant Program shall be authorized by action of
the Plan Administrator and shall be Non-Statutory Options. Each granted option shall be evidenced
by one or more instruments in the form approved by the Plan Administrator; provided, however, that
each such instrument shall comply with the terms and conditions specified below.
A. Exercise Price.
1. The exercise price per share of Common Stock subject to a Non-Statutory Option shall be
fixed by the Plan Administrator and in no event shall be less than eighty-five percent (85%) of the
Fair Market Value of such Common Stock on the grant date.
2. The exercise price shall become immediately due upon exercise of the option and shall be
payable in one of the alternative forms specified below:
(i) full payment in cash or check made payable to the Corporations order,
(ii) full payment in shares of Common Stock held for the requisite period necessary to avoid a
charge to the Corporations earnings for financial reporting purposes and valued at Fair Market
Value on the date the option is exercised,
(iii) full payment in a combination of shares of Common Stock held for the requisite period
necessary to avoid a charge to the Corporations earnings for financial reporting purposes and
valued at Fair Market Value on the date the option is exercised and cash or check made payable to
the Corporations order, or
(iv) to the extent the option is exercised for vested shares, full payment through a
broker-dealer sale and remittance procedure pursuant to which the Optionee shall provide concurrent
irrevocable written instructions (I) to a Corporation-designated brokerage firm to effect the
immediate sale of the purchased shares and remit to the Corporation, out of the sales 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 in connection with such purchase and (II) to the
Corporation to deliver the certificates for the purchased shares directly to such brokerage firm in
order to complete the sale transaction.
B. Term and Exercise of Options. Each option shall be exercisable at such time or times,
during such period and for such number of shares as shall be determined by the Plan Administrator
and set forth in the instrument evidencing such option. No option shall, however, have a maximum
term in excess of ten (10) years. During the lifetime of the Optionee, the option, together with
any stock appreciation rights pertaining to such option, shall be exercisable
only by the Optionee and shall not be assignable or transferable except for a transfer of the
option effected by will or by the laws of descent and distribution following the Optionees death,
except as the Plan Administrator may otherwise provide.
3
C. Termination of Service.
1. Except to the extent otherwise expressly authorized by the Plan Administrator, no Optionee
shall have more than a thirty-six (36)-month period measured from the date of such individuals
cessation of Service in which to exercise his or her outstanding options under the Plan.
2. Any option exercisable in whole or in part by the Optionee at the time of death may be
subsequently exercised by the personal representative of the Optionees estate or by the person or
persons to whom the option is transferred pursuant to the Optionees will or in accordance with the
laws of descent and distribution. However, no such option shall remain exercisable for more than
thirty-six (36) months after the date of the Optionees death.
3. Under no circumstances shall any such option be exercisable after the specified expiration
date of the option term.
4. During the applicable post-Service exercise period, the option may not be exercised in the
aggregate for more than the number of shares (if any) in which the Optionee is vested at the time
of his or her cessation of Service. Upon the expiration of the limited post-Service exercise
period or (if earlier) upon the specified expiration date of the option term, each such option
shall terminate and cease to remain outstanding with respect to any vested shares for which the
option has not otherwise been exercised. However, each outstanding option shall immediately
terminate and cease to remain outstanding, at the time of the Optionees cessation of Service, with
respect to any shares for which the option is not otherwise at that time exercisable or in which
the Optionee is not otherwise vested.
5. Should the Optionees Service be terminated for Misconduct, all outstanding options held by
that individual shall terminate immediately and cease to remain outstanding.
6. The Plan Administrator shall have complete discretion, exercisable either at the time the
option is granted or at any time while the option remains outstanding:
- to permit one or more options to be exercised not only with respect to the
number of vested shares of Common Stock for which each such option is exercisable at
the time of the Optionees cessation of Service but also with respect to one or more
subsequent installments of vested shares for which the option would otherwise have
become exercisable had such cessation of Service not occurred,
- to extend the period of time for which the option is to remain exercisable
following the Optionees cessation of Service or death from the limited period
otherwise in effect for that option to such greater period of time as
the Plan Administrator shall deem appropriate, but in no event beyond the
specified expiration date of the option term.
4
D. Stockholder Rights. An Optionee shall have none of the rights of a stockholder with
respect to any option shares until such individual shall have exercised the option and paid the
exercise price for the purchased shares.
E. Repurchase Rights. The shares of Common Stock acquired under this Discretionary Grant
Program may be subject to repurchase by the Corporation in accordance with the following
provisions:
1. The Plan Administrator shall have the discretion to grant options which are exercisable for
unvested shares of Common Stock. Should the Optionee cease Service while holding any unvested
shares purchased under such options, then the Corporation shall have the right to repurchase any or
all of those unvested shares at the exercise price paid per share. The terms and conditions upon
which such repurchase right shall be exercisable (including the period and procedure for exercise
and the appropriate vesting schedule for the purchased shares) shall be established by the Plan
Administrator and set forth in the instrument evidencing such repurchase right.
2. All of the Corporations outstanding repurchase rights shall automatically terminate, and
all shares subject to such terminated rights shall immediately vest in full, upon the occurrence of
a Corporate Transaction, except to the extent: (i) any such repurchase right is expressly assigned
to the successor corporation (or parent thereof) in connection with the Corporate Transaction or
(ii) such accelerated vesting is precluded by other limitations imposed by the Plan Administrator
at the time the repurchase right is issued.
3. The Plan Administrator shall have the discretionary authority, exercisable either before or
after the Optionees cessation of Service, to cancel the Corporations outstanding repurchase
rights with respect to one or more shares purchased or purchasable by the Optionee under the Plan
and thereby accelerate the vesting of such shares in whole or in part at any time.
II. |
|
CORPORATE TRANSACTIONS/CHANGES IN CONTROL/HOSTILE TAKE-OVER |
A. In the event of any Corporate Transaction, each outstanding option shall automatically
accelerate so that each such option shall, immediately prior to the specified effective date for
such Corporate Transaction, become fully exercisable with respect to the total number of shares of
Common Stock at the time subject to such option and may be exercised for all or any portion of such
shares. However, an outstanding option shall not so accelerate if and to the extent: (i) such
option is, in connection with the Corporate Transaction, either to be assumed by the successor
corporation or parent thereof or to be replaced with a comparable option to purchase shares of the
capital stock of the successor corporation or parent thereof, (ii) such option is to be replaced
with a cash incentive program of the successor corporation which preserves the option spread
existing at the time of the Corporate Transaction and provides for subsequent payout in accordance
with the same vesting schedule applicable to such option or (iii) the acceleration of such option
is subject to other limitations imposed by the Plan Administrator at the time of the option grant.
The determination of option comparability under
clause (i) above shall be made by the Plan Administrator, and its determination shall be
final, binding and conclusive.
5
B. The Plan Administrator shall have the discretionary authority, exercisable either at the
time the option is granted or at any time while the option remains outstanding, to provide for the
automatic acceleration of one or more outstanding options upon the occurrence of a Corporate
Transaction, whether or not those options are to be assumed or replaced in the Corporate
Transaction. Alternatively, the Plan Administrator shall have the authority to provide for the
subsequent acceleration of any outstanding options which do not otherwise accelerate at the time of
the Corporate Transaction, or the subsequent termination of any of the Corporations outstanding
repurchase rights which do not otherwise terminate at the time of the Corporate Transaction, should
the Optionees Service terminate through an Involuntary Termination effected within a designated
period following the effective date of such Corporate Transaction.
C. Immediately following the consummation of the Corporate Transaction, all outstanding
options shall terminate, except to the extent assumed by the successor corporation or its parent
company.
D. Each outstanding option under this Discretionary Grant Program that is assumed in
connection with the Corporate Transaction or is otherwise to continue in effect shall be
appropriately adjusted, immediately after such Corporate Transaction, to apply and pertain to the
number and class of securities which would have been issued to the option holder, in consummation
of such Corporate Transaction, had such person exercised the option immediately prior to such
Corporate Transaction. Appropriate adjustments shall also be made to the exercise price payable
per share, provided the aggregate exercise price payable for such securities shall remain the same.
In addition, the class and number of securities available for issuance under the Plan on both an
aggregate and per individual basis following the consummation of the Corporate Transaction shall be
appropriately adjusted.
E. The Plan Administrator shall have the discretionary authority, exercisable either at the
time the option is granted or at any time while the option remains outstanding, to provide for the
automatic acceleration of one or more outstanding options (and the termination of one or more of
the Corporations outstanding repurchase rights) upon the occurrence of a Change in Control. The
Plan Administrator shall also have full power and authority to condition any such option
acceleration (and the termination of any outstanding repurchase rights) upon the subsequent
termination of the Optionees Service through an Involuntary Termination effected within a
specified period following the Change in Control.
F. Any options accelerated in connection with the Change in Control shall remain fully
exercisable until the expiration or sooner termination of the option term.
G. The grant of options shall in no way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.
6
III. |
|
STOCK APPRECIATION RIGHTS |
A. The Plan Administrator shall have full power and authority, exercisable in its sole
discretion, to grant to selected Optionees Tandem Stock Appreciation Rights (Tandem Rights).
B. The following terms and conditions shall govern the grant and exercise of Tandem Rights:
1. One or more Optionees may be granted the Tandem Right, exercisable upon such terms
and conditions as the Plan Administrator may establish, to elect between the exercise of the
underlying stock option for shares of Common Stock and the surrender of that option in
exchange for a distribution from the Corporation in an amount equal to the excess of (i) the
Fair Market Value (on the option surrender date) of the number of shares in which the
Optionee is at the time vested under the surrendered option (or surrendered portion thereof)
over (ii) the aggregate exercise price payable for such vested shares.
2. No such option surrender shall be effective unless it is approved by the Plan
Administrator. If the surrender is so approved, then the distribution to which the Optionee
shall accordingly become entitled may be made in shares of Common Stock valued at Fair
Market Value on the option surrender date, in cash, or partly in shares and partly in cash,
as the Plan Administrator shall in its sole discretion deem appropriate.
3. If the surrender of an option is rejected by the Plan Administrator, then the
Optionee shall retain whatever rights the Optionee had under the surrendered option (or
surrendered portion thereof) on the option surrender date and may exercise such rights at
any time prior to the later of (i) five (5) business days after the receipt of the rejection
notice or (ii) the last day on which the option is otherwise exercisable in accordance with
the terms of the instrument evidencing such option, but in no event may such rights be
exercised more than ten (10) years after the date of the option grant.
ARTICLE THREE
MISCELLANEOUS
I. |
|
LOANS OR INSTALLMENT PAYMENTS |
A. The Plan Administrator may, in its discretion, assist any Optionee in the exercise of one
or more options granted to such Optionee under the Discretionary Grant Program, including the
satisfaction of any Federal, state and local income and employment tax obligations arising
therefrom, by (i) authorizing the extension of a loan from the Corporation to such Optionee or (ii)
permitting the Optionee to pay the exercise price or purchase price for the acquired shares in
installments over a period of years. The terms of any loan or installment method of payment
(including the interest rate and terms of repayment) shall be upon such terms as the Plan
Administrator specifies in the applicable option agreement or otherwise deems appropriate under the
circumstances. Loans or installment payments may be authorized with or without security or
collateral. However, the maximum credit available to the Optionee may not exceed the exercise
price of the acquired shares (less the par value of such shares) plus any
Federal, state and local income and employment tax liability incurred by the Optionee in
connection with the acquisition of such shares.
7
B. The Plan Administrator may, in its absolute discretion, determine that one or more loans
extended under this financial assistance program shall be subject to forgiveness by the Corporation
in whole or in part upon such terms and conditions as the Plan Administrator may deem appropriate.
II. |
|
AMENDMENT OF THE PLAN AND AWARDS |
The Plan Administrator has complete authority to amend or modify the Plan (or any component
thereof) in any or all respects whatsoever. However, no such amendment or modification shall
adversely affect rights and obligations with respect to stock options or stock appreciation rights
at the time outstanding under the Plan, unless the Optionee consents to such amendment.
A. The Corporations obligation to deliver shares of Common Stock upon the exercise of stock
options or stock appreciation rights under the Plan shall be subject to the satisfaction of all
applicable Federal, state and local income tax and employment tax withholding requirements.
B. The Plan Administrator may, in its discretion, provide any or all holders of Non-Statutory
Options with the right to use shares of Common Stock in satisfaction of all or part of the Federal,
state and local income and employment tax liabilities (the Taxes) incurred by such holders in
connection with the exercise of their options or the vesting of their shares. Such right may be
provided to any such holder in either or both of the following formats:
- Stock Withholding: The holder of the Non-Statutory Option may be provided with the
election to have the Corporation withhold, from the shares of Common Stock otherwise issuable upon
the exercise of such Non-Statutory Option or the vesting of such shares, a portion of those shares
with an aggregate Fair Market Value equal to the percentage of the Taxes (up to one hundred percent
(100%)) specified by such holder.
- Stock Delivery: The holder of the Non-Statutory Option may be provided with the election
to deliver to the Corporation, at the time the Non-Statutory Option is exercised or the shares
vest, one or more shares of Common Stock previously acquired by such individual (other than in
connection with the option exercise or share vesting triggering the Taxes) with an aggregate Fair
Market Value equal to the percentage of the Taxes (up to one hundred percent (100%)) specified by
such holder.
Any cash proceeds received by the Corporation from the sale of shares pursuant to option
grants under the Plan shall be used for general corporate purposes.
8
A. The implementation of the Plan, the granting of any option or stock appreciation right
under the Plan, and the issuance of Common Stock upon the exercise of the stock options and stock
appreciation rights granted hereunder shall be subject to the Corporations procurement of all
approvals and permits required by regulatory authorities having jurisdiction over the Plan, the
stock options and stock appreciation rights granted under it and the Common Stock issued pursuant
to it.
B. No shares of Common Stock or other assets shall be issued or delivered under this Plan
unless and until there shall have been compliance with all applicable requirements of Federal and
state securities laws, including the filing and effectiveness of the Form S-8 registration
statement for the shares of Common Stock issuable under the Plan, and all applicable listing
requirements of any securities exchange on which the Common Stock is then listed for trading.
VI. |
|
NO EMPLOYMENT/SERVICE RIGHTS |
Neither the action of the Corporation in establishing the Plan, nor any action taken by the
Plan Administrator hereunder, nor any provision of the Plan shall be construed so as to grant any
individual the right to remain in the Service of the Corporation (or Subsidiary) for any period of
specific duration, and the Corporation (or any Subsidiary retaining the services of such
individual) may terminate such individuals Service at any time and for any reason, with or without
cause.
9
GLOSSARY
The following definitions shall be in effect under the Plan:
CHANGE IN CONTROL: a change in ownership or control of the Corporation effected through any
of the following transactions:
- the direct or indirect acquisition by any person or related group of persons
(other than the Corporation or a person that directly or indirectly controls, is
controlled by, or is under common control with, the Corporation) of beneficial
ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities
possessing more than fifty percent (50%) of the total combined voting power of the
Corporations outstanding securities pursuant to a tender or exchange offer made
directly to the Corporations stockholders which the Board does not recommend such
stockholders to accept, or
- a change in the composition of the Board over a period of thirty-six (36)
months or less such that a majority of the Board members (rounded up to the next
whole number) ceases, by reason of one or more contested elections for Board
membership, to be comprised of individuals who either (a) have been Board members
continuously since the beginning of such period or (b) have been elected or
nominated for election as Board members during such period by at least a majority of
the Board members described in clause (a) who were still in office at the time such
election or nomination was approved by the Board.
CODE: the Internal Revenue Code of 1986, as amended.
COMMITTEE: a committee of two (2) or more Board members appointed by the Board to administer
the Plan.
CORPORATE TRANSACTION: any of the following stockholder-approved transactions to which the
Corporation is a party:
- a merger or consolidation in which the Corporation is not the surviving
entity, except for a transaction the principal purpose of which is to change the
state in which the Corporation is incorporated,
- a sale, transfer or other disposition of all or substantially all of the
Corporations assets in complete liquidation or dissolution of the Corporation, or
- any reverse merger in which the Corporation is the surviving entity but in
which securities possessing more than fifty percent (50%) of the total combined
voting power of the Corporations outstanding securities are transferred to a person
or persons different from the persons holding those securities immediately prior to
such merger.
EMPLOYEE: an individual who performs services while in the employ of the Corporation or one
or more Subsidiaries, subject to the control and direction of the employer
entity not only as to the work to be performed but also as to the manner and method of
performance.
10
FAIR MARKET VALUE: the closing selling price per share on the date in question on the NASDAQ
National Market. If there is no reported closing selling price for the Common Stock on the date in
question, then the Fair Market Value shall be the closing selling price on the last preceding date
for which such quotation exists.
HOSTILE TAKE-OVER: a change in ownership of the Corporation effected through the following
transaction:
- the direct or indirect acquisition by any person or related group of persons
of securities possessing more than fifty percent (50%) of the total combined voting
power of the Corporations outstanding securities pursuant to a tender or exchange
offer made directly to the Corporations stockholders which the Board does not
recommend such stockholders to accept, and
- more than fifty percent (50%) of the acquired securities are accepted from
holders other than the officers and directors of the Corporation subject to the
short-swing profit restrictions of Section 16 of the 1934 Act.
INVOLUNTARY TERMINATION: the termination of the Service of any Optionee which occurs by
reason of:
- such individuals involuntary dismissal or discharge by the Corporation for
reasons other than Misconduct, or
- such individuals voluntary resignation following (A) a change in his or her
position with the Corporation which materially reduces his or her level of
responsibility, (B) a reduction in his or her level of compensation (including base
salary, fringe benefits and any non-discretionary and objective-standard incentive
payment or bonus award) by more than five percent (5%) or (C) a relocation of such
individuals place of employment by more than fifty (50) miles, provided and only if
such change, reduction or relocation is effected by the Corporation without the
individuals consent.
MISCONDUCT: the commission of any act of fraud, embezzlement or dishonesty by the Optionee,
any unauthorized use or disclosure by such individual of confidential information or trade secrets
of the Corporation or any Parent or Subsidiary, or any other intentional misconduct by such
individual adversely affecting the business or affairs of the Corporation in a material manner.
The foregoing definition shall not be deemed to be inclusive of all the acts or omissions which the
Corporation or any Parent or Subsidiary may consider as grounds for the dismissal or discharge of
any Optionee or other individual in the Service of the Corporation.
NEWLY ISSUED SHARES: shares of Common Stock drawn from the Corporations authorized but
unissued shares of Common Stock.
11
1934 ACT: the Securities and Exchange Act of 1934, as amended.
NON-STATUTORY OPTION: a stock option not intended to meet the requirements of Code Section
422.
OPTIONEE: any person to whom an option is granted under the Discretionary Grant Program in
effect under the Plan.
PARENT: each corporation (other than the Corporation) in an unbroken chain of corporations
ending with the Corporation, provided each such corporation (other than the Corporation) in the
unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock in any other corporation in such chain.
PERMANENT DISABILITY OR PERMANENTLY DISABLED: the inability of the Optionee to engage in any
substantial gainful activity by reason of any medically determinable physical or mental impairment
expected to result in death or to be of continuous duration of twelve (12) months or more.
PLAN ADMINISTRATOR: the committee of two (2) or more Board members appointed by the Board to
administer the Discretionary Option Grant Program.
SERVICE: the provision of services on a periodic basis to the Corporation or any Parent or
Subsidiary in the capacity of an Employee, except to the extent otherwise specifically provided in
the applicable stock option agreement.
SUBSIDIARY: each corporation (other than the Corporation) in an unbroken chain of
corporations beginning with the Corporation, provided each such corporation (other than the last
corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock in any other
corporation in such chain.
TAKE-OVER PRICE: the greater of (i) the Fair Market Value per share of Common Stock on the
date the option is surrendered to the Corporation in connection with a Hostile Take-Over or (ii)
the highest reported price per share of Common Stock paid by the tender offer in effecting such
Hostile Take-Over. However, if the surrendered option is an Incentive Option, the Take-Over Price
shall not exceed the clause (i) price per share.
TREASURY SHARES: shares of Common Stock reacquired by the Corporation and held as treasury
shares.
12
exv4w6
Exhibit 4.6
DIGITAL MICROWAVE CORPORATION
1998 NON-OFFICER EMPLOYEE STOCK OPTION PLAN
ARTICLE ONE
GENERAL
I. PURPOSE OF THE PLAN
A. This 1998 Non-Officer Employee Stock Option Plan (the Plan) is intended to promote the
interests of Digital Microwave Corporation, a Delaware corporation (the Corporation), by
providing key employees (excluding officers) of the Corporation (or its Parent or Subsidiary
corporations) who are responsible for the management, growth and financial success of the
Corporation with the opportunity to acquire a proprietary interest, or otherwise increase their
proprietary interest, in the Corporation as an incentive for them to remain in the service of the
Corporation (or its subsidiary corporations).
B. The Effective Date of the Plan is January 2, 1998.
C. Capitalized terms shall, except as otherwise specifically defined within the provisions of
the Plan, have the meanings assigned to such terms in the Glossary.
II. ADMINISTRATION OF THE PLAN
A. The Committee shall have sole and exclusive authority to administer the Discretionary
Option Grant Program. Members of the Committee shall serve for such period as the Corporations
Board of Directors (the Board) may determine and shall be subject to removal by the Board at any
time.
B. The Committee as Plan Administrator shall have full power and discretion (subject to the
express provisions of the Plan) to establish such rules and regulations as it may deem appropriate
for the proper administration of the Discretionary Option Grant Program and to make such
determinations under, and issue such interpretations of, the provisions of such program and any
outstanding option grants thereunder as it may deem necessary or advisable. Decisions of the Plan
Administrator shall be final and binding on all parties who have an interest in the program or any
outstanding option thereunder.
C. Service on the Committee shall constitute service as a Board member, and members of the
Committee shall accordingly be entitled to full indemnification and reimbursement as Board members
for their service on the Committee. No member of the Committee shall be liable for any act or
omission made in good faith with respect to the Plan or any option grants under the Plan.
III. ELIGIBILITY
A. The persons eligible to participate in the Discretionary Option Grant Program are key
employees (other than officers) of the Corporation (or any Parent or Subsidiary) who render
services which contribute to the management, growth and financial success of the Corporation.
B. The Plan Administrator shall have full authority to determine, with respect to grants made
under the Discretionary Option Grant Program, which eligible individuals are to receive such
grants, the number of shares to be covered by each such grant, the time or times at which each
granted option is to become exercisable and the maximum term for which the option may remain
outstanding.
IV. STOCK SUBJECT TO THE PLAN
A. Shares of Common Stock shall be available for issuance under the Plan and shall be drawn,
from either the Corporations authorized but unissued shares of Common Stock or from reacquired
shares of Common Stock, including shares repurchased by the Corporation on the open market. The
number of shares of Common Stock reserved for issuance over the term of the Plan shall initially be
fixed at 500,000 shares.
B. Should one or more outstanding options under this Plan expire or terminate for any reason
prior to exercise in full, then the shares subject to the portion of each option not so exercised
shall be available for subsequent issuance under the Plan. Shares subject to any stock
appreciation rights exercised under the Plan, whether or not the issued shares are subsequently
repurchased by the Corporation pursuant to its repurchase rights under the Plan, shall reduce on a
share-for-share basis the number of shares of Common Stock available for subsequent issuance under
the Plan. In addition, should the exercise price of an outstanding option under the Plan be paid
with shares of Common Stock or should shares of Common Stock otherwise issuable under the Plan be
withheld by the Corporation in satisfaction of the withholding taxes incurred in connection with
the exercise of an outstanding option under the Plan, then the number of shares of Common Stock
available for issuance under the Plan shall be reduced by the gross number of shares for which the
option is exercised, and not by the net number of shares of Common Stock actually issued to the
holder of such option.
C. Should any change be made to the Common Stock issuable under the Plan by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other
change affecting the outstanding Common Stock as a class without the Corporations receipt of
consideration, then appropriate adjustments shall be made to (i) the maximum number and/or class of
securities issuable under the Plan and (ii) the number and/or class of securities and price per
share in effect under each option outstanding under the Plan. Such adjustments to the outstanding
options are to be effected in a manner which shall preclude the enlargement or dilution of rights
and benefits under those options. The adjustments determined by the Plan Administrator shall be
final, binding and conclusive.
ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
I. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the Discretionary Grant Program shall be authorized by action of
the Plan Administrator and shall be Non-Statutory Options. Each granted option shall be evidenced
by one or more instruments in the form approved by the Plan Administrator; provided, however, that
each such instrument shall comply with the terms and conditions specified below.
A. Exercise Price.
1. The exercise price per share of Common Stock subject to a Non-Statutory Option shall be
fixed by the Plan Administrator and in no event shall be less than eighty-five percent (85%) of the
Fair Market Value of such Common Stock on the grant date.
2. The exercise price shall become immediately due upon exercise of the option and shall be
payable in one of the alternative forms specified below:
(i) full payment in cash or check made payable to the Corporations order,
(ii) full payment in shares of Common Stock held for the requisite period necessary to avoid a
charge to the Corporations earnings for financial reporting purposes and valued at Fair Market
Value on the date the option is exercised,
(iii) full payment in a combination of shares of Common Stock held for the requisite period
necessary to avoid a charge to the Corporations earnings for financial reporting purposes and
valued at Fair Market Value on the date the option is exercised and cash or check made payable to
the Corporations order, or
(iv) to the extent the option is exercised for vested shares, full payment through a
broker-dealer sale and remittance procedure pursuant to which the Optionee shall provide concurrent
irrevocable written instructions (I) to a Corporation-designated brokerage firm to effect the
immediate sale of the purchased shares and remit to the Corporation, out of the sales 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 in connection with such purchase and (II) to the
Corporation to deliver the certificates for the purchased shares directly to such brokerage firm in
order to complete the sale transaction.
B. Term and Exercise of Options. Each option shall be exercisable at such time or times,
during such period and for such number of shares as shall be determined by the Plan Administrator
and set forth in the instrument evidencing such option. No option shall, however, have a maximum
term in excess of ten (10) years. During the lifetime of the Optionee, the option, together with
any stock appreciation rights pertaining to such option, shall be exercisable
only by the Optionee and shall not be assignable or transferable except for a transfer of the
option effected by will or by the laws of descent and distribution following the Optionees death,
except as the Plan Administrator may otherwise provide.
C. Termination of Service.
1. Except to the extent otherwise expressly authorized by the Plan Administrator, no Optionee
shall have more than a thirty-six (36)-month period measured from the date of such individuals
cessation of Service in which to exercise his or her outstanding options under the Plan.
2. Any option exercisable in whole or in part by the Optionee at the time of death may be
subsequently exercised by the personal representative of the Optionees estate or by the person or
persons to whom the option is transferred pursuant to the Optionees will or in accordance with the
laws of descent and distribution. However, no such option shall remain exercisable for more than
thirty-six (36) months after the date of the Optionees death.
3. Under no circumstances shall any such option be exercisable after the specified expiration
date of the option term.
4. During the applicable post-Service exercise period, the option may not be exercised in the
aggregate for more than the number of shares (if any) in which the Optionee is vested at the time
of his or her cessation of Service. Upon the expiration of the limited post-Service exercise
period or (if earlier) upon the specified expiration date of the option term, each such option
shall terminate and cease to remain outstanding with respect to any vested shares for which the
option has not otherwise been exercised. However, each outstanding option shall immediately
terminate and cease to remain outstanding, at the time of the Optionees cessation of Service, with
respect to any shares for which the option is not otherwise at that time exercisable or in which
the Optionee is not otherwise vested.
5. Should the Optionees Service be terminated for Misconduct, all outstanding options held by
that individual shall terminate immediately and cease to remain outstanding.
6. The Plan Administrator shall have complete discretion, exercisable either at the time the
option is granted or at any time while the option remains outstanding:
- to permit one or more options to be exercised not only with respect to the
number of vested shares of Common Stock for which each such option is exercisable at
the time of the Optionees cessation of Service but also with respect to one or more
subsequent installments of vested shares for which the option would otherwise have
become exercisable had such cessation of Service not occurred,
- to extend the period of time for which the option is to remain exercisable
following the Optionees cessation of Service or death from the limited period
otherwise in effect for that option to such greater period of time as
the Plan Administrator shall deem appropriate, but in no event beyond the
specified expiration date of the option term.
D. Stockholder Rights. An Optionee shall have none of the rights of a stockholder with
respect to any option shares until such individual shall have exercised the option and paid the
exercise price for the purchased shares.
E. Repurchase Rights. The shares of Common Stock acquired under this Discretionary Grant
Program may be subject to repurchase by the Corporation in accordance with the following
provisions:
1. The Plan Administrator shall have the discretion to grant options which are exercisable for
unvested shares of Common Stock. Should the Optionee cease Service while holding any unvested
shares purchased under such options, then the Corporation shall have the right to repurchase any or
all of those unvested shares at the exercise price paid per share. The terms and conditions upon
which such repurchase right shall be exercisable (including the period and procedure for exercise
and the appropriate vesting schedule for the purchased shares) shall be established by the Plan
Administrator and set forth in the instrument evidencing such repurchase right.
2. All of the Corporations outstanding repurchase rights shall automatically terminate, and
all shares subject to such terminated rights shall immediately vest in full, upon the occurrence of
a Corporate Transaction, except to the extent: (i) any such repurchase right is expressly assigned
to the successor corporation (or parent thereof) in connection with the Corporate Transaction or
(ii) such accelerated vesting is precluded by other limitations imposed by the Plan Administrator
at the time the repurchase right is issued.
3. The Plan Administrator shall have the discretionary authority, exercisable either before or
after the Optionees cessation of Service, to cancel the Corporations outstanding repurchase
rights with respect to one or more shares purchased or purchasable by the Optionee under the Plan
and thereby accelerate the vesting of such shares in whole or in part at any time.
II. CORPORATE TRANSACTIONS/CHANGES IN CONTROL/HOSTILE TAKE-OVER
A. In the event of any Corporate Transaction, each outstanding option shall automatically
accelerate so that each such option shall, immediately prior to the specified effective date for
such Corporate Transaction, become fully exercisable with respect to the total number of shares of
Common Stock at the time subject to such option and may be exercised for all or any portion of such
shares. However, an outstanding option shall not so accelerate if and to the extent: (i) such
option is, in connection with the Corporate Transaction, either to be assumed by the successor
corporation or parent thereof or to be replaced with a comparable option to purchase shares of the
capital stock of the successor corporation or parent thereof, (ii) such option is to be replaced
with a cash incentive program of the successor corporation which preserves the option spread
existing at the time of the Corporate Transaction and provides for subsequent payout in accordance
with the same vesting schedule applicable to such option or (iii) the acceleration of such option
is subject to other limitations imposed by the Plan Administrator at the time of the option grant.
The determination of option comparability under
clause (i) above shall be made by the Plan Administrator, and its determination shall be
final, binding and conclusive.
B. The Plan Administrator shall have the discretionary authority, exercisable either at the
time the option is granted or at any time while the option remains outstanding, to provide for the
automatic acceleration of one or more outstanding options upon the occurrence of a Corporate
Transaction, whether or not those options are to be assumed or replaced in the Corporate
Transaction. Alternatively, the Plan Administrator shall have the authority to provide for the
subsequent acceleration of any outstanding options which do not otherwise accelerate at the time of
the Corporate Transaction, or the subsequent termination of any of the Corporations outstanding
repurchase rights which do not otherwise terminate at the time of the Corporate Transaction, should
the Optionees Service terminate through an Involuntary Termination effected within a designated
period following the effective date of such Corporate Transaction.
C. Immediately following the consummation of the Corporate Transaction, all outstanding
options shall terminate, except to the extent assumed by the successor corporation or its parent
company.
D. Each outstanding option under this Discretionary Grant Program that is assumed in
connection with the Corporate Transaction or is otherwise to continue in effect shall be
appropriately adjusted, immediately after such Corporate Transaction, to apply and pertain to the
number and class of securities which would have been issued to the option holder, in consummation
of such Corporate Transaction, had such person exercised the option immediately prior to such
Corporate Transaction. Appropriate adjustments shall also be made to the exercise price payable
per share, provided the aggregate exercise price payable for such securities shall remain the same.
In addition, the class and number of securities available for issuance under the Plan on both an
aggregate and per individual basis following the consummation of the Corporate Transaction shall be
appropriately adjusted.
E. The Plan Administrator shall have the discretionary authority, exercisable either at the
time the option is granted or at any time while the option remains outstanding, to provide for the
automatic acceleration of one or more outstanding options (and the termination of one or more of
the Corporations outstanding repurchase rights) upon the occurrence of a Change in Control. The
Plan Administrator shall also have full power and authority to condition any such option
acceleration (and the termination of any outstanding repurchase rights) upon the subsequent
termination of the Optionees Service through an Involuntary Termination effected within a
specified period following the Change in Control.
F. Any options accelerated in connection with the Change in Control shall remain fully
exercisable until the expiration or sooner termination of the option term.
G. The grant of options shall in no way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.
III. STOCK APPRECIATION RIGHTS
A. The Plan Administrator shall have full power and authority, exercisable in its sole
discretion, to grant to selected Optionees Tandem Stock Appreciation Rights (Tandem Rights).
B. The following terms and conditions shall govern the grant and exercise of Tandem Rights:
1. One or more Optionees may be granted the Tandem Right, exercisable upon such terms and
conditions as the Plan Administrator may establish, to elect between the exercise of the underlying
stock option for shares of Common Stock and the surrender of that option in exchange for a
distribution from the Corporation in an amount equal to the excess of (i) the Fair Market Value
(on the option surrender date) of the number of shares in which the Optionee is at the time vested
under the surrendered option (or surrendered portion thereof) over (ii) the aggregate exercise
price payable for such vested shares.
2. No such option surrender shall be effective unless it is approved by the Plan
Administrator. If the surrender is so approved, then the distribution to which the Optionee shall
accordingly become entitled may be made in shares of Common Stock valued at Fair Market Value on
the option surrender date, in cash, or partly in shares and partly in cash, as the Plan
Administrator shall in its sole discretion deem appropriate.
3. If the surrender of an option is rejected by the Plan Administrator, then the Optionee
shall retain whatever rights the Optionee had under the surrendered option (or surrendered portion
thereof) on the option surrender date and may exercise such rights at any time prior to the later
of (i) five (5) business days after the receipt of the rejection notice or (ii) the last day on
which the option is otherwise exercisable in accordance with the terms of the instrument evidencing
such option, but in no event may such rights be exercised more than ten (10) years after the date
of the option grant.
ARTICLE THREE
MISCELLANEOUS
I. LOANS OR INSTALLMENT PAYMENTS
A. The Plan Administrator may, in its discretion, assist any Optionee in the exercise of one
or more options granted to such Optionee under the Discretionary Grant Program, including the
satisfaction of any Federal, state and local income and employment tax obligations arising
therefrom, by (i) authorizing the extension of a loan from the Corporation to such Optionee or (ii)
permitting the Optionee to pay the exercise price or purchase price for the acquired shares in
installments over a period of years. The terms of any loan or installment method of payment
(including the interest rate and terms of repayment) shall be upon such terms as the Plan
Administrator specifies in the applicable option agreement or otherwise deems appropriate under the
circumstances. Loans or installment payments may be authorized with or without security or
collateral. However, the maximum credit available to the Optionee may not exceed the exercise
price of the acquired shares (less the par value of such shares) plus any
Federal, state and local income and employment tax liability incurred by the Optionee in
connection with the acquisition of such shares.
B. The Plan Administrator may, in its absolute discretion, determine that one or more loans
extended under this financial assistance program shall be subject to forgiveness by the Corporation
in whole or in part upon such terms and conditions as the Plan Administrator may deem appropriate.
II. AMENDMENT OF THE PLAN AND AWARDS
The Plan Administrator has complete authority to amend or modify the Plan (or any component
thereof) in any or all respects whatsoever. However, no such amendment or modification shall
adversely affect rights and obligations with respect to stock options or stock appreciation rights
at the time outstanding under the Plan, unless the Optionee consents to such amendment.
III. TAX WITHHOLDING
A. The Corporations obligation to deliver shares of Common Stock upon the exercise of stock
options or stock appreciation rights under the Plan shall be subject to the satisfaction of all
applicable Federal, state and local income tax and employment tax withholding requirements.
B. The Plan Administrator may, in its discretion, provide any or all holders of Non-Statutory
Options with the right to use shares of Common Stock in satisfaction of all or part of the Federal,
state and local income and employment tax liabilities (the Taxes) incurred by such holders in
connection with the exercise of their options or the vesting of their shares. Such right may be
provided to any such holder in either or both of the following formats:
- Stock Withholding: The holder of the Non-Statutory Option may be provided with the
election to have the Corporation withhold, from the shares of Common Stock otherwise issuable upon
the exercise of such Non-Statutory Option or the vesting of such shares, a portion of those shares
with an aggregate Fair Market Value equal to the percentage of the Taxes (up to one hundred percent
(100%)) specified by such holder.
- Stock Delivery: The holder of the Non-Statutory Option may be provided with the election
to deliver to the Corporation, at the time the Non-Statutory Option is exercised or the shares
vest, one or more shares of Common Stock previously acquired by such individual (other than in
connection with the option exercise or share vesting triggering the Taxes) with an aggregate Fair
Market Value equal to the percentage of the Taxes (up to one hundred percent (100%)) specified by
such holder.
IV. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares pursuant to option
grants under the Plan shall be used for general corporate purposes.
V. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any option or stock appreciation right
under the Plan, and the issuance of Common Stock upon the exercise of the stock options and stock
appreciation rights granted hereunder shall be subject to the Corporations procurement of all
approvals and permits required by regulatory authorities having jurisdiction over the Plan, the
stock options and stock appreciation rights granted under it and the Common Stock issued pursuant
to it.
B. No shares of Common Stock or other assets shall be issued or delivered under this Plan
unless and until there shall have been compliance with all applicable requirements of Federal and
state securities laws, including the filing and effectiveness of the Form S-8 registration
statement for the shares of Common Stock issuable under the Plan, and all applicable listing
requirements of any securities exchange on which the Common Stock is then listed for trading.
VI. NO EMPLOYMENT/SERVICE RIGHTS
Neither the action of the Corporation in establishing the Plan, nor any action taken by the
Plan Administrator hereunder, nor any provision of the Plan shall be construed so as to grant any
individual the right to remain in the Service of the Corporation (or Subsidiary) for any period of
specific duration, and the Corporation (or any Subsidiary retaining the services of such
individual) may terminate such individuals Service at any time and for any reason, with or without
cause.
GLOSSARY
The following definitions shall be in effect under the Plan:
CHANGE IN CONTROL: a change in ownership or control of the Corporation effected through any of the
following transactions:
- the direct or indirect acquisition by any person or related group of persons
(other than the Corporation or a person that directly or indirectly controls, is
controlled by, or is under common control with, the Corporation) of beneficial
ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities
possessing more than fifty percent (50%) of the total combined voting power of the
Corporations outstanding securities pursuant to a tender or exchange offer made
directly to the Corporations stockholders which the Board does not recommend such
stockholders to accept, or
- a change in the composition of the Board over a period of thirty-six (36)
months or less such that a majority of the Board members (rounded up to the next
whole number) ceases, by reason of one or more contested elections for Board
membership, to be comprised of individuals who either (a) have been Board members
continuously since the beginning of such period or (b) have been elected or
nominated for election as Board members during such period by at least a majority of
the Board members described in clause (a) who were still in office at the time such
election or nomination was approved by the Board.
CODE: the Internal Revenue Code of 1986, as amended.
COMMITTEE: a committee of two (2) or more Board members appointed by the Board to administer the
Plan.
CORPORATE TRANSACTION: any of the following stockholder-approved transactions to which the
Corporation is a party:
- a merger or consolidation in which the Corporation is not the surviving
entity, except for a transaction the principal purpose of which is to change the
state in which the Corporation is incorporated,
- a sale, transfer or other disposition of all or substantially all of the
Corporations assets in complete liquidation or dissolution of the Corporation, or
- any reverse merger in which the Corporation is the surviving entity but in
which securities possessing more than fifty percent (50%) of the total combined
voting power of the Corporations outstanding securities are transferred to a person
or persons different from the persons holding those securities immediately prior to
such merger.
EMPLOYEE: an individual who performs services while in the employ of the Corporation or one or
more Subsidiaries, subject to the control and direction of the employer entity not only as to the
work to be performed but also as to the manner and method of performance.
FAIR MARKET VALUE: the closing selling price per share on the date in question on the NASDAQ
National Market. If there is no reported closing selling price for the Common Stock on the date in
question, then the Fair Market Value shall be the closing selling price on the last preceding date
for which such quotation exists.
INVOLUNTARY TERMINATION: the termination of the Service of any Optionee which occurs by reason of:
- such individuals involuntary dismissal or discharge by the Corporation for
reasons other than Misconduct, or
- such individuals voluntary resignation following (A) a change in his or her
position with the Corporation which materially reduces his or her level of
responsibility, (B) a reduction in his or her level of compensation (including base
salary, fringe benefits and any non-discretionary and objective-standard incentive
payment or bonus award) by more than five percent (5%) or (C) a relocation of such
individuals place of employment by more than fifty (50) miles, provided and only if
such change, reduction or relocation is effected by the Corporation without the
individuals consent.
MISCONDUCT: the commission of any act of fraud, embezzlement or dishonesty by the Optionee, any
unauthorized use or disclosure by such individual of confidential information or trade secrets of
the Corporation or any Parent or Subsidiary, or any other intentional misconduct by such individual
adversely affecting the business or affairs of the Corporation in a material manner. The foregoing
definition shall not be deemed to be inclusive of all the acts or omissions which the Corporation
or any Parent or Subsidiary may consider as grounds for the dismissal or discharge of any Optionee
or other individual in the Service of the Corporation.
NEWLY ISSUED SHARES: shares of Common Stock drawn from the Corporations authorized but unissued
shares of Common Stock.
1934 ACT: the Securities and Exchange Act of 1934, as amended.
NON-STATUTORY OPTION: a stock option not intended to meet the requirements of Code Section 422.
OPTIONEE: any person to whom an option is granted under the Discretionary Grant Program in effect
under the Plan.
PARENT: each corporation (other than the Corporation) in an unbroken chain of corporations ending
with the Corporation, provided each such corporation (other than the Corporation) in the unbroken
chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in any other corporation in such chain.
PERMANENT DISABILITY OR PERMANENTLY DISABLED: the inability of the Optionee to engage in any
substantial gainful activity by reason of any medically determinable physical or mental impairment
expected to result in death or to be of continuous duration of twelve (12) months or more.
PLAN ADMINISTRATOR: the committee of two (2) or more Board members appointed by the Board to
administer the Discretionary Option Grant Program.
SERVICE: the provision of services on a periodic basis to the Corporation or any Parent or
Subsidiary in the capacity of an Employee, except to the extent otherwise specifically provided in
the applicable stock option agreement.
SUBSIDIARY: each corporation (other than the Corporation) in an unbroken chain of corporations
beginning with the Corporation, provided each such corporation (other than the last corporation) in
the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in any other corporation in such
chain.
TAKE-OVER PRICE: the greater of (i) the Fair Market Value per share of Common Stock on the date
the option is surrendered to the Corporation in connection with a Hostile Take-Over or (ii) the
highest reported price per share of Common Stock paid by the tender offer in effecting such Hostile
Take-Over. However, if the surrendered option is an Incentive Option, the Take-Over Price shall
not exceed the clause (i) price per share.
TREASURY SHARES: shares of Common Stock reacquired by the Corporation and held as treasury shares.
exv4w7
Exhibit
4.7
DMC STRATEX NETWORKS, INC.
1999 STOCK INCENTIVE PLAN
(Amended as of May 24, 2001)
1. Purposes of the Plan. The purposes of this Stock Incentive Plan are to attract and
retain the best available personnel, to provide additional incentive to Employees, Directors and
Consultants and to promote the success of the Companys business.
2. Definitions. As used herein, the following definitions shall apply:
(a) Administrator means the Board or any of the Committees appointed to administer
the Plan.
(b) Affiliate and Associate shall have the respective meanings ascribed to
such terms in Rule 12b-2 promulgated under the Exchange Act.
(c) Applicable Laws means the legal requirements relating to the administration of
stock incentive plans, if any, under applicable provisions of federal securities laws, state
corporate and securities laws, the Code, the rules of any applicable stock exchange or national
market system, and the rules of any foreign jurisdiction applicable to Awards granted to residents
therein.
(d) Award means the grant of an Option or other right or benefit under the Plan.
(e) Award Agreement means the written agreement evidencing the grant of an Award
executed by the Company and the Grantee, including any amendments thereto.
(f) Board means the Board of Directors of the Company.
(g) Cause means, with respect to the termination by the Company or a Related Entity
of the Grantees Continuous Service, that such termination is for Cause as such term is expressly
defined in a then-effective written agreement between the Grantee and the Company or such Related
Entity, or in the absence of such then-effective written agreement and definition, is based on, in
the determination of the Administrator, the Grantees: (i) performance of any act or failure to
perform any act in bad faith and to the detriment of the Company or a Related Entity; (ii)
dishonesty, intentional misconduct or material breach of any agreement with the Company or a
Related Entity; (iii) unauthorized use or disclosure of confidential information or trade secrets
of the Company or a Related Entity or (iv) commission of a crime involving dishonesty, breach of
trust, or physical or emotional harm to any person.
(h) Change in Control means a change in ownership or control of the Company effected
through either of the following transactions:
1
(i) the direct or indirect acquisition by any person or related group of persons (other than
an acquisition from or by the Company or by a Company-sponsored
employee benefit plan or by a person that directly or indirectly controls, is controlled by,
or is under common control with, the Company) of beneficial ownership (within the meaning of Rule
13d-3 of the Exchange Act) of securities possessing more than fifty percent (50%) of the total
combined voting power of the Companys outstanding securities pursuant to a tender or exchange
offer made directly to the Companys stockholders which a majority of the Continuing Directors who
are not Affiliates or Associates of the offeror do not recommend such stockholders accept, or
(ii) a change in the composition of the Board over a period of thirty-six (36) months or less
such that a majority of the Board members (rounded up to the next whole number) ceases, by reason
of one or more contested elections for Board membership, to be comprised of individuals who are
Continuing Directors.
(i) Code means the Internal Revenue Code of 1986, as amended.
(j) Committee means any committee appointed by the Board to administer the Plan.
(k) Common Stock means the common stock of the Company.
(l) Company means DMC Stratex Networks, Inc., a Delaware corporation.
(m) Consultant means any person (other than an Employee or a Director, solely with
respect to rendering services in such persons capacity as a Director) who is engaged by the
Company or any Related Entity to render consulting or advisory services to the Company or such
Related Entity.
(n) Continuing Directors means members of the Board who either (i) have been Board
members continuously for a period of at least thirty-six (36) months or (ii) have been Board
members for less than thirty-six (36) months and were elected or nominated for election as Board
members by at least a majority of the Board members described in clause (i) who were still in
office at the time such election or nomination was approved by the Board.
(o) Continuous Service means that the provision of services to the Company or a
Related Entity in any capacity of Employee, Director or Consultant, is not interrupted or
terminated. Continuous Service shall not be considered interrupted in the case of (i) any approved
leave of absence, (ii) transfers among the Company, any Related Entity, or any successor, in any
capacity of Employee, Director or Consultant, or (iii) any change in status as long as the
individual remains in the service of the Company or a Related Entity in any capacity of Employee,
Director or Consultant (except as otherwise provided in the Award Agreement). An approved leave of
absence shall include sick leave, military leave, or any other authorized personal leave. For
purposes of Incentive Stock Options, no such leave may exceed ninety (90) days, unless reemployment
upon expiration of such leave is guaranteed by statute or contract.
2
(p) Corporate Transaction means any of the following transactions:
(i) a merger or consolidation in which the Company is not the surviving entity, except for a
transaction the principal purpose of which is to change the state in which the Company is
incorporated;
(ii) the sale, transfer or other disposition of all or substantially all of the assets of the
Company (including the capital stock of the Companys subsidiary corporations) in connection with
the complete liquidation or dissolution of the Company;
(iii) any reverse merger in which the Company is the surviving entity but in which securities
possessing more than fifty percent (50%) of the total combined voting power of the Companys
outstanding securities are transferred to a person or persons different from those who held such
securities immediately prior to such merger; or
(iv) acquisition by any person or related group of persons (other than the Company or by a
Company-sponsored employee benefit plan) of beneficial ownership (within the meaning of Rule 13d-3
of the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined
voting power of the Companys outstanding securities (whether or not in a transaction also
constituting a Change in Control), but excluding any such transaction that the Administrator
determines shall not be a Corporate Transaction.
(q) Covered Employee means an Employee who is a covered employee under Section
162(m)(3) of the Code.
(r) Director means a member of the Board or the board of directors of any Related
Entity.
(s) Disability means that a Grantee would qualify for benefit payments under the
long-term disability policy of the Company or the Related Entity to which the Grantee provides
services regardless of whether the Grantee is covered by such policy.
(t) Employee means any person, including an Officer or Director, who is an employee
of the Company or any Related Entity. The payment of a directors fee by the Company or a Related
Entity shall not be sufficient to constitute employment by the Company.
(u) Exchange Act means the Securities Exchange Act of 1934, as amended.
(v) Fair Market Value means, as of any date, the value of Common Stock determined as
follows:
(i) Where there exists a public market for the Common Stock, the Fair Market Value shall be
(A) the closing price for a Share for the last market trading day prior to the time of the
determination (or, if no closing price was reported on that date, on the last trading date on which
a closing price was reported) on the stock exchange determined by the Administrator to be the
primary market for the Common Stock or the Nasdaq National Market,
whichever is applicable, or (B)
if the Common Stock is not traded on any such exchange or national market system, the average of
the closing bid and asked prices of a Share on the Nasdaq Small Cap Market for the day prior to the
time of the determination (or, if no such prices were
reported on that date, on the last date on which such prices were reported), in each case, as
reported in The Wall Street Journal or such other source as the Administrator deems reliable; or
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(ii) In the absence of an established market for the Common Stock of the type described in
(i) above, the Fair Market Value thereof shall be determined by the Administrator in good faith.
(w) Good Reason means the occurrence after a Corporate Transaction, Change in
Control or a Related Entity Disposition of any of the following events or conditions unless
consented to by the Grantee:
(i) (A) a change in the Grantees status, title, position or responsibilities which represents
an adverse change from the Grantees status, title, position or responsibilities as in effect at
any time within six (6) months preceding the date of a Corporate Transaction, Change in Control or
Related Entity Disposition or at any time thereafter or (B) the assignment to the Grantee of any
duties or responsibilities which are inconsistent with the Optionees status, title, position or
responsibilities as in effect at any time within six (6) months preceding the date of a Corporate
Transaction, Change in Control or Related Entity Disposition or at any time thereafter;
(ii) reduction in the Grantees base salary to a level below that in effect at any time within
six (6) months preceding the date of a Corporate Transaction, Change in Control or Related Entity
Disposition or at any time thereafter; or
(iii) requiring the Grantee to be based at any place outside a 50-mile radius from the
Grantees job location or residence prior to the Corporate Transaction, Change in Control or
Related Entity Disposition, except for reasonably required travel on business which is not
materially greater than such travel requirements prior to the Corporate Transaction, Change in
Control or Related Entity Disposition.
(x) Grantee means an Employee, Director or Consultant who receives an Award pursuant
to an Award Agreement under the Plan.
(y) Immediate Family means any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in
law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any
person sharing the Grantees household (other than a tenant or employee), a trust in which these
persons have more than fifty percent (50%) of the beneficial interest, a foundation in which these
persons (or the Grantee) control the management of assets, and any other entity in which these
persons (or the Grantee) own more than fifty percent (50%) of the voting interests.
(z) Incentive Stock Option means an Option intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code.
(aa) Non-Qualified Stock Option means an Option not intended to qualify as an
Incentive Stock Option.
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(bb) Officer means a person who is an officer of the Company or a Related Entity
within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder.
(cc) Option means an option to purchase Shares pursuant to an Award Agreement
granted under the Plan.
(dd) Parent means a parent corporation, whether now or hereafter existing, as
defined in Section 424(e) of the Code.
(ee)
Performance - Based Compensation means compensation qualifying as
performance-based compensation under Section 162(m) of the Code.
(ff) Plan means this 1999 Stock Incentive Plan.
(gg) Related Entity means any Parent, Subsidiary and any business, corporation,
partnership, limited liability company or other entity in which the Company, a Parent or a
Subsidiary holds a substantial ownership interest, directly or indirectly.
(hh) Related Entity Disposition means the sale, distribution or other disposition by
the Company, a Parent or a Subsidiary of all or substantially all of the interests of the Company,
a Parent or a Subsidiary in any Related Entity effected by a sale, merger or consolidation or other
transaction involving that Related Entity or the sale of all or substantially all of the assets of
that Related Entity, other than any Related Entity Disposition to the Company, a Parent or a
Subsidiary.
(ii) Rule 16b-3 means Rule 16b-3 promulgated under the Exchange Act or any successor
thereto.
(jj) Share means a share of the Common Stock.
(kk) Subsidiary means a subsidiary corporation, whether now or hereafter existing,
as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan.
(a) Subject to the provisions of Section 10 below, the maximum aggregate number of Shares
which may be issued pursuant to all Awards (including Incentive Stock Options) is six million five
hundred thousand (6,500,000) Shares of which no more than seven hundred eighty thousand (780,000)
Shares may be used to grant Awards other than Options. The Shares to be issued pursuant to Awards
may be authorized, but unissued, or reacquired Common Stock.
(b) Any Shares covered by an Award (or portion of an Award) which is forfeited or canceled,
expires or is settled in cash, shall be deemed not to have been issued for purposes of determining
the maximum aggregate number of Shares which may be issued under the Plan. Shares that actually
have been issued under the Plan pursuant to an Award shall not be returned to the Plan and shall
not become available for future issuance under the Plan, except
that if unvested Shares are forfeited, or repurchased by the Company at their original
purchase price, such Shares shall become available for future grant under the Plan.
5
4. Administration of the Plan.
(a) Plan Administrator.
(i) Administration with Respect to Directors and Officers. With respect to grants of
Awards to Directors or Employees who are also Officers or Directors of the Company, the Plan shall
be administered by (A) the Board or (B) a Committee designated by the Board, which Committee shall
be constituted in such a manner as to satisfy the Applicable Laws and to permit such grants and
related transactions under the Plan to be exempt from Section 16(b) of the Exchange Act in
accordance with Rule 16b-3. Once appointed, such Committee shall continue to serve in its
designated capacity until otherwise directed by the Board.
(ii) Administration With Respect to Consultants and Other Employees. With
respect to grants of Awards to Employees or Consultants who are neither Directors nor Officers of
the Company, the Plan shall be administered by (A) the Board or (B) a Committee designated by the
Board, which Committee shall be constituted in such a manner as to satisfy the Applicable Laws.
Once appointed, such Committee shall continue to serve in its designated capacity until otherwise
directed by the Board. The Board may authorize one or more Officers to grant such Awards and may
limit such authority as the Board determines from time to time.
(iii) Administration With Respect to Covered Employees. Notwithstanding the
foregoing, grants of Awards to any Covered Employee intended to qualify as Performance-Based
Compensation shall be made only by a Committee (or subcommittee of a Committee) which is comprised
solely of two or more Directors eligible to serve on a committee making Awards qualifying as
Performance-Based Compensation. In the case of such Awards granted to Covered Employees,
references to the Administrator or to a Committee shall be deemed to be references to such
Committee or subcommittee.
(iv) Administration Errors. In the event an Award is granted in a manner inconsistent
with the provisions of this subsection (a), such Award shall be presumptively valid as of its grant
date to the extent permitted by the Applicable Laws.
(b) Powers of the Administrator. Subject to Applicable Laws and the provisions of the
Plan (including any other powers given to the Administrator hereunder), and except as otherwise
provided by the Board, the Administrator shall have the authority, in its discretion:
(i) to select the Employees, Directors and Consultants to whom Awards may be granted from time
to time hereunder;
(ii) to determine whether and to what extent Awards are granted hereunder;
(iii) to determine the number of Shares or the amount of other consideration to be covered by
each Award granted hereunder;
6
(iv) to approve forms of Award Agreements for use under the Plan;
(v) to determine the terms and conditions of any Award granted hereunder;
(vi) to amend the terms of any outstanding Award granted under the Plan, provided that any
amendment that would adversely affect the Grantees rights under an outstanding Award shall not be
made without the Grantees written consent and that any amendment to reduce the exercise price of
any outstanding Option shall not be made without the approval of the Companys stockholders;
(vii) to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan,
including without limitation, any notice of Award or Award Agreement, granted pursuant to the Plan;
(viii) to establish additional terms, conditions, rules or procedures to accommodate the rules
or laws of applicable foreign jurisdictions and to afford Grantees favorable treatment under such
laws; provided, however, that no Award shall be granted under any such additional terms,
conditions, rules or procedures with terms or conditions which are inconsistent with the provisions
of the Plan; and
(ix) to take such other action, not inconsistent with the terms of the Plan, as the
Administrator deems appropriate.
5. Eligibility. Awards other than Incentive Stock Options may be granted to
Employees, Directors and Consultants. Incentive Stock Options may be granted only to Employees of
the Company, a Parent or a Subsidiary. An Employee, Director or Consultant who has been granted an
Award may, if otherwise eligible, be granted additional Awards. Awards may be granted to such
Employees, Directors or Consultants who are residing in foreign jurisdictions as the Administrator
may determine from time to time.
6. Terms and Conditions of Awards.
(a) Type of Awards. The Administrator is authorized under the Plan to award any type
of arrangement to an Employee, Director or Consultant that is not inconsistent with the provisions
of the Plan and that by its terms involves or might involve the issuance of (i) Shares or (ii) an
Option with a fixed or variable price related to the Fair Market Value of the Shares and with an
exercise right or vesting provision related to the passage of time, the occurrence of one or more
events, or the satisfaction of performance criteria or other conditions.
(b) Designation of Award. Each Award shall be designated in the Award Agreement. In
the case of an Option, the Option shall be designated as either an Incentive Stock Option or a
Non-Qualified Stock Option. However, notwithstanding such designation, to the extent that the
aggregate Fair Market Value of Shares subject to Options designated as Incentive Stock Options
which become exercisable for the first time by a Grantee during any calendar year (under all plans
of the Company or any Parent or Subsidiary) exceeds $100,000, such excess Options, to the extent of
the Shares covered thereby in excess of the foregoing limitation, shall be treated as
Non-Qualified Stock Options. For this purpose, Incentive Stock Options shall be
taken into account in the order in which they were granted, and the Fair Market Value of the
Shares shall be determined as of the date the Option with respect to such Shares is granted.
7
(c) Conditions of Award. Subject to the terms of the Plan, the Administrator shall
determine the provisions, terms, and conditions of each Award including, but not limited to, the
Award vesting schedule, repurchase provisions, rights of first refusal, forfeiture provisions, form
of payment (cash, Shares, or other consideration) upon settlement of the Award, payment
contingencies, and satisfaction of any performance criteria. The performance criteria established
by the Administrator may be based on any one of, or combination of, increase in share price,
earnings per share, total stockholder return, return on equity, return on assets, return on
investment, net operating income, cash flow, revenue, economic value added, personal management
objectives, or other measure of performance selected by the Administrator. Partial achievement of
the specified criteria may result in a payment or vesting corresponding to the degree of
achievement as specified in the Award Agreement.
(d) Acquisitions and Other Transactions. The Administrator may issue Awards under the
Plan in settlement, assumption or substitution for, outstanding awards or obligations to grant
future awards in connection with the Company or a Related Entity acquiring another entity, an
interest in another entity or an additional interest in a Related Entity whether by merger, stock
purchase, asset purchase or other form of transaction.
(e) Deferral of Award Payment. The Administrator may establish one or more programs
under the Plan to permit selected Grantees the opportunity to elect to defer receipt of
consideration upon exercise of an Award, satisfaction of performance criteria, or other event that
absent the election would entitle the Grantee to payment or receipt of Shares or other
consideration under an Award. The Administrator may establish the election procedures, the timing
of such elections, the mechanisms for payments of, and accrual of interest or other earnings, if
any, on amounts, Shares or other consideration so deferred, and such other terms, conditions, rules
and procedures that the Administrator deems advisable for the administration of any such deferral
program.
(f) Award Exchange Programs. The Administrator may establish one or more programs
under the Plan to permit selected Grantees to exchange an Award under the Plan for one or more
other types of Awards under the Plan on such terms and conditions as determined by the
Administrator from time to time.
(g) Separate Programs. The Administrator may establish one or more separate programs
under the Plan for the purpose of issuing particular forms of Awards to one or more classes of
Grantees on such terms and conditions as determined by the Administrator from time to time.
(h) Individual Award Limit. The maximum number of Shares with respect to which
Options may be granted to any Employee in any fiscal year of the Company shall be seven hundred
fifty thousand (750,000) Shares. In connection with an Employees commencement of Continuous
Service, the Employee may be granted Options for up to an additional seven hundred fifty thousand
(750,000) Shares which shall not count against the limit set forth in the previous sentence. The
foregoing limitations shall be adjusted proportionately in connection with any
8
change in the Companys capitalization pursuant to Section 10 below. To the extent required
by Section 162(m) of the Code or the regulations thereunder, in applying the foregoing limitation
with respect to an Employee, if any Option is canceled, the canceled Option shall continue to count
against the maximum number of Shares with respect to which Options may be granted to the Employee.
For this purpose, the repricing of an Option shall be treated as the cancellation of the existing
Option and the grant of a new Option.
(i) Term of Award. The term of each Award shall be the term stated in the Award
Agreement, provided, however, that the term of any Award shall be no more than seven (7) years from
the date of grant thereof. However, in the case of an Incentive Stock Option granted to a Grantee
who, at the time the Option is granted, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive Stock Option shall be five (5) years from the date of grant thereof or such shorter term
as may be provided in the Award Agreement.
(j) Transferability of Awards. Incentive Stock Options may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws
of descent or distribution and may be exercised, during the lifetime of the Grantee, only by the
Grantee; provided, however, that the Grantee may designate a beneficiary of the Grantees Incentive
Stock Option in the event of the Grantees death on a beneficiary designation form provided by the
Administrator. Other Awards may be transferred by gift or through a domestic relations order to
members of the Grantees Immediate Family to the extent provided in the Award Agreement or in the
manner and to the extent determined by the Administrator.
(k) Time of Granting Awards. The date of grant of an Award shall for all purposes be
the date on which the Administrator makes the determination to grant such Award, or such other date
as is determined by the Administrator. Notice of the grant determination shall be given to each
Employee, Director or Consultant to whom an Award is so granted within a reasonable time after the
date of such grant.
7. Award Exercise or Purchase Price, Consideration, and Taxes.
(a) Exercise or Purchase Price. The exercise or purchase price, if any, for an Award
shall be as follows:
(i) In the case of an Incentive Stock Option:
(A) granted to an Employee who, at the time of the grant of such Incentive Stock Option owns
stock representing more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the per Share exercise price shall be not less than one
hundred ten percent (110%) of the Fair Market Value per Share on the date of grant; or
(B) granted to any Employee other than an Employee described in the preceding paragraph, the
per Share exercise price shall be not less than one hundred percent (100%) of the Fair Market Value
per Share on the date of grant.
9
(ii) In the case of a Non-Qualified Stock Option, the per Share exercise price shall be not
less than one-hundred percent (100%) of the Fair Market Value per Share on the date of grant.
(iii) In the case of Awards intended to qualify as Performance-Based Compensation, the
exercise or purchase price, if any, shall be not less than one hundred percent (100%) of the Fair
Market Value per Share on the date of grant.
(iv) In the case of other Awards, such price as is determined by the Administrator.
(v) Notwithstanding the foregoing provisions of this Section 7(a), in the case of an Award
issued pursuant to Section 6(d), above, the exercise or purchase price for the Award shall be
determined in accordance with the principles of Section 424(a) of the Code.
(b) Consideration. Subject to Applicable Laws, the consideration to be paid for the
Shares to be issued upon exercise or purchase of an Award including the method of payment, shall be
determined by the Administrator (and, in the case of an Incentive Stock Option, shall be determined
at the time of grant). In addition to any other types of consideration the Administrator may
determine, the Administrator is authorized to accept as consideration for Shares issued under the
Plan the following, provided that the portion of the consideration equal to the par value of the
Shares must be paid in cash or other legal consideration permitted by the Delaware General
Corporation Law:
(i) cash or check in U.S. dollars;
(ii) surrender of Shares or delivery of a properly executed form of attestation of ownership
of Shares as the Administrator may require (including withholding of Shares otherwise deliverable
upon exercise of the Award) which have a Fair Market Value on the date of surrender or attestation
equal to the aggregate exercise price of the Shares as to which said Award shall be exercised (but
only to the extent that such exercise of the Award would not result in an accounting compensation
charge with respect to the Shares used to pay the exercise price unless otherwise determined by the
Administrator);
(iii) with respect to Options, payment through a broker-dealer sale and remittance procedure
pursuant to which the Grantee (A) shall provide written instructions to a Company designated
brokerage firm to effect the immediate sale of some or all of the purchased Shares and remit to the
Company, out of the sale proceeds available on the settlement date, sufficient funds to cover the
aggregate exercise price payable for the purchased Shares and (B) shall provide written directives
to the Company to deliver the certificates for the purchased Shares directly to such brokerage firm
in order to complete the sale transaction; or
(iv) any combination of the foregoing methods of payment.
(c) Taxes. No Shares shall be delivered under the Plan to any Grantee or other person
until such Grantee or other person has made arrangements acceptable to the Administrator for the
satisfaction of any foreign, federal, state, or local income and employment tax withholding
obligations, including, without limitation, obligations incident to the receipt of
Shares or the disqualifying disposition of Shares received on exercise of an Incentive Stock
Option. Upon exercise of an Award, the Company shall withhold or collect from Grantee an amount
sufficient to satisfy such tax obligations.
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8. Exercise of Award.
(a) Procedure for Exercise; Rights as a Stockholder.
(i) Any Award granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator under the terms of the Plan and specified in the Award
Agreement; provided, however, that no Award shall be exercisable prior to the first anniversary of
the grant date.
(ii) An Award shall be deemed to be exercised when written notice of such exercise has been
given to the Company in accordance with the terms of the Award by the person entitled to exercise
the Award and full payment for the Shares with respect to which the Award is exercised, including,
to the extent selected, use of the broker-dealer sale and remittance procedure to pay the purchase
price as provided in Section 7(b)(iii) Until the issuance (as evidenced by the appropriate entry
on the books of the Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to Shares subject to an Award, notwithstanding the exercise of
an Option or other Award. The Company shall issue (or cause to be issued) such stock certificate
promptly upon exercise of the Award. No adjustment will be made for a dividend or other right for
which the record date is prior to the date the stock certificate is issued, except as provided in
the Award Agreement or Section 10, below.
(b) Exercise of Award Following Termination of Continuous Service.
(i) An Award may not be exercised after the termination date of such Award set forth in the
Award Agreement and may be exercised following the termination of a Grantees Continuous Service
only to the extent provided in the Award Agreement.
(ii) Where the Award Agreement permits a Grantee to exercise an Award following the
termination of the Grantees Continuous Service for a specified period, the Award shall terminate
to the extent not exercised on the last day of the specified period or the last day of the original
term of the Award, whichever occurs first.
(iii) Any Award designated as an Incentive Stock Option to the extent not exercised within the
time permitted by law for the exercise of Incentive Stock Options following the termination of a
Grantees Continuous Service shall convert automatically to a Non-Qualified Stock Option and
thereafter shall be exercisable as such to the extent exercisable by its terms for the period
specified in the Award Agreement.
9. Conditions Upon Issuance of Shares.
(a) Shares shall not be issued pursuant to the exercise of an Award unless the exercise of
such Award and the issuance and delivery of such Shares pursuant thereto shall
comply with all Applicable Laws, and shall be further subject to the approval of counsel for
the Company with respect to such compliance.
11
(b) As a condition to the exercise of an Award, the Company may require the person exercising
such Award to represent and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell or distribute such Shares
if, in the opinion of counsel for the Company, such a representation is required by any Applicable
Laws.
10. Adjustments Upon Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the number of Shares covered by each outstanding Award, and the number
of Shares which have been authorized for issuance under the Plan but as to which no Awards have yet
been granted or which have been returned to the Plan, the exercise or purchase price of each such
outstanding Award, the maximum number of Shares with respect to which Options may be granted to any
Employee in any fiscal year of the Company, as well as any other terms that the Administrator
determines require adjustment shall be proportionately adjusted for (i) any increase or decrease in
the number of issued Shares resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Shares, or similar event affecting the Shares, (ii) any
other increase or decrease in the number of issued Shares effected without receipt of consideration
by the Company, or (iii) as the Administrator may determine in its discretion, any other
transaction with respect to Common Stock to which Section 424(a) of the Code applies or any similar
transaction; provided, however that conversion of any convertible securities of the Company shall
not be deemed to have been effected without receipt of consideration. Such adjustment shall be
made by the Administrator and its determination shall be final, binding and conclusive. Except as
the Administrator determines, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no adjustment by reason
hereof shall be made with respect to, the number or price of Shares subject to an Award.
11. Corporate Transactions/Changes in Control/Related Entity Dispositions. Except as
may be provided in an Award Agreement:
(a) In the event of any Corporate Transaction, each Award which is at the time outstanding
under the Plan automatically shall become fully vested and exercisable and be released from any
restrictions on transfer (other than transfer restrictions applicable to Incentive Stock Options)
and repurchase or forfeiture rights, immediately prior to the specified effective date of such
Corporate Transaction, for all of the Shares at the time represented by such Award. Effective upon
the consummation of the Corporate Transaction, all outstanding Awards under the Plan shall
terminate. However, all such Awards shall not terminate if the Awards are, in connection with the
Corporate Transaction, assumed by the successor corporation or Parent thereof. In addition, an
outstanding Award under the Plan shall not so fully vest and be exercisable and released from such
limitations if and to the extent: (i) such Award is, in connection with the Corporate Transaction,
either assumed by the successor corporation or Parent thereof or replaced with a comparable Award
with respect to shares of the capital stock of the successor corporation or Parent thereof or (ii)
such Award is to be replaced with a cash incentive program of the successor corporation which
preserves the compensation element of such Award existing at the time of the Corporate Transaction
and provides for subsequent payout
in accordance with the same vesting schedule applicable to such Award The determination of
Award comparability above shall be made by the Administrator.
12
(b) The Administrator shall have the authority, exercisable either in advance of any actual or
anticipated Change in Control or at the time of an actual Change in Control Disposition and
exercisable at the time of the grant of an Award under the Plan or any time while an Award remains
outstanding, to provide for the full automatic vesting and exercisability of one or more
outstanding unvested Awards under the Plan and the release from restrictions on transfer and
repurchase or forfeiture rights of such Awards in connection with a Change in Control, on such
terms and conditions as the Administrator may specify. The Administrator also shall have the
authority to condition any such Award vesting and exercisability or release from such limitations
upon the subsequent termination of the Continuous Service of the Grantee within a specified period
following the effective date of the Change in Control. The Administrator may provide that any
Awards so vested or released from such limitations in connection with a Change in Control shall
remain fully exercisable until the expiration or sooner termination of the Award.
(c) Effective upon the consummation of a Related Entity Disposition, for purposes of the Plan
and all Awards, the Continuous Service of each Grantee who is at the time engaged primarily in
service to the Related Entity involved in such Related Entity Disposition shall be deemed to
terminate and each Award of such Grantee which is at the time outstanding under the Plan
automatically shall become fully vested and exercisable and be released from any restrictions on
transfer (other than transfer restrictions applicable to Incentive Stock Options) and repurchase or
forfeiture rights for all of the Shares at the time represented by such Award and be exercisable in
accordance with the terms of the Award Agreement evidencing such Award. However, such Continuous
Service shall be not be deemed to terminate if such Award is, in connection with the Related Entity
Disposition, assumed by the successor entity or its Parent. In addition, such Continuous Service
shall not be deemed to terminate and an outstanding Award under the Plan shall not so fully vest
and be exercisable and released from such limitations if and to the extent: (i) such Award is, in
connection with the Related Entity Disposition, either to be assumed by the successor entity or its
parent or to be replaced with a comparable Award with respect to interests in the successor entity
or its parent or (ii) such Award is to be replaced with a cash incentive program of the successor
entity which preserves the compensation element of such Award existing at the time of the Related
Entity Disposition and provides for subsequent payout in accordance with the same vesting schedule
applicable to such Award. The determination of Award comparability above shall be made by the
Administrator.
(d) The portion of any Incentive Stock Option accelerated under this Section 11 in connection
with a Corporate Transaction, Change in Control or Related Entity Disposition shall remain
exercisable as an Incentive Stock Option under the Code only to the extent the $100,000 dollar
limitation of Section 422(d) of the Code is not exceeded. To the extent such dollar limitation is
exceeded, the accelerated excess portion of such Option shall be exercisable as a Non-Qualified
Stock Option.
12. Effective Date and Term of Plan. The Plan shall become effective upon the earlier
to occur of its adoption by the Board or its approval by the stockholders of the Company. It shall
continue in effect for a term of seven (7) years unless sooner terminated. Subject to
Section 17, below, and Applicable Laws, Awards may be granted under the Plan upon its becoming
effective.
13
13. Amendment, Suspension or Termination of the Plan.
(a) The Board may at any time amend, suspend or terminate the Plan. To the extent necessary to
comply with Applicable Laws, the Company shall obtain stockholder approval of any Plan amendment in
such a manner and to such a degree as required. In addition, any amendment to this Section 13(a)
or Section 4(b)(vi) shall also require stockholder approval.
(b) No Award may be granted during any suspension of the Plan or after termination of the
Plan.
(c) Any amendment, suspension or termination of the Plan (including termination of the Plan
under Section 12, above) shall not affect Awards already granted, and such Awards shall remain in
full force and effect as if the Plan had not been amended, suspended or terminated, unless mutually
agreed otherwise between the Grantee and the Administrator, which agreement must be in writing and
signed by the Grantee and the Company.
14. Reservation of Shares.
(a) The Company, during the term of the Plan, will at all times reserve and keep available
such number of Shares as shall be sufficient to satisfy the requirements of the Plan.
(b) The inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Companys counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of
the failure to issue or sell such Shares as to which such requisite authority shall not have been
obtained.
15. No Effect on Terms of Employment/Consulting Relationship. The Plan shall not
confer upon any Grantee any right with respect to the Grantees Continuous Service, nor shall it
interfere in any way with his or her right or the Companys right to terminate the Grantees
Continuous Service at any time, with or without cause.
16. No Effect on Retirement and Other Benefit Plans. Except as specifically provided
in a retirement or other benefit plan of the Company or a Related Entity, Awards shall not be
deemed compensation for purposes of computing benefits or contributions under any retirement plan
of the Company or a Related Entity, and shall not affect any benefits under any other benefit plan
of any kind or any benefit plan subsequently instituted under which the availability or amount of
benefits is related to level of compensation. The Plan is not a Retirement Plan or Welfare
Plan under the Employee Retirement Income Security Act of 1974, as amended.
17. Stockholder Approval. The Plan was originally adopted by the Board on June 11,
1999 and by the Companys stockholders on August 10, 1999. On May 24, 2001, the Board adopted and
approved an amendment and restatement of the Plan to increase the number of Shares available for
issuance under the Plan, added a prohibition on option repricing unless such
repricing is approved by stockholders and made stockholder approval necessary for amendment of
certain sections of the Plan. The May 24, 2001 Board amendment was approved by the Companys
stockholders on August 14, 2001.
14
exv4w8
Exhibit 4.8
STRATEX NETWORKS, INC.
2002 STOCK INCENTIVE PLAN
1. Purposes of the Plan. The purposes of this Stock Incentive Plan are to
attract and retain the best available personnel, to provide additional incentive to Employees,
Directors and Consultants and to promote the success of the Companys business.
2. Definitions. As used herein, the following definitions shall apply:
(a) Administrator means the Board or any of the Committees appointed to
administer the Plan.
(b) Affiliate and Associate shall have the respective meanings
ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act.
(c) Applicable Laws means the legal requirements relating to the administration
of stock incentive plans, if any, under applicable provisions of federal securities laws, state
corporate and securities laws, the Code, the rules of any applicable stock exchange or national
market system, and the rules of any foreign jurisdiction applicable to Awards granted to residents
therein.
(d) Assumed means that (i) pursuant to a Corporate Transaction defined in
Section 2(q)(i), 2(q)(ii) or 2(q)(iii), the contractual obligations represented by the Award are
expressly assumed (and not simply by operation of law) by the successor entity or its Parent in
connection with the Corporate Transaction or (ii) pursuant to a Corporate Transaction defined in Section
2(q)(iv) or 2(q)(v), the Award is expressly affirmed by the Company.
(e) Award means the grant of an Option, Restricted Stock, Share or other right
or benefit under the Plan.
(f) Award Agreement means the written agreement evidencing the grant of an
Award executed by the Company and the Grantee, including any amendments thereto.
(g) Board means the Board of Directors of the Company.
(h) Cause means, with respect to the termination by the Company or a Related
Entity of the Grantees Continuous Service, that such termination is for Cause as such term is
expressly defined in a then-effective written agreement between the Grantee and the Company or
such Related Entity, or in the absence of such then-effective written agreement and definition, is
based on, in the determination of the Administrator, the Grantees: (i) performance of any act or
failure to perform any act in bad faith and to the detriment of the Company or a Related Entity;
(ii) dishonesty,
intentional misconduct or material breach of any agreement with the Company or a Related Entity;
(iii) unauthorized use or disclosure of confidential information or trade secrets of the Company or
a Related Entity or (iv) commission of a crime involving dishonesty, breach of trust, or physical
or emotional harm to any person.
(i) Change in Control means a change in ownership or control of the Company
effected through either of the following transactions:
(i) the direct or indirect acquisition by any person or related group of persons (other
than an acquisition from or by the Company or by a Company-sponsored employee benefit plan or by a
person that directly or indirectly controls, is controlled by, or is under common control
with, the Company) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act)
of securities possessing more than fifty percent (50%) of the total combined voting power of the
Companys outstanding securities pursuant to a tender or exchange offer made directly to the
Companys stockholders which a majority of the Continuing Directors who are not Affiliates or
Associates of the offer or do not recommend such stockholders accept, or
(ii) a change in the composition of the Board over a period of thirty-six (36) months or
less such that a majority of the Board members (rounded up to the next whole number) ceases, by
reason of one or more contested elections for Board membership, to be comprised of individuals who
are Continuing Directors.
(j) Code means the Internal Revenue Code of 1986, as amended.
(k) Committee means any committee appointed by the Board to administer the
Plan.
(l) Common Stock means the common stock of the Company.
(m) Company means Stratex Networks, Inc., a Delaware corporation.
(n) Consultant means any person (other than an Employee or a Director, solely
with respect to rendering services in such persons capacity as a Director) who is engaged by the
Company or any Related Entity to render consulting or advisory services to the Company or such
Related Entity.
(o) Continuing Directors means members of the Board who either (i) have been
Board members continuously for a period of at least thirty-six (36) months or (ii) have been Board
members for less than thirty-six (36) months and were elected or nominated for election as Board
members by at least a majority of the Board members described in clause (i) who were still in office at the time
such election or nomination was approved by the Board.
(p) Continuous Service means that the provision of services to the Company or a
Related Entity in any capacity of Employee, Director or Consultant, is not interrupted or
terminated. Continuous Service shall not be considered interrupted in the case of (i) any approved
leave of absence, (ii) transfers among the Company, any Related Entity, or any successor, in any
capacity of Employee, Director or Consultant, or (iii) any change in status as long as the
individual remains in the service of the Company or a Related Entity in any capacity of Employee,
Director or Consultant (except as otherwise provided in the Award Agreement). An approved leave of
absence shall include sick leave, military leave, or any other authorized personal leave. For
purposes of each Incentive Stock Option granted under the Plan, if such leave exceeds ninety (90)
days, and reemployment upon expiration of such leave is not guaranteed by statute or contract, then
the Incentive Stock
Option shall be treated as a Non-Qualified Stock Option on the day three (3) months and one (1) day
following the expiration of such ninety (90) day period.
(q) Corporate Transaction means any of the following transactions:
(i) a merger or consolidation in which the Company is not the surviving entity, except
for a transaction the principal purpose of which is to change the state in which the Company is
incorporated;
(ii) the sale, transfer or other disposition of all or substantially all of the assets of
the Company (including the capital stock of the Companys subsidiary corporations);
(iii) the complete liquidation or dissolution of the Company;
(iv) any reverse merger in which the Company is the surviving entity but in which
securities possessing more than forty percent (40%) of the total combined voting power of the
Companys outstanding securities are transferred to a person or persons different from those who
held such securities immediately prior to such merger; or
(v) acquisition in a single or series of related transactions by any person or related
group of persons (other than the Company or by a Company-sponsored employee benefit plan) of
beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities
possessing more than forty percent (40%) of the total combined voting power of the Companys
outstanding securities but excluding any such transaction or series of related transactions that
the Administrator determines shall not be a Corporate Transaction.
(r) Covered Employee means an Employee who is a covered employee under
Section 162(m)(3) of the Code.
(s) Director means a member of the Board or the board of directors of any
Related Entity.
(t) Disability means as defined under the long-term disability policy of the
Company or the Related Entity to which the Grantee provides services regardless of whether the
Grantee is covered by such policy. If the Company or the Related Entity to which the Grantee
provides service does not have a long-term disability plan in place, Disability means that a
Grantee is unable to carry out the responsibilities and functions of the position held by the
Grantee by reason of any medically determinable physical or mental impairment for a period of not
less than ninety (90) consecutive days. A Grantee will not be considered to have incurred a
Disability unless he or she furnishes proof of such impairment sufficient to satisfy the
Administrator in its discretion.
(u) Employee means any person, including an Officer or Director, who is an
employee of the Company or any Related Entity. The payment of a directors fee by the Company or a
Related Entity shall not be sufficient to constitute employment by the Company.
(v) Exchange Act means the Securities Exchange Act of 1934, as amended.
(w) Fair Market Value means, as of any date, the value of Common Stock
determined as follows:
(i) If the Common Stock is listed on any established stock exchange or a national market
system, including without limitation The NASDAQ National Market or The NASDAQ Small Cap Market of
The NASDAQ Stock Market, its Fair Market Value shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on
the date of determination (or, if no closing sales price or closing bid was reported on that date,
as applicable, on the last trading date such closing sales price or closing bid was reported), as
reported in The Wall Street Journal or such other source as the Administrator deems reliable;
(ii) If the Common Stock is regularly quoted on an automated quotation system (including
the OTC Bulletin Board) or by a recognized securities dealer, but selling prices are not reported,
the Fair Market Value of a share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on the date of determination (or, if no such prices were
reported on that date, on the last date such prices were reported), as reported in The Wall Street
Journal or such other source as the Administrator deems reliable; or
(iii) In the absence of an established market for the Common Stock of the type described in
(i) and (ii), above, the Fair Market Value thereof shall be determined by the Administrator in good
faith.
(x) Good Reason means the occurrence after a Corporate Transaction or Change in
Control of any of the following events or conditions unless consented to by the Grantee (and the
Grantee shall be deemed to have consented to any such event or condition unless the Grantee
provides written notice of the Grantees non-acquiescence within 30 days of the effective time of
such event or condition):
(i) a change in the Grantees responsibilities or duties which represents a material and
substantial diminution in the Grantees responsibilities or duties as in effect immediately
preceding the consummation of a Corporate Transaction or Change in Control;
(ii) a reduction in the Grantees base salary to a level below that in effect at any time
within six (6) months preceding the consummation of a Corporate Transaction or Change in Control or
at any time thereafter; or
(iii) requiring the Grantee to be based at any place outside a 50-mile radius from the
Grantees job location or residence prior to the Corporate Transaction or Change in Control, except
for reasonably required travel on business which is not materially greater than such travel
requirements prior to the Corporate Transaction or Change in Control.
(y) Grantee means an Employee, Director or Consultant who receives an Award
pursuant to an Award Agreement under the Plan.
(z) Immediate Family means any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive
relationships, any person
sharing the Grantees household (other than a tenant or employee), a trust in which these persons
(or the Grantee) have more than fifty percent (50%) of the beneficial interest, a foundation in
which these persons (or the Grantee) control the management of assets, and any other entity in
which these persons
(or the Grantee) own more than fifty percent (50%) of the voting interests.
(aa) Incentive Stock Option means an Option intended to qualify as an incentive
stock option within the meaning of Section 422 of the Code.
(bb) Non-Qualified Stock Option means an Option not intended to qualify as an
Incentive Stock Option.
(cc) Officer means a person who is an officer of the Company or a Related Entity
within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder.
(dd) Option means an option to purchase Shares pursuant to an Award Agreement
granted under the Plan.
(ee) Parent means a parent corporation, whether now or hereafter existing, as
defined in Section 424(e) of the Code.
(ff)
Performance - Based Compensation means compensation qualifying as
performance-based compensation under Section 162(m) of the Code.
(gg) Plan means this 2002 Stock Incentive Plan.
(hh) Related Entity means any Parent or Subsidiary of the Company and any
business, corporation, partnership, limited liability company or other entity in which the Company
or a Parent or a Subsidiary of the Company holds a substantial ownership interest, directly or
indirectly.
(ii) Replaced means that pursuant to a Corporate Transaction the Award is
replaced with a comparable stock award or the Award is replaced with a cash incentive program of
the successor entity or Parent thereof which preserves the compensation element of such Award
existing at the time of the Corporate Transaction and provides for subsequent payout in accordance
with the same vesting schedule applicable to such Award. The determination of Award comparability
shall be made by the Administrator and its determination shall be final, binding and conclusive.
(jj) Restricted Stock means Shares issued under the Plan to the Grantee for such
consideration, if any, and subject to such restrictions on transfer, rights of first refusal,
repurchase provisions, forfeiture provisions, and other terms and conditions as established by the
Administrator.
(kk) Rule 16b-3 means Rule 16b-3 promulgated under the Exchange Act or any
successor thereto.
(ll) Share means a share of the Common Stock.
(mm) Subsidiary means a subsidiary corporation, whether now or hereafter
existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan.
(a) Subject to the provisions of Section 10, below, the maximum aggregate number of
Shares which may be issued pursuant to all Awards (including Incentive Stock Options) is ten
million (10,000,000) Shares. Notwithstanding the foregoing and subject to the provisions of
Section 10, below, of the number of Shares specified above, the maximum aggregate number of Shares
which may be issued pursuant to all Awards other than Options is one million two hundred thousand
(1,200,000) Shares. The Shares to be issued pursuant to Awards may be authorized, but unissued, or
reacquired Common Stock.
(b) Any Shares covered by an Award (or portion of an Award) which is forfeited or
canceled, expires or is settled in cash, shall be deemed not to have been issued for purposes of
determining the maximum aggregate number of Shares which may be issued under the Plan. Shares that
actually have been issued under the Plan pursuant to an Award shall not be returned to the Plan and
shall not become available for future issuance under the Plan, except that if unvested Shares are
forfeited, or repurchased by the Company at their original purchase price, such Shares shall become
available for future grant under the Plan.
4. Administration of the Plan.
(a) Plan Administrator.
(i) Administration with Respect to Directors and Officers. With respect to grants
of Awards to Directors or Employees who are also Officers or Directors of the Company, the Plan
shall be administered by (A) the Board or (B) a Committee designated by the Board, which Committee
shall be constituted in such a manner as to satisfy the Applicable Laws and to permit such grants
and related transactions under the Plan to be exempt from Section 16(b) of the Exchange Act in
accordance with Rule 16b-3. Once appointed, such Committee shall continue to serve in its
designated capacity until otherwise directed by the Board.
(ii) Administration With Respect to Consultants and Other Employees. With respect
to grants of Awards to Employees or Consultants who are neither Directors nor Officers of the
Company, the Plan shall be administered by (A) the Board or (B) a Committee designated by the
Board, which Committee shall be constituted in such a manner as to satisfy the Applicable Laws.
Once appointed, such Committee shall continue to serve in its designated capacity until otherwise
directed by the Board. The Board may authorize one or more Officers to grant such Awards and may
limit such authority as the Board determines from time to time.
(iii) Administration With Respect to Covered Employees. Notwithstanding the
foregoing, grants of Awards to any Covered Employee intended to qualify as Performance-Based
Compensation shall be made only by a Committee (or subcommittee of a Committee) which is comprised
solely of two or more Directors eligible to serve on a committee making Awards qualifying as
Performance-Based Compensation. In the case of such Awards granted to Covered Employees,
references to the Administrator or to a Committee shall be deemed to be references to such
Committee or subcommittee.
(iv) Administration Errors. In the event an Award is granted in a manner
inconsistent with the provisions of this subsection (a), such Award shall be presumptively valid as
of its grant date to the extent permitted by the Applicable Laws.
(b) Powers of the Administrator. Subject to Applicable Laws and the provisions of
the Plan (including any other powers given to the Administrator hereunder), and except as otherwise
provided by the Board, the Administrator shall have the authority, in its discretion:
(i) to select the Employees, Directors and Consultants to whom Awards may be granted from
time to time hereunder;
(ii) to determine whether and to what extent Awards are granted hereunder;
(iii) to determine the number of Shares or the amount of other consideration to be covered
by each Award granted hereunder;
(iv) to approve forms of Award Agreements for use under the Plan;
(v) to determine the terms and conditions of any Award granted hereunder;
(vi) to amend the terms of any outstanding Award granted under the Plan, provided that any
amendment that would adversely affect the Grantees rights under an outstanding Award shall not be
made without the Grantees written consent and that any amendment to reduce the exercise price of
any outstanding Option shall not be made without the approval of the Companys
stockholders;
(vii) to construe and interpret the terms of the Plan and Awards granted pursuant to the
Plan, including without limitation, any notice of Award or Award Agreement, granted pursuant to the
Plan;
(viii) to establish additional terms, conditions, rules or procedures to accommodate the
rules or laws of applicable foreign jurisdictions and to afford Grantees favorable treatment under
such rules or laws; provided, however, that no Award shall be granted under any such additional
terms, conditions, rules or procedures with terms or conditions which are inconsistent with the
provisions of the Plan; and
(ix) to take such other action, not inconsistent with the terms of the Plan, as the
Administrator deems appropriate.
5. Eligibility. Awards other than Incentive Stock Options may be granted to
Employees, Directors and Consultants. Incentive Stock Options may be granted only to Employees of
the Company or a Parent or a Subsidiary of the Company. An Employee, Director or Consultant who has
been granted an Award may, if otherwise eligible, be granted additional Awards. Awards may be
granted to such Employees, Directors or Consultants who are residing in foreign jurisdictions as
the Administrator may determine from time to time.
6. Terms and Conditions of Awards.
(a) Type of Awards. The Administrator is authorized under the Plan to award any type
of arrangement to an Employee, Director or Consultant that is not inconsistent with the provisions
of the Plan and that by its terms involves or might involve the issuance of (i) Shares, (ii) an
Option with a fixed or variable price related to the Fair Market Value of the Shares and with an
exercise right or vesting provision related to the passage of time, the occurrence of one or more
events, or the satisfaction of performance criteria or other conditions or (iii) Restricted Stock.
An Award may consist of one or more such securities or benefits in any combination or alternative.
(b) Designation of Award. Each Award shall be designated in the Award Agreement. In
the case of an Option, the Option shall be designated as either an Incentive Stock Option or a
Non-Qualified Stock Option. However, notwithstanding such designation, to the extent that the
aggregate Fair Market Value of Shares subject to Options designated as Incentive Stock Options
which become exercisable for the first time by a Grantee during any calendar year (under all plans
of the Company or any Parent or Subsidiary of the Company) exceeds $100,000, such excess Options,
to the extent of the Shares covered thereby in excess of the foregoing limitation, shall be treated
as Non-Qualified Stock Options. For this purpose, Incentive Stock Options shall be taken into
account in the order in which they were granted, and the Fair Market Value of the Shares shall be
determined as of the grant date of the relevant Option with respect to which such Shares are
granted.
(c) Conditions of Award. Subject to the terms of the Plan, the Administrator shall
determine the provisions, terms, and conditions of each Award including, but not limited to, the
Award vesting schedule, repurchase provisions, rights of first refusal, forfeiture provisions, form
of payment (cash, Shares, or other consideration) upon settlement of the Award, payment
contingencies, and satisfaction of any performance criteria. The performance criteria established
by the Administrator may be based on any one of, or combination of, increase in share price,
earnings per share, total stockholder return, return on equity, return on assets, return on
investment, net operating income, cash flow, revenue, economic value added, personal management
objectives, or other measure of performance selected by the Administrator. Partial achievement of
the specified criteria may result in a payment or vesting corresponding to the degree of
achievement as specified in the Award Agreement.
(d) Acquisitions and Other Transactions. The Administrator may issue Awards under the
Plan in settlement, assumption or substitution for, outstanding awards or obligations to grant
future awards in connection with the Company or a Related Entity acquiring another entity, an
interest in another entity or an additional interest in a Related Entity whether by merger, stock
purchase, asset purchase or other form of transaction.
(e) Deferral of Award Payment. The Administrator may establish one or more programs
under the Plan to permit selected Grantees the opportunity to elect to defer receipt of
consideration upon exercise of an Award, satisfaction of performance criteria, or other event that
absent the election would entitle the Grantee to payment or receipt of Shares or other
consideration under an Award (but only to the extent that such deferral programs would not result
in an accounting compensation charge unless otherwise determined by the Administrator). The
Administrator may establish the election procedures, the timing of such elections, the mechanisms
for payments of, and accrual of interest or other earnings, if any, on amounts, Shares or other
consideration so deferred, and such other terms, conditions, rules and procedures that the
Administrator deems advisable for the administration of any such deferral program.
(f) Separate Programs. The Administrator may establish one or more separate programs
under the Plan for the purpose of issuing particular forms of Awards to one or more classes of
Grantees on such terms and conditions as determined by the Administrator from time to time.
(g) Individual Award Limit. The maximum number of Shares with respect to which Options
may be granted to any Grantee in any fiscal year of the Company shall be seven hundred fifty
thousand (750,000) Shares. In connection with a Grantees commencement of Continuous Service, the
Grantee may be granted Options for up to an additional seven hundred fifty thousand (750,000)
Shares, which shall not count against the limit set forth in the previous sentence. The foregoing
limitations shall be adjusted proportionately in connection with any change in the Companys
capitalization pursuant to Section 10, below. To the extent required by Section 162(m) of the Code
or the regulations thereunder, in applying the foregoing limitation with respect to a Grantee, if
any Option is canceled, the canceled Option shall continue to count against the maximum number of
Shares with respect to which Options may be granted to the Grantee. For this purpose, the repricing
of an Option shall be treated as the cancellation of the existing Option and the grant of a new
Option.
(h) Early Exercise. The Award Agreement may, but need not, include a provision whereby
the Grantee may elect at any time while an Employee, Director or Consultant to exercise any part or
all of the Award prior to full vesting of the Award. Any unvested Shares received pursuant to such
exercise may be subject to a repurchase right in favor of the Company or a Related Entity or to any
other restriction the Administrator determines to be appropriate.
(i) Term of Award. The term of each Award shall be the term stated in the Award
Agreement, provided, however, that the term of any Award shall be no more than seven (7) years from
the date of grant thereof. However, in the case of an Incentive Stock Option granted to a Grantee
who, at the time the Option is granted, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary of the Company, the
term of the Incentive Stock Option shall be five (5) years from the date of grant thereof or such
shorter term as may be provided in the Award Agreement.
(j) Transferability of Awards. Incentive Stock Options may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws
of descent or distribution and may be exercised, during the lifetime of the Grantee, only by the
Grantee; provided, however, that the Grantee may designate a beneficiary of the Grantees Incentive
Stock Option in the event of the Grantees death on a beneficiary designation form provided by the
Administrator. Other Awards shall be transferred by will and by the laws of descent and
distribution, and during the lifetime of the Grantee, by gift and/or pursuant to a domestic
relations order to members of the Grantees Immediate Family to the extent and in the manner
determined by the Administrator.
(k) Time of Granting Awards. The date of grant of an Award shall for all purposes be
the date on which the Administrator makes the determination to grant such Award, or such other date
as is determined by the Administrator. Notice of the grant determination shall be given to each
Employee, Director or Consultant to whom an Award is so granted within a reasonable time after the
date of such grant.
7. Award Exercise or Purchase Price, Consideration, and Taxes.
(a) Exercise or Purchase Price. The exercise or purchase price, if any, for an Award
shall be as follows:
(i) In the case of an Incentive Stock Option:
(A) granted to an Employee who, at the time of the grant of such Incentive Stock Option owns
stock representing more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary of the Company, the per Share exercise price shall be not less
than one hundred ten percent (110%) of the Fair Market Value per Share on the date of grant; or
(B) granted to any Employee other than an Employee described in the preceding paragraph, the
per Share exercise price shall be not less than one hundred percent (100%) of the Fair Market Value
per Share on the date of grant.
(ii) In the case of a Non-Qualified Stock Option, the per Share exercise price shall be
not less than one-hundred percent (100%) of the Fair Market Value per Share on the date of grant.
(iii) In the case of Awards intended to qualify as Performance-Based Compensation, the
exercise or purchase price, if any, shall be not less than one hundred percent (100%) of the Fair
Market Value per Share on the date of grant.
(iv) In the case of other Awards, such price as is determined by the Administrator.
(v) Notwithstanding the foregoing provisions of this Section 7(a), in the case of an
Award issued pursuant to Section 6(d), above, the exercise or purchase price for the Award shall be
determined in accordance with the provisions of the relevant instrument evidencing the agreement to
issue such Award.
(b) Consideration. Subject to Applicable Laws, the consideration to be paid for the
Shares to be issued upon exercise or purchase
of an Award including the method of payment, shall be determined by the Administrator (and, in the
case of an Incentive Stock Option, shall be determined at the time of grant). In addition to any
other types of consideration the Administrator may determine, the Administrator is authorized to
accept as consideration for Shares issued under the Plan the following, provided that the portion
of the consideration equal to the par value of the Shares must be paid in cash or other legal
consideration permitted by the Delaware General Corporation Law:
(i) cash or check in U.S. dollars;
(ii) surrender of Shares or delivery of a properly executed form of attestation of
ownership of Shares as the Administrator may require (including withholding of Shares otherwise
deliverable upon exercise of the Award) which have a Fair Market Value on the date of surrender or
attestation equal to the aggregate exercise price of the Shares as to which said Award shall be
exercised (but only to the extent that such exercise of the Award would not result in an accounting
compensation charge with respect to the Shares used to pay the exercise price unless otherwise
determined by the Administrator);
(iii) with respect to Options, payment through a broker-dealer sale and remittance
procedure pursuant to which the Grantee (A) shall provide written instructions to a Company
designated brokerage firm to effect the immediate sale of some or all of the purchased Shares and
remit to the Company, out of the sale proceeds available on the settlement date, sufficient funds
to cover the aggregate exercise price payable for the purchased Shares and (B) shall provide
written directives to the Company to deliver the certificates for the purchased Shares directly to
such brokerage firm in order to complete the sale transaction; or
(iv) any combination of the foregoing methods of payment.
(c) Taxes. No Shares shall be delivered under the Plan to any Grantee or other person
until such Grantee or other person has made arrangements acceptable to the Administrator for the
satisfaction of any foreign, federal, state, or local income and employment tax withholding
obligations, including, without limitation, obligations incident to the receipt of Shares or the
disqualifying disposition of Shares received on exercise of an Incentive Stock Option. Upon
exercise of an Award, the Company shall withhold or collect from Grantee an amount sufficient to
satisfy such tax obligations.
8. Exercise of Award.
(a) Procedure for Exercise; Rights as a Stockholder.
(i) Any Award granted hereunder shall be exercisable at such times and under such
conditions as determined by the Administrator under the terms of the Plan and specified in the
Award Agreement; provided, however, that no Award granted to an Employee, except for Restricted
Stock or an Award granted under an Award Agreement described in Section 6(h), shall be exercisable
prior to the first anniversary of the grant date.
(ii) An Award shall be deemed to be exercised when written notice (including written
notice provided via electronic transmission) of such exercise has been given to the Company in
accordance with the terms of the Award by the person entitled to exercise the Award and full
payment for the Shares with respect to which the Award is exercised, including, To the extent
selected, use of the broker-dealer sale and remittance procedure to pay the purchase price as
provided in Section 7(b)(iii). Until the issuance (as evidenced by the appropriate entry on the
books of the Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to Shares subject to an Award, notwithstanding the exercise of
an Option or other Award. The Company shall issue (or cause to be issued) such stock certificate
promptly upon exercise of the Award. No adjustment will be made for a dividend or other right for
which the record date is prior to the date the stock certificate is issued, except as provided in
the Award Agreement or Section 10, below.
(b) Exercise of Award Following Termination of Continuous Service.
(i) An Award may not be exercised after the termination date of such Award set forth in
the Award Agreement and may be exercised following the termination of a Grantees Continuous
Service only to the extent provided in the Award Agreement.
(ii) Where the Award Agreement permits a Grantee to exercise an Award following the
termination of the Grantees Continuous Service for a specified period, the Award shall terminate
to the extent not exercised on the last day of the specified period or the last day of the original
term of the Award, whichever occurs first.
(iii) Any Award designated as an Incentive Stock Option to the extent not exercised within
the time permitted by law for the exercise of Incentive Stock Options following the termination of
a Grantees Continuous Service shall convert automatically to a Non-Qualified Stock Option and
thereafter shall be exercisable as such to the extent exercisable by its terms for the period
specified in the Award Agreement.
9. Conditions Upon Issuance of Shares.
(a) Shares shall not be issued pursuant to the exercise of an Award unless the exercise of
such Award and the issuance and delivery of such Shares pursuant thereto shall comply with all
Applicable Laws, and shall be further subject to the approval of counsel for the Company with
respect to such compliance.
(b) As a condition to the exercise of an Award, the Company may require the person exercising
such Award to represent and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell or distribute such Shares
if, in the opinion of counsel for the Company, such a representation is required by any Applicable
Laws.
10. Adjustments Upon Changes in Capitalization. Subject to any required action by
the stockholders of the Company, the number of Shares covered by each outstanding Award, and the
number of Shares which have been authorized for issuance under the Plan but as to which no Awards
have yet been granted or which have been returned to the Plan, the exercise or purchase price of
each such outstanding Award, the maximum number of Shares with respect to which Options may be
granted to any Grantee in any fiscal year of the Company, as well as any other terms that the
Administrator determines require adjustment shall be proportionately adjusted for (i) any increase
or decrease in the number of issued Shares resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Shares, or similar transaction affecting the
Shares, (ii) any other increase or decrease in the number of issued Shares effected without receipt
of consideration by the Company, or (iii) as the Administrator may determine in its discretion, any
other transaction with respect to Common Stock including a corporate merger, consolidation,
acquisition of property or stock, separation (including a spin-off or other distribution of stock
or property), reorganization, liquidation (whether partial or complete) or any similar transaction;
provided, however that conversion of any convertible securities of the Company shall not be deemed
to have been effected without receipt of consideration. Such adjustment shall be made by the
Administrator and its determination shall be final, binding and conclusive. Except as the
Administrator determines, no issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment by reason hereof
shall be made with respect to, the number or price of Shares subject to an Award.
11. Corporate Transactions/Changes in Control.
Termination of Award to Extent Not Assumed.
(i) Corporate Transaction. Effective upon the consummation of a Corporate
Transaction, all outstanding Awards under the Plan shall terminate. However, all such Awards shall
not terminate to the extent they are Assumed in connection with the Corporate Transaction.
Acceleration of Award Upon Corporate Transaction/Change in Control.
(ii) Corporate Transaction. Except as provided otherwise in an individual Award
Agreement, in the event of a Corporate Transaction, for the portion of each Award that is neither
Assumed nor Replaced, such portion of the Award shall automatically become fully vested and
exercisable and be released from any repurchase or forfeiture rights (other than repurchase rights
exercisable at fair market value) for all of the Shares at the time represented by such portion of
the Award, immediately prior to the specified effective date of such Corporate Transaction.
(iii) Change in Control. The Administrator shall have the authority, exercisable
either in advance of any actual or anticipated Change in Control or at the time of an actual Change
in Control and exercisable at the time of the grant of an Award under the Plan or any time while an
Award remains outstanding, to provide for the full or partial automatic vesting and exercisability
of one or more outstanding unvested Awards under the Plan and the release from restrictions on
transfer and repurchase or forfeiture rights of such Awards in connection with a Change in Control,
on such terms and conditions as the Administrator may specify. The Administrator also shall have
the authority to condition any such Award vesting and exercisability or release from such
limitations upon the subsequent termination of the Continuous Service of the Grantee within a
specified period following the effective date of the Change in Control. The Administrator may
provide that any Awards so vested or released from such limitations in connection with a Change in Control, shall remain fully
exercisable until the expiration or sooner termination of the Award.
Effect of Acceleration on Incentive Stock Options. The portion of any Incentive
Stock Option accelerated under this Section 11 in connection with a Corporate Transaction or Change
in Control shall remain exercisable as an Incentive Stock Option under the Code only to the extent
the $100,000 dollar limitation of Section 422(d) of the Code is not exceeded. To the extent such
dollar limitation is exceeded, the accelerated excess portion of such Option shall be exercisable
as a Non-Qualified Stock Option.
12. Effective Date and Term of Plan. The Plan shall become effective upon the
earlier to occur of its adoption by the Board or its approval by the stockholders of the Company.
It shall continue in effect for a term of seven (7) years unless sooner terminated. Subject to
Section 17, below, and Applicable Laws, Awards may be granted under the Plan upon its becoming
effective.
13. Amendment, Suspension or Termination of the Plan.
(a) The Board may at any time amend, suspend or terminate the Plan. To the extent necessary to
comply with Applicable Laws, the Company shall obtain stockholder approval of any Plan amendment in
such a manner and to such a degree as required. In addition, any amendment to this Section 13(a) or
Section 4(b)(vi) shall also require stockholder approval.
(b) No Award may be granted during any suspension of the Plan or after termination of the
Plan.
(c) No amendment, suspension or termination of the Plan (including termination of the Plan
under Section 12, above) shall adversely affect any rights under Awards already granted to a
Grantee, unless consented to by the Grantee.
14. Reservation of Shares.
(a) The Company, during the term of the Plan, will at all times reserve and keep available
such number of Shares as shall be sufficient to satisfy the requirements of the Plan.
(b) The inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Companys counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of
the failure to issue or sell such Shares as to which such requisite authority shall not have been
obtained.
15. No Effect on Terms of Employment/Consulting Relationship. The Plan shall not
confer upon any Grantee any right with respect to the Grantees Continuous Service, nor shall it
interfere in any way with his or her right or the right of the Company or any Related Entity to
terminate the Grantees Continuous Service at any time, with or without Cause, and with or without
notice. The ability of the Company or any Related Entity to terminate the employment of a Grantee
who is employed at will is in no way affected by its determination that the Grantees Continuous
Service has been terminated for Cause for the purposes of this Plan.
16. No Effect on Retirement and Other Benefit Plans. Except as specifically
provided in a retirement or other benefit plan of the Company or a Related Entity, Awards shall not
be deemed
compensation for purposes of computing benefits or contributions under any retirement plan of the
Company or a Related Entity, and shall not affect any benefits under any other benefit plan of any
kind or any benefit plan subsequently instituted under which the availability or amount of benefits
is related to level of compensation. The Plan is not a Retirement Plan or Welfare Plan under
the Employee Retirement Income Security Act of 1974, as amended.
17. Stockholder Approval. The grant of Incentive Stock Options under the Plan shall
be subject to approval by the stockholders of the Company within twelve (12) months before or after
the date the Plan is adopted excluding Incentive Stock Options issued in substitution for
outstanding Incentive Stock Options pursuant to Section 424(a) of the Code. Such stockholder
approval shall be obtained in the degree and manner required under Applicable Laws. The
Administrator may grant Incentive Stock Options under the Plan prior to approval by the
stockholders, but until such approval is obtained, no such Incentive Stock Option shall be
exercisable. In the event that stockholder approval is not obtained within the twelve (12) month
period provided above, all Incentive Stock Options previously granted under the Plan shall be
exercisable as Non-Qualified Stock Options.
STRATEX NETWORKS, INC.
2002 NON-EMPLOYEE DIRECTOR OPTION PROGRAM
ARTICLE I
ESTABLISHMENT AND PURPOSE OF THE PROGRAM
1.01 ESTABLISHMENT OF PROGRAM
The Stratex Networks, Inc. 2002 Non-Employee Director Option Program (the Program) is adopted
pursuant to the Stratex Networks, Inc. 2002 Stock Incentive Plan (the Plan) and, in addition to
the terms and conditions set forth below, is subject to the provisions of the Plan.
1.02 PURPOSE OF PROGRAM
The purpose of the Program is to enhance the ability of the Company to attract and retain directors
who are not Employees (Non-Employee Directors) through a program of automatic Option grants.
1.03 EFFECTIVE DATE OF THE PROGRAM
The Program is effective as of the date of 2002 Annual Stockholders Meeting, such effectiveness
conditioned upon approval of the Plan by the Companys stockholders at such meeting.
ARTICLE II
DEFINITIONS
Capitalized terms in this Program, unless otherwise defined herein, have the meaning given to them
in the Plan.
ARTICLE III
OPTION TERMS
3.01 DATE OF GRANT AND NUMBER OF SHARES
As of the effective date of the Plan, a Non-Qualified Stock Option to purchase thirty thousand
(30,000) Shares shall be granted (the Initial Grant) to each Non-Employee Director newly elected
or appointed to the Board upon the date each such Non-Employee Director first becomes a
Non-Employee Director. In addition, immediately following each annual meeting of the Companys
stockholders commencing with the 2002 Annual Stockholders Meeting, each Non-Employee Director who
continues as a Non-Employee Director following such annual meeting shall be granted a Non-Qualified
Stock Option to purchase ten thousand (10,000) Shares (a Subsequent Grant); provided that no
Subsequent Grant shall be made to any Non-Employee Director who has not served as a director of the
Company for at least three (3) years as of the time of such annual meeting. Each such Subsequent
Grant shall be made on the date of the annual stockholders meeting in question. In the event of a
transaction described in Section 10 of the Plan, the Administrator, in its sole discretion, may
determine whether to adjust the number of Shares to be subject to the automatic issuance of Initial
Grants and Subsequent Grants that occur on or after such a transaction. No such adjustment to new
Initial Grants and Subsequent Grants shall be made in the absence of an affirmative determination
by the Administrator. However, the number of Shares underlying any Initial Grants and Subsequent
Grants outstanding on the date of a transaction described in Section 10 of the Plan shall be
subject to adjustment in accordance with Section 10 of the Plan.
3.02 VESTING
Each Initial Grant under the Program shall be immediately exercisable as to all of the Shares
subject to the Option. However, the Shares purchased under such Initial Grant shall be subject to
repurchase by the Company, at the same exercise price paid per Share by the Non-Employee Director,
upon the Non-Employee Directors cessation of Continuous Service prior to vesting in those Shares.
Each Initial Grant shall vest as to one-third (1/3) of the Shares subject to the Option twelve (12)
months after the date of grant and an additional one-third (1/3) of the Shares subject to the
Option shall vest on each yearly anniversary of the date of grant thereafter, such that the Initial
Grant will be fully vested three (3) years after its date of grant.
For purposes this Program, the term vest shall mean, with respect to any Shares, that such Shares
are no longer subject to repurchase by the Company; provided, however, that such Shares shall
remain subject to other restrictions on transfer set forth in the underlying Award Agreement or in
the Plan. Shares that have not vested are deemed Restricted Shares. If the Non-Employee Director
becomes vested in a fraction of a Restricted Share, such Restricted Share shall not vest until the
Non-Employee Director becomes vested in the entire Share. Notwithstanding the foregoing, any
Restricted Shares purchased under this Program will be subject to the provisions of the underlying
Award Agreement and Section 11 of the Plan relating to the release of repurchase and forfeiture
provisions in the event of a Corporate Transaction or Change of Control.
Each Subsequent Grant under the Program shall be fully vested and exercisable as to all Shares
subject to the Option on the date of grant. Subsequent Grants are not subject to repurchase by the
Company.
3.03 EXERCISE PRICE
The exercise price per Share of Common Stock of each Option granted under the Program shall be one
hundred percent (100%) of the Fair Market Value per Share on the date of grant.
3.04 TERM
Each Option granted under the Program shall have a maximum term of five (5) years measured from the
date of grant.
3.05 CORPORATE TRANSACTIONS/CHANGES IN CONTROL
(a) In the event of a Corporate Transaction, each Option which is at the time outstanding
under the Program automatically shall become fully vested and exercisable immediately prior to the
effective date of such Corporate Transaction. Effective upon the consummation of the Corporate
Transaction, all outstanding Options under the Program shall terminate. However, such Options shall
not terminate if the Options are Assumed by the successor corporation or Parent thereof in connection with the
Corporate Transaction.
(b) In the event of a Change in Control (other than a Change in Control which also is a
Corporate Transaction), each Option which is at the time outstanding under the Program
automatically shall become fully vested and exercisable immediately prior to the specified
effective date of such Change in Control. Each such Option shall remain so exercisable until the
expiration or sooner termination of the applicable Option term.
3.05 OTHER TERMS
The Administrator shall determine the remaining terms and conditions of the Options awarded under
the Program.
STRATEX NETWORKS, INC.
2002 NON-EMPLOYEE DIRECTOR STOCK FEE PROGRAM
ARTICLE I
ESTABLISHMENT AND PURPOSE OF THE PROGRAM
1.01 ESTABLISHMENT OF PROGRAM
The Stratex Networks, Inc. 2002 Non-Employee Director Stock Fee Program (the Program) is adopted
pursuant to the Stratex Networks, Inc. 2002 Stock Incentive Plan (the Plan) and, in addition to
the terms and conditions set forth below, is subject to the provisions of the Plan.
1.02 PURPOSE OF PROGRAM
The purpose of the Program is to enhance the ability of the Company to attract and retain directors
who are not Employees (Non-Employee Directors) through a program of receiving Shares of the
Company in lieu of annual retainer and meeting fees.
1.03 EFFECTIVE DATE OF THE PROGRAM
The Program is effective as of the date of 2002 Annual Stockholders Meeting, such effectiveness
conditioned upon approval of the Plan by the Companys stockholders at such meeting.
ARTICLE II
DEFINITIONS
Capitalized terms in this Program, unless otherwise defined herein, have the meaning given to them
in the Plan.
ARTICLE III
STOCK FEE PROGRAM TERMS
3.01 ELIGIBILITY
As of the effective date of the Plan, each Non-Employee Director shall be eligible to elect to
apply all or any portion of the annual retainer fee and meeting fees otherwise payable to such
individual in cash to the acquisition of Shares under the Plan pursuant to the terms and conditions
of this Program.
3.02 ELECTION PROCEDURE
(a) The Non-Employee Director must make the stock-in-lieu-of-fee election prior to the
start of the calendar year for which the election is to be effective. Subject to the last sentence
of this Section 3.02(a), the first calendar year for which any such election may be filed shall be
the 2003 calendar year. The election, once filed, shall be irrevocable. The election for any
upcoming calendar year may be filed at any time prior to the start of that year, but in no event
later than December 31 of the
immediately preceding calendar year. The Non-Employee Director may file a standing election to be
in effect for two (2) or more consecutive calendar years or to remain in effect indefinitely until
revoked by written instrument filed with the Administrator at least thirty (30) days prior to the
start of the first calendar year for which such standing election is no longer to remain in effect.
Any standing election filed under the Stock Fee Program of the DMC Stratex Networks, Inc. 1994
Stock Incentive Plan or the DMC Stratex Networks, Inc. 1999 Stock Incentive Plan shall be deemed a
standing election under this Program without any further action by the Non-Employee Director in
order to be administered in accordance with the terms of such previously filed standing election.
(b) The election must be filed with the Administrator on the appropriate form provided by the
Administrator for this purpose. On the election form, the Non-Employee Director must indicate the
percentage or dollar amount of his or her annual retainer fee and/or his or her meeting fees to be
applied to the acquisition of Shares.
3.03 ISSUE DATE FOR ANNUAL RETAINER FEE SHARES
On the first trading day in January of the calendar year for which the election is effective, the
portion of the annual retainer fee subject to such election shall automatically be applied to the
acquisition of Shares by dividing the elected dollar amount by the Fair Market Value per Share of
Common Stock on that trading day. The number of issuable Shares shall be rounded down to the next
whole Share, and the issued Shares shall be held in escrow by the Secretary of the Company as
Restricted Shares until the Non-Employee Director fully vests in such Restricted Shares. Such
Restricted Shares shall not be assignable or transferable while they remain unvested, but the
Non-Employee Director shall have full stockholder rights, including voting, dividend and
liquidation rights, with respect to all Restricted Shares held in escrow on his or her behalf.
3.04 VESTING OF ANNUAL RETAINER FEE SHARES
Upon completion of each calendar month of Continuous Service during the year for which the election
applicable to the annual retainer fee is in effect, the Non-Employee Director shall vest in
one-twelfth (1/12) of the Restricted Shares, and the stock certificate for those Shares shall be
released from escrow. Notwithstanding the provisions of the Plan, immediate vesting in all
Restricted Shares shall occur in the event (i) the Non-Employee Director should die or incurs a
Disability during his or her Continuous Service or (ii) there should occur a Corporate Transaction
or Change in Control while such individual remains in Continuous Service. Should such individual
cease Continuous Service prior to vesting in one or more monthly installments of the Restricted
Shares, then any Restricted Shares that remain unvested shall be canceled by the Company, and the
Non-Employee Director shall not be entitled to any cash payment or other consideration from the
Company with respect to the canceled Restricted Shares and shall have no further stockholder rights
with respect to such Restricted Shares. For purposes this Program, the term vest shall mean,
with respect to any Restricted Shares, that such Restricted Shares are no longer subject to
forfeiture to the Company or restrictions on assignability or transfer. If the Non-Employee
Director becomes vested in a fraction of a Restricted Share, such Restricted Share shall not vest
until the Non-Employee Director becomes vested
in the entire Share.
3.05 ISSUE DATE FOR MEETING FEE SHARES
On the first trading day following any meeting in a calendar year for which the election is
effective, the portion of the meeting fee subject to such election shall automatically be applied
to the acquisition of Shares by dividing the elected dollar amount by the Fair Market Value per
Share of Common Stock on that trading day. The number of issuable Shares shall be rounded down to
the next whole Share, and the Shares shall be issued as soon as practicable to the Non-Employee
Director.
3.06 OTHER TERMS
The Administrator shall determine the remaining terms and conditions of the Program.
STRATEX NETWORKS, INC. 2002 STOCK INCENTIVE PLAN
2002 NON-EMPLOYEE DIRECTOR OPTION PROGRAM
NOTICE OF NON-QUALIFIED STOCK OPTION AWARD
[PER PROGRAM, SINGLE TRIGGER ACCELERATION FOR NON-EMPLOYEE DIRECTORS REMOVE THIS]
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Grantees Name and Address: |
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You have been granted an option to purchase shares of Common Stock, subject to the terms and
conditions of this Notice of Stock Option Award (the Notice), the Stratex Networks, Inc. 2002
Stock Incentive Plan (the Plan), and the Stratex Networks, Inc. 2002 Non-Employee Director Option
Program (the Program), as amended from time to time, and the Non-Qualified Stock Option Award
Agreement (the Option Agreement) attached hereto, as follows. Unless otherwise defined herein,
the terms defined in the Plan and the Program shall have the same defined meanings in this Notice.
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Award Number |
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Date of Award |
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Vesting Commencement Date |
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Exercise Price per Share |
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Total Number of Shares subject to the Option (the Share) |
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Total Exercise Price |
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Type of Option: |
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Non-Qualified Stock Option |
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Expiration Date: |
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Post-Termination Exercise Period: |
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Three (3) Months |
Vesting Schedule:
[FOR INITIAL GRANTS] <THIS OPTION IS IMMEDIATELY EXERCISABLE, ALTHOUGH THE SHARES ISSUED
UPON EXERCISE OF THE OPTION WILL BE SUBJECT TO THE RESTRICTIONS ON TRANSFER AND A RIGHT OF
REPURCHASE AT THE EXERCISE PRICE PER SHARE, IN FAVOR OF THE COMPANY, AS DESCRIBED IN SECTION
10 OF THE OPTION AGREEMENT (THE REPURCHASE RIGHT). FOR PURPOSES OF THIS NOTICE AND THE OPTION
AGREEMENT, THE TERM VEST SHALL MEAN, WITH RESPECT TO ANY SHARES, THAT SUCH SHARES (WHETHER
SUBJECT TO THE OPTION OR ACQUIRED UPON EXERCISE OF THE OPTION) ARE NO LONGER SUBJECT TO THE
REPURCHASE RIGHT AS TO UNVESTED SHARES, PROVIDED, HOWEVER, THAT SUCH SHARES SHALL REMAIN SUBJECT TO
OTHER RESTRICTIONS ON TRANSFER SET FORTH IN THE PLAN, THE PROGRAM AND THE OPTION AGREEMENT. IF THE
GRANTEE BECOMES VESTED IN A FRACTION OF A SHARE, SUCH SHARE SHALL NOT VEST UNTIL THE GRANTEE
BECOMES VESTED IN THE ENTIRE SHARE. NOTWITHSTANDING THE FOREGOING, THE SHARES SUBJECT TO THIS
NOTICE WILL BE RELEASED FROM THE REPURCHASE RIGHT IN THE EVENT OF A CORPORATE TRANSACTION OR A
CHANGE IN CONTROL, IN ACCORDANCE WITH SECTION 3.05 OF THE PROGRAM. PROVIDED THAT GRANTEES
CONTINUOUS SERVICE IS NOT TERMINATED AND SUBJECT TO THE OTHER LIMITATIONS SET FORTH IN THIS NOTICE,
THE PLAN, THE PROGRAM AND THE OPTION AGREEMENT, THE REPURCHASE RIGHT AS TO UNVESTED SHARES SHALL
LAPSE IN ACCORDANCE WITH THE FOLLOWING SCHEDULE:
ONE-THIRD (1/3) OF THE SHARES OF COMMON STOCK SUBJECT TO THE OPTION SHALL VEST TWELVE (12)
MONTHS AFTER THE VESTING COMMENCEMENT DATE, AND AN ADDITIONAL ONE-THIRD (1/3) OF THE SHARES OF
COMMON STOCK SUBJECT TO THE OPTION SHALL VEST ON EACH YEARLY ANNIVERSARY OF THE VESTING
COMMENCEMENT DATE THEREAFTER.>
[FOR SUBSEQUENT GRANTS] <SUBJECT TO GRANTEES CONTINUOUS SERVICE AND OTHER LIMITATIONS SET
FORTH IN THIS NOTICE, THE PLAN, THE PROGRAM AND THE OPTION AGREEMENT, THE OPTION MAY BE EXERCISED,
IN WHOLE OR IN PART, IN ACCORDANCE WITH THE FOLLOWING SCHEDULE:
100% OF THE SHARES SUBJECT TO THE OPTION SHALL BE FULLY VESTED AND EXERCISABLE ON THE VESTING
COMMENCEMENT DATE AND SHALL NOT SUBJECT TO REPURCHASE BY THE COMPANY AS DESCRIBED IN SECTION 10 OF
THE OPTION AGREEMENT.>
During any authorized leave of absence, the vesting of the Option as provided in this schedule
shall be suspended after the leave of absence exceeds a period of ninety (90) days. Vesting of the
Option shall resume upon the Grantees termination of the leave of absence and return to service to
the Company or a Related Entity. The Vesting Schedule of the Option shall be extended by the length
of the suspension.
IN WITNESS WHEREOF, the Company and the Grantee have executed this Notice and agree that the
Option is to be governed by the terms and conditions of this Notice, the Plan, the Program and the
Option Agreement.
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Stratex Networks, Inc.,
a Delaware corporation |
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By: |
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Title: |
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THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE SHARES SUBJECT TO THE OPTION SHALL VEST, IF AT ALL,
ONLY DURING THE PERIOD OF THE GRANTEES CONTINUOUS SERVICE (NOT THROUGH THE ACT OF BEING GRANTED
THE OPTION OR ACQUIRING SHARES HEREUNDER).
The Grantee acknowledges receipt of a copy of the Plan, the Program and the Option Agreement,
and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts
the Option subject to all of the terms and provisions hereof and thereof. The Grantee has reviewed
this Notice, the Plan, the Program and the Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Notice, and fully understands
all provisions of this Notice, the Plan, the Program and the Option Agreement. The Grantee hereby
agrees that all disputes arising out of or relating to this Notice, the Plan, the Program and the
Option Agreement shall be resolved in accordance with Section 20 of the Option Agreement. The
Grantee further agrees to notify the Company upon any change in the residence address indicated in
this Notice.
AWARD NUMBER:
STRATEX NETWORKS, INC. 2002 STOCK INCENTIVE PLAN
2002 NON-EMPLOYEE DIRECTOR OPTION PROGRAM
NON-QUALIFIED STOCK OPTION AWARD AGREEMENT
1. Grant of Option. Stratex Networks, Inc., a Delaware corporation (the
Company), hereby grants to the Grantee (the Grantee) named in the Notice of Non-Qualified Stock
Option Award (the Notice), an option (the Option) to purchase the Total Number of Shares of
Common Stock subject to the Option (the Shares) set forth in the Notice, at the Exercise Price
per Share set forth in the Notice (the Exercise Price) subject to the terms and provisions of the
Notice, this Non-Qualified Stock Option Award Agreement (the Option Agreement), the Companys
2002 Stock Incentive Plan (the Plan), and the Companys 2002 Non-Employee Director Option Program
(the Program), as amended from time to time, which are incorporated herein by reference. Unless
otherwise defined herein, the terms defined in the Plan and the Program shall have the same defined
meanings in this Option Agreement.
The Option is intended to qualify as a Non-Qualified Stock Option and not as an Incentive
Stock Option as defined in Section 422 of the Code.
2. Exercise of Option.
(a) Right to Exercise. The Option shall be exercisable during its term in
accordance with the Vesting Schedule set out in the Notice and with the applicable provisions of
the Plan and this Option Agreement by delivery of an exercise notice (a form of which is attached
as Exhibit A) or by other such procedure as specified from time to time by the Administrator. The
Option shall be subject to the provisions of Section 3.05 of the Program relating to the
exercisability or termination of the Option in the event of a Corporate Transaction or a Change in
Control. No partial exercise of the Option may be for less than the lesser of five percent (5%) of
the total number of Shares subject to the Option or the remaining number of Shares subject to the
Option. The Grantee shall be subject to reasonable limitations on the number of requested exercises
during any monthly or weekly period as determined by the Administrator. In no event shall the
Company issue fractional Shares.
(b) Method of Exercise. The Option shall be exercisable only by delivery of an
exercise notice (attached as Exhibit A) or by such procedure as specified from time to time by the
Administrator which shall state the election to exercise the Option, the whole number of Shares in
respect of which the Option is being exercised, such other representations and agreements as to the
holders investment intent with respect to such Shares and such other provisions as may be required
by the Administrator. The exercise notice shall be signed by the Grantee and shall be delivered in
person, by certified mail, or by such other method (including electronic transmission) as
determined from time to time by the Administrator to the Company accompanied by payment of the
Exercise Price. The Option shall be deemed to be exercised upon receipt by the Company of such
written notice accompanied by the Exercise Price, which, to the extent selected, shall be deemed to
be satisfied by use of the broker-dealer sale and remittance procedure to pay the Exercise Price provided in
Section 3(d), below.
(c) Taxes. No Shares will be delivered to the Grantee or other person pursuant to
the exercise of the Option until the Grantee or other person has made arrangements acceptable to
the Administrator for the satisfaction of applicable income and employment tax withholding
obligations, including, without limitation, such other tax obligations of the Grantee incident to
the receipt of Shares. Upon exercise of the Option, the Company or the Grantees employer may
offset or withhold (from any amount owed by the Company or the Grantees employer to the Grantee)
or collect from the Grantee or other person an amount sufficient to satisfy such tax obligations
and/or the employers withholding obligations.
3. Method of Payment. Payment of the Exercise Price shall be made by any of the
following, or a combination thereof, at the election of the Grantee; provided, however, that such
exercise method does not then violate any Applicable Law and, provided further, that the portion of
the Exercise Price equal to the par value of the Shares must be paid in cash or other legal
consideration permitted by the Delaware General Corporation Law:
(a) cash;
(b) check;
(c) surrender of Shares or delivery of a properly executed form of attestation of
ownership of Shares as the Administrator may require (including withholding of Shares otherwise
deliverable upon exercise of the Option) which have a Fair Market Value on the date of surrender or
attestation equal to the aggregate Exercise Price of the Shares as to which the Option is being
exercised (but only to the extent that such exercise of the Option would not result in an
accounting compensation charge with respect to the Shares used to pay the exercise price); or
(d) payment through a broker-dealer sale and remittance procedure pursuant to which the
Grantee (i) shall provide written instructions to a Company designated brokerage firm to effect the
immediate sale of some or all of the purchased Shares and remit to the Company, out of the sale
proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price
payable for the purchased Shares and (ii) shall provide written directives to the Company to
deliver the certificates for the purchased Shares directly to such brokerage firm in order to
complete the sale transaction.
4. Restrictions on Exercise. The Option may not be exercised if the issuance of
the Shares subject to the Option upon such exercise would constitute a violation of any Applicable
Laws.
5. Termination or Change of Continuous Service. In the event the Grantees
Continuous Service terminates, other than for Cause, the Grantee may, but only during the
Post-Termination Exercise Period, exercise the portion of the Option that was vested at the date of
such termination (the Termination Date). In the event of termination of the Grantees Continuous
Service for Cause, the Grantees right to exercise the Option shall, except as otherwise determined
by the Administrator, terminate concurrently with the termination of the Grantees Continuous
Service (also the
Termination Date). In no event shall the Option be exercised later than the Expiration Date set
forth in the Notice. In the event of the Grantees change in status from Employee, Director or
Consultant to any other status of Employee, Director or Consultant, the Option shall remain in
effect and, except to the extent otherwise determined by the Administrator, continue to vest.
Except as provided in Sections 6 and 7 below, to the extent that the Option was unvested on the
Termination Date, or if the Grantee does not exercise the vested portion of the Option within the
Post-Termination Exercise Period, the Option shall terminate.
6. Disability of Grantee. In the event the Grantees Continuous Service
terminates as a result of his or her Disability, the Grantee may, but only within twelve (12)
months from the Termination Date (and in no event later than the Expiration Date), exercise the
portion of the Option that was vested on the Termination Date. To the extent that the Option was
unvested on the Termination Date, or if the Grantee does not exercise the vested portion of the
Option within the time specified herein, the Option shall terminate.
7. Death of Grantee. In the event of the termination of the Grantees Continuous
Service as a result of his or her death, or in the event of the Grantees death during the
Post-Termination Exercise Period or during the twelve (12) month period following the Grantees
termination of Continuous Service as a result of his or her Disability, the Grantees estate, or a
person who acquired the right to exercise the Option by bequest or inheritance, may exercise the
portion of the Option that was vested at the date of termination, within twelve (12) months from
the date of death (but in no event later than the Expiration Date). To the extent that the Option
was unvested on the date of death, or if the vested portion of the Option is not exercised within
the time specified herein, the Option shall terminate.
8. Transferability of Option. The Option may not be transferred in any manner
other than by will or by the laws of descent and distribution, provided, however, that the Option
may be transferred to members of the Grantees Immediate Family to the extent and in the manner
authorized by the Administrator. The terms of the Option shall be binding upon the executors,
administrators, heirs and successors of the Grantee.
9. Term of Option. The Option may be exercised no later than the Expiration Date set
forth in the Notice or such earlier date as otherwise provided herein.
10. Companys Repurchase Right.
(a) Grant of Repurchase Right. The Company is hereby granted the right (the
Repurchase Right), exercisable at any time during the ninety (90) day period following the
Termination Date, to repurchase all or any portion of the Shares that have not vested pursuant to
the terms of the Vesting Schedule purchased upon exercise of the Option (the Share Repurchase
Period).
(b) Exercise of the Repurchase Right. The Repurchase Right shall be exercisable
by written notice delivered to the Grantee prior to the expiration of the Share Repurchase Period.
The notice shall indicate the number of Shares to be repurchased and the date on which the
repurchase is to be effected, such date to be not later than the last day of the Share Repurchase
Period. On the date on which the repurchase is to be effected, the Company and/or its assigns shall
pay to the Grantee in cash or cash equivalents (including the cancellation of any purchase-money
indebtedness) an amount equal
to the lower of the Exercise Price or Fair Market Value per Share for unvested Shares which are to
be repurchased from the Grantee. Upon such payment or deposit into escrow for the benefit of the
Grantee, the Company and/or its assigns shall become the legal and beneficial owner of the Shares
being repurchased and all rights and interest thereon or related thereto, and the Company shall
have the right to transfer to its own name or its assigns the number of Shares being repurchased,
without further action by the Grantee.
(c) Assignment. Whenever the Company shall have the right to purchase Shares
under this Repurchase Right, the Company may designate and assign one or more employees, officers,
directors or shareholders of the Company or other persons or organizations, to exercise all or a
part of the Companys Repurchase Right.
(d) Termination of the Repurchase Right. The Repurchase Right shall terminate
with respect to any Shares for which it is not timely exercised.
(e) Corporate Transaction/Change in Control. Notwithstanding the foregoing,
Shares subject to the Repurchase Right will be released from the Repurchase Right in the event of a
Corporate Transaction or a Change in Control, in accordance with Section 3.05 of the Program.
11. Transfer Restrictions for Unvested Shares. The Shares sold to the Grantee
hereunder may not be sold, transferred by gift, pledged, hypothecated, or otherwise transferred or
disposed of by the Grantee prior to the date that the Shares become vested pursuant to the Vesting
Schedule set forth in the Notice. Any attempt to transfer Shares in violation of this Section 11
will be null and void and will be disregarded.
12. Escrow of Stock. For purposes of facilitating the enforcement of the
provisions of the Repurchase Right, the Grantee agrees, immediately upon receipt of the
certificate(s) for the Shares, to deliver such certificate(s), together with an Assignment Separate
from Certificate in the form attached hereto as Exhibit B, executed in blank by the Grantee and the
Grantees spouse (if required for transfer) with respect to each such stock certificate, to the
Secretary or Assistant Secretary of the Company, or their designee, to hold in escrow for so long
as such Shares have not vested pursuant to the Vesting Schedule set forth in the Notice and are
subject to Companys Repurchase Right, with the authority to take all such actions and to
effectuate all such transfers and/or releases as may be necessary or appropriate to accomplish the
objectives of this Option Agreement in accordance with the terms hereof. The Grantee hereby
acknowledges that the appointment of the Secretary or Assistant Secretary of the Company (or their
designee) as the escrow holder hereunder with the stated authorities is a material inducement to
the Company to make this Option Agreement and that such appointment is coupled with an interest and
is accordingly irrevocable. The Grantee agrees that such escrow holder shall not be liable to any
party hereto (or to any other party) for any actions or omissions unless such escrow holder is
grossly negligent relative thereto. The escrow holder may rely upon any letter, notice or other
document executed by any signature purported to be genuine and may resign at any time. Subject to
the provisions of any security agreement relating to Grantees purchase of the Shares, upon the
vesting of Shares and termination of the Companys Repurchase Right as set forth in Section 10, the
escrow holder will, upon request, transmit to the Grantee the certificate evidencing such Shares.
13. Additional Securities. Any securities or cash received (other than a regular
cash dividend) as the result of ownership of the Shares (the Additional Securities), including,
but not by way of limitation, warrants, options and securities received as a stock dividend or
stock split, or as a result of any transaction described in Section 10 of the Plan, shall be
subject to the same conditions and restrictions as the Shares with respect to which they were
issued, including, without limitation, the Vesting Schedule set forth in the Notice, and the
Repurchase Right and retained in escrow in the same manner as the Shares with respect to which they
relate. The Grantee shall be entitled to direct the Company to exercise any warrant or option
received as Additional Securities upon supplying the funds necessary to do so, in which event the
securities so purchased shall constitute Additional Securities, but the Grantee may not direct the
Company to sell any such warrant or option. If Additional Securities consist of a convertible
security, the Grantee may exercise any conversion right, and any securities so acquired shall
constitute Additional Securities. Appropriate adjustments to reflect the distribution of Additional
Securities shall be made to the price per share to be paid upon the exercise of the Repurchase
Right in order to reflect the effect of any such transaction upon the Companys capital structure.
In the event of any change in certificates evidencing the Shares or the Additional Securities by
reason of any recapitalization, reorganization or other transaction that results in the creation of
Additional Securities, the escrow holder is authorized to deliver to the issuer the certificates
evidencing the Shares or the Additional Securities in exchange for the certificates of the
replacement securities.
14. Distributions. Subject to Section 10(e) and Section 13, the Company shall
disburse to the Grantee all regular cash dividends with respect to the Shares and Additional
Securities (whether vested or not), less any applicable withholding obligations.
15. Stop-Transfer Notices. In order to ensure compliance with the restrictions on
transfer set forth in this Option Agreement, the Notice, the Plan or the Program, the Company may
issue appropriate stop transfer instructions to its transfer agent, if any, and, if the Company
transfers its own securities, it may make appropriate notations to the same effect in its own
records.
16. Refusal to Transfer. The Company shall not be required (i) to transfer on its
books any Shares that have been sold or otherwise transferred in violation of any of the provisions
of this Option Agreement or (ii) to treat as owner of such Shares or to accord the right to vote or
pay dividends to any purchaser or other transferee to whom such Shares shall have been so
transferred.
17. Special Tax Election for Exercise of Option Subject to Forfeiture/Tax
Consequences. Set forth below is a brief summary as of the date of this Option Agreement of
some of the federal tax consequences of exercise of the Option and disposition of the Shares. THIS
SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE
GRANTEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.
(a) Section 83 (b) Election For Exercise of Non-Qualified Stock Option Subject to
Vesting. If the Shares are acquired hereunder pursuant to the exercise of a Non-Qualified Stock
Option that has not vested pursuant to the Vesting Schedule set forth in the Notice, then the
Grantee understands that under Code Section 83, the excess of the Fair Market Value of the Shares
on the date any forfeiture restrictions applicable to the Shares lapse over the Exercise Price paid
for the Shares
will be reportable as ordinary income on the lapse date. For this purpose, the term forfeiture
restrictions includes the right of the Company to repurchase the Shares pursuant to the Repurchase
Right provided under Section 10. The Grantee understands that he/she may elect under Code Section
83(b) to be taxed at the time the Shares are acquired hereunder, rather than when and as the Shares
cease to be subject to the forfeiture restrictions. Such election (the 83(b) Election) must be
filed with the Internal Revenue Service within thirty (30) days after the date Shares are acquired
upon exercise of the Option. Even if the Fair Market Value of the Shares on the date the Option is
exercised equals the Exercise Price paid (and thus no tax is payable), the 83(b) Election must be
made to avoid adverse tax consequences in the future. THE FORM FOR MAKING THIS 83(b) ELECTION IS
ATTACHED
AS EXHIBIT C HERETO. THE GRANTEE UNDERSTANDS THAT FAILURE TO MAKE THIS FILING WITHIN THE APPLICABLE
THIRTY (30)-DAY PERIOD WILL RESULT IN THE RECOGNITION OF ORDINARY INCOME BY THE GRANTEE AS THE
FORFEITURE RESTRICTIONS LAPSE.
(b) FILING RESPONSIBILITY. THE GRANTEE ACKNOWLEDGES THAT IT IS THE GRANTEES SOLE
RESPONSIBILITY, AND NOT THE COMPANYS, TO FILE A TIMELY 83(b) ELECTION UNDER CODE SECTION 83(b),
EVEN IF THE GRANTEE REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS OR HER
BEHALF.
(c) Exercise of Vested Non-Qualified Stock Option. If pursuant to the Vesting
Schedule set forth in the Notice, the Shares acquired upon exercise of the Option are not subject
to any forfeiture restrictions, the Grantee will be treated as having received compensation income
(taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the
Shares on the date of exercise over the Exercise Price. If the Grantee is a former Employee, the
Company will be required to withhold from the Grantees compensation or collect from the Grantee
and pay to the applicable taxing authorities an amount in cash equal to a percentage of this
compensation income at the time of exercise, and may refuse to honor the exercise and refuse to
deliver Shares if such withholding amounts are not delivered at the time of exercise.
(d) Disposition of Shares. In the case of a Non-Qualified Stock Option, if Shares
are held for more than one year, any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes and subject to tax at a maximum rate of 20%.
18. Entire Agreement: Governing Law. The Notice, the Plan, the Program and this
Option Agreement constitute the entire agreement of the parties with respect to the subject matter
hereof and supersede in their entirety all prior undertakings and agreements of the Company and the
Grantee with respect to the subject matter hereof, and may not be modified adversely to the
Grantees interest except by means of a writing signed by the Company and the Grantee. Nothing in
the Notice, the Plan, the Program and this Option Agreement (except as expressly provided therein)
is intended to confer any rights or remedies on any persons other than the parties. The Notice, the
Plan, the Program and this Option Agreement are to be construed in accordance with and governed by
the internal laws of the State of California without giving effect to any choice of law rule that
would cause the application of the laws of any jurisdiction other than the internal laws of the
State of California to the rights and duties of the parties. Should any provision of the Notice,
the Plan, the Program or this Option Agreement be determined by a court of law to be illegal or
unenforceable, such provision shall be enforced to the fullest extent allowed by law and the other provisions shall nevertheless remain
effective and shall remain enforceable.
19. Headings. The captions used in the Notice and this Option Agreement are
inserted for convenience and shall not be deemed a part of the Option for construction or
interpretation.
20. Dispute Resolution. The provisions of this Section 20 shall be the exclusive
means of resolving disputes arising out of or relating to the Notice, the Plan, the Program and
this Option Agreement. The Company, the Grantee, and the Grantees assignees pursuant to Section 8
(the parties) shall attempt in good faith to resolve any disputes arising out of or relating to
the Notice, the Plan, the Program and this Option Agreement by negotiation between individuals who
have authority to settle the controversy. Negotiations shall be commenced by either party by notice
of a written statement of the partys position and the name and title of the individual who will
represent the party. Within thirty (30) days of the written notification, the parties shall meet at
a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary, to
resolve the dispute. If the dispute has not been resolved by negotiation, the parties agree that
any suit, action, or proceeding arising out of or relating to the Notice, the Plan, the Program or
this Option Agreement shall be brought in the United States District Court for the Northern
District of California (or should such court lack jurisdiction to hear such action, suit or
proceeding, in the Santa Clara County Superior Court) and that the parties shall submit to the
jurisdiction of such court. The parties irrevocably waive,
to the fullest extent permitted by law, any objection the party may have to the laying of venue for
any such suit, action or proceeding brought in such courts. THE PARTIES ALSO EXPRESSLY WAIVE ANY
RIGHT THEY HAVE OR MAY HAVE TO A JURY TRIAL OF ANY SUCH SUIT, ACTION OR PROCEEDING. If any one or
more provisions of this Section 20 shall for any reason be held invalid or unenforceable, it is the
specific intent of the parties that such provisions shall be modified to the minimum extent
necessary to make it or its application valid and enforceable.
21. Notices. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in the United States
mail by certified mail (if the parties are within the United States) or upon deposit for delivery
by an internationally recognized express mail courier service (for international delivery of
notice), with postage and fees prepaid, addressed to the other party at its address as shown
beneath its signature in the Notice, or to such other address as such party may designate in
writing from time to time to the other party.
EXHIBIT A
STRATEX NETWORKS, INC. 2002 STOCK INCENTIVE PLAN
EXERCISE NOTICE
Stratex Networks, Inc.
170 Rose Orchard Way
San Jose, California 95134
Attention: Secretary
1. Exercise of Option. Effective as of today, , ___the
undersigned (the Grantee) hereby elects to exercise the Grantees option to purchase
shares of the Common Stock (the Shares) of Stratex Networks, Inc. (the Company) under and
pursuant to the Companys 2002 Stock Incentive Plan, the Companys 2002 Non-Employee Director
Option Program (the Program), as amended from time to time, and the Non-Qualified Stock Option
Award Agreement (the Option Agreement) and Notice of Non-qualified Stock Option Award (the
Notice) dated , ___. Unless otherwise defined herein, the terms defined in the
Plan and the Program shall have the same defined meanings in this Exercise Notice.
2. Representations of the Grantee. The Grantee acknowledges that the Grantee has
received, read and understood the Notice, the Plan, the Program and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.
3. Rights as Stockholder. Until the stock certificate evidencing such Shares is
issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to the Shares, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such stock certificate promptly after the Option is
exercised. No adjustment will be made for a dividend or other right for which the record date is
prior to the date the stock certificate is issued, except as provided in Section 8 of the Plan.
The Grantee shall enjoy rights as a stockholder until such time as the Grantee disposes of the
Shares or the Company and/or its assignee(s) exercises the Repurchase Right. Upon such exercise,
the Grantee shall have no further rights as a holder of the Shares so purchased except the right to
receive payment for the Shares so purchased in accordance with the provisions of the Option
Agreement, and the Grantee shall forthwith cause the certificate(s) evidencing the Shares so
purchased to be surrendered to the Company for transfer or cancellation.
4. Delivery of Payment. The Grantee herewith delivers to the Company the full
Exercise Price for the Shares, which, to the extent selected, shall be deemed to be satisfied by
use of the broker-dealer sale and remittance procedure to pay the Exercise Price provided in
Section 3(d) of the Option Agreement.
5. Tax Consultation. The Grantee understands that the Grantee may suffer adverse
tax consequences as a result of the Grantees purchase or disposition of the Shares. The Grantee
represents that the Grantee has consulted with any tax consultants the Grantee deems advisable in
connection with the purchase or disposition of the Shares and that the Grantee is not relying on
the Company for any tax advice.
6. Tax Election; Taxes. The Grantee shall provide the Company with a copy of any
timely filed 83(b) Election relating to the purchase of the Shares. If the Grantee makes a timely
83(b) Election, the Grantee shall immediately pay the Company (or the Related Entity to which the
Grantee provides service) the amount necessary to satisfy any applicable federal, state, and local
income and employment tax withholding obligations. If the Grantee does not make a timely 83(b)
Election, the Grantee shall, either at the time that the restrictions lapse under the Option
Agreement, the Program and the Plan or at the time withholding is otherwise required by Applicable
Law, pay the Company (or the Related Entity to which the Grantee provides service) the amount
necessary to satisfy any applicable federal, state, and local income and employment tax withholding
obligations. In addition, the Grantee agrees to satisfy all other applicable federal, state and
local income and employment tax withholding obligations and herewith delivers to the Company the full amount of such obligations or
has made arrangements acceptable to the Company to satisfy such obligations.
7. Restrictive Legends. The Grantee understands and agrees that the Company
shall cause the legend set forth below or legends substantially equivalent thereto, to be placed
upon any certificate(s) evidencing ownership of the Shares together with any other legends that may
be required by the Company or by state or federal securities laws:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER AND A REPURCHASE RIGHT HELD
BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE OPTION
AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE
SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL
OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS AND
REPURCHASE RIGHT ARE BINDING ON TRANSFEREES OF THESE SHARES.
8. Successors and Assigns. The Company may assign any of its rights under this
Exercise Notice to single or multiple assignees, and this agreement shall inure to the benefit of
the successors and assigns of the Company. This Exercise Notice shall be binding upon the Grantee
and his or her heirs, executors, administrators, successors and assigns.
9. Headings. The captions used in this Exercise Notice are inserted for
convenience and shall not be deemed a part of this agreement for construction or interpretation.
10. Dispute Resolution. The provisions of Section 20 of the Option Agreement
shall be the exclusive means of resolving disputes arising out of or relating to this Exercise
Notice.
11. Governing Law; Severability. This Exercise Notice is to be construed in
accordance with and governed by the internal laws of the State of California without giving effect
to any choice of law rule that would cause the application of the laws of any jurisdiction other
than the internal laws of the
State of California to the rights and duties of the parties. Should any provision of this Exercise
Notice be determined by a court of law to be illegal or unenforceable, such provision shall be
enforced to the fullest extent allowed by law and the other provisions shall nevertheless remain
effective and shall remain enforceable.
12. Notices. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in the United States
mail by certified mail, (if the parties are within the United States) or upon deposit for delivery
by an internationally recognized express mail courier service (for international delivery of
notice) with postage and fees prepaid, addressed to the other party at its address as shown below
beneath its signature, or to such other address as such party may designate in writing from time to
time to the other party.
13. Further Instruments. The parties agree to execute such further instruments
and to take such further action as may be reasonably necessary to carry out the purposes and intent
of this agreement.
14. Entire Agreement. The Notice, the Plan, the Program, and the Option Agreement
are incorporated herein by reference, and together with this Exercise Notice constitute the entire
agreement of the parties with respect to the subject matter hereof and supersede in their entirety
all prior undertakings and agreements of the Company and the Grantee with respect to the subject
matter hereof, and may not be modified adversely to the Grantees interest except by means of a
writing signed by the Company and the Grantee. Nothing in the Notice, the Plan, the Program, the
Option Agreement and this Exercise Notice (except as expressly provided therein) is intended to
confer any rights or remedies on any persons other than the parties.
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Accepted by: |
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STRATEX NETWORKS, INC. |
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By: |
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Title: |
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Address: |
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Address: |
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170 Rose Orchard Way |
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San Jose, California 95134 |
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EXHIBIT B
STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE
[PLEASE SIGN THIS DOCUMENT BUT DO NOT DATE IT. THE DATE AND INFORMATION OF THE
TRANSFEREE WILL BE COMPLETED IF AND WHEN THE SHARES ARE ASSIGNED.]
FOR
VALUE RECEIVED,
hereby sells, assigns
and transfers unto ,
(___) shares of the Common Stock Stratex Networks,
Inc., a Delaware corporation (the Company), standing in his name on the books of, represented by
Certificate No. ___ herewith, and does hereby irrevocably constitute and appoint the Secretary of
the Company attorney to transfer the said stock in the books of the Company with full power of
substitution.
DATED: ________________
___________________________________
The undersigned spouse of ____________________ joins in this assignment.
Dated: ___________________
___________________________________
(Spouse of _____________)
EXHIBIT C
ELECTION UNDER SECTION 83(b)
OF THE INTERNAL REVENUE CODE OF 1986
The undersigned taxpayer hereby elects, pursuant to the Internal Revenue Code, to include in
gross income for 20___ the amount of any compensation taxable in connection with the taxpayers
receipt of the property described below:
1. The name, address, taxpayer identification number and taxable year of the undersigned
are:
TAXPAYERS NAME:
SPOUSES NAME:
TAXPAYERS SOCIAL SECURITY NO.:
SPOUSES SOCIAL SECURITY NO.:
TAXABLE YEAR: Calendar Year 20__
ADDRESS:
2. The property which is the subject of this election is shares of common
stock of Stratex Networks, Inc.
3.
The property was transferred to the undersigned on , 20___.
4. The property is subject to the following restriction: the right of repurchase of the
shares of common stock by Stratex Networks, Inc. or its successor or assigns upon the cessation of
service with Stratex Networks, Inc. or its successor or assigns prior to the lapse of the
designated restriction period. The repurchase price shall be the lower of the original purchase
price or the fair market value of the shares on the repurchase date.
5. The fair market value of the property at the time of transfer (determined without
regard to any restriction other than a restriction which by its terms will never lapse) is:
$
per share x
shares = $
.
6.
The undersigned paid $ per share x shares for the property
transferred or a total of $ .
The undersigned has submitted a copy of this statement to the person for whom the services were
performed in connection with the undersigneds receipt of the above-described property. The
undersigned taxpayer is the person performing the services in connection with the transfer of said
property.
The undersigned will file this election with the Internal Revenue Service office to which he
files his annual income tax return not later than 30 days after the date of transfer of the
property. A copy of the election also will be furnished to the person for whom the services were
performed. Additionally, the undersigned will include a copy of the election with his income tax
return for the taxable year in which the property is transferred. The undersigned understands that
this election will also be effective as an election under law.
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The undersigned spouse of taxpayer joins in this election. |
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STRATEX NETWORKS, INC. 2002 STOCK INCENTIVE PLAN
NOTICE OF STOCK OPTION AWARD
[PER PLAN, ACCELERATION FOR NON-OFFICERS UNLESS ASSUMED REMOVE THIS]
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Grantees Name and Address: |
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You have been granted an option to purchase shares of Common Stock, subject to the terms and
conditions of this Notice of Stock Option Award (the Notice), the Stratex Networks, Inc. 2002
Stock Incentive Plan, as amended from time to time (the Plan) and the Stock Option Award
Agreement (the Option Agreement) attached hereto, as follows. Unless otherwise defined herein,
the terms defined in the Plan shall have the same defined meanings in this Notice.
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Award Number
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Date of Award
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Vesting Commencement Date
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Exercise Price per Share
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$
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Total Number of Shares subject to the
Option
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Total Exercise Price
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$
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Type of Option:
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Incentive Stock Option |
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Non-Qualified Stock Option |
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Expiration Date:
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Post-Termination Exercise Period:
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Three (3) Months |
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Vesting Schedule:
Subject to Grantees Continuous Service and other limitations set forth in this Notice, the
Plan and the Option Agreement, the Option may be exercised, in whole or in part, in accordance with
the following schedule: 25% of the Shares subject to the Option shall vest twelve months after the
Vesting Commencement Date, and an additional 25% of the Shares subject to the Option shall vest on
each yearly anniversary of the Vesting Commencement Date thereafter.
During any authorized leave of absence, the vesting of the Option as provided in this schedule
shall be suspended after the leave of absence exceeds a period of ninety (90) days. Vesting of the
Option shall resume upon the Grantees termination of the leave of absence and return to service to
the Company or a Related Entity. The Vesting Schedule of the Option shall be extended by the length
of the suspension.
In the event of the Grantees change in status from Employee to Consultant or from an Employee
whose customary employment is 20 hours or more per week to an Employee whose customary employment
is fewer than 20 hours per week, vesting of the Option shall continue only to the extent determined
by the Administrator as of such change in status.
In the event of termination of the Grantees Continuous Service for Cause, the Grantees right
to exercise the Option shall terminate concurrently with the termination of the Grantees
Continuous Service.
IN WITNESS WHEREOF, the Company and the Grantee have executed this Notice and agree that the
Option is to be governed by the terms and conditions of this Notice, the Plan, and the Option
Agreement.
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Stratex Networks, Inc., |
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a Delaware corporation |
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By: |
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Title: |
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THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE SHARES SUBJECT TO THE OPTION SHALL VEST, IF AT ALL,
ONLY DURING THE PERIOD OF THE GRANTEES CONTINUOUS SERVICE (NOT THROUGH THE ACT OF BEING HIRED,
BEING GRANTED THE OPTION OR ACQUIRING SHARES HEREUNDER). THE GRANTEE FURTHER ACKNOWLEDGES AND
AGREES THAT NOTHING IN THIS NOTICE, THE OPTION AGREEMENT, OR THE PLAN SHALL CONFER UPON THE GRANTEE
ANY RIGHT WITH RESPECT TO FUTURE AWARDS OR CONTINUATION OF GRANTEES CONTINUOUS SERVICE, NOR SHALL
IT INTERFERE IN ANY WAY WITH THE GRANTEES RIGHT OR THE RIGHT OF THE GRANTEES EMPLOYER TO
TERMINATE GRANTEES CONTINUOUS SERVICE, WITH OR WITHOUT CAUSE, AND WITH OR WITHOUT NOTICE. THE
GRANTEE ACKNOWLEDGES THAT UNLESS THE GRANTEE HAS A WRITTEN EMPLOYMENT AGREEMENT WITH THE COMPANY TO
THE CONTRARY, GRANTEES STATUS IS AT WILL.
The Grantee acknowledges receipt of a copy of the Plan and the Option Agreement, and
represents that he or she is familiar with the terms and provisions thereof, and hereby accepts the
Option subject to all of the terms and provisions hereof and thereof. The Grantee has reviewed this
Notice, the Plan, and the Option Agreement in their entirety, has had an opportunity to obtain the
advice of counsel prior to executing this Notice, and fully understands all provisions of this
Notice, the
Plan and the Option Agreement. The Grantee hereby agrees that all disputes arising out of or
relating to this Notice, the Plan and the Option Agreement shall be resolved in accordance with
Section 15 of the Option Agreement. The Grantee further agrees to notify the Company upon any
change in the residence address indicated in this Notice.
AWARD NUMBER: ___________
STRATEX NETWORKS, INC. 2002 STOCK INCENTIVE PLAN
STOCK OPTION AWARD AGREEMENT
1. Grant of Option. Stratex Networks, Inc., a Delaware corporation (the
Company), hereby grants to the Grantee (the Grantee) named in the Notice of Stock Option Award
(the Notice), an option (the Option) to purchase the Total Number of Shares of Common Stock
subject to the Option (the Shares) set forth in the Notice, at the Exercise Price per Share set
forth in the Notice (the Exercise Price) subject to the terms and provisions of the Notice, this
Stock Option Award Agreement (the Option Agreement) and the Companys 2002 Stock Incentive Plan,
as amended from time to time (the Plan), which are incorporated herein by reference. Unless
otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in
this Option Agreement.
If designated in the Notice as an Incentive Stock Option, the Option is intended to qualify as
an Incentive Stock Option as defined in Section 422 of the Code. However, notwithstanding such
designation, to the extent that the aggregate Fair Market Value of Shares subject to Options
designated as Incentive Stock Options which become exercisable for the first time by the Grantee
during any calendar year (under all plans of the Company or any Parent or Subsidiary of the
Company) exceeds $100,000, such excess Options, to the extent of the Shares covered thereby in
excess of the foregoing limitation, shall be treated as Non-Qualified Stock Options. For this
purpose, Incentive Stock Options shall be taken into account in the order in which they were
granted, and the Fair Market Value of the Shares shall be determined as of the date the Option with
respect to such Shares is awarded.
2. Exercise of Option.
(a) Right to Exercise. The Option shall be exercisable during its term in
accordance with the Vesting Schedule set out in the Notice and with the applicable provisions of
the Plan and this Option Agreement. The Option shall be subject to the provisions of Section 11 of
the Plan relating to the exercisability or termination of the Option in the event of a Corporate
Transaction or Change in Control. No partial exercise of the Option may be for less than the lesser
of five percent (5%) of the total number of Shares subject to the Option or the remaining number of
Shares subject to the Option. The Grantee shall be subject to reasonable limitations on the number
of requested exercises during any monthly or weekly period as determined by the Administrator. In
no event shall the Company issue fractional Shares.
(b) The Option shall be exercisable only by delivery of an exercise notice (a form of
which is attached as Exhibit A) or by other such procedure as specified from time to time by the
Administrator which shall state the election to exercise the Option, the whole number of Shares in
respect of which the Option is being exercised, such other representations and agreements as to the
holders investment intent with respect to such Shares and such other provisions as may be required
by the Administrator. The exercise notice shall be signed by the Grantee and shall be delivered in
person, by certified mail, or by such other method (including electronic transmission) as
determined from time to time by the Administrator to the Company accompanied by payment of the
Exercise Price. The Option shall be deemed to be exercised upon receipt by the Company of such
written notice
accompanied by the Exercise Price, which, to the extent selected, shall be deemed to be satisfied
by use of the broker-dealer sale and remittance procedure to pay the Exercise Price provided in
Section 3(d), below.
(c) Taxes. No Shares will be delivered to the Grantee or other person pursuant to
the exercise of the Option until the Grantee or other person has made arrangements acceptable to
the Administrator for the satisfaction of applicable income and employment tax withholding
obligations, including, without limitation, such other tax obligations of the Grantee incident to
the receipt of Shares or the disqualifying disposition of Shares received on exercise of an
Incentive Stock Option. Upon exercise of the Option, the Company or the Grantees employer may
offset or withhold (from any amount owed by the Company or the Grantees employer to the Grantee)
or collect from the Grantee or other person an amount sufficient to satisfy such tax obligations
and/or the employers withholding obligations.
3. Method of Payment. Payment of the Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Grantee; provided, however, that such
exercise method does not then violate any Applicable Law and, provided further, that the portion of
the Exercise Price equal to the par value of the Shares must be paid in cash or other legal
consideration permitted by the Delaware General Corporation Law:
(a) cash;
(b) check;
(c) surrender of Shares or delivery of a properly executed form of attestation of
ownership of Shares as the Administrator may require (including withholding of Shares otherwise
deliverable upon exercise of the Option) which have a Fair Market Value on the date of surrender or
attestation equal to the aggregate Exercise Price of the Shares as to which the Option is being
exercised (but only to the extent that such exercise of the Option would not result in an
accounting compensation charge with respect to the Shares used to pay the exercise price); or
(d) payment through a broker-dealer sale and remittance procedure pursuant to which the
Grantee (i) shall provide written instructions to a Company designated brokerage firm to effect the
immediate sale of some or all of the purchased Shares and remit to the Company, out of the sale
proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price
payable for the purchased Shares and (ii) shall provide written directives to the Company to
deliver the certificates for the purchased Shares directly to such brokerage firm in order to
complete the sale transaction.
4. Restrictions on Exercise. The Option may not be exercised if the issuance of the
Shares subject to the Option upon such exercise would constitute a violation of any Applicable
Laws. In addition, the Option, if an Incentive Stock Option, may not be exercised until such time
as the Plan has been approved by the stockholders of the Company.
5. Termination or Change of Continuous Service. In the event the Grantees
Continuous Service terminates, other than for Cause, the Grantee may, but only during the
Post-Termination
Exercise Period, exercise the portion of the Option that was vested at the date of such termination
(the Termination Date). In the event of termination of the Grantees Continuous Service for
Cause, the Grantees right to exercise the Option shall, except as otherwise determined by the
Administrator, terminate concurrently with the termination of the Grantees Continuous Service
(also the Termination Date). In no event shall the Option be exercised later than the Expiration
Date set forth in the Notice. In the event of the Grantees change in status from Employee,
Director or Consultant to any other status of Employee, Director or Consultant, the Option shall
remain in effect and, except to the extent otherwise determined by the Administrator, continue to
vest; provided, however, with respect to any Incentive Stock Option that shall remain in effect
after a change in status from Employee to Director or Consultant, such Incentive Stock Option shall
cease to be treated as an Incentive Stock Option and shall be treated as a Non-Qualified Stock
Option on the day three (3) months and one (1) day following such change in status. Except as
provided in Sections 6 and 7 below, to the extent that the Option was unvested on the Termination
Date, or if the Grantee does not exercise the vested portion of the Option within the
Post-Termination Exercise Period, the Option shall terminate.
6. Disability of Grantee. In the event the Grantees Continuous Service
terminates as a result of his or her Disability, the Grantee may, but only within twelve (12)
months from the Termination Date (and in no event later than the Expiration Date), exercise the
portion of the Option that was vested on the Termination Date; provided, however, that if such
Disability is not a disability as such term is defined in Section 22(e)(3) of the Code and the
Option is an Incentive Stock Option, such Incentive Stock Option shall cease to be treated as an
Incentive Stock Option and shall be treated as a Non-Qualified Stock Option on the day three (3)
months and one (1) day following the Termination Date. To the extent that the Option was unvested
on the Termination Date, or if the Grantee does not exercise the vested portion of the Option
within the time specified herein, the Option shall terminate.
7. Death of Grantee. In the event of the termination of the Grantees Continuous
Service as a result of his or her death, or in the event of the Grantees death during the
Post-Termination Exercise Period or during the twelve (12) month period following the Grantees
termination of Continuous Service as a result of his or her Disability, the Grantees estate, or a
person who acquired the right to exercise the Option by bequest or inheritance, may exercise the
portion of the Option that was vested at the date of termination, within twelve (12) months from
the date of death (but in no event later than the Expiration Date). To the extent that the Option
was unvested on the date of death, or if the vested portion of the Option is not exercised within
the time specified herein, the Option shall terminate.
8. Transferability of Option. The Option, if an Incentive Stock Option, may not
be transferred in any manner other than by will or by the laws of descent and distribution and may
be exercised during the lifetime of the Grantee only by the Grantee. The Option, if a Non-Qualified
Stock Option, may not be transferred in any manner other than by will or by the laws of descent and
distribution, provided, however, that a Non-Qualified Stock Option may be transferred to members of
the Grantees Immediate Family to the extent and in the manner authorized by the Administrator. The
terms of the Option shall be binding upon the executors, administrators, heirs and successors of
the Grantee.
9. Stop-Transfer Notices. In order to ensure compliance with the restrictions on
transfer set forth in this Option Agreement, the Notice or the Plan, the Company may issue
appropriate stop
transfer instructions to its transfer agent, if any, and, if the Company transfers its own
securities, it may make appropriate notations to the same effect in its own records.
10. Refusal to Transfer. The Company shall not be required (i) to transfer on its
books any Shares that have been sold or otherwise transferred in violation of any of the provisions
of this Option Agreement or (ii) to treat as owner of such Shares or to accord the right to vote or
pay dividends to any purchaser or other transferee to whom such Shares shall have been so
transferred.
11. Term of Option. The Option may be exercised no later than the Expiration Date
set forth in the Notice or such earlier date as otherwise provided herein.
12. Tax Consequences. Set forth below is a brief summary as of the date of this
Option Agreement of some of the federal tax consequences of exercise of the Option and disposition
of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT
TO CHANGE. THE GRANTEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF
THE SHARES.
(a) Exercise of Incentive Stock Option. If the Option qualifies as an Incentive
Stock Option, there will be no regular federal income tax liability upon the exercise of the
Option, although the excess, if any, of the Fair Market Value of the Shares on the date of exercise
over the Exercise Price will be treated as income for purposes of the alternative minimum tax for
federal tax purposes and may subject the Grantee to the alternative minimum tax in the year of
exercise. However, the Internal Revenue Service issued proposed regulations which would subject the
Grantee to withholding at the time the Grantee exercises an Incentive Stock Option for Social
Security and Medicare taxes based upon the excess, if any, of the Fair Market Value of the Shares
on the date of exercise over the Exercise Price. These proposed regulations are subject to further
modification by the Internal Revenue Service and, if adopted, would be effective only for the
exercise of Incentive Stock Options on or after January 1, 2003.
(b) Exercise of Incentive Stock Option Following Disability. If the Grantees
Continuous Service terminates as a result of Disability that is not total and permanent disability
as defined in Section 22(e)(3) of the Code, to the extent permitted on the date of termination, the
Grantee must exercise an Incentive Stock Option within three (3) months of such termination for the
Incentive Stock Option to be qualified as an Incentive Stock Option.
(c) Exercise of Non-Qualified Stock Option. On exercise of a Non-Qualified Stock
Option, the Grantee will be treated as having received compensation income (taxable at ordinary
income tax rates) equal to the excess, if any, of the Fair Market Value of the Shares on the date
of exercise over the Exercise Price. If the Grantee is an Employee or a former Employee, the
Company will be required to withhold from the Grantees compensation or collect from the Grantee
and pay to the applicable taxing authorities an amount in cash equal to a percentage of this
compensation income at the time of exercise, and may refuse to honor the exercise and refuse to
deliver Shares if such withholding amounts are not delivered at the time of exercise.
(d)
Disposition of Shares. In the case of a Non-Qualified Stock Option, if Shares
are held for more than one year, any gain realized on disposition of the Shares will be treated as
long-term
capital gain for federal income tax purposes and subject to tax at a maximum rate of 20%. In the
case of an Incentive Stock Option, if Shares transferred pursuant to the Option are held for more
than one year after receipt of the Shares and are disposed more than two years after the Date of
Award, any gain realized on disposition of the Shares also will be treated as capital gain for
federal income tax purposes and subject to the same tax rates and holding periods that apply to
Shares acquired upon exercise of a Non-Qualified Stock Option. If Shares purchased under an
Incentive Stock Option are disposed of prior to the expiration of such one-year or two-year
periods, any gain realized on such disposition will be treated as compensation income (taxable at
ordinary income rates) to the extent of the difference between the Exercise Price and the lesser of
(i) the Fair Market Value of the Shares on the date of exercise, or (ii) the sale price of the
Shares.
13. Entire Agreement: Governing Law. The Notice, the Plan and this Option
Agreement constitute the entire agreement of the parties with respect to the subject matter hereof
and supersede in their entirety all prior undertakings and agreements of the Company and the
Grantee with respect to the subject matter hereof, and may not be modified adversely to the
Grantees interest except by means of a writing signed by the Company and the Grantee. Nothing in
the Notice, the Plan and this Option Agreement (except as expressly provided therein) is intended
to confer any rights or remedies on any persons other than the parties. The Notice, the Plan and
this Option Agreement are to be construed in accordance with and governed by the internal laws of
the State of California without giving effect to any choice of law rule that would cause the
application of the laws of any jurisdiction other than the internal laws of the State of California
to the rights and duties of the parties. Should any provision of the Notice, the Plan or this
Option Agreement be determined by a court of law to be illegal or unenforceable, such provision
shall be enforced to the fullest extent allowed by law and the other provisions shall nevertheless
remain effective and shall remain enforceable.
14. Headings. The captions used in the Notice and this Option Agreement are
inserted for convenience and shall not be deemed a part of the Option for construction or
interpretation.
15. Dispute Resolution. The provisions of this Section 15 shall be the exclusive
means of resolving disputes arising out of or relating to the Notice, the Plan and this Option
Agreement. The Company, the Grantee, and the Grantees assignees pursuant to Section 8 (the
parties) shall attempt in good faith to resolve any disputes arising out of or relating to the
Notice, the Plan and this Option Agreement by negotiation between individuals who have authority to
settle the controversy. Negotiations shall be commenced by either party by notice of a written
statement of the partys position and the name and title of the individual who will represent the
party. Within thirty (30) days of the written notification, the parties shall meet at a mutually
acceptable time and place, and thereafter as often as they reasonably deem necessary, to resolve
the dispute. If the dispute has not been resolved by negotiation, the parties agree that any suit,
action, or proceeding arising out of or relating to the Notice, the Plan or this Option Agreement
shall be brought in the United States District Court for the Northern District of California (or
should such court lack jurisdiction to hear such action, suit or proceeding, in the Santa Clara
County Superior Court) and that the parties shall submit to the jurisdiction of such court. The
parties irrevocably waive, to the fullest extent permitted by law, any objection the party may have
to the laying of venue for any such suit, action or proceeding brought in such court. THE PARTIES
ALSO EXPRESSLY WAIVE ANY RIGHT THEY HAVE OR MAY HAVE TO A JURY TRIAL OF ANY SUCH SUIT, ACTION OR
PROCEEDING. If any one or more provisions of this Section 15 shall for any reason be held invalid
or unenforceable, it is the specific
intent of the parties that such provisions shall be modified to the minimum extent necessary to
make it or its application valid and enforceable.
16. Notices. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in the United States
mail by certified mail (if the parties are within the United States) or upon deposit for delivery
by an internationally recognized express mail courier service (for international delivery of
notice), with postage and fees prepaid, addressed to the other party at its address as shown
beneath its signature in the Notice, or to such other address as such party may designate in
writing from time to time to the other party.
EXHIBIT A
STRATEX NETWORKS, INC. 2002 STOCK INCENTIVE PLAN
EXERCISE NOTICE
Stratex Networks, Inc.
170 Rose Orchard Way
San Jose, California 95134
Attention: Secretary
1. Exercise
of Option. Effective as of today, , ___ the
undersigned (the Grantee) hereby elects to exercise the Grantees option to purchase
shares of the Common Stock (the Shares) of Stratex Networks, Inc. (the Company) under and
pursuant to the Companys 2002 Stock Incentive Plan, as amended from time to time (the Plan) and
the [ ] Incentive [ ] Non-Qualified Stock Option Award Agreement (the Option Agreement) and
Notice of Stock Option Award (the Notice) dated , ___. Unless otherwise
defined herein, the terms defined in the Plan shall have the same defined meanings in this Exercise
Notice.
2. Representations of the Grantee. The Grantee acknowledges that the Grantee has
received, read and understood the Notice, the Plan, and the Option Agreement and agrees to abide by
and be bound by their terms and conditions.
3. Rights as Stockholder. Until the stock certificate evidencing such Shares is
issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to the Shares, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such stock certificate promptly after the Option is
exercised. No adjustment will be made for a dividend or other right for which the record date is
prior to the date the stock certificate is issued, except as provided in Section 10 of the Plan.
4. Delivery of Payment. The Grantee herewith delivers to the Company the full
Exercise Price for the Shares, which, to the extent selected, shall be deemed to be satisfied by
use of the broker-dealer sale and remittance procedure to pay the Exercise Price provided in
Section 3(d) of the Option Agreement.
5. Tax Consultation. The Grantee understands that the Grantee may suffer adverse
tax consequences as a result of the Grantees purchase or disposition of the Shares. The Grantee
represents that the Grantee has consulted with any tax consultants the Grantee deems advisable in
connection with the purchase or disposition of the Shares and that the Grantee is not relying on
the Company for any tax advice
6. Taxes. The Grantee agrees to satisfy all applicable federal, state and local income
and employment tax withholding obligations and herewith delivers to the Company the full amount of
such obligations or has made arrangements acceptable to the Company to satisfy such obligations. In
the case of an Incentive Stock Option, the Grantee also agrees, as partial consideration for the
designation of the Option as an Incentive Stock Option, to notify the Company in writing within
thirty (30) days of any disposition of any shares acquired by exercise of the Option if such
disposition occurs within two (2) years from the Date of Award or within one (1) year from the date
the Shares were transferred to the Grantee. If the Company is required to satisfy any federal,
state or local income or employment tax withholding obligations as a result of such an early
disposition, the Grantee agrees to satisfy the amount of such withholding in a manner that the
Administrator prescribes.
7. Successors and Assigns. The Company may assign any of its rights under this
Exercise Notice to single or multiple assignees, and this agreement shall inure to the benefit of
the successors and assigns of the Company. This Exercise Notice shall be binding upon the Grantee
and his or her heirs, executors, administrators, successors and assigns.
8. Headings. The captions used in this Exercise Notice are inserted for
convenience and shall not be deemed a part of this agreement for construction or interpretation.
9. Dispute Resolution. The provisions of Section 15 of the Option Agreement
shall be the exclusive means of resolving disputes arising out of or relating to this Exercise
Notice.
10. Governing Law; Severability. This Exercise Notice is to be construed in
accordance with and governed by the internal laws of the State of California without giving effect
to any choice of law rule that would cause the application of the laws of any jurisdiction other
than the internal laws of the State of California to the rights and duties of the parties. Should
any provision of this Exercise Notice be determined by a court of law to be illegal or
unenforceable, such provision shall be enforced to the fullest extent allowed by law and the other
provisions shall nevertheless remain effective and shall remain enforceable.
11. Notices. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in the United States
mail by certified mail, (if the parties are within the United States) or upon deposit for delivery
by an internationally recognized express mail courier service (for international delivery of
notice) with postage and fees prepaid, addressed to the other party at its address as shown below
beneath its signature, or to such other address as such party may designate in writing from time to
time to the other party.
12. Further Instruments. The parties agree to execute such further instruments
and to take such further action as may be reasonably necessary to carry out the purposes and intent
of this agreement.
13. Entire Agreement. The Notice, the Plan, and the Option Agreement are
incorporated herein by reference, and together with this Exercise Notice constitute the entire
agreement of the parties with respect to the subject matter hereof and supersede in their entirety
all prior undertakings and agreements of the Company and the Grantee with respect to the subject
matter hereof, and may not be modified adversely to the Grantees interest except by means of a
writing signed by the Company and the Grantee. Nothing in the Notice, the Plan, the Option
Agreement and this Exercise Notice (except as expressly provided therein) is intended to confer any
rights or remedies on any persons other than the parties.
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Accepted by: |
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STRATEX NETWORKS, INC. |
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STRATEX NETWORKS, INC. 2002 STOCK INCENTIVE PLAN
NOTICE OF STOCK OPTION AWARD
[DOUBLE TRIGGER ACCELERATION FOR OFFICERS REMOVE THIS]
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Grantees Name and Address: |
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You have been granted an option to purchase shares of Common Stock, subject to the terms and
conditions of this Notice of Stock Option Award (the Notice), the Stratex Networks, Inc. 2002
Stock Incentive Plan, as amended from time to time (the Plan) and the Stock Option Award
Agreement (the Option Agreement) attached hereto, as follows. Unless otherwise defined herein,
the terms defined in the Plan shall have the same defined meanings in this Notice.
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Award Number
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Date of Award
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Vesting Commencement Date
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Exercise Price per Share
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Total Number of Shares subject to the
Option
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Total Exercise Price
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Type of Option:
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Incentive Stock Option |
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Non-Qualified Stock Option |
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Expiration Date:
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Post-Termination Exercise Period:
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Three (3) Months |
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Vesting Schedule:
Subject to Grantees Continuous Service and other limitations set forth in this Notice, the
Plan and the Option Agreement, the Option may be exercised, in whole or in part, in accordance with
the following schedule:
25% of the Shares subject to the Option shall vest twelve months after the Vesting
Commencement Date, and an additional 25% of the Shares subject to the Option shall vest on each
yearly anniversary of the Vesting Commencement Date thereafter.
During any authorized leave of absence, the vesting of the Option as provided in this schedule
shall be suspended after the leave of absence exceeds a period of ninety (90) days. Vesting of the
Option shall resume upon the Grantees termination of the leave of absence and return to service to
the Company or a Related Entity. The Vesting Schedule of the Option shall be extended by the length
of the suspension.
In the event of the Grantees change in status from Employee to Consultant or from an Employee
whose customary employment is 20 hours or more per week to an Employee whose customary employment
is fewer than 20 hours per week, vesting of the Option shall continue only to the extent determined
by the Administrator as of such change in status.
In the event of termination of the Grantees Continuous Service for Cause, the Grantees right
to exercise the Option shall terminate concurrently with the termination of the Grantees
Continuous Service.
IN WITNESS WHEREOF, the Company and the Grantee have executed this Notice and agree that the
Option is to be governed by the terms and conditions of this Notice, the Plan, and the Option
Agreement.
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Stratex Networks, Inc., |
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a Delaware corporation |
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By: |
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Title: |
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THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE SHARES SUBJECT TO THE OPTION SHALL VEST, IF AT ALL,
ONLY DURING THE PERIOD OF THE GRANTEES CONTINUOUS SERVICE (NOT THROUGH THE ACT OF BEING HIRED,
BEING GRANTED THE OPTION OR ACQUIRING SHARES HEREUNDER). THE GRANTEE FURTHER ACKNOWLEDGES AND
AGREES THAT NOTHING IN THIS NOTICE, THE OPTION AGREEMENT, OR THE PLAN SHALL CONFER UPON THE GRANTEE
ANY RIGHT WITH RESPECT TO FUTURE AWARDS OR CONTINUATION OF GRANTEES CONTINUOUS SERVICE, NOR SHALL
IT INTERFERE IN ANY WAY WITH THE GRANTEES RIGHT OR THE RIGHT OF THE GRANTEES EMPLOYER TO
TERMINATE GRANTEES CONTINUOUS SERVICE, WITH OR WITHOUT CAUSE, AND WITH OR WITHOUT NOTICE. THE
GRANTEE ACKNOWLEDGES THAT UNLESS THE GRANTEE HAS A WRITTEN EMPLOYMENT AGREEMENT WITH THE COMPANY TO
THE CONTRARY, GRANTEES STATUS IS AT WILL.
The Grantee acknowledges receipt of a copy of the Plan and the Option Agreement, and
represents that he or she is familiar with the terms and provisions thereof, and hereby accepts the
Option subject to all of the terms and provisions hereof and thereof. The Grantee has reviewed this
Notice, the Plan, and the Option Agreement in their entirety, has had an opportunity to obtain the
advice of counsel prior to executing this Notice, and fully understands all provisions of this
Notice, the Plan and the Option Agreement. The Grantee hereby agrees that all disputes arising out
of or relating to this Notice, the Plan and the Option Agreement shall be resolved in accordance
with Section 16 of the Option Agreement. The Grantee further agrees to notify the Company upon any
change in the residence address indicated in this Notice.
AWARD NUMBER: ___________
STRATEX NETWORKS, INC. 2002 STOCK INCENTIVE PLAN
STOCK OPTION AWARD AGREEMENT
1. Grant of Option. Stratex Networks, Inc., a Delaware corporation (the
Company), hereby grants to the Grantee (the Grantee) named in the Notice of Stock Option Award
(the Notice), an option (the Option) to purchase the Total Number of Shares of Common Stock
subject to the Option (the Shares) set forth in the Notice, at the Exercise Price per Share set
forth in the Notice (the Exercise Price) subject to the terms and provisions of the Notice, this
Stock Option Award Agreement (the Option Agreement) and the Companys 2002 Stock Incentive Plan,
as amended from time to time (the Plan), which are incorporated herein by reference. Unless
otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in
this Option Agreement.
If designated in the Notice as an Incentive Stock Option, the Option is intended to qualify as
an Incentive Stock Option as defined in Section 422 of the Code. However, notwithstanding such
designation, to the extent that the aggregate Fair Market Value of Shares subject to Options
designated as Incentive Stock Options which become exercisable for the first time by the Grantee
during any calendar year (under all plans of the Company or any Parent or Subsidiary of the
Company) exceeds $100,000, such excess Options, to the extent of the Shares covered thereby in
excess of the foregoing limitation, shall be treated as Non-Qualified Stock Options. For this
purpose, Incentive Stock Options shall be taken into account in the order in which they were
granted, and the Fair Market Value of the Shares shall be determined as of the date the Option with
respect to such Shares is awarded.
2. Exercise of Option.
(a) Right to Exercise. The Option shall be exercisable during its term in
accordance with the Vesting Schedule set out in the Notice and with the applicable provisions of
the Plan and this Option Agreement. The Option shall be subject to the provisions of Section 3
relating to the exercisability or termination of the Option in the event of a Corporate Transaction
or Change in Control. No partial exercise of the Option may be for less than the lesser of five
percent (5%) of the total number of Shares subject to the Option or the remaining number of Shares
subject to the Option. The Grantee shall be subject to reasonable limitations on the number of
requested exercises during any monthly or weekly period as determined by the Administrator. In no
event shall the Company issue fractional Shares.
(b)
Method of Exercise. The Option shall be exercisable only by delivery of an
exercise notice (a form of which is attached as Exhibit A) or by other such procedure as specified
from time to time by the Administrator which shall state the election to exercise the Option, the
whole number of Shares in respect of which the Option is being exercised, such other
representations and agreements as to the holders investment intent with respect to such Shares and
such other provisions as may be required by the Administrator. The exercise notice shall be signed
by the Grantee and shall be delivered in person, by certified mail, or by such other method
(including electronic transmission) as determined from time to time by the Administrator to the
Company accompanied by payment of the Exercise Price. The Option shall be deemed to be exercised
upon receipt by the Company of such
written notice accompanied by the Exercise Price, which, to the extent selected, shall be deemed to
be satisfied by use of the broker-dealer sale and remittance procedure to pay the Exercise Price
provided in Section 4(d), below.
(c) Taxes. No Shares will be delivered to the Grantee or other person pursuant to
the exercise of the Option until the Grantee or other person has made arrangements acceptable to
the Administrator for the satisfaction of applicable income and employment tax withholding
obligations, including, without limitation, such other tax obligations of the Grantee incident to
the receipt of Shares or the disqualifying disposition of Shares received on exercise of an
Incentive Stock Option. Upon exercise of the Option, the Company or the Grantees employer may
offset or withhold (from any amount owed by the Company or the Grantees employer to the Grantee)
or collect from the Grantee or other person an amount sufficient to satisfy such tax obligations
and/or the employers withholding obligations.
3. Corporate Transactions/Changes in Control.
(a) Termination of Option to Extent Not Assumed Upon a Corporate Transaction.
Effective upon the consummation of a Corporate Transaction, this Option shall terminate. However,
this Option shall not terminate to the extent it is Assumed in connection with the Corporate
Transaction.
(b) Acceleration of Option Upon Corporate Transaction/Change in Control.
(i) Corporate Transaction. In the event of a Corporate Transaction and:
(A) for the portion of this Option that is Assumed or Replaced, the Option (if Assumed),
the replacement Option (if Replaced), or the cash incentive program (if Replaced) automatically
shall become fully vested, exercisable and payable for all of the Shares at the time represented by
such Assumed or Replaced portion of this Option, immediately upon termination of the Grantees
Continuous Service (substituting the successor employer corporation, if any, for Company or
Related Entity for the definition of Continuous Service) if such Continuous Service is
terminated by the successor company or the Company without Cause or voluntarily by the Grantee with
Good Reason within eighteen (18) months of the Corporate Transaction; and
(B) for the portion of this Option that is neither Assumed nor Replaced, such portion of
the Option shall automatically become fully vested and exercisable for all of the Shares at the
time represented by such portion of the Option, immediately prior to the specified effective date
of the Corporate Transaction.
(ii) Change in Control. Following a Change in Control (other than a Change in Control
which also is a Corporate Transaction) and upon the termination of the Continuous Service of a
Grantee if such Continuous Service is terminated by the Company or Related Entity without Cause or
voluntarily by the Grantee with Good Reason within eighteen (18) months of a Change in Control, the
outstanding Option shall automatically become fully vested and exercisable and be released from any
repurchase or forfeiture rights (other than repurchase rights exercisable at fair market value),
immediately upon the termination of such Continuous Service.
(c) Disclaimer of Accelerated Vesting. In the event that vesting is to occur
earlier than provided in the Vesting Schedule as a result of the application of this Section 3 (the
Accelerated Vesting), the Grantee may, prior to the date on which the Accelerated Vesting is to
occur, disclaim some or all of the Accelerated Vesting to the extent that the Accelerated Vesting
would result in any payment or benefit (within the meaning of Section 280G(b)(2) of the Code) to
the Grantee that would be subject to the excise tax imposed by Section 4999 of the Code. To
disclaim such Accelerated Vesting, the Grantee must provide notice of the disclaimer to the Company
in a form that is acceptable to the Administrator.
(d) The portion of the Option, if an Incentive Stock Option, accelerated under this
Section 3 in connection with a Corporate Transaction or Change in Control shall remain exercisable
as an Incentive Stock Option under the Code only to the extent the $100,000 dollar limitation of
Section 422(d) of the Code is not exceeded. To the extent such dollar limitation is exceeded, the
accelerated excess portion of the Option shall be exercisable as a Non-Qualified Stock Option.
4. Method of Payment. Payment of the Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Grantee; provided, however, that such
exercise method does not then violate any Applicable Law and, provided further, that the portion of
the Exercise Price equal to the par value of the Shares must be paid in cash or other legal
consideration permitted by the Delaware General Corporation Law:
(a) cash;
(b) check;
(c) surrender of Shares or delivery of a properly executed form of attestation of
ownership of Shares as the Administrator may require (including withholding of Shares otherwise
deliverable upon exercise of the Option) which have a Fair Market Value on the date of surrender or
attestation equal to the aggregate Exercise Price of the Shares as to which the Option is being
exercised (but only to the extent that such exercise of the Option would not result in an
accounting compensation charge with respect to the Shares used to pay the exercise price); or
(d) payment through a broker-dealer sale and remittance procedure pursuant to which the
Grantee (i) shall provide written instructions to a Company designated brokerage firm to effect the
immediate sale of some or all of the purchased Shares and remit to the Company, out of the sale
proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price
payable for the purchased Shares and (ii) shall provide written directives to the Company to
deliver the certificates for the purchased Shares directly to such brokerage firm in order to
complete the sale transaction.
5. Restrictions on Exercise. The Option may not be exercised if the issuance of
the Shares subject to the Option upon such exercise would constitute a violation of any Applicable
Laws. In addition, the Option, if an Incentive Stock Option, may not be exercised until such time
as the Plan has been approved by the stockholders of the Company.
6. Termination or Change of Continuous Service. In the event the Grantees
Continuous Service terminates, other than for Cause, the Grantee may, but only during the
Post-Termination Exercise Period, exercise the portion of the Option that was vested at the date of
such termination (the Termination Date). In the event of termination of the Grantees Continuous
Service for Cause, the Grantees right to exercise the Option shall, except as otherwise determined
by the Administrator, terminate concurrently with the termination of the Grantees Continuous
Service (also the Termination Date). In no event shall the Option be exercised later than the
Expiration Date set forth in the Notice. In the event of the Grantees change in status from
Employee, Director or Consultant to any other status of Employee, Director or Consultant, the
Option shall remain in effect and, except to the extent otherwise determined by the Administrator,
continue to vest; provided, however, with respect to any Incentive Stock Option that shall remain
in effect after a change in status from Employee to Director or Consultant, such Incentive Stock
Option shall cease to be treated as an Incentive Stock Option and shall be treated as a
Non-Qualified Stock Option on the day three (3) months and one (1) day following such change in
status. Except as provided in Sections 7 and 8 below, to the extent that the Option was unvested on
the Termination Date, or if the Grantee does not exercise the vested portion of the Option within
the Post-Termination Exercise Period, the Option shall terminate.
7. Disability of Grantee. In the event the Grantees Continuous Service
terminates as a result of his or her Disability, the Grantee may, but only within twelve (12)
months from the Termination Date (and in no event later than the Expiration Date), exercise the
portion of the Option that was vested on the Termination Date; provided, however, that if such
Disability is not a disability as such term is defined in Section 22(e)(3) of the Code and the
Option is an Incentive Stock Option, such Incentive Stock Option shall cease to be treated as an
Incentive Stock Option and shall be treated as a Non-Qualified Stock Option on the day three (3)
months and one (1) day following the Termination Date. To the extent that the Option was unvested
on the Termination Date, or if the Grantee does not exercise the vested portion of the Option
within the time specified herein, the Option shall terminate.
8. Death of Grantee. In the event of the termination of the Grantees Continuous
Service as a result of his or her death, or in the event of the Grantees death during the
Post-Termination Exercise Period or during the twelve (12) month period following the Grantees
termination of Continuous Service as a result of his or her Disability, the Grantees estate, or a
person who acquired the right to exercise the Option by bequest or inheritance, may exercise the
portion of the Option that was vested at the date of termination, within twelve (12) months from
the date of death (but in no event later than the Expiration Date). To the extent that the Option
was unvested on the date of death, or if the vested portion of the Option is not exercised within
the time specified herein, the Option shall terminate.
9. Transferability of Option. The Option, if an Incentive Stock Option, may not
be transferred in any manner other than by will or by the laws of descent and distribution and may
be exercised during the lifetime of the Grantee only by the Grantee. The Option, if a Non-Qualified
Stock Option, may not be transferred in any manner other than by will or by the laws of descent and
distribution, provided, however, that a Non-Qualified Stock Option may be transferred to members of
the Grantees Immediate Family to the extent and in the manner authorized by the Administrator. The
terms of the Option shall be binding upon the executors, administrators, heirs and successors of
the Grantee.
10. Stop-Transfer Notices. In order to ensure compliance with the restrictions on
transfer set forth in this Option Agreement, the Notice or the Plan, the Company may issue
appropriate stop transfer instructions to its transfer agent, if any, and, if the Company
transfers its own securities, it may make appropriate notations to the same effect in its own
records.
11. Refusal to Transfer. The Company shall not be required (i) to transfer on its
books any Shares that have been sold or otherwise transferred in violation of any of the provisions
of this Option Agreement or (ii) to treat as owner of such Shares or to accord the right to vote or
pay dividends to any purchaser or other transferee to whom such Shares shall have been so
transferred.
12. Term of Option. The Option may be exercised no later than the Expiration Date
set forth in the Notice or such earlier date as otherwise provided herein.
13. Tax Consequences. Set forth below is a brief summary as of the date of this
Option Agreement of some of the federal tax consequences of exercise of the Option and disposition
of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT
TO CHANGE. THE GRANTEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF
THE SHARES.
(a) Exercise of Incentive Stock Option. If the Option qualifies as an Incentive
Stock Option, there will be no regular federal income tax liability upon the exercise of the
Option, although the excess, if any, of the Fair Market Value of the Shares on the date of exercise
over the Exercise Price will be treated as income for purposes of the alternative minimum tax for
federal tax purposes and may subject the Grantee to the alternative minimum tax in the year of
exercise. However, the Internal Revenue Service issued proposed regulations which would subject the
Grantee to withholding at the time the Grantee exercises an Incentive Stock Option for Social
Security and Medicare taxes based upon the excess, if any, of the Fair Market Value of the Shares
on the date of exercise over the Exercise Price. These proposed regulations are subject to further
modification by the Internal Revenue Service and, if adopted, would be effective only for the
exercise of Incentive Stock Options on or after January 1, 2003.
(b) Exercise of Incentive Stock Option Following Disability. If the Grantees
Continuous Service terminates as a result of Disability that is not total and permanent disability
as defined in Section 22(e)(3) of the Code, to the extent permitted on the date of termination, the
Grantee must exercise an Incentive Stock Option within three (3) months of such termination for the
Incentive Stock Option to be qualified as an Incentive Stock Option.
(c) Exercise of Non-Qualified Stock Option. On exercise of a Non-Qualified Stock
Option, the Grantee will be treated as having received compensation income (taxable at ordinary
income tax rates) equal to the excess, if any, of the Fair Market Value of the Shares on the date
of exercise over the Exercise Price. If the Grantee is an Employee or a former Employee, the
Company will be required to withhold from the Grantees compensation or collect from the Grantee
and pay to the applicable taxing authorities an amount in cash equal to a percentage of this
compensation income at the time of exercise, and may refuse to honor the exercise and refuse to
deliver Shares if such withholding amounts are not delivered at the time of exercise.
(d) Disposition of Shares. In the case of a Non-Qualified Stock Option, if Shares
are held for more than one year, any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes and subject to tax at a maximum rate of 20%.
In the case of an Incentive Stock Option, if Shares transferred pursuant to the Option are held for
more than one year after receipt of the Shares and are disposed more than two years after the Date
of Award, any gain realized on disposition of the Shares also will be treated as capital gain for
federal income tax purposes and subject to the same tax rates and holding periods that apply to
Shares acquired upon exercise of a Non-Qualified Stock Option. If Shares purchased under an
Incentive Stock Option are disposed of prior to the expiration of such one-year or two-year
periods, any gain realized on such disposition will be treated as compensation income (taxable at
ordinary income rates) to the extent of the difference between the Exercise Price and the lesser of
(i) the Fair Market Value of the Shares on the date of exercise, or (ii) the sale price of the
Shares.
14. Entire Agreement: Governing Law. The Notice, the Plan and this Option
Agreement constitute the entire agreement of the parties with respect to the subject matter hereof
and supersede in their entirety all prior undertakings and agreements of the Company and the
Grantee with respect to the subject matter hereof, and may not be modified adversely to the
Grantees interest except by means of a writing signed by the Company and the Grantee. Nothing in
the Notice, the Plan and this Option Agreement (except as expressly provided therein) is intended
to confer any rights or remedies on any persons other than the parties. The Notice, the Plan and
this Option Agreement are to be construed in accordance with and governed by the internal laws of
the State of California without giving effect to any choice of law rule that would cause the
application of the laws of any jurisdiction other than the internal laws of the State of California
to the rights and duties of the parties. Should any provision of the Notice, the Plan or this
Option Agreement be determined by a court of law to be illegal or unenforceable, such provision
shall be enforced to the fullest extent allowed by law and the other provisions shall nevertheless
remain effective and shall remain enforceable.
15. Headings. The captions used in the Notice and this Option Agreement are
inserted for convenience and shall not be deemed a part of the Option for construction or
interpretation.
16. Dispute Resolution. The provisions of this Section 16 shall be the exclusive
means of resolving disputes arising out of or relating to the Notice, the Plan and this Option
Agreement. The Company, the Grantee, and the Grantees assignees pursuant to Section 9 (the
parties) shall attempt in good faith to resolve any disputes arising out of or relating to the
Notice, the Plan and this Option Agreement by negotiation between individuals who have authority to
settle the controversy. Negotiations shall be commenced by either party by notice of a written
statement of the partys position and the name and title of the individual who will represent the
party. Within thirty (30) days of the written notification, the parties shall meet at a mutually
acceptable time and place, and thereafter as often as they reasonably deem necessary, to resolve
the dispute. If the dispute has not been resolved by negotiation, the parties agree that any suit,
action, or proceeding arising out of or relating to the Notice, the Plan or this Option Agreement
shall be brought in the United States District Court for the Northern District of California (or
should such court lack jurisdiction to hear such action, suit or proceeding, in the Santa Clara
County Superior Court) and that the parties shall submit to the jurisdiction of such court. The
parties irrevocably waive, to the fullest extent permitted by law, any objection the party may have
to the laying of venue for any such suit, action or proceeding brought in such court. THE PARTIES
ALSO EXPRESSLY WAIVE ANY RIGHT THEY HAVE OR MAY
HAVE TO A JURY TRIAL OF ANY SUCH SUIT, ACTION OR PROCEEDING. If any one or more provisions of this
Section 16 shall for any reason be held invalid or unenforceable, it is the specific intent of the
parties that such provisions shall be modified to the minimum extent necessary to make it or its
application valid and enforceable.
17. Notices. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in the United States
mail by certified mail (if the parties are within the United States) or upon deposit for delivery
by an internationally recognized express mail courier service (for international delivery of
notice), with postage and fees prepaid, addressed to the other party at its address as shown
beneath its signature in the Notice, or to such other address as such party may designate in
writing from time to time to the other party.
EXHIBIT A
STRATEX NETWORKS, INC. 2002 STOCK INCENTIVE PLAN
EXERCISE NOTICE
Stratex Networks, Inc.
170 Rose Orchard Way
San Jose, California 95134
Attention: Secretary
1. Exercise
of Option. Effective as of today, , ___ the
undersigned (the Grantee) hereby elects to exercise the Grantees option to purchase
shares of the Common Stock (the Shares) of Stratex Networks, Inc. (the Company) under and
pursuant to the Companys 2002 Stock Incentive Plan, as amended from time to time (the Plan) and
the [ ] Incentive [ ] Non-Qualified Stock Option Award Agreement (the Option Agreement) and
Notice of Stock Option Award (the Notice) dated , . Unless otherwise
defined herein, the terms defined in the Plan shall have the same defined meanings in this Exercise
Notice.
2. Representations of the Grantee. The Grantee acknowledges that the Grantee has
received, read and understood the Notice, the Plan and the Option Agreement and agrees to abide by
and be bound by their terms and conditions.
3. Rights as Stockholder. Until the stock certificate evidencing such Shares is
issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to the Shares, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such stock certificate promptly after the Option is
exercised. No adjustment will be made for a dividend or other right for which the record date is
prior to the date the stock certificate is issued, except as provided in Section 10 of the Plan.
4. Delivery of Payment. The Grantee herewith delivers to the Company the full
Exercise Price for the Shares, which, to the extent selected, shall be deemed to be satisfied by
use of the broker-dealer sale and remittance procedure to pay the Exercise Price provided in
Section 4(d) of the Option Agreement.
5. Tax Consultation. The Grantee understands that the Grantee may suffer adverse
tax consequences as a result of the Grantees purchase or disposition of the Shares. The Grantee
represents that the Grantee has consulted with any tax consultants the Grantee deems advisable in
connection with the purchase or disposition of the Shares and that the Grantee is not relying on
the Company for any tax advice
6. Taxes. The Grantee agrees to satisfy all applicable federal, state and local
income and employment tax withholding obligations and herewith delivers to the Company the full
amount of
such obligations or has made arrangements acceptable to the Company to satisfy such obligations. In
the case of an Incentive Stock Option, the Grantee also agrees, as partial consideration for the
designation of the Option as an Incentive Stock Option, to notify the Company in writing within
thirty (30) days of any disposition of any shares acquired by exercise of the Option if such
disposition occurs within two (2) years from the Date of Award or within one (1) year from the date
the Shares were transferred to the Grantee. If the Company is required to satisfy any federal,
state or local income or employment tax withholding obligations as a result of such an early
disposition, the Grantee agrees to satisfy the amount of such withholding in a manner that the
Administrator prescribes.
7. Successors and Assigns. The Company may assign any of its rights under this
Exercise Notice to single or multiple assignees, and this agreement shall inure to the benefit of
the successors and assigns of the Company. This Exercise Notice shall be binding upon the Grantee
and his or her heirs, executors, administrators, successors and assigns.
8. Headings. The captions used in this Exercise Notice are inserted for
convenience and shall not be deemed a part of this agreement for construction or interpretation.
9. Dispute Resolution. The provisions of Section 16 of the Option Agreement
shall be the exclusive means of resolving disputes arising out of or relating to this Exercise
Notice.
10. Governing Law; Severability. This Exercise Notice is to be construed in
accordance with and governed by the internal laws of the State of California without giving effect
to any choice of law rule that would cause the application of the laws of any jurisdiction other
than the internal laws of the State of California to the rights and duties of the parties. Should
any provision of this Exercise Notice be determined by a court of law to be illegal or
unenforceable, such provision shall be enforced to the fullest extent allowed by law and the other
provisions shall nevertheless remain effective and shall remain enforceable.
11. Notices. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in the United States
mail by certified mail, (if the parties are within the United States) or upon deposit for delivery
by an internationally recognized express mail courier service (for international delivery of
notice) with postage and fees prepaid, addressed to the other party at its address as shown below
beneath its signature, or to such other address as such party may designate in writing from time to
time to the other party.
12. Further Instruments. The parties agree to execute such further instruments
and to take such further action as may be reasonably necessary to carry out the purposes and intent
of this agreement.
13. Entire Agreement. The Notice, the Plan, and the Option Agreement are
incorporated herein by reference, and together with this Exercise Notice constitute the entire
agreement of the parties with respect to the subject matter hereof and supersede in their entirety
all prior undertakings and agreements of the Company and the Grantee with respect to the subject
matter hereof, and may not be modified adversely to the Grantees interest except by means of a
writing signed by the Company and the Grantee. Nothing in the Notice, the Plan, the Option
Agreement and this Exercise
Notice (except as expressly provided therein) is intended to confer any rights or remedies on any
persons other than the parties.
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Accepted by: |
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GRANTEE: |
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STRATEX NETWORKS, INC. |
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(Signature) |
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Address: |
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170 Rose Orchard Way
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exv4w9
Exhibit 4.9
HARRIS STRATEX NETWORKS, INC.
2007 STOCK EQUITY PLAN
Table
of Contents
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1.
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Purpose
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2.
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Definitions
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3.
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Term of the Plan
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4.
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Stock Subject to the Plan
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5.
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Administration
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6.
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Authorization of Grants
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7.
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Specific Terms of Awards
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8.
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Adjustment Provisions
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9.
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Change of Control
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10.
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Settlement of Awards
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11.
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Reservation of Stock
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12.
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Limitation of Rights in Stock; No Special Service Rights
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13.
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Unfunded Status of Plan
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14.
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Nonexclusivity of the Plan
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15.
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Termination and Amendment of the Plan
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16.
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Notices and Other Communications
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17.
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Severability
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18.
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Governing Law
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HARRIS STRATEX NETWORKS, INC.
2007 Stock Equity Plan
1. Purpose
This Plan is intended to encourage ownership of Stock by employees, consultants and directors
of the Company and its Affiliates and to provide additional incentive for them to promote the
success of the Companys business through the grant of Awards of or pertaining to shares of the
Companys Stock. The Plan is intended to be an incentive stock option plan within the meaning of
Section 422 of the Code, but not all Awards are required to be Incentive Options.
2. Definitions
As used in this Plan, the following terms shall have the following meanings:
2.1. Accelerate, Accelerated, and Acceleration, means: (a) when used
with respect to an Option or Stock Appreciation Right, that as of the time of reference the Option
or Stock Appreciation Right will become exercisable with respect to some or all of the shares of
Stock for which it was not then otherwise exercisable by its terms; (b) when used with respect to
Restricted Stock or Restricted Stock Units, that the Risk of Forfeiture otherwise applicable to the
Stock or Units shall expire with respect to some or all of the shares of Restricted Stock or Units
then still otherwise subject to the Risk of Forfeiture; and (c) when used with respect to
Performance Units, that the applicable Performance Goals shall be deemed to have been met as to
some or all of the Units.
2.2. Acquisition means a merger or consolidation of the Company into another person
(i.e., which merger or consolidation the Company does not survive) or the sale, transfer, or other
disposition of all or substantially all of the Companys assets to one or more other persons in a
single transaction or series of related transactions.
2.3. Affiliate means any corporation, partnership, limited liability company, business
trust, or other entity controlling, controlled by or under common control with the Company.
2.4. Award means any grant or sale pursuant to the Plan of Options, Stock Appreciation
Rights, Performance Units, Restricted Stock, Restricted Stock Units, or Stock Grants.
2.5. Award Agreement means an agreement between the Company and the recipient of an
Award, setting forth the terms and conditions of the Award.
2.6. Board means the Companys Board of Directors.
2.7. Change of Control means the occurrence of any of the following unless both (i)
immediately prior to such occurrence Harris Corporation (Harris) owns more than 30% of the total
combined voting power of the Companys outstanding securities and (ii) immediately after such
occurrence (and the exercise or lapse of any rights triggered by such occurrence) Harris owns a
majority of such total combined voting power of the outstanding capital stock of the Company:
- 2 -
(a) any merger, consolidation, share exchange or Acquisition, unless immediately following
such merger, consolidation, share exchange or Acquisition at least 50% of the total voting power
(in respect of the election of directors, or similar officials in the case of an entity other than
a corporation) of (i) the entity resulting from such merger, consolidation or share exchange, or
the entity which has acquired all or substantially all of the assets of the Company (in the case of
an asset sale that satisfies the criteria of an Acquisition) (in either case, the Surviving
Entity), or (ii) if applicable, the ultimate parent entity that directly or indirectly has
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50%
or more of the total voting power (in respect of the election of directors, or similar officials in
the case of an entity other than a corporation) of the Surviving Entity (the Parent Entity) is
represented by Company securities that were outstanding immediately prior to such merger,
consolidation, share exchange or Acquisition (or, if applicable, is represented by shares into
which such Company securities were converted pursuant to such merger, consolidation, share exchange
or Acquisition), or
(b) any person or group of persons (within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended and in effect from time to time) directly or indirectly acquires
beneficial ownership (determined pursuant to Securities and Exchange Commission Rule 13d-3
promulgated under the said Exchange Act), other than through a merger, consolidation, share
exchange or Acquisition, of securities possessing more than 30% of the total combined voting power
of the Companys outstanding securities other than (i) Harris, provided that this exclusion of
Harris shall no longer apply after such time, if any, as Harris beneficially owns less than 30% of
such total voting power, (ii) an employee benefit plan of the Company or any of its Affiliates
(other than Harris), (iii) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any of its Affiliates (other than Harris), or (iv) an underwriter
temporarily holding securities pursuant to an offering of such securities, or
(c) over a period of 36 consecutive months or less, there is a change in the composition of
the Board such that a majority of the Board members (rounded up to the next whole number, if a
fraction) ceases, by reason of one or more proxy contests for the election of Board members, to be
composed of individuals each of whom meet one of the following criteria: (i) have been a Board
member continuously since the adoption of this Plan or the beginning of such 36 month period, (ii)
have been appointed by Harris Corporation, or (iii) have been elected or nominated during such 36
month period by at least a majority of the Board members that (x) belong to the same class of
director as such Board member and (y) satisfied the criteria of this subsection (c) when they were
elected or nominated, or
(d) a majority of the Board determines that a Change of Control has occurred.
2.8. Code means the Internal Revenue Code of 1986, as amended from time to time, or
any successor statute thereto, and any regulations issued from time to time thereunder.
2.9. Committee means the Compensation Committee of the Board, or such other committee
of the Board to which such authority may be granted from time to time, which in general is
responsible for the administration of the Plan, as provided in Section 5 of the Plan. For any
period during which no such committee is in existence Committee shall mean the Board and all
authority and responsibility assigned to the Committee under the Plan shall be exercised, if at
all, by the Board.
- 3 -
2.10. Company means Harris Stratex Networks, Inc., a corporation organized under the
laws of the Delaware.
2.11. Covered Employee means an employee who is a covered employee within the
meaning of Section 162(m) of the Code.
2.12. Grant Date means the date as of which an Award is granted, as determined under
Section 7.1(a).
2.13. Incentive Option means an Option which by its terms is to be treated as an
incentive stock option within the meaning of Section 422 of the Code.
2.14. Market Value means the value of a share of Stock on a particular date determined
by such methods or procedures as may be established by the Committee. Unless otherwise determined
by the Committee, the Market Value of Stock as of any date is the closing price for the Stock as
reported on the NASDAQ Global Market (or on any other national securities exchange on which the
Stock is then listed) for that date or, if no closing price is reported for that date, the closing
price on the next preceding date for which a closing price was reported.
2.15. Nonstatutory Option means any Option that is not an Incentive Option.
2.16. Option means an option to purchase shares of Stock.
2.17. Optionee means a Participant to whom an Option shall have been granted under the
Plan.
2.18. Participant means any holder of an outstanding Award under the Plan.
2.19. Performance Criteria means the criteria that the Committee selects for purposes
of establishing the Performance Goal or Performance Goals for a Participant for a Performance
Period. The Performance Criteria used to establish Performance Goals are limited to: (i) cash
flow (before or after dividends), (ii) earnings per share (including, without limitation, earnings
before interest, taxes, depreciation and amortization), (iii) stock price, (iv) return on equity,
(v) stockholder return or total stockholder return, (vi) return on capital (including, without
limitation, return on total capital or return on invested capital), (vii) return on investment,
(viii) return on assets or net assets, (ix) market capitalization, (x) economic value added, (xi)
debt leverage (debt to capital), (xii) revenue, (xiii) sales or net sales, (xiv) backlog, (xv)
income, pre-tax income or net income, (xvi) operating income or pre-tax profit, (xvii) operating
profit, net operating profit or economic profit, (xviii) gross margin, operating margin or profit
margin, (xix) return on operating revenue or return on operating assets, (xx) cash from operations,
(xxi) operating ratio, (xxii) operating revenue, (xxiii) market share improvement, (xxiv) general
and administrative expenses or (xxv) customer service.
2.20. Performance Goals means, for a Performance Period, the written goal or goals
established by the Committee for the Performance Period based upon the Performance Criteria. The
Performance Goals may be expressed in terms of overall Company performance or the performance of a
division, business unit, subsidiary, or an individual, either individually, alternatively or in any
combination, applied to either the Company as a whole or to a business unit or Affiliate, either
individually, alternatively or in any combination, and measured either quarterly, annually or
cumulatively over a period of years, on an absolute basis or relative to a
- 4 -
pre-established target, to previous years results or to a designated comparison group, in
each case as specified by the Committee. The Committee will, in the manner and within the time
prescribed by Section 162(m) of the Code in the case of Qualified Performance-Based Awards,
objectively define the manner of calculating the Performance Goal or Goals it selects to use for
such Performance Period for such Participant. To the extent consistent with Section 162(m) of the
Code, the Committee may appropriately adjust any evaluation of performance against a Performance
Goal to exclude any of the following events that occurs during a performance period: (i) asset
write-downs, (ii) litigation, claims, judgments or settlements, (iii) the effect of changes in tax
law, accounting principles or other such laws or provisions affecting reported results, (iv)
accruals for reorganization and restructuring programs and (v) any extraordinary, unusual,
non-recurring or non-comparable items (A) as described in Accounting Principles Board Opinion No.
30, (B) as described in managements discussion and analysis of financial condition and results of
operations appearing in the Companys Annual Report to stockholders for the applicable year, or (C)
publicly announced by the Company in a press release or conference call relating to the Companys
results of operations or financial condition for a completed quarterly or annual fiscal period.
2.21. Performance Period means the one or more periods of time, which may be of
varying and overlapping durations, selected by the Committee, over which the attainment of one or
more Performance Goals will be measured for purposes of determining a Participants right to, and
the payment of, a Performance Unit.
2.22. Performance Unit means a right granted to a Participant under Section 7.5, to
receive cash, Stock or other Awards, the payment of which is contingent on achieving Performance
Goals established by the Committee.
2.23. Plan means this 2007 Stock Equity Plan of the Company, as amended from time to
time, and including any attachments or addenda hereto.
2.24. Qualified Performance-Based Awards means Awards intended to qualify as
performance-based compensation under Section 162(m) of the Code.
2.25. Restricted Stock means a grant or sale of shares of Stock to a Participant
subject to a Risk of Forfeiture.
2.26. Restricted Stock Units means rights to receive shares of Stock at the close of a
Restriction Period, subject to a Risk of Forfeiture.
2.27. Restriction Period means the period of time, established by the Committee in
connection with an Award of Restricted Stock or Restricted Stock Units, during which the shares of
Restricted Stock are subject to a Risk of Forfeiture described in the applicable Award Agreement.
2.28. Risk of Forfeiture means a limitation on the right of the Participant to retain
Restricted Stock or Restricted Stock Units, including a right in the Company to reacquire shares of
Restricted Stock at less than their then Market Value, arising because of the occurrence or
non-occurrence of specified events or conditions.
2.29. Stock means Class A common stock, par value $0.01 per share, of the Company, and
such other securities as may be substituted for Stock pursuant to Section 8.
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2.30. Stock Appreciation Right means a right to receive any excess in the Market Value
of shares of Stock (except as otherwise provided in Section 7.2(c)) over a specified exercise
price.
2.31. Stock Grant means the grant of shares of Stock not subject to restrictions or
other forfeiture conditions.
2.32. Ten Percent Owner means a person who owns, or is deemed within the meaning of
Section 422(b)(6) of the Code to own, stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company (or any parent or subsidiary corporations of the
Company, as defined in Sections 424(e) and (f), respectively, of the Code). Whether a person is a
Ten Percent Owner shall be determined with respect to an Option based on the facts existing
immediately prior to the Grant Date of the Option.
3. Term of the Plan
Unless the Plan shall have been earlier terminated by the Board, Awards may be granted under
this Plan at any time in the period commencing on the date of approval of the Plan by the Board and
ending immediately prior to the seventh anniversary of the earlier of the adoption of the Plan by
the Board or approval of the Plan by the Companys stockholders. Awards granted pursuant to the
Plan within that period shall not expire solely by reason of the termination of the Plan. Awards
of Incentive Options granted prior to stockholder approval of the Plan are expressly conditioned
upon such approval, but in the event of the failure of the stockholders to approve the Plan shall
thereafter and for all purposes be deemed to constitute Nonstatutory Options.
4. Stock Subject to the Plan
At no time shall the number of shares of Stock issued pursuant to or subject to outstanding
Awards granted under the Plan (including pursuant to Incentive Options), nor the number of shares
of Stock issued pursuant to Incentive Options, exceed 5,000,000 shares of Stock, subject, however,
to the provisions of Section 8 of the Plan. For purposes of applying the foregoing limitation, (a)
if any Option or Stock Appreciation Right expires, terminates, or is cancelled for any reason
without having been exercised in full, or if any other Award is forfeited by the recipient or
repurchased at less than its Market Value, the shares not purchased by the Optionee or which are
forfeited by the recipient or repurchased shall again be available for Awards to be granted under
the Plan and (b) if any Option is exercised by delivering previously owned shares in payment of the
exercise price therefor, only the net number of shares, that is, the number of shares issued minus
the number received by the Company in payment of the exercise price, shall be considered to have
been issued pursuant to an Award granted under the Plan. In addition, settlement of any Award
shall not count against the foregoing limitations except to the extent settled in the form of
Stock. Shares of Stock issued pursuant to the Plan may be either authorized but unissued shares or
shares held by the Company in its treasury.
5. Administration
The Plan shall be administered by the Committee; provided, however, that at any time and on
any one or more occasions the Board may itself exercise any of the powers and responsibilities
assigned the Committee under the Plan and when so acting shall have the benefit of all of the
provisions of the Plan pertaining to the Committees exercise of its authorities
- 6 -
hereunder and provided further, however, that the Committee may delegate to an executive
officer or officers the authority to grant Awards hereunder to employees who are not officers, and
to consultants, in accordance with such guidelines as the Committee shall set forth at any time or
from time to time. Subject to the provisions of the Plan, the Committee shall have complete
authority, in its discretion, to make or to select the manner of making all determinations with
respect to each Award to be granted by the Company under the Plan including the employee,
consultant or director to receive the Award and the form of Award. In making such determinations,
the Committee may take into account the nature of the services rendered by the respective
employees, consultants, and directors, their present and potential contributions to the success of
the Company and its Affiliates, and such other factors as the Committee in its discretion shall
deem relevant. Subject to the provisions of the Plan, the Committee shall also have complete
authority to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to
it, to determine the terms and provisions of the respective Award Agreements (which need not be
identical), and to make all other determinations necessary or advisable for the administration of
the Plan. The Committees determinations made in good faith on matters referred to in the Plan
shall be final, binding and conclusive on all persons having or claiming any interest under the
Plan or an Award made pursuant hereto.
6. Authorization of Grants
6.1.
Eligibility. The Committee may grant from time to time and at any time prior to the
termination of the Plan one or more Awards, either alone or in combination with any other Awards,
to any employee of or consultant to one or more of the Company and its Affiliates or to
non-employee member of the Board or of any board of directors (or similar governing authority) of
any Affiliate. However, only employees of the Company, and of any parent or subsidiary corporations
of the Company, as defined in Sections 424(e) and (f), respectively, of the Code, shall be eligible
for the grant of an Incentive Option. Further, in no event shall the number of shares of Stock
covered by Options or other Awards granted to any one person in any one calendar year exceed 10% of
the aggregate number of shares of Stock subject to the Plan.
6.2. General Terms of Awards. Each grant of an Award shall be subject to all
applicable terms and conditions of the Plan (including but not limited to any specific terms and
conditions applicable to that type of Award set out in the following Section), and such other terms
and conditions, not inconsistent with the terms of the Plan, as the Committee may prescribe. No
prospective Participant shall have any rights with respect to an Award, unless and until such
Participant shall have complied with the applicable terms and conditions of such Award (including
if applicable delivering a fully executed copy of any agreement evidencing an Award to the
Company).
6.3. Effect of Termination of Employment, Etc. Unless the Committee shall provide
otherwise with respect to any Award, if the Participants employment or other association with the
Company and its Affiliates ends for any reason, including because of the Participants employer
ceasing to be an Affiliate, (a) any outstanding Option or SAR of the Participant shall cease to be
exercisable in any respect not later than 3 months following that event and, for the period it
remains exercisable following that event, shall be exercisable only to the extent exercisable at
the date of that event, and (b) any other outstanding Award of the Participant shall be forfeited
or otherwise subject to return to or repurchase by the Company on the terms specified in the
applicable Award Agreement. Military or sick leave or other bona fide leave shall not be deemed a
termination of employment or other association, provided that it does not exceed the
longer of three (3) months or the period during which the absent Participants reemployment
rights, if any, are guaranteed by statute or by contract.
- 7 -
6.4. Non-Transferability of Awards. Except as otherwise provided in this Section 6.4,
Awards shall not be transferable, and no Award or interest therein may be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of
descent and distribution. All of a Participants rights in any Award may be exercised during the
life of the Participant only by the Participant or the Participants legal representative.
However, the Committee may, at or after the grant of an Award of a Nonstatutory Option, or shares
of Restricted Stock, provide that such Award may be transferred by the recipient to a family
member; provided, however, that any such transfer is without payment of any consideration
whatsoever and that no transfer shall be valid unless first approved by the Committee, acting in
its sole discretion. For this purpose, family member means any child, stepchild, grandchild,
parent, stepparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships,
any person sharing the employees household (other than a tenant or employee), a trust in which the
foregoing persons have more than fifty (50) percent of the beneficial interests, a foundation in
which the foregoing persons (or the Participant) control the management of assets, and any other
entity in which these persons (or the Participant) own more than fifty (50) percent of the voting
interests.
7. Specific Terms of Awards
7.1. Options.
(a) Date of Grant. The granting of an Option shall take place at the time specified
in the Award Agreement. Only if expressly so provided in the applicable Award Agreement shall the
Grant Date be the date on which the Award Agreement shall have been duly executed and delivered by
the Company and the Optionee.
(b) Exercise Price. The price at which shares of Stock may be acquired under each
Incentive Option shall be not less than 100% of the Market Value of Stock on the Grant Date, or not
less than 110% of the Market Value of Stock on the Grant Date if the Optionee is a Ten Percent
Owner. The price at which shares may be acquired under each Nonstatutory Option shall be not less
than 100% of the Market Value of Stock on the Grant Date.
(c) Option Period. No Incentive Option may be exercised on or after the seventh
anniversary of the Grant Date, or on or after the fifth anniversary of the Grant Date if the
Optionee is a Ten Percent Owner. No Nonstatutory Option may be exercised on or after the seventh
anniversary of the Grant Date.
(d) Exercisability. An Option may be immediately exercisable or become exercisable in such
installments, cumulative or non-cumulative, as the Committee may determine. In the case of an
Option not otherwise immediately exercisable in full, the Committee may Accelerate such Option in
whole or in part at any time; provided, however, that in the case of an Incentive Option, any such
Acceleration of the Option would not cause the Option to fail to comply with the provisions of
Section 422 of the Code or the Optionee consents to the Acceleration.
- 8 -
(e) Method of Exercise. An Option may be exercised by the Optionee giving written
notice, in the manner provided in Section 16, specifying the number of shares with respect to which
the Option is then being exercised. The notice shall be accompanied by payment in the form of cash
or check payable to the order of the Company in an amount equal to the exercise price of the shares
to be purchased or, subject in each instance to the Committees approval, acting in its sole
discretion, and to such conditions, if any, as the Committee may deem necessary to avoid adverse
accounting effects to the Company, by delivery to the Company shares of Stock having a Market Value
equal to the exercise price of the shares to be purchased.
If the Stock is traded on an established market, payment of any exercise price may also be made
through and under the terms and conditions of any formal cashless exercise program authorized by
the Company entailing the sale of the Stock subject to an Option in a brokered transaction (other
than to the Company). Receipt by the Company of such notice and payment in any authorized or
combination of authorized means shall constitute the exercise of the Option. Within thirty (30)
days thereafter but subject to the remaining provisions of the Plan, the Company shall deliver or
cause to be delivered to the Optionee or his agent the number of shares then being purchased. Such
shares shall be fully paid and nonassessable.
(f) Limit on Incentive Option Characterization. An Incentive Option shall be
considered to be an Incentive Option only to the extent that the number of shares of Stock for
which the Option first becomes exercisable in a calendar year do not have an aggregate Market Value
(as of the date of the grant of the Option) in excess of the current limit. The current limit
for any Optionee for any calendar year shall be $100,000 minus the aggregate Market Value at the
date of grant of the number of shares of Stock available for purchase for the first time in the
same year under each other Incentive Option previously granted to the Optionee under the Plan, and
under each other incentive stock option previously granted to the Optionee under any other
incentive stock option plan of the Company and its Affiliates, after December 31, 1986. Any shares
of Stock which would cause the foregoing limit to be violated shall be deemed to have been granted
under a separate Nonstatutory Option, otherwise identical in its terms to those of the Incentive
Option.
(g) Notification of Disposition. Each person exercising any Incentive Option granted
under the Plan shall be deemed to have covenanted with the Company to report to the Company any
disposition of such shares prior to the expiration of the holding periods specified by Section
422(a)(1) of the Code and, if and to the extent that the realization of income in such a
disposition imposes upon the Company federal, state, local or other withholding tax requirements,
or any such withholding is required to secure for the Company an otherwise available tax deduction,
to remit to the Company an amount in cash sufficient to satisfy those requirements.
7.2. Stock Appreciation Rights.
(a) Tandem or Stand-Alone. Stock Appreciation Rights may be granted in tandem with an
Option (at or, in the case of a Nonstatutory Option, after, the award of the Option), or alone and
unrelated to an Option. Stock Appreciation Rights in tandem with an Option shall terminate to the
extent that the related Option is exercised, and the related Option shall terminate to the extent
that the tandem Stock Appreciation Rights are exercised.
(b) Exercise Price. Stock Appreciation Rights shall have an exercise price of not
less than one hundred percent (100%) of the Market Value of the Stock on the date of award,
or in the case of Stock Appreciation Rights in tandem with Options, the exercise price of the
related Option.
- 9 -
(c) Other Terms. Except as the Committee may deem inappropriate or inapplicable in
the circumstances, Stock Appreciation Rights shall be subject to terms and conditions substantially
similar to those applicable to a Nonstatutory Option.
7.3. Restricted Stock.
(a) Purchase Price. Shares of Restricted Stock shall be issued under the Plan for
such consideration, in cash, other property or services, or any combination thereof, as is
determined by the Committee.
(b) Issuance of Shares. Shares of Restricted Stock awarded pursuant to a Restricted
Stock Award shall be issued as certificates or recorded in book-entry form, subject to subsection
(c) below. Such shares shall be registered in the name of the Participant. Any certificates so
issued shall be printed with an appropriate legend referring to the terms, conditions, and
restrictions applicable to such Award as determined or authorized in the sole discretion of the
Committee. Shares recorded in book-entry form shall be recorded with a notation referring to the
terms, conditions, and restrictions applicable to such Award as determined or authorized in the
sole discretion of the Committee.
(c) Escrow of Shares. The Committee may require that the stock certificates or
book-entry registrations evidencing shares of Restricted Stock be held in custody by a designated
escrow agent (which may but need not be the Company) until the restrictions thereon shall have
lapsed, and that the Participant deliver a stock power, endorsed in blank, relating to the Stock
covered by such Award.
(d) Restrictions and Restriction Period. During the Restriction Period applicable to
shares of Restricted Stock, such shares shall be subject to limitations on transferability and a
Risk of Forfeiture arising on the basis of such conditions related to the performance of services,
Company or Affiliate performance or otherwise as the Committee may determine and provide for in the
applicable Award Agreement. Any such Risk of Forfeiture may be waived or terminated, or the
Restriction Period shortened, at any time by the Committee on such basis as it deems appropriate.
(e) Rights Pending Lapse of Risk of Forfeiture or Forfeiture of Award. Except as
otherwise provided in the Plan or the applicable Award Agreement, at all times prior to lapse of
any Risk of Forfeiture applicable to, or forfeiture of, an Award of Restricted Stock, the
Participant shall have all of the rights of a stockholder of the Company, including the right to
vote, and the right to receive any dividends with respect to, the shares of Restricted Stock. The
Committee, as determined at the time of Award, may permit or require the payment of cash dividends
to be deferred and, if the Committee so determines, reinvested in additional Restricted Stock to
the extent shares are available under Section 4.
(f) Lapse of Restrictions. If and when the Restriction Period expires without a prior
forfeiture of the Restricted Stock, any certificates for such shares shall be delivered to the
Participant promptly if not theretofore so delivered, and the restrictive legends shall be promptly
removed from any book-entry registrations for such shares.
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7.4. Restricted Stock Units.
(a) Character. Each Restricted Stock Unit shall entitle the recipient to a share of Stock at
a close of such Restriction Period as the Committee may establish and subject to a Risk of
Forfeiture arising on the basis of such conditions relating to the performance of services, Company
or Affiliate performance or otherwise as the Committee may determine and provide for in the
applicable Award Agreement. Any such Risk of Forfeiture may be waived or terminated, or the
Restriction Period shortened, at any time by the Committee on such basis as it deems appropriate.
(b) Form and Timing of Payment. Payment of earned Restricted Stock Units shall be
made in a single lump sum following the close of the applicable Restriction Period. At the
discretion of the Committee, Participants may be entitled to receive payments equivalent to any
dividends declared with respect to Stock referenced in grants of Restricted Stock Units but only
following the close of the applicable Restriction Period and then only if the underlying Stock
shall have been earned. Unless the Committee shall provide otherwise, any such dividend
equivalents shall be paid, if at all, without interest or other earnings.
7.5. Performance Units.
(a) Character. Each Performance Unit shall entitle the recipient to the value of a specified
number of shares of Stock, over the initial value for such number of shares, if any, established by
the Committee at the time of grant, at the close of a specified Performance Period to the extent
specified Performance Goals shall have been achieved.
(b) Earning of Performance Units. The Committee shall set Performance Goals in its
discretion which, depending on the extent to which they are met within the applicable Performance
Period, will determine the number and value of Performance Units that will be paid out to the
Participant. After the applicable Performance Period has ended, the holder of Performance Units
shall be entitled to receive payout on the number and value of Performance Units earned by the
Participant over the Performance Period, to be determined as a function of the extent to which the
corresponding Performance Goals have been achieved.
(c) Form and Timing of Payment. Payment of earned Performance Units shall be made in
a single lump sum following the close of the applicable Performance Period. At the discretion of
the Committee, Participants may be entitled to receive any dividends declared with respect to Stock
which have been earned in connection with grants of Performance Units which have been earned, but
not yet distributed to Participants. The Committee may permit or, if it so provides at grant
require, a Participant to defer such Participants receipt of the payment of cash or the delivery
of Stock that would otherwise be due to such Participant by virtue of the satisfaction of any
requirements or goals with respect to Performance Units. If any such deferral election is required
or permitted, the Committee shall establish rules and procedures for such payment deferrals.
7.6. Stock Grants. Stock Grants shall be awarded solely in recognition of significant
contributions to the success of the Company or its Affiliates, in lieu of compensation otherwise
already due and in such other limited circumstances as the Committee deems appropriate. Stock
Grants shall be made without forfeiture conditions of any kind.
- 11 -
7.7. Qualified Performance-Based Awards.
(a) Purpose. The purpose of this Section 7.7 is to provide the Committee the ability
to qualify Awards as performance-based compensation under Section 162(m) of the Code. If the
Committee, in its discretion, decides to grant an Award as a Qualified Performance-Based Award, the
provisions of this Section 7.7 will control over any contrary provision contained in the Plan. In
the course of granting any Award, the Committee may specifically designate the Award as intended to
qualify as a Qualified Performance-Based Award. However, no Award shall be considered to have
failed to qualify as a Qualified Performance-Based Award solely because the Award is not expressly
designated as a Qualified Performance-Based Award, if the Award otherwise satisfies the provisions
of this Section 7.7 and the requirements of Section 162(m) of the Code and the regulations
promulgated thereunder applicable to performance-based compensation.
(b) Authority. All grants of Awards intended to qualify as Qualified Performance-Based Awards
and determination of terms applicable thereto shall be made by the Committee or, if not all of the
members thereof qualify as outside directors within the meaning of applicable IRS regulations
under Section 162 of the Code, a subcommittee of the Committee consisting of such of the members of
the Committee as do so qualify. Any action by such a subcommittee shall be considered the action
of the Committee for purposes of the Plan.
(c) Applicability. This Section 7.7 will apply only to those Covered Employees, or to
those persons who the Committee determines are reasonably likely to become Covered Employees in the
period covered by an Award, selected by the Committee to receive Qualified Performance-Based
Awards. The Committee may, in its discretion, grant Awards to Covered Employees that do not
satisfy the requirements of this Section 7.7.
(d) Discretion of Committee with Respect to Qualified Performance-Based Awards.
Options may be granted as Qualified Performance-Based Awards in accordance with Section 7.1, except
that the exercise price of any Option intended to qualify as a Qualified Performance-Based Award
shall in no event be less that the Market Value of the Stock on the date of grant. With regard to
other Awards intended to qualify as Qualified Performance-Based Awards, such as Restricted Stock,
Restricted Stock Units, or Performance Units, the Committee will have full discretion to select the
length of any applicable Restriction Period or Performance Period, the kind and/or level of the
applicable Performance Goal, and whether the Performance Goal is to apply to the Company, a
Subsidiary or any division or business unit or to the individual. Any Performance Goal or Goals
applicable to Qualified Performance-Based Awards shall be objective, shall be established not later
than three (3) months after the beginning of any applicable Performance Period (or at such other
date as may be required or permitted for performance-based compensation under Section 162(m) of
the Code) and shall otherwise meet the requirements of Section 162(m) of the Code, including the
requirement that the outcome of the Performance Goal or Goals be substantially uncertain (as
defined in the regulations under Section 162(m) of the Code) at the time established.
(e) Payment of Qualified Performance-Based Awards. A Participant will be eligible to
receive payment under a Qualified Performance-Based Award which is subject to achievement of a
Performance Goal or Goals only if the applicable Performance Goal or Goals period are achieved
within the applicable Performance Period, as determined by the Committee. In determining the
actual size of an individual Qualified Performance-Based Award, the Committee may reduce or
eliminate the amount of the Qualified Performance-Based Award
earned for the Performance Period, if in its sole and absolute discretion, such reduction or
elimination is appropriate.
- 12 -
(f) Maximum Award Payable. The maximum Qualified Performance-Based Award payment to
any one Participant under the Plan for a Performance Period is the number of shares of Stock set
forth in Section 4 above, or if the Qualified Performance-Based Award is paid in cash, that number
of shares multiplied by the Market Value of the Stock as of the date the Qualified
Performance-Based Award is granted.
(g) Limitation on Adjustments for Certain Events. No adjustment of any Qualified
Performance-Based Award pursuant to Section 8 shall be made except on such basis, if any, as will
not cause such Award to provide other than performance-based compensation within the meaning of
Section 162(m) of the Code.
7.8. Awards to Participants Outside the United States. The Committee may modify the
terms of any Award under the Plan granted to a Participant who is, at the time of grant or during
the term of the Award, resident or primarily employed outside of the United States in any manner
deemed by the Committee to be necessary or appropriate in order that the Award shall conform to
laws, regulations, and customs of the country in which the Participant is then resident or
primarily employed, or so that the value and other benefits of the Award to the Participant, as
affected by foreign tax laws and other restrictions applicable as a result of the Participants
residence or employment abroad, shall be comparable to the value of such an Award to a Participant
who is resident or primarily employed in the United States. The Committee may establish
supplements to, or amendments, restatements, or alternative versions of the Plan for the purpose of
granting and administrating any such modified Award. No such modification, supplement, amendment,
restatement or alternative version may increase the share limit of Section 4.
8. Adjustment Provisions
8.1. Adjustment for Corporate Actions. All of the share numbers set forth in the Plan
reflect the capital structure of the Company as of the Closing Date (as defined in the Amended and
Restated Formation, Contribution and Merger Agreement, dated as of December 18, 2006 (the
Formation Agreement), between Harris and Stratex Networks, Inc. Subject to Section 8.2, if
subsequent to that date the outstanding shares of Stock (or any other securities covered by the
Plan by reason of the prior application of this Section) are increased, decreased, or exchanged for
a different number or kind of shares or other securities, or if additional shares or new or
different shares or other securities are distributed with respect to shares of Stock, through
merger, consolidation, sale of all or substantially all the property of the Company,
reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock
split, or other similar distribution with respect to such shares of Stock, an appropriate and
proportionate adjustment will be made in (i) the maximum numbers and kinds of shares provided in
Section 4, (ii) the numbers and kinds of shares or other securities subject to the then outstanding
Awards, (iii) the exercise price for each share or other unit of any other securities subject to
then outstanding Options and Stock Appreciation Rights (without change in the aggregate purchase
price as to which such Options or Rights remain exercisable), and (iv) the repurchase price of each
share of Restricted Stock then subject to a Risk of Forfeiture in the form of a Company repurchase
right.
- 13 -
8.2. Treatment in Certain Acquisitions. Subject to any provisions of then outstanding
Awards granting greater rights to the holders thereof, in the event of an Acquisition in which
outstanding Awards are not Accelerated in full pursuant to Section 9, any then outstanding
Awards shall nevertheless Accelerate in full to the extent not assumed or replaced by comparable
Awards referencing shares of the capital stock of the successor or acquiring entity or parent
thereof, and thereafter (or after a reasonable period following the Acquisition, as determined by
the Committee) terminate. As to any one or more outstanding Awards which are not otherwise
Accelerated in full by reason of such Acquisition, the Committee may also, either in advance of an
Acquisition or at the time thereof and upon such terms as it may deem appropriate, provide for the
Acceleration of such outstanding Awards in the event that the employment of the Participants should
subsequently terminate following the Acquisition. Each outstanding Award that is assumed in
connection with an Acquisition, or is otherwise to continue in effect subsequent to the
Acquisition, will be appropriately adjusted, immediately after the Acquisition, as to the number
and class of securities and other relevant terms in accordance with Section 8.1.
8.3. Cancellation and Termination of Awards. The Committee may, in connection
with any merger, consolidation, share exchange or other transaction entered into by the Company in
good faith, determine that any outstanding Awards granted under the Plan, whether or not vested,
will be canceled and terminated and that in connection with such cancellation and termination the
holder of such Award may receive for each share of Common Stock subject to such Award a cash
payment (or the delivery of shares of stock, other securities or a combination of cash, stock and
securities equivalent to such cash payment) equal to the difference, if any, between the amount
determined by the Committee to be the fair market value of the Common Stock and the purchase price
per share (if any) under the Award multiplied by the number of shares of Common Stock subject to
such Award; provided that if such product is zero or less or to the extent that the Award is not
then exercisable, the Award will be canceled and terminated without payment therefor.
8.4. Dissolution or Liquidation. Upon dissolution or liquidation of the Company,
other than as part of an Acquisition or similar transaction, each outstanding Option and SAR shall
terminate, but the Optionee or SAR holder (if at the time in the employ of or otherwise associated
with the Company or any of its Affiliates) shall have the right, immediately prior to the
dissolution or liquidation, to exercise the Option or SAR to the extent exercisable on the date of
dissolution or liquidation.
8.5. Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring
Events. In the event of any corporate action not specifically covered by the preceding
Sections, including but not limited to an extraordinary cash distribution on Stock, a corporate
separation or other reorganization or liquidation, the Committee may make such adjustment of
outstanding Awards and their terms, if any, as it, in its sole discretion, may deem equitable and
appropriate in the circumstances. The Committee may make adjustments in the terms and conditions
of, and the criteria included in, Awards in recognition of unusual or nonrecurring events
(including, without limitation, the events described in this Section) affecting the Company or the
financial statements of the Company or of changes in applicable laws, regulations, or accounting
principles, whenever the Committee determines that such adjustments are appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended to be made available
under the Plan.
8.6. Related Matters. Any adjustment in Awards made pursuant to this Section 8 shall
be determined and made, if at all, by the Committee and shall include any correlative modification
of terms, including of Option exercise prices, rates of vesting or exercisability, Risks of
Forfeiture, applicable repurchase prices for Restricted Stock, and Performance Goals and other
financial objectives which the Committee may deem necessary or appropriate so as to ensure the
rights of the Participants in their respective Awards are not substantially diminished nor enlarged
- 14 -
as a result of the adjustment and corporate action other than as expressly contemplated in
this Section 8. No fraction of a share shall be purchasable or deliverable upon exercise, but in
the event any adjustment hereunder of the number of shares covered by an Award shall cause such
number to include a fraction of a share, such number of shares shall be adjusted to the nearest
smaller whole number of shares. No adjustment of an Option exercise price per share pursuant to
this Section 8 shall result in an exercise price which is less than the par value of the Stock.
9. Change of Control
Upon the occurrence of a Change of Control:
(a) any and all Options and Stock Appreciation Rights not already exercisable in full shall
Accelerate if and to the extent so provided in the Award Agreement or so determined by the
Committee;
(b) any Risk of Forfeiture applicable to Restricted Stock and Restricted Stock Units which is
not based on achievement of Performance Goals shall lapse if and to the extent so provided in the
Award Agreement or so determined by the Committee; and
(c) all outstanding Awards of Restricted Stock and Restricted Stock Units conditioned on the
achievement of Performance Goals and the target payout opportunities attainable under outstanding
Performance Units shall be deemed to have been satisfied as of the effective date of the Change of
Control if and to the extent so provided in the Award Agreement or so determined by the Committee;
None of the foregoing shall apply, however, (i) in the case of a Qualified Performance-Based Award
specifically designated as such by the Committee at the time of grant (except to the extent allowed
by Section 162(m) of the Code), (ii) in the case of any Award pursuant to an Award Agreement
requiring other or additional terms upon a Change of Control (or similar event), or (iii) if
specifically prohibited under applicable laws, or by the rules and regulations of any governing
governmental agencies or national securities exchanges.
10. Settlement of Awards
10.1. In General. Options and Restricted Stock shall be settled in accordance with
their terms. All other Awards may be settled in cash, Stock, or other Awards, or a combination
thereof, as determined by the Committee at or after grant and subject to any contrary Award
Agreement. The Committee may not require settlement of any Award in Stock pursuant to the
immediately preceding sentence to the extent issuance of such Stock would be prohibited or
unreasonably delayed by reason of any other provision of the Plan.
10.2. Violation of Law. Notwithstanding any other provision of the Plan or the
relevant Award Agreement, if, at any time, in the reasonable opinion of the Company, the issuance
of shares of Stock covered by an Award may constitute a violation of law, then the Company may
delay such issuance and the delivery of such shares until (i) approval shall have been obtained
from such governmental agencies, other than the Securities and Exchange Commission, as may be
required under any applicable law, rule, or regulation and (ii) in the case where such issuance
would constitute a violation of a law administered by or a regulation of the Securities and
Exchange Commission, one of the following conditions shall have been satisfied:
- 15 -
(a) the shares are at the time of the issue of such shares effectively registered under the
Securities Act of 1933; or
(b) the Company shall have determined, on such basis as it deems appropriate (including an
opinion of counsel in form and substance satisfactory to the Company) that the sale, transfer,
assignment, pledge, encumbrance or other disposition of such shares or such beneficial interest, as
the case may be, does not require registration under the Securities Act of 1933, as amended or any
applicable State securities laws.
The Company shall make all reasonable efforts to bring about the occurrence of said events.
10.3. Corporate Restrictions on Rights in Stock. Any Stock to be issued pursuant to
Awards granted under the Plan shall be subject to all restrictions upon the transfer thereof which
may be now or hereafter imposed by the charter, certificate or articles, and by-laws, of the
Company.
10.4. Investment Representations. The Company shall be under no obligation to issue
any shares covered by any Award unless the shares to be issued pursuant to Awards granted under the
Plan have been effectively registered under the Securities Act of 1933, as amended, or the
Participant shall have made such written representations to the Company (upon which the Company
believes it may reasonably rely) as the Company may deem necessary or appropriate for purposes of
confirming that the issuance of such shares will be exempt from the registration requirements of
that Act and any applicable state securities laws and otherwise in compliance with all applicable
laws, rules and regulations, including but not limited to that the Participant is acquiring the
shares for his or her own account for the purpose of investment and not with a view to, or for sale
in connection with, the distribution of any such shares.
10.5. Registration. If the Company shall deem it necessary or desirable to register under the
Securities Act of 1933, as amended or other applicable statutes any shares of Stock issued or to be
issued pursuant to Awards granted under the Plan, or to qualify any such shares of Stock for
exemption from the Securities Act of 1933, as amended or other applicable statutes, then the
Company shall take such action at its own expense. The Company may require from each recipient of
an Award, or each holder of shares of Stock acquired pursuant to the Plan, such information in
writing for use in any registration statement, prospectus, preliminary prospectus or offering
circular as is reasonably necessary for that purpose and may require reasonable indemnity to the
Company and its officers and directors from that holder against all losses, claims, damage and
liabilities arising from use of the information so furnished and caused by any untrue statement of
any material fact therein or caused by the omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light of the
circumstances under which they were made. In addition, the Company may require of any such person
that he or she agree that, without the prior written consent of the Company or the managing
underwriter in any public offering of shares of Stock, he or she will not sell, make any short sale
of, loan, grant any option for the purchase of, pledge or otherwise encumber, or otherwise dispose
of, any shares of Stock during the 180 day period commencing on the effective date of the
registration statement relating to the underwritten public offering of securities. Without limiting
the generality of the foregoing provisions of this Section 10.5, if in connection with any
underwritten public offering of securities of the Company the managing underwriter of such offering
requires that the Companys directors and officers enter into a lock-up agreement containing
provisions that are more restrictive than the provisions set forth in the preceding sentence, then
(a) each holder of shares of Stock acquired pursuant to the Plan (regardless of
- 16 -
whether such person has complied or complies with the provisions of clause (b) below) shall be
bound by, and shall be deemed to have agreed to, the same lock-up terms as those to which the
Companys directors and officers are required to adhere; and (b) at the request of the Company or
such managing underwriter, each such person shall execute and deliver a lock-up agreement in form
and substance equivalent to that which is required to be executed by the Companys directors and
officers.
10.6. Placement of Legends; Stop Orders; etc. Each share of Stock to be issued
pursuant to Awards granted under the Plan may bear a reference to the investment representation
made in accordance with Section 10.4 in addition to any other applicable restriction under the
Plan, the terms of the Award and to the fact that no registration statement has been filed with the
Securities and Exchange Commission in respect to such shares of Stock. All shares of Stock or
other securities delivered under the Plan shall be subject to such stock transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations, and other
requirements of any stock exchange upon which the Stock is then listed, and any applicable federal
or state securities law, and the Committee may cause a legend or legends to be put on any
certificates or recorded in connection with book-entry accounts representing the shares to make
appropriate reference to such restrictions.
10.7. Tax Withholding. Whenever shares of Stock are issued or to be issued pursuant to
Awards granted under the Plan, the Company shall have the right to require the recipient to remit
to the Company an amount sufficient to satisfy federal, state, local or other withholding tax
requirements if, when, and to the extent required by law (whether so required to secure for the
Company an otherwise available tax deduction or otherwise) prior to the delivery of any such
shares. The obligations of the Company under the Plan shall be conditional on satisfaction of all
such withholding obligations and the Company shall, to the extent permitted by law, have the right
to deduct any such taxes from any payment of any kind otherwise due to the recipient of an Award.
However, in such cases Participants may elect, subject to the approval of the Committee, acting in
its sole discretion, to satisfy an applicable withholding requirement, in whole or in part, by
having the Company withhold shares to satisfy their tax obligations. Participants may only elect
to have Shares withheld having a Market Value on the date the tax is to be determined equal to the
minimum statutory total tax which could be imposed on the transaction. All elections shall be
irrevocable, made in writing, signed by the Participant, and shall be subject to any restrictions
or limitations that the Committee deems appropriate.
11. Reservation of Stock
The Company shall at all times during the term of the Plan and any outstanding Awards granted
hereunder reserve or otherwise keep available such number of shares of Stock as will be sufficient
to satisfy the requirements of the Plan (if then in effect) and the Awards and shall pay all fees
and expenses necessarily incurred by the Company in connection therewith.
12. Limitation of Rights in Stock; No Special Service Rights
A Participant shall not be deemed for any purpose to be a stockholder of the Company with
respect to any of the shares of Stock subject to an Award, unless and until shares shall have been
issued therefor and delivered to the Participant or his agent. Any Stock to be issued pursuant to
Awards granted under the Plan shall be subject to all restrictions upon the transfer thereof which
may be now or hereafter imposed by the Certificate of Incorporation and the By-laws of the Company.
Nothing contained in the Plan or in any Award Agreement shall confer
- 17 -
upon any recipient of an Award any right with respect to the continuation of his or her
employment or other association with the Company (or any Affiliate), or interfere in any way with
the right of the Company (or any Affiliate), subject to the terms of any separate employment or
consulting agreement or provision of law or corporate articles or by-laws to the contrary, at any
time to terminate such employment or consulting agreement or to increase or decrease, or otherwise
adjust, the other terms and conditions of the recipients employment or other association with the
Company and its Affiliates.
13. Unfunded Status of Plan
The Plan is intended to constitute an unfunded plan for incentive compensation, and the Plan
is not intended to constitute a plan subject to the provisions of the Employee Retirement Income
Security Act of 1974, as amended. With respect to any payments not yet made to a Participant by
the Company, nothing contained herein shall give any such Participant any rights that are greater
than those of a general creditor of the Company. In its sole discretion, the Committee may
authorize the creation of trusts or other arrangements to meet the obligations created under the
Plan to deliver Stock or payments with respect to Options, Stock Appreciation Rights and other
Awards hereunder, provided, however, that the existence of such trusts or other arrangements is
consistent with the unfunded status of the Plan.
14. Nonexclusivity of the Plan
Neither the adoption of the Plan by the Board nor the submission of the Plan to the
stockholders of the Company shall be construed as creating any limitations on the power of the
Board to adopt such other incentive arrangements as it may deem desirable, including without
limitation, the granting of stock options and restricted stock other than under the Plan, and such
arrangements may be either applicable generally or only in specific cases.
15. Termination and Amendment of the Plan
The Board may at any time terminate the Plan or make such modifications of the Plan as it
shall deem advisable. Unless the Board otherwise expressly provides, no amendment of the Plan
shall affect the terms of any Award outstanding on the date of such amendment.
The Committee may amend the terms of any Award theretofore granted, prospectively or
retroactively, provided that the Award as amended is consistent with the terms of the Plan.
Notwithstanding the foregoing, the Company will not reprice, or cancel and regrant any outstanding
award without shareholder approval.
No amendment or modification of the Plan by the Board, or of an outstanding Award by the
Committee, shall impair the rights of the recipient of any Award outstanding on the date of such
amendment or modification or such Award, as the case may be, without the Participants consent;
provided, however, that no such consent shall be required if (i) the Board or Committee, as the
case may be, determines in its sole discretion and prior to the date of any Change of Control that
such amendment or alteration either is required or advisable in order for the Company, the Plan or
the Award to satisfy any law or regulation, including without limitation the provisions of Section
409A of the Code or to meet the requirements of or avoid adverse financial accounting consequences
under any accounting standard, or (ii) the Board or Committee, as the case may be, determines in
its sole discretion that such amendment or alteration is not reasonably
likely to significantly diminish the benefits provided under the Award, or that any such
diminution has been adequately compensated.
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16. Notices and Other Communications
Any notice, demand, request or other communication hereunder to any party shall be deemed to
be sufficient if contained in a written instrument delivered in person or duly sent by first class
registered, certified or overnight mail, postage prepaid, or telecopied with a confirmation copy by
regular, certified or overnight mail, addressed or telecopied, as the case may be, (i) if to the
recipient of an Award, at his or her residence address last filed with the Company and (ii) if to
the Company, at its principal place of business, addressed to the attention of its Treasurer, or to
such other address or telecopier number, as the case may be, as the addressee may have designated
by notice to the addressor. All such notices, requests, demands and other communications shall be
deemed to have been received: (i) in the case of personal delivery, on the date of such delivery;
(ii) in the case of mailing, when received by the addressee; and (iii) in the case of facsimile
transmission, when confirmed by facsimile machine report.
17. Severability
If any one or more of the provisions contained in this Agreement shall be invalid, illegal or
unenforceable in any respect under any applicable law, the validity, legality and enforceability of
the remaining provisions contained herein shall not in any way be affected or impaired thereby.
18. Governing Law
The Plan and all Award Agreements and actions taken thereunder shall be governed, interpreted
and enforced in accordance with the laws of the state of Delaware, without regard to the conflict
of laws principles thereof.
exv5w1
Exhibit 5.1
February 2, 2007
Harris Stratex Networks, Inc.
Research Triangle Park
637 Davis Drive
Morrisville, North Carolina 27560
Registration Statement on Form S-8
Ladies and Gentlemen:
We have acted as counsel for Harris Stratex Networks, Inc., a Delaware corporation (the
Company), in connection with the preparation of the Companys Registration Statement on Form S-8
proposed to be filed with the Securities and Exchange Commission (the Commission) on or about
February 1, 2007 (the Registration Statement).
The
Registration Statement covers the registration of a total of
8,360,696 shares (the Shares) of Class A
common stock, par value $0.01 per share, of the Company (Class A Common Stock), which are
issuable by the Company upon exercise of (i) options and other awards for the purchase of Class A
Common Stock to be granted under the Harris Stratex Networks, Inc. 2007 Stock Equity Plan and (ii) options for the
purchase of Class A Common Stock already granted under the following option plans:
Stratex
Networks, Inc. 1990 Innova Stock Option Plan
Stratex Networks, Inc. (formerly known as Digital Microwave Corporation) 1994 Stock Incentive Plan
Stratex Networks, Inc. (formerly known as Digital Microwave Corporation) 1996 Non-Officer Employee Stock Option Plan
Stratex Networks, Inc. (formerly known as Digital Microwave Corporation) 1998 Non-Officer Employee Stock Option Plan
Stratex Networks, Inc. 1999 Stock Incentive Plan
Stratex Networks, Inc. 2002 Stock Incentive Plan
The term Plans means collectively the
Stratex Networks, Inc. 1990 Innova Stock Option Plan, Stratex Networks, Inc. (formerly known as Digital Microwave Corporation)
1994 Stock Incentive Plan, Stratex Networks, Inc.
(formerly known as Digital Microwave Corporation) 1996 Non-Officer Employee Stock Option Plan, Stratex Networks, Inc.
(formerly known as Digital Microwave Corporation) 1998 Non-Officer Employee Stock Option Plan, Stratex Networks, Inc. 1999
Stock Incentive Plan, Stratex Networks, Inc. 2002 Stock Incentive Plan and Harris
Stratex Networks, Inc. 2007 Stock Equity Plan.
We have reviewed the corporate proceedings of the Company with respect to the authorization of
the Plans. We have reviewed copies of each of the Plans as currently in effect. We have also
examined and relied upon such agreements, instruments, corporate records, certificates, and other
documents as we have
Harris Stratex Networks, Inc.
February 2, 2007
Page 2
deemed necessary or appropriate as a basis for the opinions hereinafter expressed. In our
examination, we have assumed the genuineness of all signatures, the conformity to the originals of
all documents reviewed by us as copies, the authenticity and completeness of all original documents
reviewed by us in original or copy form, and the legal competence of each individual executing any
document.
We further assume, without investigation, that all Shares issued pursuant to the Plans will be
issued in accordance with the terms of the Plans and that the purchase price of each of the Shares
will be at least equal to the par value of such Shares.
This opinion is limited solely to the Delaware General Corporation Law as applied by courts
located in Delaware, the applicable provisions of the Delaware Constitution and the reported
judicial decisions interpreting those laws.
Based upon and subject to the foregoing, we are of the opinion that the Shares, when issued
and delivered upon the exercise of options or awards granted pursuant to and in accordance with the
Plans and against the payment of any purchase price therefor, as specified in such Plans or
documents governing such awards, will be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the Registration Statement.
In giving this consent, however, we do not thereby admit that we are an expert within the meaning
of the Securities Act of 1933, as amended.
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Very truly yours, |
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/s/ Bingham McCutchen LLP |
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Bingham McCutchen LLP |
exv23w1
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference of our report dated November 21, 2006, with respect to
the combined financial statements and schedule of The Microwave Communications Division of Harris
Corporation and subsidiaries included in the Harris Stratex Networks, Inc.s prospectus filed with the
Securities and Exchange Commission on January 8, 2007 pursuant to Rule 424(b) in the Registration
Statement (Form S-8
No. 333- )
dated February 5, 2007 pertaining to the Stratex Networks, Inc.
1990 Innova Stock Option Plan, the Stratex Networks, Inc. (formerly known as Digital Microwave
Corporation) 1994 Stock Incentive Plan, the Stratex Networks, Inc. (formerly known as Digital
Microwave Corporation) 1996 Non-Officer Employee Stock Option Plan, the Stratex Networks, Inc.
(formerly known as Digital Microwave Corporation) 1998 Non-Officer Employee Stock Option Plan, the
Stratex Networks, Inc. 1999 Stock Incentive Plan, the Stratex Networks, Inc. 2002 Stock Incentive
Plan, and the Harris Stratex Networks, Inc. 2007 Stock Equity Plan.
/s/ Ernst & Young LLP
Ernst & Young LLP
Certified Public Accountants
Raleigh, North Carolina
February 2, 2007
exv23w2
Exhibit 23.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in this Registration Statement on Form S-8 of (1) our
reports dated June 14, 2006, relating to the consolidated financial statements and financial
statement schedule of Stratex Networks, Inc. (the Company) and (2) our report dated June 14,
2006, relating to managements report on the effectiveness of internal control over financial
reporting (which report expresses an adverse opinion on the effectiveness of the Companys internal
control over financial reporting because of a material weakness), appearing in the Annual Report on
Form 10-K/A of Stratex Networks, Inc. for the year ended March 31, 2006.
/s/ DELOITTE & TOUCHE LLP
San Jose, California
February 1, 2007