UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
NETWORK APPLIANCE, INC.
(Exact name of registrant as specified in its charter)
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Delaware
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77-0307520
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(State of Incorporation)
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(I.R.S. Employer Identification No.)
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495 East Java Drive,
Sunnyvale, California 94089
(Address of principal executive offices)
ONARO, INC. AMENDED AND RESTATED 2002 STOCK OPTION AND INCENTIVE PLAN
(Full title of the plan)
Daniel J. Warmenhoven
Chief Executive Officer and Director
Network Appliance, Inc.
495 East Java Drive,
Sunnyvale, California 94089
(408) 822-6000
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
Steven E. Bochner, Esq.
Wilson Sonsini Goodrich & Rosati, P. C.
650 Page Mill Road
Palo Alto, CA 94304
(650) 493-9300
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated
filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
(Check one):
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þ
Large accelerated filer
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Accelerated filer
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Non-accelerated filer
(Do not check if a
smaller reporting company)
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Smaller reporting company
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CALCULATION OF REGISTRATION FEE
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Proposed Maximum
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Proposed Maximum
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Title of Securities
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Amount to be
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Offering Price Per
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Aggregate Offering
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Amount of
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to be Registered
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Registered (1)
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Share (2)
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Price (2)
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Registration Fee
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Common Stock (par
value $0.001)
issuable under the
Onaro, Inc. Amended
and Restated 2002
Stock Option and
Incentive Plan
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1,000,171
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$
13.82/$21.44
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$
15,282,612.88
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$600.61
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(1)
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Pursuant to Rule 416(a) of the Securities Act of 1933, as amended (the “Securities Act”), this
Registration Statement shall also cover any additional shares of the Registrant’s common stock that
became issuable under the applicable plan by reason of any stock dividend, stock split,
recapitalization or other similar transaction effected without the receipt of consideration that
increases the number of outstanding shares of registrant’s common stock. Stock awards outstanding
under the Onaro, Inc. Amended and Restated 2002 Stock Option and Incentive Plan were assumed
by the Registrant following the effectiveness of the merger of Tottenham Merger Corp., a Delaware
corporation and wholly-owned subsidiary of the Registrant (“Tottenham”), with and into Onaro, Inc.,
a Delaware corporation (“Onaro”), pursuant to the Agreement and Plan of Merger dated as of December
7, 2007, by and among the Registrant, Onaro, Tottenham, and Amnon Shoham as stockholder
representative.
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(2)
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Estimated solely for the purpose of calculating the amount of the registration fee pursuant to
Rule 457(h) and Rule 457(c). The price per share and aggregate offering price
are based upon (i) for the assumed outstanding options, a weighted
average exercise price of $ 13.82 per share for the outstanding options,
and (ii) for the assumed outstanding restricted stock units, an
assumed price of $21.44 per share, which is the average of
the high and low prices of the Comman Stock on February 15, 2008, as
quoted on the Nasdaq Global Select Market.
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TABLE OF CONTENTS
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information.
The documents containing the information specified in this Item 1 will be sent or given to
employees, officers, directors or others as specified by Rule 428(b)(1). In accordance with the
rules and regulations of the Securities and Exchange Commission (the “Commission”) and the
instructions to Form S-8, such documents are not being filed with the Commission either as part of
this Registration Statement or as prospectuses or prospectus supplements pursuant to Rule 424.
Item 2. Registration Information and Employee Plan Annual Information.
The documents containing the information specified in this Item 2 will be sent or given to
employees, officers, directors or others as specified by Rule 428(b)(1). In accordance with the
rules and regulations of the Commission and the instructions to Form S-8, such documents are not
being filed with the Commission either as part of this Registration Statement or as prospectuses or
prospectus supplements pursuant to Rule 424. Such documents, together with the documents
incorporated by reference herein
pursuant to Item 3 of Part II of this Registration Statement on Form S-8, constitute a
prospectus that meets the requirements of Section 10(a) of the Securities Act, and are available
upon written or oral request: Network Appliance, Inc., Attn: General Counsel, 495 East Java Drive,
Sunnyvale, CA 94089, Tel: 408.822.6000.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
Network Appliance, Inc. (the “Registrant”) hereby incorporates by reference into this
Registration Statement the following documents previously filed with the Commission (excluding any
portions of such documents that have been “furnished” but not “filed” for purposes of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)):
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(a)
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The Registrant’s Annual Report on Form 10-K for the fiscal year ended
April 27, 2007 filed with the Commission on June 26, 2007;
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(b)
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The Registrant’s Quarterly Reports on Form 10-Q for the quarter ended
July 27, 2007 filed with the Commission on September 5, 2007, and for
the quarter ended October 26, 2007 filed with the Commission on
December 4, 2007;
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(c)
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The Registrant’s Current Reports on Form 8-K filed with the Commission
on May 30, 2007, July 20, 2007, August 15, 2007, August 17, 2007, August 23, 2007,
October 12, 2007, November 8, 2007, December 5, 2007, February 1, 2008
and February 7, 2008.
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(d)
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The description of the Registrant’s Common Stock contained in the
Registrant’s Registration Statement on Form 8-A filed with the
Commission on November 1, 1995 (File No. 000-27130).
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All documents filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act after the date of this Registration Statement and prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been sold or which de-registers
all securities then remaining unsold shall be deemed to be incorporated by reference into this
Registration Statement and to be a part hereof from the date of filing of such documents. Any
statement contained in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Registration Statement to the
extent that a statement contained herein or in any subsequently filed document which also is deemed
to be incorporated by reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded, to constitute a
part of this Registration Statement.
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
Not applicable.
Item 6. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law authorizes a court to award or a
corporation’s board of directors to grant indemnification to directors and officers in terms
sufficiently broad to permit the indemnification under some circumstances for liabilities
(including reimbursement for expenses incurred) arising under the Securities Act. Article IX of the
Certificate of Incorporation of the Registrant provides that, subject to Delaware law, its
directors will not be personally liable for monetary damages for breach of their fiduciary duties
to the Registrant and its stockholders. This provision does not
eliminate any director’s fiduciary duties and in appropriate circumstances, equitable remedies
such as injunctive or other forms of non-monetary relief will remain available under Delaware law.
The provision also does not affect a director’s responsibilities under any other law, such as the
federal securities laws or state or federal environmental laws.
Article VII of the Registrant’s Bylaws provides for indemnification of its directors and
officers to the fullest extent authorized by Delaware General Corporation Law. The Registrant’s
Bylaws also provide that:
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The Registrant is required to advance the expenses, as incurred, of
any such individual in connection with defending a proceeding, action
or suit by reason of such individual’s serving on behalf of and at the
Registrant’s request, except that such officer or director shall
undertake to repay such advances if it is ultimately determined that
such person is not entitled to indemnification.
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The rights conferred in the bylaws are not exclusive, and the
Registrant is authorized to enter into indemnification arrangements
with any person other than a director who is made a party to any
action, suit or proceedings by reason of the fact that he is or was an
officer, employee or other agent of the Registrant.
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The Registrant may not retroactively amend the Bylaw provisions to
reduce its indemnification obligations to its directors, officers,
employees and agents.
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The Registrant’s policy is to enter into separate indemnification agreements with each of its
directors and executive officers that provide the maximum indemnity allowed to directors and
executive officers by Section 145 of the Delaware General Corporation Law and which allow for
certain additional procedural protections. The Registrant also maintains directors and officers
insurance to insure such persons against certain liabilities.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
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Exhibit
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Number
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Documents
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4.1
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Onaro, Inc. Amended and Restated 2002 Stock Option and
Incentive Plan (including Appendix — Israeli Taxpayers)
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5.1
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Opinion of Wilson Sonsini Goodrich & Rosati, P.C.
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23.1
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Consent of Independent Registered Public Accounting Firm
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23.2
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Consent of Wilson Sonsini Goodrich & Rosati, P.C. is
contained in Exhibit 5.1 to this Registration Statement
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Power of Attorney is contained on the Signature Page
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In accordance with the requirements of Item 8(b) of Part II of Form S-8, the
Registrant will submit or has submitted the Onaro, Inc. Amended and Restated 2002 Stock Option and
Incentive Plan (the “Plan”), and any amendments thereto, to the Internal Revenue Service (the
“IRS”) in a timely manner and has made or will make all changes required by the IRS to qualify the
Plan.
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective
amendment to this Registration Statement.
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(i)
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To include any prospectus required by Section 10(a)(3) of the
Securities Act;
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(ii)
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To reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
Registration Statement;
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(iii)
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To include any material information with respect to the plan
of distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement;
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provided however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this section do not apply if the
information required to be included in a post-effective amendment by those paragraphs is contained
in periodic reports filed with or furnished to the Commission by the Registrant pursuant to Section
13 or Section 15(d) of the Exchange Act that are incorporated by reference in this Registration
Statement.
(2) That, for the purpose of determining any liability under the Securities Act, each such
post-effective amendment shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability
under the Securities Act, each filing of the Registrant’s annual report pursuant to Section 13(a)
or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit
plan’s annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in this Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act may be permitted
to directors, officers and controlling persons of the Registrant pursuant to the provisions
described in Item 6 above, or otherwise, the Registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies
that it has reasonable grounds to believe that it meets all of the requirements for filing on Form
S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Sunnyvale, State of
California, on February 21, 2008.
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Network Appliance,
Inc.
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By:
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/s/ DANIEL
J. WARMENHOVEN
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Daniel J. Warmenhoven
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Title:
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Chief Executive Officer and Director
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POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENT, that each person whose signature appears below
constitutes and appoints Daniel J. Warmenhoven and Steven J. Gomo, and each of them, as his true
and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for
him and in his name, place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement on Form S-8, and to file the
same, with all exhibits thereto, and 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 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 substitutes, may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement
has been signed below by the following persons on behalf of the Company and in the capacities and
on the dates indicated:
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Signatures
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Title
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Date
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/s/ DANIEL J. WARMENHOVEN
(Daniel J. Warmenhoven)
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Chief Executive Officer, Director
(Principal Executive Officer)
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February 21, 2008
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/s/ DONALD T. VALENTINE
(Donald T. Valentine)
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Chairman of the Board, Director
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February 20, 2008
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/s/ STEVEN J. GOMO
(Steven J. Gomo)
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Executive Vice President of Finance
and Chief Financial Officer
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February 21, 2008
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/s/ MARK LESLIE
(Mark Leslie)
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Director
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February 21, 2008
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/s/ CAROL A. BARTZ
(Carol A. Bartz)
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Director
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February 19, 2008
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/s/ NICHOLAS G. MOORE
(Nicholas G. Moore)
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Director
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February 13, 2008
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/s/ GEORGE T. SHAHEEN
(George T. Shaheen)
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Director
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February 13, 2008
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/s/ ROBERT T. WALL
(Robert T. Wall)
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Director
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February 21, 2008
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/s/ JEFFRY R. ALLEN
(Jeffry R. Allen)
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Director
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February 21, 2008
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/s/ ALAN EARHART
(Alan Earhart)
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Director
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February 16, 2008
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/s/ EDWARD KOZEL
(Edward Kozel)
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Director
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February 21, 2008
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EXHIBIT INDEX
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Exhibit
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Number
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Description
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4.1
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Onaro, Inc. Amended and Restated 2002 Stock Option and Incentive
Plan (including Appendix — Israeli Taxpayers)
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5.1
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Opinion of Wilson Sonsini Goodrich & Rosati, P.C.
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23.1
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Consent of Independent Registered Public Accounting Firm
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23.2
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Consent of Wilson Sonsini Goodrich & Rosati, P. C., is contained
in Exhibit 5.1 to this Registration Statement
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Power of Attorney is contained on the Signature Page
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Exhibit 4.1
ONARO, INC.
Amended and Restated
2002 Stock Option and Incentive Plan
1.
Purpose and Eligibility
The purpose of this 2002 Stock Option and Incentive Plan (the “
Plan
”) of Onaro, Inc.
(the “
Company
”) is to provide stock options and other equity interests in the Company (each
an “
Award
”) to employees, officers, directors, consultants and advisors of the Company and
its Subsidiaries, all of whom are eligible to receive Awards under the Plan. Any person to whom an
Award has been granted under the Plan is called a “
Participant
”. Additional definitions
are contained in Section 8.
2.
Administration
a.
Administration by Board of Directors
. The Plan will be administered by the Board
of Directors of the Company (the “
Board
”). The Board, in its sole discretion, shall have
the authority to grant and amend Awards, to adopt, amend and repeal rules relating to the Plan and
to interpret and correct the provisions of the Plan and any Award. All decisions by the Board
shall be final and binding on all interested persons. Neither the Company nor any member of the
Board shall be liable for any action or determination relating to the Plan.
b.
Appointment of Committees
. To the extent permitted by applicable law, the Board
may delegate any or all of its powers under the Plan to one or more committees or subcommittees of
the Board (a “
Committee
”). All references in the Plan to the “
Board
” shall mean
such Committee or the Board.
c.
Delegation to Executive Officers
. To the extent permitted by applicable law, the
Board may delegate to one or more executive officers of the Company the power to grant Awards and
exercise such other powers under the Plan as the Board may determine,
provided that
the Board shall
fix the maximum number of Awards to be granted and the maximum number of shares issuable to any one
Participant pursuant to Awards granted by such executive officers.
3.
Stock Available for Awards
a.
Number of Shares
. Subject to adjustment under Section 3(c), the aggregate number
of shares of Common Stock of the Company (the “
Common Stock
”) that may be issued pursuant
to the Plan is 14,724,117 shares. If any Award expires, or is terminated, surrendered or
forfeited, in whole or in part, the unissued Common Stock covered by such Award shall again be
available for the grant of Awards under the Plan. If shares of Common Stock issued pursuant to the
Plan are repurchased by, or are surrendered or forfeited to, the Company at no more than cost, such
shares of Common Stock shall again be available for the grant of Awards under the Plan;
provided,
however,
that the cumulative number of such shares that may be so reissued under the Plan will not exceed
14,724,117 shares. Shares issued under the Plan may consist in whole or in part of authorized but
unissued shares or treasury shares.
b.
Per-Participant Limit
. Subject to adjustment under Section 3(c), no Participant
may be granted Awards during any one fiscal year to purchase more than 1,100,000 shares of Common
Stock.
c.
Adjustment to Common Stock
. In the event of any stock split, stock dividend,
extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, combination,
exchange of shares, liquidation, spin-off, split-up, or other similar change in capitalization or
event, (i) the number and class of securities available for Awards under the Plan and the
per-Participant share limit, (ii) the number and class of securities, vesting schedule and exercise
price per share subject to each outstanding Option, (iii) the repurchase price per security subject
to repurchase, and (iv) the terms of each other outstanding stock-based Award shall be equitably
adjusted by the Company (or substituted Awards may be made) to the extent that such an adjustment
(or substitution) is appropriate. If Section 7(e)(i) applies for any event, this Section 3(c) shall
not be applicable.
4.
Stock Options
a.
General
. The Board may grant options to purchase Common Stock (each, an
“
Option
”) and determine the number of shares of Common Stock to be covered by each Option,
the exercise price of each Option and the conditions and limitations applicable to the exercise of
each Option and the Common Stock issued upon the exercise of each Option, including vesting
provisions, repurchase provisions and restrictions relating to applicable federal or state
securities laws, as it considers advisable.
b.
Incentive Stock Options
. An Option that the Board intends to be an “incentive
stock option” as defined in Section 422 of the Code (an “
Incentive Stock Option
”) shall be
granted only to employees of the Company and shall be subject to and shall be construed
consistently with the requirements of Section 422 of the Code. The Board and the Company shall
have no liability if an Option or any part thereof that is intended to be an Incentive Stock Option
does not qualify as such. An Option or any part thereof that does not qualify as an Incentive Stock
Option is referred to herein as a “
Nonstatutory Stock Option
.”
c.
Exercise Price
. The Board shall establish the exercise price (or determine the
method by which the exercise price shall be determined) at the time each Option is granted and
specify it in the applicable option agreement;
provided, however
, such exercise price shall not be
less than 100% of the fair market value per share of Common Stock on the date of grant.
d.
Duration of Options
. Each Option shall be exercisable at such times and subject to
such terms and conditions as the Board may specify in the applicable option
agreement;
provided, however
, that no Option granted after January 23, 2008 shall have a term in
excess of seven (7) years measured form the date of grant.
e.
Exercise of Option
. Options may be exercised only by delivery to the Company of a
written notice of exercise signed by the proper person together with payment in full as specified
in Section 4(f) for the number of shares for which the Option is exercised.
2
f.
Payment Upon Exercise
. Common Stock purchased upon the exercise of an Option shall
be paid for by one or any combination of the following forms of payment:
(i) by cash or check payable to the order of the Company;
(ii) except as otherwise explicitly provided in the applicable option agreement, and only if
the Common Stock is then publicly traded, delivery of an irrevocable and unconditional undertaking
by a creditworthy broker to deliver promptly to the Company sufficient funds to pay the exercise
price, or delivery by the Participant to the Company of a copy of irrevocable and unconditional
instructions to a creditworthy broker to deliver promptly to the Company cash or a check sufficient
to pay the exercise price; or
(iii) to the extent explicitly provided in the applicable option agreement, by (x) delivery of
shares of Common Stock owned by the Participant valued at fair market value (as determined by the
Board or as determined pursuant to the applicable option agreement), (y) delivery of a promissory
note of the Participant to the Company (and delivery to the Company by the Participant of a check
in an amount equal to the par value of the shares purchased), or (z) payment of such other lawful
consideration as the Board may determine.
5.
Restricted Stock
a.
Grants
. The Board may grant Awards entitling recipients to acquire shares of
Common Stock, subject to (i) delivery to the Company by the Participant of cash or other lawful
consideration in an amount at least equal to the par value of the shares purchased, and (ii) the
right of the Company to repurchase all or part of such shares at their issue price or other stated
or formula price from the Participant in the event that conditions specified by the Board in the
applicable Award are not satisfied prior to the end of the applicable restriction period or periods
established by the Board for such Award (each, a “
Restricted Stock Award
”).
b.
Terms and Conditions
. The Board shall determine the terms and conditions of any
such Restricted Stock Award. Any stock certificates issued in respect of a Restricted Stock Award
shall be registered in the name of the Participant and, unless otherwise determined by the Board,
deposited by the Participant, together with a stock power endorsed in blank, with the Company (or
its designee). After the expiration of the applicable restriction periods, the Company (or such
designee) shall deliver the
certificates no longer subject to such restrictions to the Participant or, if the Participant has
died, to the beneficiary designated by a Participant, in a manner determined by the Board, to
receive amounts due or exercise rights of the Participant in the event of the Participant’s death
(the “
Designated Beneficiary
”). In the absence of an effective designation by a
Participant, Designated Beneficiary shall mean the Participant’s estate.
6.
Other Stock-Based Awards
a. The Board is authorized to make Awards of Restricted Stock Units (“
Restricted Stock
Units
”) in such amounts and subject to such terms and conditions as determined by the Board.
At the time of grant, the Board shall specify the date or dates on which the Restricted
3
Stock Units
shall become fully vested and nonforfeitable, and may specify such conditions to vesting as it
deems appropriate. At the time of grant, the Board shall specify the maturity date applicable to
each grant of Restricted Stock Units which shall be no earlier than the vesting date or dates of
the Award. On the maturity date, the Company shall, subject to Section 7(h), transfer to the
Participant one unrestricted, fully transferable share of Common Stock for each Restricted Stock
Unit scheduled to be paid out on such date and not previously forfeited.
b. The Board shall have the right to grant other Awards based upon the Common Stock having
such terms and conditions as the Board may determine, including, without limitation, the grant of
shares based upon certain conditions, the grant of securities convertible into Common Stock and the
grant of stock appreciation rights or phantom stock awards.
7.
General Provisions Applicable to Awards
a.
Transferability of Awards
. Except as the Board may otherwise determine or provide
in an Award, Awards shall not be sold, assigned, transferred, pledged or otherwise encumbered by
the person to whom they are granted, either voluntarily or by operation of law, except by will or
the laws of descent and distribution, and, during the life of the Participant, shall be exercisable
only by the Participant. References to a Participant, to the extent relevant in the context, shall
include references to authorized transferees.
b.
Documentation
. Each Award under the Plan shall be evidenced by a written
instrument in such form as the Board shall determine or as executed by an officer of the Company
pursuant to authority delegated by the Board. Each Award may contain terms and conditions in
addition to those set forth in the Plan
provided that
such terms and conditions do not contravene
the provisions of the Plan.
c.
Board Discretion
. The terms of each type of Award need not be identical, and the
Board need not treat Participants uniformly.
d.
Termination of Status
. The Board shall determine the effect on an Award of the
disability, death, retirement, authorized leave of absence or other change in the
employment or other status of a Participant and the extent to which, and the period during which,
the Participant, or the Participant’s legal representative, conservator, guardian or Designated
Beneficiary, may exercise rights under the Award.
e.
Acquisition of the Company
(i)
Consequences of an Acquisition
. Upon the consummation of an Acquisition, the
Board or the board of directors of the surviving or acquiring entity (as used in this Section
7(e)(i), also the “
Board
”), shall, as to outstanding Awards (on the same basis or on
different bases as the Board shall specify), make appropriate provision for the continuation of
such Awards by the Company or the assumption of such Awards by the surviving or acquiring entity
and by substituting on an equitable basis for the shares then subject to such Awards either (a) the
consideration payable with respect to the outstanding shares of Common Stock in connection with the
Acquisition, (b) shares of stock of the surviving or acquiring corporation or
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(c) such other
securities or other consideration as the Board deems appropriate, the fair market value of which
(as determined by the Board in its sole discretion) shall not materially differ from the fair
market value of the shares of Common Stock subject to such Awards immediately preceding the
Acquisition. In addition to or in lieu of the foregoing, with respect to outstanding Options, the
Board may, on the same basis or on different bases as the Board shall specify, upon written notice
to the affected optionees, provide that one or more Options then outstanding must be exercised, in
whole or in part, within a specified number of days of the date of such notice, at the end of which
period such Options shall terminate, or provide that one or more Options then outstanding, in whole
or in part, shall be terminated in exchange for a cash payment equal to the excess of the fair
market value (as determined by the Board in its sole discretion) for the shares subject to such
Options over the exercise price thereof;
provided, however,
that before terminating any portion of
an Option that is not vested or exercisable (other than in exchange for a cash payment), the Board
must first accelerate in full the exercisability of the portion that is to be terminated.
Furthermore, in addition to or in lieu of any of the foregoing, with respect to any outstanding
Restricted Stock Units, the Board may, on the same basis or on different bases as the Board shall
specify, upon written notice to the affected Participant, provide that one or more Restricted Stock
Units then outstanding, in whole or in part, shall be terminated in exchange for a cash payment
equal to the fair market value (as determined by the Board in its sole discretion) for the shares
subject to such Restricted Stock Units. Unless otherwise determined by the Board (on the same
basis or on different bases as the Board shall specify), any repurchase rights or other rights of
the Company that relate to an Option or other Award shall continue to apply to consideration,
including cash, that has been substituted, assumed or amended for an Option or other Award pursuant
to this paragraph. The Company may hold in escrow all or any portion of any such consideration in
order to effectuate any continuing restrictions.
(ii)
Accelerated Vesting Due to Acquisition.
Without derogating from 7e(i) above, in
the case of Options or other awards granted prior to January 23, 2008 only, if an Acquisition that
is not a Private Transaction (as defined below) occurs while the Participant maintains a Business
Relationship with the Company and the Business
Relationship with the Company or the surviving or acquiring entity is ceased (other than for Cause
(as defined below)) within one (1) year after the closing of the Acquisition, due to any one of the
Accelerating Events (as defined below), then the Option granted to the Participant shall become
fully exercisable and vested.
(iii)
Definitions
.
“
Accelerating Events
” means (i) a reduction in salary or material
reduction in the level of benefits of the Participant as in effect on the date
immediately prior to the closing of an Acquisition; (ii) a diminution in the nature
or scope of the Participant’s authority, duties or responsibilities (as an
employee, officer, director or consultant) in effect immediately prior to the
closing of the Acquisition; or (iii) a change in location of the principal office
to which the Participant must report of greater than 50 miles.
An “
Acquisition
” shall mean: (x) the sale of the Company by merger in
which the shareholders of the Company in their capacity as such no longer own a
5
majority of the outstanding equity securities of the Company (or its successor); or
(y) any sale of all or substantially all of the assets or capital stock of the
Company (other than in a spin-off or similar transaction) or (z) any other
acquisition of the business of the Company, as determined by the Board.
“
Business Relationship
” means service to the Company or its successor
in the capacity of an employee, officer, director or consultant.
“
Cause
” means: (i) gross negligence or willful malfeasance in the
performance of the Participant’s work or a breach of fiduciary duty or
confidentiality obligations to the Company by the Participant; (ii) failure to
follow the proper directions of the Participant’s direct or indirect supervisor
after written notice of such failure; (iii) the commission by the Participant of
illegal conduct relating to the Company; (iv) disregard by the Participant of the
material rules or material policies of the Company which has not been cured within
15 days after notice thereof from the Company; (v) intentional acts on the part of
the Participant that have generated material adverse publicity toward or about the
Company; (vi) breach of any written agreement with the Company.
“
Private Transaction
” means any Acquisition where the consideration
received or retained by the holders of the then outstanding capital stock of the
Company does not consist of (i) cash or cash equivalent consideration, (ii)
securities which are registered under the Securities Act and/or (iii) securities
for which the Company or any other issuer thereof has agreed to file a registration
statement within 90 days of completion of the transaction for resale to the public
pursuant to the Securities Act.
(iv)
Assumption of Options Upon Certain Events
. In connection with a merger or
consolidation of an entity with the Company or the acquisition by the Company of property or stock
of an entity, the Board may grant Awards under the Plan in substitution for stock and stock-based
awards issued by such entity or an affiliate thereof. The substitute Awards shall be granted on
such terms and conditions as the Board considers appropriate in the circumstances.
f.
Withholding
. Each Participant shall pay to the Company, or make provisions
satisfactory to the Company for payment of, any taxes required by law to be withheld in connection
with Awards to such Participant no later than the date of the event creating the tax liability.
The Board may allow Participants to satisfy such tax obligations in whole or in part by
transferring shares of Common Stock, including shares retained from the Award creating the tax
obligation, valued at their fair market value (as determined by the Board or as determined pursuant
to the applicable option agreement). The Company may, to the extent permitted by law, deduct any
such tax obligations from any payment of any kind otherwise due to a Participant.
g.
Amendment of Awards
. The Board may amend, modify or terminate any outstanding
Award including, but not limited to, substituting therefor another Award of the same or a different
type, changing the date of exercise or realization, and converting an Incentive
6
Stock Option to a
Nonstatutory Stock Option,
provided that
the Participant’s consent to such action shall be required
unless the Board determines that the action, taking into account any related action, would not
materially and adversely affect the Participant.
h.
Conditions on Delivery of Stock
. The Company will not be obligated to deliver any
shares of Common Stock pursuant to the Plan or to remove restrictions from shares previously
delivered under the Plan until (i) all conditions of the Award have been met or removed to the
satisfaction of the Company, (ii) in the opinion of the Company’s counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied, including any
applicable securities laws and any applicable stock exchange or stock market rules and regulations,
and (iii) the Participant has executed and delivered to the Company such representations or
agreements as the Company may consider appropriate to satisfy the requirements of any applicable
laws, rules or regulations.
i.
Acceleration
. The Board may at any time provide that any Options shall become
immediately exercisable in full or in part, that any Restricted Stock Awards shall be free of some
or all restrictions, or that any other stock-based Awards may become exercisable in full or in part
or free of some or all restrictions or conditions, or otherwise realizable in full or in part, as
the case may be, despite the fact that the foregoing actions may (i) cause the application of
Sections 280G and 4999 of the Code if a change in control of the Company occurs, or (ii) disqualify
all or part of the Option as an Incentive Stock Option. In the event of the acceleration of the
exercisability of one or more
outstanding Options, including pursuant to paragraph (e)(i), the Board may provide, as a condition
of full exercisability of any or all such Options, that the Common Stock or other substituted
consideration, including cash, as to which exercisability has been accelerated shall be restricted
and subject to forfeiture back to the Company at the option of the Company at the cost thereof upon
termination of employment or other relationship, with the timing and other terms of the vesting of
such restricted stock or other consideration being equivalent to the timing and other terms of the
superseded exercise schedule of the related Option.
8.
Miscellaneous
a.
Definitions
.
(i) “
Company
” for purposes of eligibility under the Plan, shall include any present or
future subsidiary corporations of Onaro, Inc., as defined in Section 424(f) of the Code (a
“
Subsidiary
”), and any present or future parent corporation of Onaro, Inc., as defined in
Section 424(e) of the Code. For purposes of Awards other than Incentive Stock Options, the term
“
Company
” shall include any other business venture in which the Company has a direct or
indirect significant interest, as determined by the Board in its sole discretion.
(ii) “
Code
” means the Internal Revenue Code of 1986, as amended, and any regulations
promulgated thereunder.
7
(iii) “
employee
” for purposes of eligibility under the Plan (but not for purposes of
Section 4(b)) shall include a person to whom an offer of employment has been extended by the
Company.
(iv) “
Plan Administrator
” means either the Board or a Committee acting in its capacity
as administrator of the Plan pursuant to Section 2.
(v) “
Service
” means a Participant’s performance of services for the Company (or any
parent or subsidiary of the Company) in the capacity of an employee, a non-employee member of the
board of directors or a consultant or independent advisor.
b.
No Right To Employment or Other Status
. No person shall have any claim or right to
be granted an Award, and the grant of an Award shall not be construed as giving a Participant the
right to continued employment or any other relationship with the Company. The Company expressly
reserves the right at any time to dismiss or otherwise terminate its relationship with a
Participant free from any liability or claim under the Plan.
c.
No Rights As Stockholder
. Subject to the provisions of the applicable Award, no
Participant or Designated Beneficiary shall have any rights as a stockholder with respect to any
shares of Common Stock to be distributed with respect to an Award until becoming the record holder
thereof.
d.
Effective Date and Term of Plan
. The Plan shall become effective on the date on
which it is adopted by the Board. No Awards shall be granted under the Plan after the completion
of ten years from the date on which the Plan was adopted by the Board, but Awards previously
granted may extend beyond that date.
e.
Amendment of Plan
. The Board may amend, suspend or terminate the Plan or any
portion thereof at any time.
f.
Governing Law
. The provisions of the Plan and all Awards made hereunder shall be
governed by and interpreted in accordance with the laws of the State of Delaware, without regard to
any applicable conflicts of law.
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Adopted by the Board of Directors
on January 25, 2008
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Approved by the stockholders on
January 25, 2008
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8
Onaro Inc.
2002 Stock Option and Incentive Plan
Appendix — Israeli Taxpayers
1.
Special Provisions for Israeli Taxpayers
1.1 This Appendix (the
“Appendix"
) to the Onaro Inc. 2002 Stock Option and Incentive Plan
(the
“Plan"
) is effective as of June 6, 2007 (the
“Effective Date"
).
1.2 The provisions specified hereunder apply only to persons who are deemed to be residents of
the State of Israel for tax purposes, or are otherwise subject to taxation in Israel with respect
to Awards.
1.3 This Appendix applies with respect to Awards granted as Options or Shares under the Plan.
The purpose of this Appendix is to establish certain rules and limitations applicable to Options
and Restricted Stock Awards that may be granted or issued under the Plan from time to time, in
compliance with the securities and other applicable laws currently in force in the State of Israel.
Except as otherwise provided by this Appendix, all grants made pursuant to this Appendix shall be
governed by the terms of the Plan. This Appendix is applicable only to grants made after the
Effective Date. This Appendix complies with, and is subject to the ITO and Section 102.
1.4 The Plan and this Appendix shall be read together. In any case of contradiction, whether
explicit or implied, between the provisions of this Appendix and the Plan, the provisions of this
Appendix shall govern.
1.5 This Appendix shall also apply with respect to other Stock-Based Awards as described in
Section 6 of the Plan, if any, to the extent such Awards are consistent with the requirements of
the ITO and other applicable law.
2.
Definitions
Capitalized terms not otherwise defined herein shall have the meaning assigned to them in the
Plan. The following additional definitions will apply to grants made pursuant to this Appendix:
“
3(i) Option
” means an Option which is subject to taxation pursuant to Section 3(i) of the ITO
which has been granted to any person who is not an Eligible 102 Participant.
“
102 Capital Gains Track
” means the tax alternative set forth in Section 102(b)(2) of the ITO
pursuant to which income resulting from the sale of Shares derived from Options is taxed as a
capital gain.
“
102 Capital Gains Track Grant
” means a 102 Trustee Grant qualifying for the special tax
treatment under the 102 Capital Gains Track.
“
102 Ordinary Income Track
” means the tax alternative set forth in Section 102(b)(1) of the
ITO pursuant to which income resulting from the sale of Stock derived from Options is taxed as
ordinary income.
“
102 Ordinary Income Track Grant
” means a 102 Trustee Grant qualifying for the ordinary income
tax treatment under the 102 Ordinary Income Track.
“
102 Trustee Grant
” means an Award of Options or Shares granted pursuant to Section 102(b) of
the ITO and held in trust by a Trustee for the benefit of the Participant, and includes both 102
Capital Gains Track Grants and 102 Ordinary Income Track Grants.
“
Affiliate
” means any “employing company” within the meaning of Section 102(a) of the ITO.
“
Controlling Shareholder
” means a “controlling shareholder” within the meaning of Section
32(9) of the Ordinance, currently defined as an individual who prior to the grant or as a result of
the grant or exercise of any Award, holds or would hold, directly or indirectly, in his name or
with a relative (as defined in the Ordinance) (i) 10% of the outstanding shares of the Company,
(ii) 10% of the voting power of the Company, (iii) the right to hold or purchase 10% of the
outstanding equity or voting power, (iv) the right to obtain 10% of the “profit” of the Company (as
defined in the Ordinance), or (v) the right to appoint a director of the Company.
“
Election
” means the Company’s choice of the type (as between capital gains track or ordinary
income track) of 102 Trustee Grants it will make under the Plan, as filed with the ITA.
“
Eligible 102 Participant
” means a person who is employed by the Company or its Affiliates,
including an individual who is serving as a director or an office holder, who is not a Controlling
Shareholder.
“
Fair Market Value
” shall mean with respect to 102 Capital Gains Track Grants only and for the
sole purpose of determining tax liability pursuant to Section 102(b)(3) of the ITO, if at the date
of grant the Company’s shares are listed on any established stock exchange or a national market
system or if the Company’s shares will be registered for trading within ninety (90) days following
the date of grant, the fair market value of the Shares at the date of grant shall be determined in
accordance with the average value of the Company’s shares on the thirty (30) trading days preceding
the date of grant or on the thirty (30) trading days following the date of registration for
trading, as the case may be.
“
ITA
” means the Israeli Tax Authorities.
“
ITO
” means the Israeli Income Tax Ordinance (New Version) 1961 and the rules, regulations,
orders or procedures promulgated thereunder and any amendments thereto, including specifically the
Rules, all as may be amended from time to time.
“
Non-Trustee Grant
” means an Award granted to an Eligible 102 Participant pursuant to Section
102(c) of the ITO and not held in trust by a Trustee.
2
“
Option
” means an Option granted pursuant to the terms and conditions of the Plan and this
Appendix.
“
Required Holding Period
” means the requisite period prescribed by the ITO and the Rules, or
such other period as may be required by the ITA, with respect to 102 Trustee Grants, during which
Options or Shares granted by the Company must be held by the Trustee for the benefit of the person
to whom it was granted. As of the Effective Date, the Required Holding Period for 102 Capital
Gains Track Grants is 24 months from the date of grant of the Options.
“
Rules”
means the Income Tax Rules (Tax benefits in Stock Issuance to Employees) 5763-2003.
“
Section 102
” shall mean the provisions of Section 102 of the ITO, as amended from time to
time, including by the Law Amending the Income Tax Ordinance (Number 132), 2002, effective as of
January 1, 2003 and by the Law Amending the Income Tax Ordinance (Number 147), 2005.
“
Shares
” means shares of Common Stock, including Restricted Stock or shares of Common Stock
issued upon exercise of Stock Options.
“
Trustee
” means a person or entity designated by the Board to serve as a trustee and approved
by the ITA in accordance with the provisions of Section 102(a) of the ITO.
3.
Types of Awards and Section 102 Election
3.1 Awards made pursuant to Section 102, whether as grants of Options or as issuances of
Shares under the Plan, shall be made pursuant to either (a) Section 102(b)(2) of the ITO as 102
Capial Gains Track Grants or (b) Section 102(b)(1) of the ITO as 102 Ordinary Income Track Grants.
The Company’s Election regarding the type of 102 Trustee Grant it chooses to make shall be filed
with the ITA. Once the Company has filed such Election, it may change the type of 102 Trustee Grant
that it chooses to make only after the passage of at least 12 months from the end of the calendar
year in which the first grant was made in accordance with the previous Election, in accordance with
Section 102. For the avoidance of doubt, such Election shall not prevent the Company from granting
Non-Trustee Grants to Eligible 102 Participants at any time.
3.2 Eligible 102 Participants may receive only 102 Trustee Grants or Non-Trustee Grants under
this Appendix. Participants who are not Eligible 102 Participants may be granted only 3(i)
Options under this Appendix.
3.3 No 102 Trustee Grants may be made effective pursuant to this Appendix until 30 days after
the requisite filings required by the ITO and the Rules have been made with the ITA.
3.4 The option agreement or documents evidencing the Options granted or Shares issued pursuant
to the Plan and this Appendix shall indicate whether the grant is a 102
3
Trustee Grant, a
Non-Trustee Grant or a 3(i) Grant; and, if the grant is a 102 Trustee Grant, whether it is a 102
Capital Gains Track Grant or a 102 Ordinary Income Track Grant.
4.
Terms And Conditions Of 102 Trustee Options
4.1 Each 102 Trustee Grant will be deemed granted on the date stated in a written notice by
the Company, provided that effective as of such date (i) the Company
has provided such notice to the Trustee and (ii) the Participant has signed all documents
required pursuant to this Section 4.
4.2 Each 102 Trustee Grant granted to an Eligible 102 Participant and each certificate for
shares of Stock acquired pursuant to the exercise of an Option or issued directly as Shares shall
be issued to and registered in the name of a Trustee and shall be held in trust for the benefit of
the Participant for the Required Holding Period. After termination of the Required Holding Period,
the Trustee may release such Option and any such Shares, provided that (i) the Trustee has received
an acknowledgment from the Israeli Income Tax Authority that the Eligible 102 Participant has paid
any applicable tax due pursuant to the ITO or (ii) the Trustee and/or the Company or its Affiliate
withholds any applicable tax due pursuant to the ITO. The Trustee shall not release any 102 Trustee
Options or shares issued upon exercise of such Option prior to the full payment of the Eligible 102
Participant’s tax liabilities.
4.3 Each 102 Trustee Grant (whether a 102 Capital Gains Track Grant or a 102 Ordinary Income
Track Grant, as applicable) shall be subject to the relevant terms of Section 102 and the ITO,
which shall be deemed an integral part of the 102 Trustee Option and shall prevail over any term
contained in the Plan, this Appendix or any agreement that is not consistent therewith. Any
provision of the ITO and any certificates or rulings of the ITA not expressly specified in this
Appendix or Option Agreement which are necessary to receive or maintain any tax benefit pursuant to
the Section 102 shall be binding on the Eligible 102 Participant. The Trustee and the Eligible 102
Participant granted a 102 Trustee Grant shall comply with the ITO, and the terms and conditions of
the Trust Agreement entered into between the Company and the Trustee. For avoidance of doubt, it is
reiterated that compliance with the ITO specifically includes compliance with the Rules. Further,
the Eligible 102 Participant agrees to execute any and all documents which the Company or the
Trustee may reasonably determine to be necessary in order to comply with the provision of any
applicable law, and, particularly, Section 102.
4.4 During the Required Holding Period, the Eligible 102 Participant shall not require the
Trustee to release or sell the Options or Shares and other shares received subsequently following
any realization of rights derived from Shares or Options (including stock dividends) to the
Eligible 102 Participant or to a third party, unless permitted to do so by applicable law.
Notwithstanding the foregoing, the Trustee may, pursuant to a written request and subject to
applicable law, release and transfer such Shares to a designated third party, provided that both of
the following conditions have been fulfilled prior to such transfer: (i) all taxes required to be
paid upon the release and transfer of the shares have been withheld for Transfer to the tax
authorities and (ii) the Trustee has received written confirmation from the Company that all
requirements for such release and transfer have been fulfilled according to the
4
terms of the
Company’s corporate documents, the Plan, any applicable agreement and any applicable law. To
avoid doubt such sale or release during the Required Holding Period will result in different tax
ramifications to the Eligible 102 Participant under Section 102 of the ITO and the Rules and/or
any other regulations or orders or procedures promulgated thereunder, which shall apply to and
shall be borne solely by such Eligible 102 Participant.
4.5 In the event a stock dividend is declared and/or additional rights are granted with
respect to Shares which derive from Awards granted as 102 Trustee Grants, such dividend and/or
rights shall also be subject to the provisions of this Section 4 and the Required Holding Period
for such shares and/or rights shall be measured from the commencement of the Required Holding
Period for the Award with respect to which the dividend was declared and/or rights granted. In the
event of a cash dividend on Shares, the Trustee shall transfer the dividend proceeds to the
Eligible 102 Participant after deduction of taxes and mandatory payments in compliance with
applicable withholding requirements.
4.6 If an Option granted as a 102 Trustee Grant is exercised during the Required Holding
Period, the Shares issued upon such exercise shall be issued in the name of the Trustee for the
benefit of the Eligible 102 Participant. If such an Option is exercised after the Required Holding
Period ends, the Shares issued upon such exercise shall, at the election of the Eligible 102
Participant, either (i) be issued in the name of the Trustee, or (ii) be transferred to the
Eligible 102 Participant directly, provided that the Participant first complies with all applicable
provisions of the Plan.
5.
Assignability
As long as Options or Shares are held by the Trustee on behalf of the Eligible 102
Participant, all rights of the Eligible 102 Participant over the shares are personal, can not be
transferred, assigned, pledged or mortgaged, other than by will or laws of descent and
distribution.
6.
Tax Consequences
6.1 Any tax consequences arising from the grant of any Award, exercise of any Option, from
the issuance, sale or transfer of Shares, or from any other event or act (of the Company and/or its
Affiliate and/or the Trustee and/or the Participant) relating to an Award or Shares issued
thereupon shall be borne solely by the Participant. The Company and/or its Affiliate, and/or the
Trustee shall withhold taxes according to the requirements under the applicable laws, rules, and
regulations, including withholding taxes at source. Furthermore, the Participant shall agree to
indemnify the Company and/or its Affiliate and/or the Trustee and hold them harmless against and
from any and all liability for any such tax or interest or penalty thereon, including without
limitation, liabilities relating to the necessity to withhold, or to have withheld, any such tax
from any payment made to the Participant. The Company or any of its Affiliates and the Trustee may
make such provisions and take such steps as it/they may deem necessary or appropriate for the
withholding of all taxes required by law to be withheld with respect to Awards granted under the
Plan and the exercise, sale, transfer or other disposition thereof, including, but not limited, to
(i) deducting the amount so required to be withheld from any other amount then or
5
thereafter
payable to a Participant, including by deducting any such amount from a Participant’s salary or
other amounts payable to the Participant, to the maximum extent permitted under law and/or (ii)
requiring a Participant to pay to the Company or any of its Affiliates the amount so required to be
withheld as a condition of the issuance, delivery, distribution or release of any Shares and/or
(iii) by causing the exercise of Options and/or sale of Shares held by or on behalf of the
Participant to cover
such liability, up to the amount required to satisfy minimum statutory withholding
requirements. In addition, the Participant will be required to pay any amount that exceeds the tax
to be withheld and transferred to the tax authorities, pursuant to applicable tax laws, regulations
and rules.
6.2 With respect to Non-Trustee Grants, if the Participant ceases to be employed by the
Company or any Affiliate, the Eligible 102 Participant shall extend to the Company and/or its
Affiliate a security or guarantee for the payment of tax due at the time of sale of Shares to the
satisfaction of the Company, all in accordance with the provisions of Section 102 of the ITO and
the Rules.
* * *
6