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governmental, administrative or regulatory authority or agency, domestic or
foreign, that would be required for the acquisition or ownership of our options
as contemplated herein. If any other approval or action should be required, we
presently intend to seek the approval or take the action. This could require us
to delay the exchange of options returned to us. We are unable to predict
whether we may determine that we are required to delay the acceptance of options
for exchange or the issuance of new options pending the outcome of any such
matter. We cannot assure you that any compliance, approval or other action, if
needed, would be possible or obtained without substantial conditions or that the
failure to comply with such rules or obtain any such approval or other action
might not result in adverse consequences to our business. Our obligation under
the offer to accept tendered options for exchange and to issue new options for
tendered options is subject to conditions, including the conditions described in
Section 6.
13. MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES.
The following is a general summary of the material U.S. federal income
tax consequences of the exchange of options under the offer and the grant of new
options. This discussion is based on the Internal Revenue Code, its legislative
history, Treasury Regulations and administrative and judicial interpretations as
of the date of the offer, all of which may change, possibly on a retroactive
basis. This summary does not discuss all of the tax consequences that may be
relevant to you in light of your particular circumstances, nor is it intended to
apply in all respects to all categories of option holders.
Consequences Of Exchange Of Options. If you exchange outstanding
incentive or nonqualified stock options for new options, you will not be
required to recognize income for U.S. federal income tax purposes at the time of
the exchange. We believe that the exchange will be treated as a non-taxable
exchange.
Tax Status Of New Options. All new options will be granted as
nonqualified stock options, even if the eligible option exchanged therefor was
an incentive stock option, and regardless of whether or not issued under the
1999 Plan.
Tax Consequences Of Not Accepting The Offer. If your eligible option is
an incentive stock option and you do not accept the offer, for U.S. federal
income tax purposes only, your option will be treated as if it were cancelled
and granted as a new option on April 30, 2001, the date of the offer. In such a
case, the option will remain an incentive stock option, except to the extent the
deemed re-grant is in excess of the $100,000 rule. Under the $100,000 rule, if
your option becomes vested in one calendar year for more than $100,000 of common
stock, valued as of April 30, 2001, the deemed grant date, the amount in excess
of $100,000 will be treated as nonqualified stock option. If your eligible
option is a nonqualified stock option there will be no tax consequences of not
accepting the offer.
Tax Consequences Of Non-Statutory Options. In general, you will not
recognize U.S. taxable income upon the grant of a nonqualified stock option.
Unlike the case of an incentive stock option, however, you will recognize
taxable income upon the exercise of a nonqualified stock option. In particular,
upon exercise of a nonqualified