<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 10, 1996
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
HOT TOPIC, INC.
(Exact name of Registrant as specified in its charter)
----------------
California 77-0198182
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
3410 Pomona Boulevard
Pomona, California 91768
(909) 869-6373
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
----------------
NON-PLAN STOCK OPTIONS
1996 EQUITY INCENTIVE PLAN
1996 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
EMPLOYEE STOCK PURCHASE PLAN
(Full title of the plan)
----------------
Jay A. Johnson
Chief Financial Officer
HOT TOPIC, INC.
3410 Pomona Boulevard
Pomona, California 91768
(909) 869-6373
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------------
Copies to:
M. Wainwright Fishburn, Esq.
Lance W. Bridges, Esq.
COOLEY GODWARD LLP
4365 Executive Drive, Suite 1100
San Diego, CA 92121
(619) 550-6000
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<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==============================================================================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Stock Options and Common Stock, no par value 931,795 $2.00-$23.375 $13,665,030.25 $4,140.92
==============================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457. The price per share and aggregate
offering price are based upon (a) the actual exercise price for shares
subject to options granted outside of the 1996 Equity Incentive Plan (the
"Equity Plan"); (b) the actual exercise price for shares subject to options
previously granted under the Registrant's Equity Plan; (c) additional
shares of Common Stock available for future grant under the Equity Plan
calculated on the basis of the average of the high and low sales price of
Registrant's Common Stock on October 3, 1996 as reported on the Nasdaq
National Market System; (d) the actual exercise price for shares subject to
options previously granted under the Registrant's 1996 Non-Employee
Directors' Stock Option Plan (the "Directors' Plan"), (e) shares issuable
under the Directors Plan calculated on the basis of the average of the
high and low sales price of Registrant's Common Stock on October 3, 1996
as reported on the Nasdaq National Market System; and (f) shares issuable
under the Employee Stock Purchase Plan calculated on the basis of the
average of the high and low sales price of Registrant's Common Stock on
October 3, 1996 as reported on the Nasdaq National Market System. The
following chart shows the calculation of the registration fee.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Offering Price Aggregate
Type of Shares Number of Shares Per Share Offering Price
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock issuable pursuant to outstanding
options issued outside of the Equity Plan 13,420 $2.00 $26,840.00
- ----------------------------------------------------------------------------------------------------------
Common Stock issuable pursuant to outstanding
options under the Equity Plan 2,000 $2.34 $4,680.00
- ----------------------------------------------------------------------------------------------------------
Common Stock issuable pursuant to outstanding
options under the Equity Plan 114,875 $2.50 $287,187.50
- ----------------------------------------------------------------------------------------------------------
Common Stock issuable pursuant to outstanding
options under the Equity Plan 91,000 $2.75 $250,250.00
- ----------------------------------------------------------------------------------------------------------
Common Stock issuable pursuant to outstanding
options under the Equity Plan 53,000 $3.03 $160,590.00
- ----------------------------------------------------------------------------------------------------------
Common Stock issuable pursuant to outstanding
options under the Equity Plan 37,500 $3.25 $121,875.00
- ----------------------------------------------------------------------------------------------------------
Common Stock issuable pursuant to outstanding
options under the Equity Plan 68,500 $5.00 $342,500.00
- ----------------------------------------------------------------------------------------------------------
Common Stock issuable pursuant to outstanding
options under the Equity Plan 25,000 $8.00 $200,000.00
- ----------------------------------------------------------------------------------------------------------
Common Stock available for grant under the
Equity Plan 346,500 $23.375 $8,099,437.50
- ----------------------------------------------------------------------------------------------------------
Common Stock issuable under the Directors' Plan 6,666 $18.00 $119,988.00
- ----------------------------------------------------------------------------------------------------------
Common Stock issuable under the Directors' Plan 23,334 $23.375 $545,432.25
- ----------------------------------------------------------------------------------------------------------
Common Stock issuable under the Employee
Stock Purchase Plan 150,000 $23.375 $3,506,250.00
- ----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 3
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The contents of the Registration Statement on Form SB-2, No.
333-5054-LA, filed by Hot Topic, Inc. (the "Registrant") with the Securities and
Exchange Commission (the "Commission") on June 17, 1996, as amended through the
date hereof (the "Form SB-2") are hereby incorporated by reference into this
Registration Statement. The Registrant has not filed, and has not been required
to file, an annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as of the date hereof. A
description of the Registrant's Common Stock which is contained in the Form
SB-2, including any amendment or reports filed for the purpose of updating such
description, is hereby incorporated by reference into this Registration
Statement. All documents filed by the Registrant with the Commission pursuant to
Sections 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 have been sold or which deregisters
all securities then remaining unsold shall be deemed to be incorporated by
reference into this Registration Statement and to be a part hereof from the date
of filing of such documents. Any statement contained in a document incorporated
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 other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
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
The validity of the issuance of the Common Stock offered pursuant to
the 1996 Equity Incentive Plan, the 1996 Non-Employee Directors' Stock Option
Plan, the Employee Stock Purchase Plan and the options to purchase up to
13,420 shares of Common Stock granted outside the foregoing plans will be
passed upon for the Company by its counsel, Cooley Godward LLP, San Diego,
California. GC&H Investments, a general partnership formed by the partners of
Cooley Godward LLP for investment purposes, holds 10,100 shares of Common Stock
of the Registrant.
1.
<PAGE> 4
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant's Amended and Restated Articles of Incorporation provide
that to the fullest extent permitted by California law, the Registrant's
directors will not be personally liable to the Registrant and its shareholders
for monetary damages for any breach of a director's fiduciary duty. The Amended
and Restated Articles of Incorporation do not, however, eliminate the duty of
care, and in appropriate circumstances equitable remedies such as an injunction
or other forms of non-monetary relief would remain available under California
law. Each director will continue to be subject to liability for acts or
omissions not in good faith or involving intentional misconduct or knowing
violations of law, for acts or omissions that the director believes to be
contrary to the best interests of the Registrant or its shareholders, for any
transaction from which the director derived an improper personal benefit, for
acts or omissions involving a reckless disregard for the director's duty to the
Registrant or its shareholders when the director was aware or should have been
aware of a risk of serious injury to the Registrant or its shareholders, for
acts or omissions that constitute an unexcused pattern of inattention that
amounts to an abdication of the director's duty to the Registrant or its
shareholders, for improper transactions between the director and the Registrant
and for improper distributions to shareholders and loans to directors and
officers. This provision also does not affect a director's responsibilities
under any other laws, such as the Federal securities laws or state or Federal
environmental laws.
In addition, the Registrant's Bylaws provide that the Registrant shall
indemnify its directors and may indemnify its officers, employees and other
agents to the fullest extent permitted by California law. The Registrant is also
empowered under its Bylaws to enter into indemnification contracts with its
directors and officers and to purchase insurance on behalf of any person whom it
is required or permitted to indemnify. Pursuant to this provision, the
Registrant has entered into indemnity agreements with each of its directors and
officers. In addition, the Registrant is required, subject to certain
exceptions, to advance all expenses incurred by any director or executive
officer in connection with a completed, pending or threatened action, suit or
proceeding upon receipt of an undertaking by such director or executive officer
to repay all amounts advanced by the Registrant on such person's behalf if it is
ultimately determined that such person is not entitled to be indemnified under
the Bylaws or otherwise
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
2.
<PAGE> 5
ITEM 8. EXHIBITS.
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
4.1 Registrant's Amended and Restated Articles of Incorporation.
4.2 Registrant's Bylaws.
4.3 Specimen Stock Certificate. (1)
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.
24.1 Power of Attorney. Reference is made to page 6.
99.1 1996 Equity Incentive Plan (the "Equity Plan"). (1)
99.2 Form of Incentive Stock Option Agreement under the Equity Plan. (1)
99.3 Form of Nonstatutory Stock Option Agreement under the Equity Plan. (1)
99.4 1996 Non-Employee Directors' Stock Option Plan. (1)
99.5 Employee Stock Purchase Plan. (1)
99.6 Form of Nonstatutory Stock Option Agreement outside of the Equity Plan.
</TABLE>
- ---------------
(1) Filed as an exhibit to Amendment No. 1 to the Registration Statement on
Form SB-2 (No. 333-5054-LA), and incorporated herein by reference.
3.
<PAGE> 6
ITEM 9. UNDERTAKINGS
(a) Rule 415 Offering.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) (Section 230.424(b)
of this chapter) if, in the aggregate, the changes in volume and price represent
no more than a 20% change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this Registration Statement or
any material change to such information in the Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if this Registration Statement is on Form S-3 or Form S-8 and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the 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 herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
4.
<PAGE> 7
(b) Filings Incorporating Subsequent Exchange Act Documents By
Reference.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act of 1934) that
is incorporated by reference in the Registration Statement shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Request for Acceleration of Effective Date or Filing of
Registration Statement on Form S-8.
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 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.
5.
<PAGE> 8
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Pomona, State of California, on October 9, 1996.
HOT TOPIC, INC.
By /s/ ORVAL D. MADDEN
--------------------------------------
Orval D. Madden
President, Chief Executive Officer
and Director
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Orval D. Madden and Jay A. Johnson and
each of them, his true and lawful attorney-in-fact and agent, 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, 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 attorney-in-fact and agent, or any of
them, or his substitutes or substitute, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ ROBERT M. JAFFE Chairman of the Board October 2, 1996
- --------------------------------
Robert M. Jaffe
/s/ ORVAL D. MADDEN President, Chief Executive Officer October 9, 1996
- -------------------------------- and Director(Principal Executive Officer)
Orval D. Madden
/s/ JAY A. JOHNSON Chief Financial Officer and Assistant October 9, 1996
- -------------------------------- Secretary (Principal Financial and
Jay A. Johnson Accounting Officer)
/s/ EDGAR F. BERNER Director October 9, 1996
- --------------------------------
Edgar F. Berner
/s/ STANLEY E. FOSTER Director October 9, 1996
- --------------------------------
Stanley E. Foster
/s/ JESS MARZAK Director October 9, 1996
- --------------------------------
Jess Marzak
/s/ GEORGE PEYSER Director October 9, 1996
- --------------------------------
George Peyser
/s/ CECE SMITH Director October 9, 1996
- --------------------------------
Cece Smith
</TABLE>
6.
<PAGE> 9
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C> <C>
4.1 Registrant's Amended and Restated Articles of Incorporation.
4.2 Registrant's Bylaws.
4.3 Specimen Stock Certificate. *
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.
24.1 Power of Attorney. Reference is made to Page 6.
99.1 1996 Equity Incentive Plan (the "Equity Plan"). *
99.2 Form of Incentive Stock Option Agreement under the Equity Plan. *
99.3 Form of Nonstatutory Stock Option Agreement under the Equity Plan. *
99.4 1996 Non-Employee Directors' Stock Option Plan. *
99.5 Employee Stock Purchase Plan. *
99.6 Form of Nonstatutory Stock Option Agreement outside of the Equity Plan.
</TABLE>
- -----------------
* Filed as an exhibit to Amendment No. 1 to the Registration Statement on
Form SB-2 (No. 333-5054-LA), and incorporated herein by reference.
<PAGE> 1
EXHIBIT 4.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION OF
HOT TOPIC, INC.
Orval D. Madden and Jay A. Johnson certify that:
1. They are the Chief Executive Officer and the Assistant Secretary,
respectively, of Hot Topic, Inc., a California corporation (the "Corporation").
2. The articles of incorporation of the Corporation are amended and
restated in their entirety to provide as follows:
I
The name of the Corporation is HOT TOPIC, INC.
II
The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business or
the practice of a profession permitted to be incorporated by the California
Corporations Code.
III
The Corporation is authorized to issue two classes of shares designated
"Common Stock" and "Preferred Stock," respectively. The number of shares of
Common Stock authorized to be issued is fifty million (50,000,000) and the
number of shares of Preferred Stock authorized to be issued is ten million
(10,000,000).
The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized, by filing a certificate of
determination pursuant to the California Corporations Code, to fix or alter from
time to time the powers, preferences and rights of the shares of each such
series and the qualifications, limitations or restrictions thereof, including
without limitation, the dividend rights, dividend rate, conversion rights,
voting rights, rights and terms of redemption (including sinking fund
provisions), redemption price or prices, and the liquidation preferences of any
wholly unissued series of Preferred Stock, and to establish from time to time
the number of shares constituting any such series and the designation thereof,
or any of them; and to increase or decrease the number of shares of any series
subsequent to the issuance of shares of that series, but not below the number of
shares of such series then outstanding. In case the number of shares of any
series shall be so decreased, the shares constituting
1.
<PAGE> 2
such decrease shall resume the status that they had prior to the adoption of the
resolution originally fixing the number of shares of such series.
IV
The liability of the directors of the Corporation for monetary damages
shall be eliminated to the fullest extent permissible under California law.
V
The Corporation is authorized to provide indemnification of agents (as
defined in Section 317 of the Corporations Code) for breach of duty to the
Corporation and its shareholders through bylaw provisions or through agreements
with the agents, or both, in excess of the indemnification otherwise permitted
by Section 317 of the Corporations Code, subject to the limits on such excess
indemnification set forth in Section 204 of the Corporations Code.
VI
1. For the management of the business and for the conduct of the
affairs of the Corporation, and in further definition, limitation and regulation
of the powers of the Corporation, of its directors and of its shareholders or
any class thereof, as the case may be, it is further provided that:
1.1. No action shall be taken by the shareholders of the
Corporation, except at an annual or special meeting of the shareholders called
in accordance with the bylaws of the Corporation.
1.2. Article II, Sections 2, 3, 8 and 10, Article III, Sections 2
and 4 and Article VIII, Section I of the bylaws may be altered, amended or
repealed by the shareholders, only by the affirmative vote of at least sixty-six
and two-thirds percent (66-2/3%) of the voting power of all of the
then-outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (the "Voting Stock"). Subject to
California law, all other sections of the bylaws may be altered, amended or
repealed by the affirmative vote of a majority of the Voting Stock. In
furtherance and not in limitation of the power conferred by statute, the board
of directors is expressly authorized to adopt, amend, supplement or repeal the
bylaws, except as otherwise provided by the Corporations Code.
1.3. Vacancies in the board of directors caused by any reason,
including the removal of a director or directors, may be filled by a majority of
the remaining directors, though less than a quorum, or by a sole remaining
director.
2.
<PAGE> 3
1.4. Notwithstanding any other provisions of these Amended and
Restated Articles of Incorporation, each director shall serve until his
successor is duly elected and qualified or until his death, resignation or
removal.
1.5. The number of authorized directors shall be as set forth in
the bylaws of the Corporation. The maximum or minimum number of directors may be
changed, or a definite number fixed without provision for a variable number,
only by an amendment to the articles of incorporation or bylaws of the
Corporation duly adopted by the vote of holders of sixty-six and two-thirds
percent (66-2/3%) of the Voting Stock. No amendment may change the stated
maximum number of authorized directors to a number greater than two (2) times
the stated minimum number of directors minus one (1).
1.6. The ability of shareholders to cumulate votes in the election
of directors shall be eliminated; provided this provision shall become effective
only when the Corporation becomes a listed corporation within the meaning of
Section 301.5 of the Corporations Code.
VII
1. In addition to any affirmative vote required by law, by these
Amended and Restated Articles of Incorporation or by any preferred stock
designation, and except as otherwise expressly provided in Section 3 of this
Article VII:
1.1. any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with (a) any Interested Shareholder (as
hereinafter defined) or (b) any other corporation (whether or not itself an
Interested Shareholder) which is, or after such merger or consolidation would
be, an Affiliate (as hereinafter defined) of an Interested Shareholder; or
1.2. any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions) to or with
any Interested Shareholder or any Affiliate of any Interested Shareholder of any
assets of the Corporation or any Subsidiary having an aggregate Fair Market
Value (as hereinafter defined) equal to or greater than 15% of the Corporation's
assets as set forth on the Corporation's most recent audited consolidated
financial statements; or
1.3. the issuance or transfer by the Corporation or any Subsidiary
(in one transaction or a series of transactions) of any securities of the
Corporation or any Subsidiary to any Interested Shareholder or any Affiliate of
any Interested Shareholder in exchange for cash, securities or other property
(or a combination thereof) having an aggregate Fair Market Value equal to or
greater than 15% of the Corporation's assets as set forth on the Corporation's
most recent audited consolidated financial statements; or
3.
<PAGE> 4
1.4. any reclassification of securities (including any reverse
stock split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any other
transaction (whether or not with or into or otherwise involving any Interested
Shareholder) which has the effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any class of equity or
convertible securities of the Corporation or any Subsidiary which is
Beneficially Owned (as hereinafter defined) by any Interested Shareholder or any
Affiliate of any Interested Shareholder;
shall require the affirmative vote of the holders of at least sixty-six and
two-thirds percent (66-2/3%) of voting power of all of the then-outstanding
shares of the Voting Stock, voting together as a single class. Such affirmative
vote shall be required notwithstanding any other provisions of these Amended and
Restated Articles of Incorporation or any provision of law or of any agreement
with any national securities exchange or otherwise which might otherwise permit
a lesser vote or no vote.
2. The term "Business Combination" as used in this Article VII shall
mean any transaction which is referred to in any one or more of subparagraphs
1.1 through 1.4 of Section 1.
3. The provisions of Section 1. of this Article VII shall not be
applicable to any particular Business Combination, and such Business Combination
shall require only such affirmative vote as is required by law, any other
provision of these Amended and Restated Articles of Incorporation and any
preferred stock designation, if, in the case of a Business Combination that does
not involve any cash or other consideration being received by the shareholders
of the Corporation, solely in their respective capacities as shareholders of the
Corporation, the condition specified in the following paragraph 3.1 is met, or,
in the case of any other Business Combination, the conditions specified in
either of the following paragraph 3.1 or paragraph 3.2 are met:
3.1. The Business Combination shall have been approved by:
(a) a majority of the Continuing Directors (as hereinafter
defined); provided however, that this condition shall not be capable of
satisfaction unless there are at least two Continuing Directors; or
(b) a majority of the shares not held by the Interested
Shareholder.
4.
<PAGE> 5
3.2. All of the following conditions shall have been met:
(a) The consideration to be received by holders of shares of
a particular class (or series) of outstanding Voting Stock (including Common
Stock and other than Excluded Preferred Stock (as hereinafter defined)) shall be
in cash or in the same form as the Interested Shareholder or any of its
Affiliates has previously paid for shares of such class (or series) of Voting
Stock. If the Interested Shareholder or any of its Affiliates have paid for
shares of any class (or series) of Voting Stock with varying forms of
consideration, the form of consideration to be received per share by holders of
shares of such class (or series) of Voting Stock shall be either cash or the
form used to acquire the largest number of shares of such class (or series) of
Voting Stock previously acquired by the Interested Shareholder.
(b) The aggregate amount of (x) the cash and (y) the Fair
Market Value, as of the date (the "Consummation Date") of the consummation of
the Business Combination, of the consideration other than cash to be received
per share by holders of Common Stock in such Business Combination shall be at
least equal to the higher of the following (in each case appropriately adjusted
in the event of any stock dividend, stock split, combination of shares or
similar event):
(i) (if applicable) the highest per share price paid
by the Interested Shareholder or any of its Affiliates for any shares of Common
Stock acquired by them within the two-year period immediately prior to the date
of the first public announcement of the proposal of the Business Combination
(the "Announcement Date") or in any transaction in which the Interested
Shareholder became an Interested Shareholder, whichever is higher; and
(ii) the Fair Market Value per share of Common Stock
on the Announcement Date or the first date on which the Interested Shareholder
became an Interested Shareholder (the "Determination Date") (which, if more than
two years prior to the Announcement Date shall be deemed to be the date two
years prior to the Announcement Date), whichever is higher.
(c) The aggregate amount of (x) the cash and (y) the Fair
Market Value, as of the Consummation Date, of the consideration other than cash
to be received per share by holders of shares of any class (or series), other
than Common Stock or Excluded Preferred Stock, of outstanding Voting Stock shall
be at least equal to the higher of the following (in each case appropriately
adjusted in the event of any stock dividend, stock split, combination of shares
or similar event), it being intended that the requirements of this paragraph
3.2(c) shall be required to be met with respect to every such class (or series)
of outstanding Voting Stock whether or not the Interested
5.
<PAGE> 6
Shareholder or any of its Affiliates has previously acquired any shares of a
particular class (or series) of Voting Stock):
(i) (if applicable) the highest per share price paid
by the Interested Shareholder or any of its Affiliates for any shares of such
class (or series) of Voting Stock acquired by them within the two-year period
immediately prior to the Announcement Date or in any transaction in which it
became an Interested Shareholder, whichever is higher; and
(ii) the Fair Market Value per share of such class (or
series) of Voting Stock on the Announcement Date or on the Determination Date,
whichever is higher.
(d) After such Interested Shareholder has become an
interested Shareholder and prior to the consummation of such Business
Combination: (a) except as approved by a majority of the Continuing Directors,
there shall have been no failure to declare and pay at the regular date therefor
any full quarterly dividends (whether or not cumulative) on any outstanding
Preferred Stock; (b) there shall have been (I) no reduction in the annual rate
of dividends paid on the Common Stock (except as necessary to reflect any
subdivision of the Common Stock), except as approved by a majority of the
Continuing Directors, and (II) an increase in such annual rate of dividends as
necessary to reflect any reclassification (including any reverse stock split),
recapitalization, reorganization or any similar transaction which has the effect
of reducing the number of outstanding shares of the Common Stock, unless the
failure so to increase such annual rate is approved by a majority of the
Continuing Directors; and (c) neither such Interested Shareholder nor any of its
Affiliates shall have become the beneficial owner of any additional shares of
Voting Stock except as part of the transaction which results in such Interested
Shareholder becoming an Interested Shareholder.
(e) After such Interested Shareholder has become an
Interested Shareholder, such Interested Shareholder and any of its Affiliates
shall not have received the benefit, directly or indirectly (except
proportionately, solely in such Interested Shareholder's or Affiliate's capacity
as a shareholder of the Corporation), of any loans, advances, guarantees,
pledges or other financial assistance or any tax credits or other tax advantages
provided by the Corporation, whether in anticipation of or in connection with
such Business Combination or otherwise.
(f) A proxy or information statement describing the proposed
Business Combination and complying with the requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder (or
any subsequent provisions replacing such Act, rules or regulations) shall be
mailed to all shareholders of the Corporation at least 30 days prior to the
consummation of such Business Combination
6.
<PAGE> 7
(whether or not such proxy or information statement is required to be mailed
pursuant to such Act or subsequent provisions).
(g) Such Interested Shareholder shall have supplied the
Corporation with such information as shall have been requested pursuant to
Section 6 of this Article VII within the time period set forth therein.
4. For the purposes of this Article VII:
4.1. A "person" means any individual, limited partnership, general
partnership, corporation or other firm or entity.
4.2. "Interested Shareholder" means any person (other than the
Corporation or any Subsidiary) who or which:
(a) is the Beneficial Owner (as hereinafter defined),
directly or indirectly, of fifteen percent (15%) or more of the voting power of
all of the then-outstanding shares of the Voting Stock; or
(b) is an Affiliate of the Corporation and at any time within
the two-year period immediately prior to the date in question was the Beneficial
Owner, directly or indirectly, of fifteen percent (15%) or more of the voting
power of all of the then-outstanding shares of the Voting Stock; or
(c) is an assignee of or has otherwise succeeded to any
shares of Voting Stock which were at any time within the two-year period
immediately prior to the date in question beneficially owned by an Interested
Shareholder, if such assignment or succession shall have occurred in the course
of a transaction or series of transactions not involving a public offering
within the meaning of the 1933 Act.
4.3. A person shall be a "Beneficial Owner" of, or shall
"Beneficially Own," any Voting Stock:
(a) which such person or any of its Affiliates or Associates
(as hereinafter defined) beneficially owns, directly or indirectly within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as in effect on
the adoption date of these Amended and Restated Articles of Incorporation; or
(b) which such person or any of its Affiliates or Associates
has (a) the right to acquire (whether such right is exercisable immediately or
only after the passage of time), pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (b) the right to vote pursuant to any
agreement, arrangement or understanding (but shall not
7.
<PAGE> 8
be deemed to be the Beneficial Owner of any shares of Voting Stock solely by
reason of a revocable proxy granted for a particular meeting of shareholders,
pursuant to a public solicitation of proxies for such meeting, and with respect
to which shares neither such person nor any such Affiliate or Associate is
otherwise deemed the Beneficial Owner); or
(c) which is beneficially owned, directly or indirectly,
within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as
in effect on the adoption date of these Amended and Restated Articles of
Incorporation, by any other person with which such person or any of its
Affiliates or Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting (other than solely by reason of a
revocable proxy as described in subparagraph (b) of this paragraph 4.3) or
disposing of any shares of Voting Stock;
provided, however, that in case of any employee stock ownership or similar plan
of the Corporation or of any Subsidiary in which the beneficiaries thereof
possess the right to vote any shares of Voting Stock held by such plan, no such
plan nor any trustee with respect thereto (nor any Affiliate of such trustee),
solely by reason of such capacity of such trustee, shall be deemed, for any
purposes hereof, to beneficially own any shares of Voting Stock held under any
such plan.
4.4. For the purposes of determining whether a person is an
Interested Shareholder pursuant to paragraph 4.2 of this Section 4, the number
of shares of Voting Stock deemed to be outstanding shall include shares deemed
owned through application of paragraph 4.3 of this Section 4 but shall not
include any other unissued shares of Voting Stock which may be issuable pursuant
to any agreement, arrangement or understanding, or upon exercise of conversion
rights, warrants or options, or otherwise.
4.5. "Affiliate" or "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as in effect on the adoption date of these
Amended and Restated Articles of Incorporation.
4.6. "Subsidiary" means any corporation of which a majority of any
class of equity security is owned, directly or indirectly, by the Corporation;
provided, however, that for the purposes of the definition of Interested
Shareholder set forth in paragraph 4.2 of this Section 4, the term "Subsidiary"
shall mean only a corporation of which a majority of each class of equity
security is owned directly or indirectly, by the Corporation.
4.7. "Continuing Director" means any member of the Board of
Directors of the Corporation who is a director originally elected or appointed
upon incorporation of the Corporation or who is not an Interested Shareholder or
affiliated with the Interested Shareholder and was a member of the Board of
Directors prior to the time that the
8.
<PAGE> 9
Interested Shareholder became an Interested Shareholder and any director who is
thereafter chosen to fill any vacancy on the Board of Directors or who is
elected and who, in either event, is not an Interested Shareholder or
unaffiliated with the Interested Shareholder and in connection with his or her
initial assumption of office is recommended for an appointment or election by a
majority of Continuing Directors then on the Board.
4.8. "Fair Market Value" means: (i) in the case of stock, the
highest closing sale price on the last trading day immediately Preceding the
date in question of a share of such stock on the composite Tape for New York
Stock Exchange-Listed Stocks, or, if such stock is not quoted on the Composite
Tape, on the New York Stock Exchange, or, if such stock is not listed on such
Exchange, on the principal United States securities exchange registered under
the Securities Exchange Act of 1934 on which such stock is listed, or, if such
stock is not listed on any such exchange, the highest closing sale price
quotation with respect to a share of such stock on the last trading day
preceding the date in question on the National Association of Securities
Dealers, Inc. Automated Quotations System or any system then in use, or if no
such quotations are available, the fair market value on the date in question of
a share of such stock as determined by the Board in accordance with Section 5 of
this Article VII; and (ii) in the case of property other than cash or stock, the
fair market value of such property on the date in question as determined by the
Board in accordance with Section 5 of this Article VII.
4.9. In the event of any Business Combination in which the
Corporation survives, the phrase "consideration other than cash to be received"
as used in paragraphs 3.2(b) and 3.2(c) of Section 3 of this Article VII shall
include the shares of Common Stock and/or the shares of any other class (or
series) of outstanding Voting Stock retained by the holders of such shares.
4.10. "Whole Board" means the total number of directors which the
Corporation would have if there were no vacancies.
4.11. "Excluded Preferred Stock" means any series of Preferred
Stock with respect to which the preferred stock designation creating such series
expressly provides that the provisions of this Article VII shall not apply.
5. A majority of the Whole Board but only if a majority of the Whole
Board shall then consist of Continuing Directors or, if a majority of the Whole
Board shall not then consist of Continuing Directors, a majority of the then
Continuing Directors, shall have the power and duty to determine, on the basis
of information known to them after reasonable inquiry, all facts necessary to
determine compliance with this Article VII, including, without limitation, (i)
whether a person is an Interested Shareholder, (ii) the number of shares of
Voting Stock beneficially owned by any person (iii) whether a person
9.
<PAGE> 10
is an Affiliate or Associate of another, (iv) whether the applicable conditions
set forth in paragraph 3.2 of Section 3 have been met with respect to any
Business Combination, (v) the Fair Market Value of stock or other property in
accordance with paragraph 4.8 of Section 4 of this Article VII, and (vi) whether
the assets which are the subject of any Business Combination referred to in
paragraph 1.2 of Section 1 have or the consideration to be received for the
issuance or transfer of securities by the Corporation or any Subsidiary in any
Business Combination referred to in paragraph 1.3 of Section 1 has, an aggregate
Fair Market Value equal to or greater than 15% of the Corporation's assets as
set forth on the Corporation's most recent audited consolidated financial
statements.
6. A majority of the Whole Board shall have the right to demand, but
only if a majority of the Whole Board shall then consist of Continuing
Directors, or, if a majority of the Whole Board shall not then consist of
Continuing Directors, a majority of the then Continuing Directors shall have the
right to demand, that any person who it is reasonably believed is an Interested
Shareholder (or holds of record shares of Voting Stock Beneficially Owned by any
Interested Shareholder) supply the Corporation with complete information as to
(i) the record owner(s) of all shares Beneficially Owned by such person who it
is reasonably believed is an Interested Shareholder, (ii) the number of, and
class or series of, shares Beneficially Owned by such person who it is
reasonably believed is an Interested Shareholder and held of record by each such
record owner and the number(s) of the stock certificate(s) evidencing such
shares, and (iii) any other factual matter relating to the applicability of
effect of this Article VII, as may be reasonably requested of such person, and
such person shall furnish such information within 10 days after receipt of such
demand.
7. Nothing contained in this Article VII shall be construed to relieve
any Interested Shareholder from any fiduciary obligation imposed by law.
VIII
1. The Corporation reserves the right to amend, alter, change or repeal
any provision contained in these Amended and Restated Articles of Incorporation,
in the manner now or hereafter prescribed by statute, except as provided in
paragraph 2 of this Article VIII, and all rights conferred upon the shareholders
herein are granted subject to this reservation.
2. Notwithstanding any other provisions of these Amended and Restated
Articles of Incorporation or any provision of law which might otherwise permit a
lesser vote or no vote, but in addition to any affirmative vote of the holders
of any particular class or series of the voting power of the Corporation
required by law, these Amended and Restated Articles of Incorporation or any
preferred stock designation, the affirmative vote of the holders of at least
sixty-six and two-thirds percent (66-2/3%) of the voting
10.
<PAGE> 11
power of all of the then-outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors, voting together as a
single class, shall be required to alter, amend or repeal Article VI, Article
VII or this Article VIII.
* * *
3. The foregoing amended and restated articles of incorporation have
been duly approved by the board of directors.
4. The foregoing amended and restated articles of incorporation have
been duly approved by the required vote of shareholders in accordance with
Sections 902 and 903 of the Corporations Code. On the record date for the
shareholder approval of the foregoing amended and restated articles of
incorporation, the total number of outstanding shares of the Corporation was
764,001 shares of Common Stock, 225,807 shares of Series A Preferred, 204,422
shares of Series B Preferred, 236,944 shares of Series C Preferred, and
1,611,800 shares of Series D Preferred. The number of shares voting in favor of
the amendment equaled or exceeded the vote required. The percentage vote
required was more than one-half of the Common Stock and more than two-thirds of
the Preferred Stock voting as a single class.
5. Subsequent to such shareholder approval and prior to the filing of
this certificate, all outstanding shares of Preferred Stock were converted into
shares of Common Stock.
11.
<PAGE> 12
We further declare under penalty of perjury under the laws of the State
of California that the matters set forth in this certificate are true and
correct of our own knowledge.
Dated: September 23, 1996, at Pomona, California.
/s/ Orval D. Madden
____________________________________
Orval D. Madden,
Chief Executive Officer
/s/ Jay A. Johnson
____________________________________
Jay A. Johnson
Assistant Secretary
12.
<PAGE> 1
EXHIBIT 4.2
- --------------------------------------------------------------------------------
AMENDED AND RESTATED BYLAWS
OF
HOT TOPIC, INC.
DATED SEPTEMBER 23, 1996
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I. OFFICES........................................................... 1
Section 1. Principal Office............................................ 1
Section 2. Other Offices............................................... 1
ARTICLE II. MEETINGS OF SHAREHOLDERS.......................................... 1
Section 1. Place of Meeting............................................ 1
Section 2. Annual Meeting.............................................. 1
Section 3. Special Meeting............................................. 3
Section 4. Notice of Shareholders' Meetings............................ 4
Section 5. Manner of Giving Notice; Affidavit of Notice................ 4
Section 6. Quorum...................................................... 5
Section 7. Adjourned Meeting; Notice................................... 5
Section 8. Voting...................................................... 5
Section 9. Waiver of Notice or Consent by Absent Shareholders.......... 6
Section 10. Shareholder Action by Written Consent Without a
Meeting..................................................... 7
Section 11. Proxies..................................................... 7
Section 12. Inspectors of Election...................................... 8
ARTICLE III. DIRECTORS......................................................... 8
Section 1. Powers...................................................... 8
Section 2. Number and Qualification of Directors....................... 9
Section 3. Election and Term of Office of Directors.................... 9
Section 4. Vacancies................................................... 9
Section 5. Place of Meetings and Meetings by Telephone................. 10
Section 6. Annual Meeting.............................................. 10
Section 7. Other Regular Meetings...................................... 10
Section 8. Special Meetings............................................ 10
Section 9. Quorum...................................................... 10
Section 10. Waiver of Notice............................................ 11
Section 11. Adjournment................................................. 11
Section 12. Notice of Adjournment....................................... 11
Section 13. Action Without Meeting...................................... 11
Section 14. Fees and Compensation of Director........................... 11
Section 15. Removal Without Cause....................................... 12
</TABLE>
i.
<PAGE> 3
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE IV. COMMITTEES........................................................ 12
Section 1. Committees of Directors..................................... 12
Section 2. Meetings and Action of Committees........................... 12
ARTICLE V. OFFICERS.......................................................... 13
Section 1. Officers.................................................... 13
Section 2. Election of Officers........................................ 13
Section 3. Subordinate Officers........................................ 13
Section 4. Removal and Resignation of Officers......................... 13
Section 5. Vacancies in Offices........................................ 14
Section 6. Chairman of the Board....................................... 14
Section 7. President................................................... 14
Section 8. Vice President.............................................. 14
Section 9. Secretary................................................... 14
Section 10. Chief Financial Officer..................................... 15
Section 11. Excessive Compensation...................................... 15
ARTICLE VI. RECORDS AND REPORTS............................................... 15
Section 1. Maintenance and Inspection of Share Register................ 15
Section 2. Maintenance and Inspection of Bylaws........................ 16
Section 3. Maintenance and Inspection of Other Corporate
Records..................................................... 16
Section 4. Inspection by Directors..................................... 16
Section 5. Annual Report to Shareholders............................... 17
Section 6. Financial Statements........................................ 17
Section 7. Annual Statement of General Information..................... 17
ARTICLE VII. GENERAL CORPORATE MATTERS......................................... 18
Section 1. Record Date for Purposes Other than Notice and
Voting...................................................... 18
Section 2. Checks, Drafts, Evidences of Indebtedness................... 18
Section 3. Corporate Contracts and Instruments; How Executed........... 18
Section 4. Certificate for Shares...................................... 18
Section 5. Lost Certificates........................................... 19
Section 6. Representation of Shares of Other Corporations.............. 19
Section 7. Construction and Definitions................................ 20
</TABLE>
ii.
<PAGE> 4
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE VIII. AMENDMENTS........................................................ 20
Section 1. Amendment by Shareholders................................... 20
Section 2. Amendment by Directors...................................... 20
ARTICLE IX. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS...... 20
Section 1. Director.................................................... 20
Section 2. Officers, Employees and Other Agents........................ 21
Section 3. Determination by the Corporation............................ 21
Section 4. Good Faith.................................................. 21
Section 5. Expenses.................................................... 22
Section 6. Enforcement................................................. 22
Section 7. Non-Exclusivity of Rights................................... 23
Section 8. Survival of Rights.......................................... 23
Section 9. Insurance................................................... 23
Section 10. Amendments.................................................. 23
Section 11. Employee Benefit Plans...................................... 23
Section 12. Saving Clause............................................... 23
Section 13. Certain Definitions......................................... 23
</TABLE>
iii.
<PAGE> 5
AMENDED AND RESTATED BYLAWS
OF
HOT TOPIC, INC.
ARTICLE I
OFFICES
SECTION 1. PRINCIPAL OFFICE. The board of directors shall fix the
location of the principal executive office of the corporation at any place
within or outside the State of California. If the principal executive office is
located outside this state, and the corporation has one or more business offices
in this state, the board of directors shall fix and designate a principal
business office in the State of California.
SECTION 2. OTHER OFFICES. The board of directors may at any time
establish branch or subordinate offices at any place or places where the
corporation is qualified to do business.
ARTICLE II
MEETINGS OF SHAREHOLDERS
SECTION 1. PLACE OF MEETING. Meetings of shareholders shall be held at
any place within or outside the State of California designated by the board of
directors. In the absence of any such designation, shareholders' meetings shall
be held at the principal executive office of the corporation.
SECTION 2. ANNUAL MEETING. The annual meeting of the shareholders shall
be held each year on a date and at a time designated by the board of directors.
If this day shall be a legal holiday, then the meeting shall be held on the next
succeeding business day, at the same hour. At each annual meeting, directors
shall be elected and other proper business may be transacted.
At an annual meeting of the shareholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be properly
brought before an annual meeting, business must be: (i) specified in the notice
of meeting (or any supplement thereto) given by or at the direction of the board
of directors, (ii) otherwise properly brought before the meeting by or at the
direction of the board of directors, or (iii) otherwise properly brought before
the meeting by a shareholder. For business to be properly brought before an
annual meeting by a shareholder, the shareholder must have
1.
<PAGE> 6
given timely notice thereof in writing to the secretary of the corporation. To
be timely, a shareholder's notice must be delivered to or mailed and received at
the principal executive offices of the corporation not less than one hundred
twenty (120) calendar days in advance of the date specified in the corporation's
proxy statement released to shareholders in connection with the previous year's
annual meeting of shareholders; provided, however, that in the event that no
annual meeting was held in the previous year or the date of the annual meeting
has been changed by more than thirty (30) days from the date contemplated at the
time of the previous year's proxy statement, notice by the shareholder to be
timely must be so received a reasonable time before the solicitation is made. A
shareholder's notice to the secretary shall set forth as to each matter the
shareholder proposes to bring before the annual meeting (i) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting, (ii) the name and address,
as they appear on the corporation's books, of the shareholder proposing such
business, (iii) the class and number of shares of the corporation which are
beneficially owned by the shareholder, (iv) any material interest of the
shareholder in such business and (v) any other information that is required to
be provided by the shareholder pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), in his capacity as a
proponent of a shareholder proposal. Notwithstanding the foregoing, in order to
include information with respect to a shareholder proposal in the proxy
statement and form of proxy for a shareholders' meeting, shareholders must
provide notice as required by the regulations promulgated under the 1934 Act.
Notwithstanding anything in these bylaws to the contrary, no business shall be
conducted at any annual meeting except in accordance with the procedures set
forth in this paragraph. The chairman of the annual meeting shall, if the facts
warrant, determine and declare at the meeting that business was not properly
brought before the meeting and in accordance with the provisions of this
paragraph, and, if he should so determine, he shall so declare at the meeting
that any such business not properly brought before the meeting shall not be
transacted.
Only persons who are nominated in accordance with the procedures set
forth in this paragraph shall be eligible for election as directors. Nominations
of persons for election to the board of directors of the corporation may be made
at a meeting of shareholders by or at the direction of the board of directors or
by any shareholder of the corporation entitled to vote in the election of
directors at the meeting who complies with the notice procedures set forth in
this paragraph. Such nominations, other than those made by or at the direction
of the board of directors, shall be made pursuant to timely notice in writing to
the secretary of the corporation in accordance with the provisions of the
preceding paragraph. Such shareholder's notice shall set forth (i) as to each
person, if any, whom the shareholder proposes to nominate for election or re
election as a director: (A) the name, age, business address and residence
address of such person, (B) the principal occupation or employment of such
person, (C) the class and number of shares of
2.
<PAGE> 7
the corporation which are beneficially owned by such person, (D) a description
of all arrangements or understandings between the shareholder and each nominee
and any other person or persons (naming such person or persons) pursuant to
which the nominations are to be made by the shareholder, and (E) any other
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required, in
each case pursuant to Regulation 14A under the 1934 Act (including without
limitation such person's written consent to being named in the proxy statement,
if any, as a nominee and to serving as a director if elected); and (ii) as to
such shareholder giving notice, the information required to be provided pursuant
to the preceding paragraph. At the request of the board of directors, any person
nominated by a shareholder for election as a director shall furnish to the
secretary of the corporation that information required to be set forth in the
shareholder's notice of nomination which pertains to the nominee. No person
shall be eligible for election as a director of the corporation unless nominated
in accordance with the procedures set forth in this paragraph. The chairman of
the meeting shall, if the facts warrant, determine and declare at the meeting
that a nomination was not made in accordance with the provisions of this
paragraph, and if he should so determine, he shall so declare at the meeting,
and the defective nomination shall be disregarded.
SECTION 3. SPECIAL MEETING. Special meetings of the shareholders may be
called at any time by the board of directors, the chairman of the board, the
president, a vice president, the secretary or by one or more shareholders
holding not less than one-tenth (1/10th) of the voting power of the corporation.
Except as next provided, notice shall be given as for the annual meeting.
Upon receipt of a written request addressed to the chairman, president,
vice president or secretary, mailed or delivered personally to such office by
any person (other than the board) entitled to call a special meeting of
shareholders, such officer shall cause notice to be given, to the shareholders
entitled to vote, that a meeting will be held at a time requested by the person
or persons calling the meeting, not less than thirty-five (35) nor more than
sixty (60) days after the receipt of such request. If such notice is not given
within twenty (20) days after receipt of such request, the persons calling the
meeting may give notice thereof in the manner provided by these bylaws or apply
to the Superior Court as provided in Section 305(c) of the Corporations Code of
California. Such person's notice delivered to such office shall set forth as to
each matter such person proposes to bring before the special meeting (i) a brief
description of the business desired to be brought before the special meeting and
the reasons for conducting such business at the special meeting, (ii) the name
and address, as they appear on the corporation's books, of the person proposing
such business, if applicable, (iii) the class and number of shares of the
corporation which are beneficially owned by the person, if applicable, (iv) any
material interest of the person in such business and (v) any other information
that is
3.
<PAGE> 8
required to be provided by the shareholder pursuant to Regulation 14A under the
1934 Act.
SECTION 4. NOTICE OF SHAREHOLDERS' MEETINGS. All notices of meetings
shall be sent or otherwise given in accordance with Section 5 of this Article II
not less than ten (10) nor more than sixty (60) days before the date of the
meeting. The notice shall specify the place, date and hour of the meeting and
(i) in the case of a special meeting, the general nature of the business to be
transacted, or (ii) in the case of the annual meeting, those matters which the
board of directors, at the time of giving the notice, intends to present for
action by the shareholders. The notice of any meeting at which directors are to
be elected shall include the name of any nominee or nominees whom, at the time
of the notice, management intends to present for election.
If action is proposed to be taken at any meeting for approval of (i) a
contract or transaction in which a director has a direct or indirect financial
interest, pursuant to Section 310 of the Corporations Code of California, (ii)
an amendment of the articles of incorporation, pursuant to Section 902 of that
Code, (iii) a reorganization of the corporation, pursuant Section 1201 of that
Code, (iv) a voluntary dissolution of the corporation, pursuant to Section 1900
of that Code, or (v) a distribution in dissolution other than in accordance with
the rights of outstanding preferred shares, pursuant to Section 2007 of that
Code, the notice shall also state the general nature of that proposal.
SECTION 5. MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE. Notice of any
meeting of shareholders shall be given either personally or by first-class mail
or telegraphic or other written communication, charges prepaid, addressed to the
shareholder at the address of that shareholder appearing on the books of the
corporation or given by the shareholder to the corporation for the purpose of
notice. If no such address appears on the corporation's books or is given,
notice shall be deemed to have been given if sent to that shareholder by
first-class mail or telegraphic or other written communication to the
corporation's principal executive office, or if published at least once in a
newspaper of general circulation in the county where that office is located.
Notice shall be deemed to have been given at the time when delivered personally
or deposited in the mail or sent by telegram or other means of written
communication.
If any notice addressed to a shareholder at the address of that
shareholder appearing on the books of the corporation is returned to the
corporation by the United States Postal Service marked to indicate that the
United States Postal Service is unable to deliver the notice to the shareholder
at that address, all future notices or reports shall be deemed to have been duly
given without further mailing if these shall be available to the shareholder on
written demand of the shareholder at the principal executive office of the
corporation for a period of one year from the date of giving of the notice.
4.
<PAGE> 9
An affidavit of the mailing or other means of giving any notice of any
shareholders' meeting shall be executed by the secretary, assistant secretary or
any transfer agent of the corporation giving the notice, and shall be filed and
maintained in the minute book of the corporation.
SECTION 6. QUORUM. The presence in person or by proxy of the holders of
a majority of the shares entitled to vote at any meeting of shareholders shall
constitute a quorum for the transaction of business. The shareholders present at
a duly called or held meeting at which a quorum is present may continue to do
business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum, if any action taken (other than
adjournment) is approved by at least a majority of the shares required to
constitute a quorum.
SECTION 7. ADJOURNED MEETING; NOTICE. Any shareholders' meeting, annual
or special, whether or not a quorum is present, may be adjourned from time to
time by the vote of the majority of the shares represented at that meeting,
either in person or by proxy, but in the absence of a quorum, no other business
may be transacted at that meeting, except as provided in Section 6 of this
Article II.
When any meeting of shareholders, either annual or special, is
adjourned to another time or place, notice need not be given of the adjourned
meeting if the time and place are announced at a meeting at which the
adjournment is taken, unless a new record date for the adjourned meeting is
fixed, or unless the adjournment is for more than forty-five (45) days from the
date set for the original meeting, in which case the board of directors shall
set a new record date. Notice of any such adjourned meeting shall be given to
each shareholder of record entitled to vote at the adjourned meeting in
accordance with the provisions of sections 4 and 5 of this Article II. At any
adjourned meeting, the corporation may transact any business which might have
been transacted at the original meeting.
SECTION 8. VOTING. The shareholders entitled to vote at any meeting of
shareholders shall be determined in accordance with the provisions of Section 11
of this Article II, subject to the provisions of Sections 702 to 704, inclusive,
of the Corporations Code of California (relating to voting shares held by a
fiduciary, in the name of a corporation or in joint ownership). The
shareholders' vote may be by voice vote or by ballot; provided, however, that
any election for directors must be by ballot if demanded by any shareholder
before the voting has begun. On any matter other than elections of directors,
any shareholder may vote part of the shares in favor of the proposal and refrain
from voting the remaining shares or vote them against the proposal, but, if the
shareholder fails to specify the number of shares which the shareholder is
voting affirmatively, it will be conclusively presumed that the shareholder's
approving vote is with respect to all shares that the shareholder is entitled to
vote. If a quorum is present, the affirmative vote
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of the majority of the shares represented at the meeting and entitled to vote on
any matter (other than the election of directors) shall be the act of the
shareholders, unless the vote of a greater number or voting by classes is
required by the Corporations Code of California or by the articles of
incorporation.
At a shareholders' meeting at which directors are to be elected, no
shareholder shall be entitled to cumulate votes (i.e., cast for any one or more
candidates a number of votes greater than the number of the shareholder's
shares) unless the candidates' names have been placed in nomination prior to
commencement of the voting and a shareholder has given notice prior to
commencement of the voting of the shareholder's intention to cumulate votes. If
any shareholder has given such a notice, then every shareholder entitled to vote
may cumulate votes for candidates in nomination and give one candidate a number
of votes equal to the number of directors to be elected multiplied by the number
of votes to which that shareholder's shares are entitled, or distribute the
shareholder's votes on the same principle among any or all of the candidates, as
the shareholder thinks fit. The candidates receiving the highest number of
votes, up to the number of directors to be elected, shall be elected.
On and after the first date upon which the corporation has equity
securities qualified for trading on the Nasdaq National Market and has 800
holders of its equity securities as of the record date of its most recent annual
meeting of shareholders (the "Qualifying Record Date"): (A) cumulative voting
shall no longer be available to the shareholders, (B) the immediately preceding
paragraph shall no longer be applicable, (C) the third sentence of the first
paragraph of this Section 8 shall read, "Any shareholder may vote part of the
shares in favor of the proposal and refrain from voting the remaining shares or
vote them against the proposal, but, if the shareholder fails to specify the
number of shares which the shareholder is voting affirmatively, it will be
conclusively presumed that the shareholder's approving vote is with respect to
all shares that the shareholder is entitled to vote", and (D) the parenthetical
reference in the first paragraph of this Section 8, "(other than the election of
directors)," shall no longer be applicable.
SECTION 9. WAIVER OF NOTICE OR CONSENT BY ABSENT SHAREHOLDERS. The
transactions at any meeting of shareholders, either annual or special, however
called and noticed, and wherever held, shall be as valid as though had at a
meeting duly held after regular call and notice, if a quorum be present either
in person or by proxy, and if, either before or after the meeting, each person
entitled to vote, who was not present in person or by proxy, signs a written
waiver of notice, a consent to holding of the meeting or an approval of the
minutes. The waiver of notice or consent need not specify either the business to
be transacted or the purpose of any annual or special meeting of shareholders,
except that if action is taken or proposed to be taken for approval of any of
those matters specified in the second paragraph of Section 4 of this Article II,
the waiver of notice or consent shall state the general nature of the proposal.
All such waivers, consents or
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approvals shall be filed with the corporate records or made a part of the
minutes of the meeting.
Attendance by a person at a meeting shall also constitute a waiver of
notice of that meeting, except when the person objects, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened, and except that attendance at a meeting is not a waiver of
any right to object to the consideration of matters not included in the notice
of the meeting if that objection is expressly made at the meeting.
SECTION 10. SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING. No
action shall be taken by the shareholders of the corporation, except at an
annual or special meeting of the shareholders called in accordance with these
bylaws.
(a) RECORD DATE FOR SHAREHOLDER NOTICE, VOTING AND GIVING
CONSENTS. For purposes of determining the shareholders entitled to notice of or
to vote at any meeting, the board of directors may fix, in advance, a record
date, which shall not be more than sixty (60) days nor less than ten (10) days
before the date of any such meeting, and in this event only shareholders of
record on the date so fixed are entitled to notice or to vote, as the case may
be, notwithstanding any transfer of any shares on the books of the corporation
after the record date, except as otherwise provided in the Corporations Code of
California. If the board of directors does not so fix a record date, the record
date for determining shareholders entitled to notice of or to vote at a meeting
of shareholders shall be at the close of business on the business day next
preceding the day an which notice is given or, if notice is waived, at the close
of business on the business day next preceding the day on which the meeting is
held.
SECTION 11. PROXIES. Every person entitled to vote for directors or on
any other matter shall have the right to do so either in person or by one or
more agents authorized by a written proxy signed by the person and filed with
the secretary of the corporation. A proxy shall be deemed signed if the
shareholder's name is placed on the proxy (whether by manual signature,
typewriting, telegraphic transmission or otherwise) by the shareholder or the
shareholder's attorney in fact. A validly executed proxy which does not state
that it is irrevocable shall continue in full force and effect unless (i)
revoked by the person executing it, before the vote pursuant to that proxy, by a
writing delivered to the corporation stating that the proxy is revoked, or by a
subsequent proxy executed by, or attendance at the meeting and voting in person
by, the person executing the proxy; or (ii) written notice of the death or
incapacity of the maker of that proxy is received by the corporation before the
vote pursuant to that proxy is counted; provided, however, that no proxy shall
be valid after the expiration of eleven (11) months from the date of the proxy,
unless otherwise provided in the proxy. The revocability of a proxy that states
on its face
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that it is irrevocable shall be governed by the provisions of Sections 705(e)
and 705(f) of the Corporations Code of California.
SECTION 12. INSPECTORS OF ELECTION. Before any meeting of shareholders,
the board of directors may appoint any persons other than nominees for office to
act as inspectors of election at the meeting or its adjournment. If no
inspectors of election are so appointed, the chairman of the meeting may, and on
the request of any shareholder or a shareholder's proxy shall, appoint
inspectors of election at the meeting. The number of inspectors shall be either
one (1) or three (3). If inspectors are appointed at a meeting on the request of
one or more shareholders or proxies, the holders of a majority of shares or
their proxies present at the meeting shall determine whether one (1) or three
(3) inspectors are to be appointed. If any person appointed as inspector fails
to appear or fails or refuses to act, the chairman of the meeting may, and upon
the request of any shareholder or a shareholder's proxy shall, appoint a person
to fill that vacancy.
These inspectors shall:
(a) Determine the number of shares outstanding and the voting
power of each, the shares represented at the meeting, the existence of a quorum
and the authenticity, validity and effect of proxies;
(b) Receive votes, ballots or consents;
(c) Hear and determine all challenges and questions in any way
arising in connection with the right to vote;
(d) Count and tabulate all votes or consents;
(e) Determine when the polls shall close;
(f) Determine the result; and
(g) Do any other acts that may be proper to conduct the election
or vote with fairness to all shareholders.
ARTICLE III
DIRECTORS
SECTION 1. POWERS. Subject to the provisions of the Corporations Code
of California and any limitations in the articles of incorporation and these
bylaws relating to action required to be approved by the shareholders or by the
outstanding shares, the business and affairs of the corporation shall be managed
and all corporate powers shall be exercised by or under the direction of the
board of directors.
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SECTION 2. NUMBER AND QUALIFICATION OF DIRECTORS.
(a) The number of directors of the corporation shall be not
less than six (6) nor more than eleven (11) and the exact number of directors
shall be fixed within these limits from time to time by approval of the board of
directors. The indefinite number of directors may be changed, or a definite
number fixed without provision for an indefinite number, by a duly adopted
amendment to the articles of incorporation or by an amendment to this bylaw duly
adopted by the vote of holders of sixty-six and two-thirds percent (66-2/3%) of
the outstanding shares entitled to vote. No amendment may change the stated
maximum number of authorized directors to a number greater than two (2) times
the stated minimum number of directors minus one (1).
SECTION 3. ELECTION AND TERM OF OFFICE OF DIRECTORS. Directors shall be
elected at each annual meeting by the shareholders to hold office until the next
annual meeting. Each director, including a director elected to fill a vacancy,
shall hold office until the expiration of the term for which elected and until a
successor has been elected and qualified.
SECTION 4. VACANCIES. Vacancies in the board of directors may be filled
by a majority of the remaining directors, though less than a quorum, or by a
sole remaining director. Each director so elected shall hold office until the
next annual meeting of the shareholders and until a successor has been elected
and qualified.
A vacancy or vacancies in the board of directors shall be deemed to
exist in the event of the death, resignation, or removal of any director, or if
the board of directors by resolution declares vacant the office of a director
who has been declared of unsound mind by an order of court or convicted of a
felony, or if the authorized number of directors is increased, or if the
shareholders fail, at any meeting of shareholders at which any director or
directors are elected, to elect the number of directors to be voted for at that
meeting.
The shareholders may elect a director or directors at any time to fill
any vacancy or vacancies not filled by the directors.
Any director may resign effective on giving written notice to the
chairman of the board, the president, the secretary or the board of directors,
unless the notice specifies a later time for that resignation to become
effective. If the resignation of a director is effective at a future time, the
board of directors may elect a successor to take office when the resignation
becomes effective.
No reduction of the authorized number of directors shall have the
effect of removing any director before that director's term of office expires.
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SECTION 5. PLACE OF MEETINGS AND MEETINGS BY TELEPHONE. Regular
meetings of the board of directors may be held at any place within or outside
the State of California that has been designated from time to time by resolution
of the board. In the absence of such a designation, regular meetings shall be
held at the principal executive office of the corporation. Special meetings of
the board shall be held at any place within or outside the State of California
that has been designated in the notice of the meeting or, if not stated in the
notice or there is no notice, at the principal executive office of the
corporation. Any meeting, regular or special, may be held by conference
telephone or similar communication equipment, so long as all directors
participating in the meeting can hear one another, and all such directors shall
be deemed to be present in person at the meeting.
SECTION 6. ANNUAL MEETING. Immediately following each annual meeting of
shareholders, the board of directors shall hold a regular meeting for the
purpose of organization, any desired election of officers and the transaction of
other business. Notice of this meeting shall not be required.
SECTION 7. OTHER REGULAR MEETINGS. Other regular meetings of the board
of directors shall be held without call at such time as shall from time to time
be fixed by the board of directors. Such regular meetings may be held without
notice.
SECTION 8. SPECIAL MEETINGS. Special meetings of the board of directors
for any purpose or purposes may be called at any time by the chairman of the
board, the president, any vice president, the secretary or any two directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's address
as it is shown on the records of the corporation. In the event that the notice
is mailed, it shall be deposited in the United States mail at least four (4)
days before the time of the holding of the meeting. In the event that the notice
is delivered personally or by telephone or telegram, it shall be delivered
personally or by telephone or to the telegraph company at least forty-eight (48)
hours before the time of the holding of the meeting. Any oral notice given
personally or by telephone may be communicated either to the director or to a
person at the office of the director who the person giving the notice has reason
to believe will promptly communicate it to the director. The notice need not
specify the purpose of the meeting, or the place of the meeting if the meeting
is to be held at the principal executive office of the corporation.
SECTION 9. QUORUM. A majority of the authorized number of directors
shall constitute a quorum for the transaction of business, except to adjourn as
provided in Section 11 of this Article III. Every act or decision done or made
by a majority of the directors present at a meeting duly held at which a quorum
is present shall be regarded as
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the act of the board of directors, subject to the provisions of Section 310 of
the Corporations Code of California (as to approval of contracts or transactions
in which a director has a direct or indirect material financial interest),
Section 311 of that Code (as to appointment of committees) and Section 317(e) of
that Code (as to indemnification of directors). A meeting at which a quorum is
initially present may continue to transact business notwithstanding the
withdrawal of directors, if any action taken is approved by at least a majority
of the required quorum for that meeting.
SECTION 10. WAIVER OF NOTICE. The transaction of any meeting of the
board of directors, however called and noticed or wherever held, shall be as
valid as though had at a meeting duly held after regular call and notice if a
quorum is present and if, either before or after the meeting, each of the
directors not present signs a written waiver of notice, a consent to holding the
meeting or an approval of the minutes. The waiver of notice or consent need not
specify the purpose of the meeting. All such waivers, consents and approvals
shall be filed with the corporate records or made a part of the minutes of the
meeting. Notice of a meeting shall also be deemed given to any director who
attends the meeting without protesting, before or at its commencement, the lack
of notice to that director.
SECTION 11. ADJOURNMENT. A majority of the directors present, whether
or not constituting a quorum, may adjourn any meeting to another time and place.
SECTION 12. NOTICE OF ADJOURNMENT. Notice of the time and place of
holding an adjourned meeting need not be given, unless the meeting is adjourned
for more than twenty-four (24) hours, in which case notice of the time and place
shall be given before the time of the adjourned meeting, in the manner specified
in Section 8 of this Article III, to the directors who were not present at the
time of the adjournment.
SECTION 13. ACTION WITHOUT MEETING. Any action required or permitted to
be taken by the board of directors may be taken without a meeting, if all
members of the board shall individually or collectively consent in writing to
that action. Such action by written consent shall have the same force and effect
as a unanimous vote of the board of directors. Such written consent or consents
shall be filed with the minutes of the proceedings of the board.
SECTION 14. FEES AND COMPENSATION OF DIRECTOR. Directors and members of
committees may receive such compensation, if any, for their services, and such
reimbursement of expenses, as may be fixed or determined by resolution of the
board of directors. This Section 14 shall not be construed to preclude any
director from serving the corporation in any other capacity as an officer,
agent, employee or otherwise, and receiving compensation for those services.
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SECTION 15. REMOVAL WITHOUT CAUSE. Any or all of the directors may be
removed without cause if the removal is approved by the outstanding shares
entitled to vote.
ARTICLE IV
COMMITTEES
SECTION 1. COMMITTEES OF DIRECTORS. The board of directors may, by
resolution adopted by a majority of the authorized number of directors,
designate one or more committees, each consisting of two (2) or more directors,
to serve at the pleasure of the board. The board may designate one or more
directors as alternate members of any committee, who may replace any absent
member at any meeting of the committee. Any committee, to the extent provided in
the resolution of the board, shall have all the authority of the board, except
with respect to:
(a) the approval of any action which, under the Corporations
Code of California, also requires shareholders' approval or approval of the
outstanding shares;
(b) the filling of vacancies on the board of directors or any
committee;
(c) the fixing of compensation of the directors for serving on
the board or any committee;
(d) the amendment or repeal of bylaws or the adoption of new
bylaws;
(e) the amendment or repeal of any resolution of the board of
directors which by its express terms is not so amendable or repealable;
(f) a distribution to the shareholders of the corporation, except
at a rate or in a periodic amount or within a price range determined by the
board of directors;
(g) the appointment of any other committees of the board of
directors or the members of these committees.
SECTION 2. MEETINGS AND ACTION OF COMMITTEES. Meetings and action of
committees shall be governed by, and held and taken in accordance with, the
provisions of Article III of these bylaws, Section 5 (place of meetings),
Section 7 (regular meetings), Section 8 (special meetings and notice), Section 9
(quorum), Section 10 (waiver of notice), Section 11 (adjournment), Section 12
(notice of adjournment) and Section 13 (action without meeting), with such
changes in the context of those bylaws as are necessary to substitute the
committee and its members for the board of directors and its members, except
that the time of regular meetings of committees may be determined
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either by resolution of the board of directors or by resolution of the
committee; special meetings of committees may also be called by resolution of
the board of directors; and notice of special meetings of committees shall also
be given to all alternate members, who shall have the right to attend all
meetings of the committee. The board of directors may adopt rules for the
government of any committee not inconsistent with the provisions of these
bylaws.
ARTICLE V
OFFICERS
SECTION 1. OFFICERS. The officers of the corporation shall be a
president, a secretary and a chief financial officer. The corporation may also
have, at the discretion of the board of directors, a chairman of the board, one
or more vice presidents, one or more assistant secretaries, one or more
assistant treasurers and such other officers as may be appointed in accordance
with the provisions of Section 3 of this Article V. Any number of offices may
be held by the same person.
SECTION 2. ELECTION OF OFFICERS. The officers of the corporation,
except such officers as may be appointed in accordance with the provisions of
Section 3 or Section 5 of this Article V, shall be chosen by the board of
directors, and each shall serve at the pleasure of the board, subject to the
rights, if any, of an officer under any contract of employment.
SECTION 3. SUBORDINATE OFFICERS. The board of directors may appoint,
and may empower the president to appoint, such other officers as the business of
the corporation may require, each of whom shall hold office for such period,
have such authority and perform such duties as are provided in the bylaws or as
the board of directors may from time to time determine.
SECTION 4. REMOVAL AND RESIGNATION OF OFFICERS. Subject to the rights,
if any, of an officer under any contract of employment, any officer may be
removed, either with or without cause, by the board of directors, at any regular
or special meeting of the board, or, except in case of an officer chosen by the
board of directors, by any officer upon whom such power of removal may be
conferred by the board of directors.
Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the officer is a
party.
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SECTION 5. VACANCIES IN OFFICES. A vacancy in any office because of
death, resignation, removal, disqualification or any other cause shall be filled
in the manner prescribed in these bylaws for regular appointments to that
office.
SECTION 6. CHAIRMAN OF THE BOARD. The chairman of the board, if such an
officer be elected, shall, if present, preside at meetings of the board of
directors and exercise and perform such other powers and duties as may be from
time to time assigned to him by the board of directors or prescribed by the
bylaws. If there is no president, the chairman of the board shall in addition be
the chief executive officer of the corporation and shall have the powers and
duties prescribed in Section 7 of this Article V.
SECTION 7. PRESIDENT. Subject to such supervisory powers, if any, as
may be given by the board of directors to the chairman of the board, if there be
such an officer, the president shall be the chief executive officer of the
corporation and shall, subject to the control of the board of directors, have
general supervision, direction and control of the business and the officers of
the corporation. He shall preside at all meetings of the shareholders and, in
the absence of the chairman of the board, or if there be none, at all meetings
of the board of directors. He shall have the general powers and duties of
management usually vested in the office of president of a corporation, and shall
have such other powers and duties as may be prescribed by the board of directors
or these bylaws.
SECTION 8. VICE PRESIDENT. In the absence or disability of the
president, the vice presidents, if any, in order of their rank as fixed by the
board of directors or, if not ranked, a vice president designated by the board
of directors, shall perform all the duties of the president, and when so acting
shall have all the powers of, and be subject to all the restrictions upon, the
president. The vice presidents shall have such other powers and perform such
other duties as from time to time may be prescribed for each of them,
respectively, by the board of directors or the bylaws, and the president or the
chairman of the board.
SECTION 9. SECRETARY. The secretary shall keep or cause to be kept, at
the principal executive office or such other place as the board of directors may
direct, a book of minutes of all meetings and actions of directors, committees
of directors and shareholders, with the time and place of holding, whether
regular or special, and, if special, how authorized, the notice given, the names
of those present at directors' meetings or committee meetings, the number of
shares present or represented at shareholders' meetings, and the proceedings.
The secretary shall keep, or cause to be kept, at the principal
executive office or at the office of the corporation's transfer agent or
registrar, as determined by resolution of the board of directors, a share
register, or a duplicate share register, showing the names of all shareholders
and their addresses, the number and classes of shares held by each, the
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number and date of certificates issued for the same, and the number and date of
cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings
of the shareholders and of the board of directors required by these bylaws or by
law to be given, and shall keep the seal of the corporation, if one be adopted,
in safe custody, and shall have such other powers and perform such other duties
as may be prescribed by the board of directors or by these bylaws.
SECTION 10. CHIEF FINANCIAL OFFICER. The chief financial officer shall
keep and maintain, or cause to be kept and maintained, adequate and correct
books and records of accounts of the properties and business transactions of the
corporation, including accounts of its assets, liabilities, receipts,
disbursements, gains, losses, capital, retained earnings and shares. The books
of account shall at all reasonable times be open to inspection by any directors.
The chief financial officer shall deposit all moneys and other
valuables in the name and to the credit of the corporation with such
depositories as may be designated by the board of directors. He shall disburse
the funds of the corporation as may be ordered by the board of directors, shall
render to the president and directors, whenever they request it, an account of
all of his transactions as chief financial officer and of the financial
condition of the corporation, and shall have the powers and perform such other
duties as may be prescribed by the board of directors or these bylaws.
SECTION 11. EXCESSIVE COMPENSATION. If the Internal Revenue Service
disallows as a business deduction to the corporation any part of the salary or
other compensation paid by it to any officer, director or employee as being
excessive compensation, that part disallowed shall be repaid to the corporation
by the officer, director or employee, unless the board of directors declares
otherwise.
ARTICLE VI
RECORDS AND REPORTS
SECTION 1. MAINTENANCE AND INSPECTION OF SHARE REGISTER. The
corporation shall keep at its principal executive office, or at the office of
its transfer agent or registrar, if either be appointed and as determined by
resolution of the board of directors, a record of its shareholders, giving the
names and addresses of all shareholders and the number and classes of shares
held by each shareholder.
A shareholder or shareholders of the corporation holding at least five
percent (5%) in the aggregate of the outstanding voting shares of the
corporation may (i) inspect and copy the records of shareholders' names and
addresses and shareholdings during usual
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business hours on five (5) days' prior written demand on the corporation, and
(ii) obtain from the transfer agent of the corporation, on written demand and on
the tender of such shareholders' names and addresses, a list of who are entitled
to vote for the election of directors, and their shareholdings, as of the most
recent record date for which that list has been compiled or as of a date
specified by the shareholder after the date of demand. This list shall be made
available to any such shareholder by the transfer agent on or before the later
of five (5) days after the demand is received or the date specified in the
demand as the date as of which the list is to be compiled. The record of
shareholders shall also be open to inspection on the written demand of any
shareholder or holder of a voting trust certificate, at any time during usual
business hours, for a purpose reasonably related to the holder's interests as a
shareholder or as the holder of a voting trust certificate. Any inspection and
copying under this Section 1 may be made in person or by an agent or attorney
for the shareholder or holder of a voting trust certificate making the demand.
SECTION 2. MAINTENANCE AND INSPECTION OF BYLAWS. The corporation shall
keep at its principal executive office, or if its principal executive office is
not in the State of California, at its principal business office in this state,
the original or a copy of the bylaws as amended to date, which shall be open to
inspection by the shareholders at all reasonable times during office hours. If
the principal executive office of the corporation is outside the State of
California and the corporation has no principal business office in this state,
the Secretary shall, upon the written request of any shareholder, furnish to
that shareholder a copy of the bylaws as amended to date.
SECTION 3. MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS. The
accounting books and records and minutes of proceedings of the shareholders and
the board of directors and any committee or committees of the board of directors
shall be kept at such place or places designated by the board of directors or,
in the absence of such designation, at the principal executive office of the
corporation. The minutes shall be kept in written form and the accounting books
and records shall be kept either in written form in any other form capable of
being converted into written form. The minutes and accounting books and records
shall be open to inspection upon the written demand of any shareholder or holder
of a voting trust certificate, at any reasonable time during usual business
hours, for a purpose reasonably related to the holder's interests as a
shareholder or as the holder of a voting trust certificate. The inspection may
be made in person or by an agent or attorney, and shall include he right to copy
and make extracts. These rights of inspection shall extend to the records of
each subsidiary corporation of the corporation.
SECTION 4. INSPECTION BY DIRECTORS. Every director shall have the
absolute right at any reasonable time to inspect all books, records and
documents of every kind and the physical properties of the corporation and each
of its subsidiary corporations. This inspection by a director may be made in
person or by an agent or attorney and the right of inspection includes the right
to copy and make extracts of documents.
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SECTION 5. ANNUAL REPORT TO SHAREHOLDERS. The annual report to
shareholders referred to in Section 1501 of the Corporations Code of California
is expressly dispensed with, but nothing herein shall be interpreted as
prohibiting the board of directors from issuing annual or other periodic reports
to the shareholders of the corporation as they consider appropriate.
SECTION 6. FINANCIAL STATEMENTS. A copy of any annual financial
statement and any income statement of the corporation for each quarterly period
of each fiscal year, and any accompanying balance sheet of the corporation as of
the end of each such period, that has been prepared by the corporation shall be
kept on file in the principal executive office of the corporation for twelve
(12) months and each such statement shall be exhibited at all reasonable times
to any shareholder demanding an examination of any such statement or a copy
shall be mailed to any such shareholder.
If a shareholder or shareholders holding at least five percent (5%) of
the outstanding shares of any class of stock of the corporation makes a written
request to the corporation for an income statement of the corporation for the
three-month, six-month or nine-month period of the then current fiscal year
ended more than thirty (30) days before the date of the request, and a balance
sheet of the corporation as of the end of that period, the chief financial
officer shall cause that statement to be prepared, if not already prepared, and
shall deliver personally or mail that statement or statements to the person
making the request within thirty (30) days after the receipt of the request. If
the corporation has not sent to the shareholder an annual report which is
available for the last fiscal year, this report shall likewise be delivered or
mailed to the shareholder within thirty (30) days after the request.
The corporation shall also, on the written request of any shareholder,
mail to the shareholder a copy of the last annual, semi-annual or quarterly
income statement which it has prepared, and a balance sheet as of the end of
that period.
The quarterly income statements and balance sheets referred to in this
section shall be accompanied by the report, if any, of any independent
accountants engaged by the corporation or the certificate of an authorized
officer of the corporation that the financial statements were prepared without
audit from the books and records of the corporation.
SECTION 7. ANNUAL STATEMENT OF GENERAL INFORMATION. The corporation
shall, by the end of the calendar month of the anniversary date of its
incorporation each year, file with the Secretary of State of the State of
California, on the prescribed form, a statement setting forth the authorized
number of directors, the number of any vacancies on the board, the names and
complete business or residence addresses of all incumbent directors, the names
and complete business or residence addresses of the chief executive officer,
secretary and chief financial officer, the street address of its principal
executive
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office, if the principal executive office is not in this state, the principal
business office in this state, and the general type of business constituting the
principal business activity of the corporation, together with a designation of
the agent of the corporation for the purpose of service of process, all in
compliance with Section 1502 of the Corporations Code of California.
ARTICLE VII
GENERAL CORPORATE MATTERS
SECTION 1. RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING. For
purposes of determining the shareholders entitled to receive payment of any
dividend or other distribution or allotment of any rights or entitled to
exercise any rights in respect of any other lawful action, the board of
directors may fix, in advance, a record date, which shall not be more than sixty
(60) days before any such action, and in that case only shareholders of record
on the date so fixed are entitled to receive the dividend, distribution,
allotment, rights or to exercise the rights, as the case may be, notwithstanding
any transfer of any shares on the books of the corporation after the record date
so fixed, except as otherwise provided in the Corporations Code of California.
If the board of directors does not so fix a record date, the record
date for determining shareholders for any such purpose shall be at the close of
business on the day on which the board adopts the applicable resolution or the
sixtieth (60th) day before the date of that action, whichever is later.
SECTION 2. CHECKS, DRAFTS, EVIDENCES OF INDEBTEDNESS. All checks,
drafts or other orders for payment of money, notes or other evidences of
indebtedness, issued in the name of or payable to the corporation, shall be
signed or endorsed by such person or persons and in such manner as from time to
time determined by resolution of the board of directors.
SECTION 3. CORPORATE CONTRACTS AND INSTRUMENTS; HOW EXECUTED. The board
of directors, except as otherwise provided in these bylaws, may authorize any
officer or officers, agent or agents, to enter into any contract or execute any
instrument in the name of and on behalf of the corporation, and this authority
may be general or confined to specific instances; and, unless so authorized or
ratified by the board of directors or within the agency power of an officer, no
officer, agent or employee shall have any power or authority to bind the
corporation by any contract or engagement or to pledge its credit or to render
it liable for any purpose or for any amount.
SECTION 4. CERTIFICATE FOR SHARES. A certificate or certificates for
shares of the capital stock of the corporation may be issued to each shareholder
when any of these
18.
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shares are fully paid, and the board of directors may authorize the issuance of
certificates or shares as partly paid provided that these certificates shall
state the amount of consideration to be paid for them and the amount paid. All
certificates shall be signed in the name of the corporation by the chairman of
the board or vice chairman of the board or the president or vice president and
by the chief financial officer or an assistant treasurer or the secretary or any
assistant secretary, certifying the number of shares and the class or series of
shares owned by the shareholder. Any or all of the signatures on the certificate
may be facsimile. In the event that any officer, transfer agent or registrar who
has signed or whose facsimile signature has been placed on a certificate shall
have ceased to be that officer, transfer agent or registrar before that
certificate is issued, it may be issued by the corporation with the same effect
as if that person were an officer, transfer agent or registrar at the date of
issue.
Notwithstanding any provision in these bylaws to the contrary, the
board of directors of the corporation may issue, record and transfer its shares
of capital stock by electronic or other means not involving any issuance of
certificates, including provisions for notice to purchasers in substitution for
the required statements on certificates required by the Corporations Code of
California, and as may be required by the California Commissioner of Corporation
in administering the California Corporate Securities Law of 1968, which has been
(1) approved by the United States Securities and Exchange Commission, (2) is
authorized in any statute of the United States or (3) is in accordance with
Division 8 (commencing with Section 801) of the California Commercial Code. If
the board of directors implements the provisions of this paragraph, the
provisions shall not become effective as to previously issued and outstanding
certificated shares until the certificates therefor have been surrendered to the
corporation.
SECTION 5. LOST CERTIFICATES. Except as provided in this Section 5, no
new certificate for shares shall be issued to replace an old certificate unless
the latter is surrendered to the corporation and canceled at the same time. The
board of directors may, in case any share certificate or certificate for any
other security is lost, stolen or destroyed, authorize the issuance of a
replacement certificate on such terms and conditions as the board may require,
including provision for indemnification of the corporation secured by a bond or
other adequate security sufficient to protect the corporation against any claim
that may be made against it, including any expense or liability on account of
the alleged loss, theft or destruction of the certificate or the issuance of the
replacement certificate.
SECTION 6. REPRESENTATION OF SHARES OF OTHER CORPORATIONS. The chairman
of the board, the president, any vice president or any other person authorized
by resolution of the board of directors or by any of the foregoing designated
officers, is authorized to vote on behalf of the corporation any and all shares
of any other corporation or corporations, foreign or domestic, standing in the
name of the corporation. The
19.
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authority granted to these officers to vote or represent on behalf of the
corporation any and all shares held by the corporation in any other corporation
or corporations may be exercised by any of these officers in person or by any
person authorized to do so by a proxy duly executed by these officers.
SECTION 7. CONSTRUCTION AND DEFINITIONS. Unless the context requires
otherwise, the general provisions, rules of construction and definitions in the
Corporations Code of California shall govern the construction of these bylaws.
Without limiting the generality of this provision, the singular number includes
the plural, the plural number includes the singular and the term "person"
includes both a corporation and a natural person.
ARTICLE VIII
AMENDMENTS
SECTION 1. AMENDMENT BY SHAREHOLDERS. New bylaws may be adopted or
these bylaws may be amended or repealed by the vote of a majority of the
outstanding shares entitled to vote; provided, however, that (i) if the articles
of incorporation of the corporation set forth the number of authorized directors
of the corporation, the authorized number of directors may be changed only by an
amendment of the articles of incorporation, and (ii) Article II, Sections 2, 3,
8 and 10, Article III, Sections 2 and 4 and this Article VIII, Section 1 of
these bylaws may be altered, amended or repealed by the affirmative vote of at
least sixty-six and two-thirds percent (66-2/3%) of the outstanding shares of
the outstanding shares entitled to vote.
SECTION 2. AMENDMENT BY DIRECTORS. Subject to the rights of the
shareholders as provided in Section 1 of this Article VIII, bylaws other than a
bylaw or an amendment of a bylaw changing the authorized number of directors may
be adopted, amended or repealed by the board of directors.
ARTICLE IX
INDEMNIFICATION OF DIRECTORS,
OFFICERS, EMPLOYEES AND AGENTS
SECTION 1. DIRECTOR. The corporation shall indemnify its directors to
the fullest extent not prohibited by the Corporations Code of California;
provided, however, that the corporation may limit the extent of such
indemnification by individual contracts with its directors; and, provided,
further, that the corporation shall not be required to indemnify any director in
connection with any proceeding (or part thereof) initiated by such person or any
proceeding by such person against the corporation or its directors, officers,
20.
<PAGE> 25
employees or other agents unless (i) such indemnification is expressly required
to be made by law, (ii) the proceeding was authorized by the board of directors
of the corporation or (iii) such indemnification is provided by the corporation,
in its sole discretion, pursuant to the powers vested in the corporation under
the Corporations Code of California.
SECTION 2. OFFICERS, EMPLOYEES AND OTHER AGENTS. The corporation shall
have power to indemnify its officers, employees and other agents as set forth in
the Corporations Code of California.
SECTION 3. DETERMINATION BY THE CORPORATION. Promptly after receipt of
a request for indemnification hereunder (and in any event within 90 days
thereof), a reasonable, good faith determination as to whether indemnification
of the director is proper under the circumstances because such director has met
the applicable standard of care shall be made by:
(a) a majority vote of a quorum consisting of directors who are
not parties to such proceeding;
(b) if such quorum is not obtainable, by independent legal
counsel in a written opinion; or
(c) approval or ratification by the affirmative vote of a
majority of the shares of this corporation represented and voting at a duly held
meeting at which a quorum is present (which shares voting affirmatively also
constitute at least a majority of the required quorum) where the shares owned by
the person to be indemnified shall not be considered entitled to vote thereon.
SECTION 4. GOOD FAITH.
(a) For purposes of any determination under this bylaw, a
director shall be deemed to have acted in good faith and in a manner he
reasonably believed to be in the best interests of the corporation and its
shareholders, and, with respect to any criminal action or proceeding, to have
had no reasonable cause to believe that his conduct was unlawful, if his action
is based on information, opinions, reports and statements, including financial
statements and other financial data, in each case prepared or presented by:
(1) one or more officers or employees of the corporation
whom the director believed to be reliable and competent in the matters
presented;
(2) counsel, independent accountants or other persons as to
matters which the director believed to be within such person's professional
competence; and
21.
<PAGE> 26
(3) a committee of the Board upon which such director does
not serve, as to matters within such committee's designated authority, which
committee the director believes to merit confidence; so long as, in each case,
the director acts without knowledge that would cause such reliance to be
unwarranted.
(b) The termination of any proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its equivalent shall
not, of itself, create a presumption that the person did not act in good faith
and in a manner which he reasonably believed to be in the best interests of the
corporation and its shareholders or that he had reasonable cause to believe that
his conduct was unlawful.
(c) The provisions of this Section 4 shall not be deemed to be
exclusive or to limit in any way the circumstances in which a person may be
deemed to have met the applicable standard of conduct set forth by the
Corporations Code of California.
SECTION 5. EXPENSES. The corporation shall advance, prior to the final
disposition of any proceeding, promptly following request therefor, all expenses
incurred by any director in connection with such proceeding upon receipt of an
undertaking by or on behalf of such person to repay said amounts if it shall be
determined ultimately that such person is not entitled to be indemnified under
this bylaw or otherwise.
SECTION 6. ENFORCEMENT. Without the necessity of entering into an
express contract, all rights to indemnification and advances to directors under
this bylaw shall be deemed to be contractual rights and be effective to the same
extent and as if provided for in a contract between the corporation and the
director. Any right to indemnification or advances granted by this bylaw to a
director shall be enforceable by or on behalf of the person holding such right
in the forum in which the proceeding is or was pending or, if such forum is not
available or a determination is made that such forum is not convenient, in any
court of competent jurisdiction if (i) the claim for indemnification or advances
is denied, in whole or in part, or (ii) no disposition of such claim is made
within ninety (90) days of request therefor. The claimant in such enforcement
action, if successful in whole or in part, shall be entitled to be paid also the
expense of prosecuting his claim. The corporation shall be entitled to raise as
a defense to any such action (other than an action brought to enforce a claim
for expenses incurred in connection with any proceeding in advance of its final
disposition when the required undertaking has been tendered to the corporation)
that the claimant has not met the standards of conduct that make it permissible
under the Corporations Code of California for the corporation to indemnify the
claimant for the amount claimed. Neither the failure of the corporation
(including its board of directors, independent legal counsel or its
shareholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he has met the applicable standard of conduct set forth in the
Corporations Code of California, nor an actual determination by
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<PAGE> 27
the corporation (including its board of directors, independent legal counsel or
its shareholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that claimant
has not met the applicable standard of conduct.
SECTION 7. NON-EXCLUSIVITY OF RIGHTS. To the fullest extent permitted
by the corporation's articles of incorporation and the Corporations Code of
California, the rights conferred on any person by this bylaw shall not be
exclusive of any other right which such person may have or hereafter acquire
under any statute, provision of the articles of incorporation, bylaws,
agreement, vote of shareholders or disinterested directors or otherwise, both as
to action in his official capacity and as to action in another capacity while
holding office. The corporation is specifically authorized to enter into
individual contracts with any or all of its directors, officers, employees or
agents respecting indemnification and advances, to the fullest extent permitted
by the Corporations Code of California and the corporation's articles of
incorporation.
SECTION 8. SURVIVAL OF RIGHTS. The rights conferred on any person by
this bylaw shall continue as to a person who has ceased to be a director and
shall inure to the benefit of the heirs, executors and administrators of such a
person.
SECTION 9. INSURANCE. The corporation, upon approval by the board of
directors, may purchase insurance on behalf of any person required or permitted
to be indemnified pursuant to this bylaw.
SECTION 10. AMENDMENTS. Any repeal or modification of this bylaw shall
only be prospective and shall not affect the rights under this bylaw in effect
at the time of the alleged occurrence of any action or omission to act that is
the cause of any proceeding against any agent of the corporation.
SECTION 11. EMPLOYEE BENEFIT PLANS. The corporation shall indemnify the
directors and officers of the corporation who serve at the request of the
corporation as trustees, investment managers or other fiduciaries of employee
benefit plans to the fullest extent permitted by the Corporations Code of
California, and any other applicable laws.
SECTION 12. SAVING CLAUSE. If this bylaw or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
corporation shall nevertheless indemnify each director to the fullest extent
permitted by any applicable portion of this bylaw that shall not have been
invalidated, or by any other applicable law.
SECTION 13. CERTAIN DEFINITIONS. For the purposes of this bylaw, the
following definitions shall apply:
23.
<PAGE> 28
(a) The term "proceeding" shall be broadly construed and shall
include, without limitation, the investigation, preparation, prosecution,
defense, settlement and appeal of any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative, arbitrative or
investigative.
(b) The term "expenses" shall be broadly construed and shall
include, without limitation, court costs, attorneys' fees, witness fees, fines,
amounts paid in settlement or judgment and any other costs and expenses of any
nature or kind incurred in connection with any proceeding, including expenses of
establishing a right to indemnification under this bylaw or any applicable law.
(c) The term the "corporation" shall include, in addition to
the resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger which, if
its separate existence had continued, would have had power and authority to
indemnify its directors, officers, and employees or agents, so that any person
who is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position under
the provisions of this bylaw with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
(d) References to a "director," "officer," "employee" or
"agent" of the corporation shall include, without limitation, situations where
such person is serving corporation as a director, officer, employee, trustee or
agent of another corporation, partnership, joint venture, trust or other
enterprise.
24.
<PAGE> 1
EXHIBIT 5.1
[Cooley Godward LLP Letterhead]
October 9, 1996
Hot Topic, Inc.
3410 Pomona Boulevard
Pomona, California 91768
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by Hot Topic, Inc. (the "Company") of a Registration Statement
on Form S-8 (the "Registration Statement") with the Securities and Exchange
Commission covering the offering of 931,795 shares of the Company's Common
Stock, no par value (the "Shares"), including 391,875 shares issuable pursuant
to outstanding stock options under the Company's 1996 Equity Incentive Plan (the
"Equity Plan"), 346,500 additional shares available for grant under the Equity
Plan, 13,420 shares issuable pursuant to outstanding stock options (the
"Options") issued outside the Equity Plan, 23,334 shares available for grant
under the Company's 1996 Non-Employee Directors' Stock Option Plan (the
"Directors' Plan"), 6,666 shares issuable pursuant to outstanding stock options
under the Directors' Plan, and 150,000 shares available for grant under the
Company's Employee Stock Purchase Plan (the "Stock Purchase Plan").
In connection with this opinion, we have examined the Registration Statement and
related Prospectus, your Articles of Incorporation, as amended, and By-laws,
as amended, and such other documents, records, certificates, memoranda and other
instruments as we deem necessary as a basis for this opinion. We have assumed
the genuineness and authenticity of all documents submitted to us as originals,
the conformity to originals of all documents submitted to us as copies thereof,
and the due execution and delivery of all documents where due execution and
delivery are a prerequisite to the effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares, when sold and issued in accordance with the Registration
Statement and the Equity Plan, the Options, the Directors' Plan or the Stock
Purchase Plan, as the case may be, will be validly issued, fully paid and
nonassessable.
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
COOLEY GODWARD LLP
/s/ M. WAINWRIGHT FISHBURN, JR.
- --------------------------------
M. Wainwright Fishburn, Jr.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8), pertaining to the 1996 Equity Incentive Plan, Non-Plan Stock
Options, 1996 Non-Employee Directors' Stock Option Plan and the Employee Stock
Purchase Plan of Hot Topic, Inc. of our report dated March 19, 1996 (except as
to the penultimate paragraph of Note 5, and the second, fifth, sixth and seventh
paragraphs of Note 6, as to which the date is July 23, 1996) with respect to the
financial statements of Hot Topic, Inc. included in the Registration Statement
on Form SB-2 (No. 333-5054-LA) filed with the Securities and Exchange
Commission.
ERNST & YOUNG LLP
San Diego, California
October 4, 1996
<PAGE> 1
EXHIBIT 99.6
FORM OF
HOT TOPIC, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
FOR GOOD AND VALUABLE CONSIDERATION, Hot Topic, Inc., a California
corporation, hereby irrevocably grants to the Employee named below a
non-qualified stock option (the "Option") to purchase any part or all of the
specified number of shares of its Common Stock upon the terms and subject to the
conditions set forth in this Agreement, at the specified purchase price per
share without commission or other charge. The Option is granted subject to the
Terms and Conditions Relating to Non-Qualified Stock Options attached hereto as
EXHIBIT A and incorporated herein (the "Terms and Conditions").
Name of Employee: _______________
Social Security Number: _______________
Number of Shares covered by Option __________ (_____)
(the "Option Shares"):
Purchase Price Per Option Share: Two Dollars ($2.00)
Minimum Number of Option Shares Per Partial
Exercise (unless Optionee exercises all of the
Option then exercisable): One hundred (100)
The Option shall become exercisable as follows:
_______ Option Shares shall be subject to purchase on the date hereof.
An additional _____ Option Shares shall become subject to purchase on
the 1st day of each calendar month, commencing with _____________ and
ending __________, and the final ____ Option Shares shall become
subject to purchase on _____________. Once subject to purchase, the
Option Shares shall remain subject to purchase until _______________
(the "Expiration Date") unless the Option is earlier terminated in
accordance with the Terms and Conditions.
Date of this Agreement: _________________
HOT TOPIC, INC. ______________________________
Employee's Signature
By:_______________________________________ Residence Address:
[NAME] _____________________________
_____________________________
<PAGE> 2
TERMS AND CONDITIONS RELATING
TO NON-QUALIFIED STOCK OPTIONS
__________, 19__
The following Terms and Conditions Relating to Non-Qualified Stock
Options (the "Terms and Conditions") apply to the Non-Statutory Stock Options
granted on the date hereof by Hot Topic, Inc. to ____________________________.
These Terms and Conditions are incorporated by reference into each such Option.
Whenever capitalized terms are used in these Terms and Conditions, they shall
have the meaning specified (i) in the Hot Topic, Inc. Non-Statutory Stock Option
Agreement (the "Facing Page") into which these Terms and Conditions are
incorporated by reference, or (ii) below, unless the context clearly indicates
to the contrary. As used herein, the "Option Agreement" shall mean the Facing
Page and these Terms and Conditions as incorporated therein. The masculine
pronoun shall include the feminine and neuter, and the singular the plural,
where the context so indicates.
1. TERM OF OPTION. The term of the Option shall be the period
commencing on the date of the Option Agreement and ending on the Expiration Date
(as defined in the Facing Page), unless terminated earlier as provided herein.
2. EXERCISE PRICE. The exercise price of the Option granted hereby
shall be equal to the purchase price per Option Share as set forth on the Facing
Page.
3. EXERCISE OF OPTION.
(a) The Facing Page sets forth the rate at which the Option
Shares shall become subject to purchase by Optionee.
(b) Optionee shall exercise the Option to the extent
exercisable, in whole or in part, by sending written notice to the Company in
the form attached hereto as APPENDIX A of his intention to purchase Option
Shares hereunder, together with a check in the amount of the full purchase price
of the Option Shares to be purchased. Optionee shall not exercise the Option at
any one time with respect to less than the minimum number of Option Shares as is
set forth in the Facing Page.
(c) Optionee agrees to complete and execute any additional
documents which the Company reasonably requests that Optionee complete in order
to comply with applicable federal, state and local securities laws, rules and
regulations.
(d) Subject to the Company 's compliance with all applicable
laws, rules and regulations relating to the issuance of such Option Shares and
Optionee's compliance
2.
<PAGE> 3
with all the terms and conditions of the Option Agreement, the Company shall
promptly deliver the Option Shares to the Optionee.
(e) Except as otherwise provided herein, the Option may be
exercised during the lifetime of the Optionee only by the Optionee.
4. OPTION NOT TRANSFERABLE. The Option granted hereunder shall not be
transferable in any manner other than upon the death of Optionee. More
particularly (but without limiting the foregoing), the Option may not be
assigned, transferred (except as expressly provided herein), pledged or
hypothecated in any way, shall not be assignable by operation of law and shall
not be subject to execution, attachment or similar process. Any attempted
assignment, transfer, pledge, hypothecation or other disposition of the Option
contrary to the provisions hereof, or the levy of any execution, attachment or
similar process upon the Option, shall be null and void and without effect.
5. TERMINATION OF OPTION.
(a) To the extent not previously exercised, the Option shall
terminate on the Expiration Date; provided, however, that except as otherwise
provided in this Section 5 THE OPTION MAY NOT BE EXERCISED MORE THAN THIRTY (30)
DAYS AFTER THE TERMINATION OF: OPTIONEE'S EMPLOYMENT RELATIONSHIP WITH THE
COMPANY (THE "EMPLOYMENT RELATIONSHIP") FOR ANY REASON (OTHER THAN UPON
OPTIONEE'S DEATH OR DISABILITY, AS DEFINED BELOW). Within such thirty (30) day
period, Optionee may exercise the Option only to the extent the same was
exercisable on the date of such termination and said right to exercise shall
terminate at the end of such period.
(b) In the event of the termination of the Employment
Relationship as a result of Optionee's total and permanent disability, as
defined in Section 22(e)(3) of the Internal Revenue Code of 1986 and as
interpreted by the Company's Board of Directors in each case ("Disability"), the
Option shall be exercisable for a period of twelve (12) months from the date of
such termination, but only to the extent that the Option was exercisable on the
date of such termination.
(c) In the event of the termination of the Employment
Relationship as a result of Optionee's death, the Option shall be exercisable by
the Optionee's estate (or by the person who acquires the right to exercise the
Option by will or by the laws of descent and distribution) for a period of
twelve (12) months from the date of such termination, but only to the extent
that the Optionee was entitled to exercise the Option on the date of death.
(d) Notwithstanding the preceding paragraphs of this Section
5, if the Company's Board of Directors determines in good faith that Optionee
has committed an act of fraud, theft, other act of dishonesty, act of moral
turpitude, or any other act
3.
<PAGE> 4
materially inimical to the interest of the Company, the Option (including the
right to purchase Option Shares hereunder which have accrued but remain
unexercised) shall cease to be exercisable simultaneously with such act.
(e) Notwithstanding anything herein to the contrary, no
portion of any Option which is not exercisable by the Optionee upon the
termination of the Employment Relationship shall thereafter become exercisable,
regardless of the reason for such termination.
6. NO RIGHT TO CONTINUED EMPLOYMENT. The Option does not confer upon
Optionee any right to continue in the employ of the Company, nor does it limit
in any way the right of the Company to terminate Optionee's employment at any
time, with or without cause.
7. RIGHT OF REPURCHASE OF OPTION SHARES.
(a) Notwithstanding any provision herein to the contrary, the
Option Shares issued pursuant to the Option shall be subject to a right, but not
an obligation, of repurchase by the Company (the "Right of Repurchase"), at the
price determined under subsection (b) below, if prior to the Expiration Date or
the termination of the Right of Repurchase as provided in Section 9(d) below (i)
the Optionee terminates his employment with the Company "without cause" (if
Optionee has an employment agreement with the Company defining such term) or for
any reason (if Optionee has no such employment agreement), (ii) the Company
terminates Optionee's employment with the Company "for cause" (if Optionee has
an employment agreement with the Company defining such term) or for any reason
(if Optionee has no such employment agreement), or (iii) the Optionee's
employment with the Company is terminated because of his death or Disability.
Option Shares issued by the Company shall not be transferable by the Optionee
during the period during which the Right of Repurchase applies, and the Company
may take such steps as it deems necessary to ensure compliance with this
restriction.
(b) The price per share at which the Company may exercise the
Right of Repurchase (the "Repurchase Price") shall be the higher of (i) the
price the Optionee paid for such Option Shares or (ii) the fair market value of
such Option Shares on the date the Company exercises its Right of Repurchase, as
determined in good faith by the Company's Board of Directors (or an officer
appointed by the Board of Directors for such purpose), after giving due
consideration to the factors set forth in Section 260.140.50 of Title 10 of the
California Code of Regulations (exclusive of any reference to an initial public
offering price).
(c) The Company's Right of Repurchase shall terminate if not
exercised by written notice from the Company to the Optionee within ninety (90)
days of the first to
4.
<PAGE> 5
occur of the events described in clauses (i), (ii) and (iii) of Section 7(a)
above. If the Company exercises its Right of Repurchase, it shall give notice
thereof to the Optionee within such ninety (90) day period, and, upon receipt of
such notice, the Optionee shall immediately endorse and deliver to the Company
the stock certificate(s) representing the Option Shares being repurchased, and
the Company shall then promptly pay, pursuant to the provisions of Section 7(d)
below, the total Repurchase Price to the Optionee. If the Company exercises its
Right of Repurchase it shall exercise its right with respect to all (not some)
of such Option Shares.
(d) The Repurchase Price shall be paid first by cancellation
of any obligation for accrued but unpaid interest outstanding under notes issued
by the Optionee upon purchase of the Option Shares (if any), next by
cancellation of principal outstanding under such notes (if any), and finally by
payment in cash of the balance due.
(e) In the event the Company does not elect to exercise its
Right of Repurchase within the ninety (90) day period, the Option Shares shall
no longer be subject to repurchase by the Company pursuant to this Section 7.
8. RIGHT OF FIRST REFUSAL.
Unless Optionee is a party to the Shareholders Rights
Agreement dated on or about the date hereof among the Company and its
shareholders, Optionee agrees that he will not sell or otherwise transfer any
Option Shares (including transfer by operation of law) at any time after the
expiration of the Right of Repurchase and prior to the termination of this
section pursuant to Section 9(d) below unless such Option Shares shall first be
offered to the Company as follows:
(a) The Optionee shall deliver a notice (the "Notice") to the
Company, stating (i) the Optionee's bona fide intention to sell or transfer such
Option Shares, (ii) the number of such Option Shares to be sold or transferred,
(iii) the consideration for which the Optionee proposes to sell or transfer such
Option Shares, (iv) the terms of payment of such consideration and any other
terms and conditions of sale, and (v) the name of the proposed purchaser or
transferee.
(b) Within sixty (60) days after receipt of the Notice, the
Company may elect to purchase any or all of the Option Shares to which the
Notice refers, for the consideration per share and upon the terms and conditions
specified in the Notice, except as set forth in Section 8(e) below for transfers
involving non-cash consideration. If the Company elects not to purchase all such
Option Shares, the Company may assign its right to purchase the remaining Option
Shares. The Company's assignees may elect within sixty (60) days after receipt
by the Company of the Notice to purchase any or all Option Shares to which the
Notice refers which the Company has not elected to purchase, for the
5.
<PAGE> 6
consideration per share and upon the terms and conditions specified in the
Notice, except as set forth in Section 8(e) below. An election to purchase shall
be made by written notice to the Optionee, specifying the number of Option
Shares to be purchased.
(c) If the Company and/or its assignees do not so purchase all
of such Option Shares within such sixty (60) day period, Optionee shall have a
period of thirty (30) days thereafter to transfer all (but not less than all) of
such Option Shares (less those Option Shares purchased by the Company and/or its
assignees as provided in Section 8(b)) to the transferee referred to in the
Notice and for the same consideration and on the other terms as set forth
therein; provided, however, that prior to any transfer of such Option Shares,
the proposed transferee shall execute and deliver to the Company an agreement
with the Company, in form and substance satisfactory to the Company, pursuant to
which such transferee agrees to be subject to the relevant provisions of the
Option Agreement.
(d) In the event that such Option Shares are not transferred
in accordance with the terms of the Option Agreement within such 30-day period,
the restrictions on transfer provided in this Section 8 shall again become
applicable to the Option Shares.
(e) If part or all of the purchase consideration specified in
a Notice delivered by the Optionee pursuant to this Section 8 is other than cash
or purchaser's promissory note or other evidence of indebtedness, the Company
and its assignee(s) shall have the right to purchase any or all of the Option
Shares specified in the Notice for a cash price equal to the fair market value
of the number of Option Shares to be so purchased by the Company and/or its
assignee(s).
The fair market value of any Option Shares shall be as determined in
good faith by the Company's Board of Directors (or an officer appointed by the
Board of Directors, for such purposes) after giving due consideration to the
factors set forth in Section 260.140.50 of Title 10 of the California Code of
Regulations (exclusive of any reference to an initial public offering price).
9. OTHER PROVISIONS REGARDING TRANSFER.
(a) Optionee, as a condition for accepting any Option Shares,
shall not sell, transfer or pledge any Option Shares subject to the Right of
Repurchase described in Section 7 or the right of first refusal described in
Section 8 hereof, other than in the manner expressly permitted in the Option
Agreement, and any such sale, transfer or pledge of the Option Shares in
violation of this Agreement shall be void. The Company shall not be required (i)
to transfer on its books any Option Shares which shall have been sold or
transferred in violation of any of the provisions set forth in the Option
Agreement
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<PAGE> 7
or (ii) to treat as the owner of such Option Shares or accord the right to vote
or pay dividends to any transferee to whom such Option Shares shall have been so
transferred.
(b) Notwithstanding anything to the contrary contained herein,
Optionee is under no restrictions as to the transfer by him of any or all of the
Option Shares to his Related Transferees (as defined herein) provided that each
such Related Transferee shall first (i) execute a written consent to be bound by
all of the relevant provisions of the Option Agreement in form and substance
satisfactory to the Company and (ii) give a duplicate original of such consent
to the Company. The "Related Transferees" of the Optionee as used herein shall
consist of the Optionee's spouse, his adult lineal descendants, the adult
spouses of his lineal descendants and trusts for the benefit of any of the
foregoing, Optionee and/or his minor lineal descendants. In the event of any
transfer by the Optionee to his Related Transferees of all or any part of the
Option Shares (or in the event of any subsequent transfer by any such Related
Transferee to another Related Transferee of the Optionee), such Related
Transferees shall receive and hold the Option Shares subject to the relevant
terms of the Option Agreement and the Optionee's rights and obligations
hereunder as though the Option Shares were still owned by the Optionee and shall
together with the Optionee continue to be deemed to be the "Optionee" for
purposes of the Option Agreement, including without limitation restrictions on
the transfer of Option Shares. There shall be no further transfer of the Option
Shares by a Related Transferee except between and among such Related Transferee,
the Optionee and other Related Transferees of the Optionee, or except as
permitted by the Option Agreement. The Company advises the Optionee to seek
independent tax counsel prior to transferring any Option Shares to any Related
Transferee.
(c) The Optionee hereby grants to the Company a security
interest in the Option Shares for the purpose of ensuring that a transfer in
violation of the restrictions set forth in Sections 7, 8 and 9 of this Agreement
does not occur. In furtherance of such security interest, the Company may, at
its option, retain the certificate(s) evidencing the Option Shares, together
with stock assignments executed in blank by the Optionee, until such transfer
restrictions terminate in accordance with Section 9(d). The Optionee hereby
grants to any officer(s) of the Company the power of attorney to cause the
Option Shares to be transferred on the books of the Company in the event the
Company and/or its assignees repurchase some or all of the Option Shares in
accordance with the Option Agreement.
(d) The transfer restrictions provided in Sections 7, 8 and 9
hereof shall terminate if and when a registration statement (other than a
registration statement pursuant to any employee, purchase, savings, option,
bonus, appreciation, profit sharing, thrift, incentive or similar plan of the
Company), filed by the Company under the Securities Act in connection with the
initial public offering of its securities, becomes
7.
<PAGE> 8
effective, and the sale of securities made pursuant to such registration
statement has been completed for an aggregate amount of at least $10,000,000.
10. NOTICE OF TAX ELECTION.
If Optionee makes any tax election relating to the treatment
of the Option Shares under the Internal Revenue Code of 1986, as amended,
Optionee shall promptly notify the Company of such election.
11. MARKET STAND-OFF.
(a) In connection with any underwritten public offering by the
Company of its equity securities pursuant to an effective registration statement
filed under the Securities Act of 1933, as amended, including the Company's
initial public offering, Optionee shall not sell, make any short sale of, loan,
hypothecate, pledge, grant any option for the purchase of, or otherwise dispose
of or transfer for value or otherwise agree to engage in any of the foregoing
transactions with respect to any of the Option Shares without the prior written
consent of the Company and its underwriters, for such period of time from and
after the effective date of such registration statement as may be requested by
the Company or such underwriters. This Section 11 shall only remain in effect
for the two (2) year period immediately following the effective date of the
Company's initial public offering and shall thereafter terminate.
(b) Notwithstanding the foregoing, Optionee shall be subject
to the market stand-off provisions of this Section 11 only if the executive
officers and directors of the Company are also subject to similar arrangements.
(c) In order to enforce the provisions of this Section 11, the
Company may impose stop-transfer instructions with respect to the Option Shares
until the end of the applicable stand-off period.
12. ACKNOWLEDGMENTS OF OPTIONEE. Optionee acknowledges and agrees that:
(a) Optionee and his transferees shall have no rights as a
shareholder with respect to any Option Shares until the date of the issuance of
a stock certificate evidencing such Option Shares. No adjustment shall be made
for dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date is prior to
the date such stock certificate is issued, except as provided in Section 9 is
below.
(b) All certificates representing the Option Shares shall have
endorsed thereon the following legends, the provisions of which are hereby
incorporated into the Option Agreement:
8.
<PAGE> 9
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR THE SECURITIES LAWS OF ANY STATE OTHER THAN THE
STATE OF CALIFORNIA AND HAVE BEEN ISSUED AND SOLD PURSUANT TO
AN EXEMPTION FROM THE ACT AND MAY NOT BE SOLD, PLEDGED OR
OTHERWISE TRANSFERRED BY THE HOLDERS THEREOF AT ANY TIME
EXCEPT (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
FILED UNDER THE ACT COVERING THE SECURITIES, OR (2) IF, IN THE
REASONABLE OPINION OF COUNSEL TO THE CORPORATION, SUCH SHARES
MAY BE TRANSFERRED WITHOUT SUCH REGISTRATION.
IN ADDITION, SALE, TRANSFER OR HYPOTHECATION OF THIS SECURITY
IS RESTRICTED BY THE PROVISIONS OF A NON-QUALIFIED STOCK
OPTION AGREEMENT (AND THE TERMS AND CONDITIONS RELATING TO
INCENTIVE STOCK OPTIONS INCORPORATED THEREIN) ENTERED INTO BY
THE CORPORATION AND THIS SHAREHOLDER DATED AS OF SEPTEMBER 23,
1992, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF
THE CORPORATION AND ALL OF THE PROVISIONS OF WHICH ARE
INCORPORATED HEREIN.
13. INVESTMENT REPRESENTATIONS. As an inducement to the Company to
grant the Option and issue the Option Shares to the Optionee, the Optionee
hereby makes the following representations and warranties, and authorizes the
Company to rely upon the same:
(a) The Optionee will acquire the Option Shares for investment
for his own account, not for resale, without any intention of or view toward or
for participating, directly or indirectly, in a distribution of the Option
Shares or any portion thereof.
(b) Optionee is aware of and familiar with the Company's
business affairs and financial condition and has acquired sufficient information
about the Company to reach an informed decision to acquire the Option. Optionee
has such knowledge and experience in business and financial matters that
Optionee is capable of evaluating the merits and risks of acquiring the Option.
9.
<PAGE> 10
(c) The Optionee understands that an investment in the Company
is speculative, that any possible profits therefrom are uncertain, and that he
must bear the economic risks of the investment in the Company for an indefinite
period of time.
(d) The Optionee understands that the Option Shares have not
been registered under the Securities Act in reliance on the exemption provided
by Rule 701 promulgated thereunder for compensatory benefit plans; and that the
Option Shares have not been registered or qualified under the "blue sky" laws of
any state.
(e) The Optionee understands that the Option Shares may have
to be held indefinitely unless they are subsequently registered under the
Securities Act and qualified or registered under other applicable securities
laws, rules and regulations, which is unlikely, or unless an exemption from such
qualification or registration is available.
(f) The Optionee understands and agrees that (i) the legends
set forth in Section 12(b) hereof will be placed on the certificate(s)
evidencing the Option Shares and on certificate(s) issued to transferees; (ii)
the stock records of the Company will be noted with respect to such
restrictions; (iii) the Company will not be under any obligation to register the
Option Shares or to comply with any exemption available for sale of the Option
Shares without registration; and (iv) the information or conditions necessary to
permit routine sales of securities of the Company under Rule 144 of the
Securities Act are not now available and it is not likely that they will become
available in the foreseeable future.
(g) The Optionee is a bona fide resident and domiciliary of,
not a temporary transient resident of, and has his principal residence in, the
state or other jurisdiction set forth under Optionee's signature in the Option
Agreement, and Optionee does not have any present intention of moving his
principal residence from such state or jurisdiction.
14. WITHHOLDING TAXES. Whenever Option Shares are to be issued under
the Option Agreement, the Company shall have the right to require Optionee to
remit to the Company an amount sufficient to satisfy federal, state and local
withholding tax requirements prior to issuance and/or delivery of any
certificate or certificates for such Option Shares.
15. ADJUSTMENTS UPON CHANGES IN COMMON STOCK.
(a) If any change is made in the Common Stock subject to the
Option (through reorganization, recapitalization, stock dividend, dividend in
property other than cash, stock split, liquidating dividend, combination of
shares, exchange of shares, change in corporate structure or otherwise), the
class and number of shares and price per share of Common Stock subject to the
Option will be appropriately adjusted.
10.
<PAGE> 11
(b) In the event the Company is merged or consolidated with
another corporation and the Company is the surviving corporation, the Option,
whether or not then exercisable, shall pertain to and apply to the securities or
other property to which a holder of the number the Option Shares subject to the
Option would have been entitled upon such transaction.
(c) In the event the Company is merged or consolidated with
another corporation and the Company is not the surviving corporation, or in the
event substantially all of the property or stock of the Company is acquired by
another corporation, or in case of a separation, reorganization, or liquidation
of the Company, the Board of Directors of the Company shall, in its sole
discretion, either (i) make appropriate provision for protection of the Option
by the substitution on an equitable basis of appropriate stock of the Company,
or of the merged, consolidated or otherwise reorganized corporation which will
be issuable with respect to the stock of the Company, or (ii) upon written
notice to the Optionee, provided that the Option must be exercised within a
specified period not exceeding sixty (60) days of the date of such notice to the
extent the Option is exercisable on the last day of such specified period or it
will be terminated. Any portion of the Option which is not exercisable on the
last day of such specified period will be terminated and any portion of the
Option which is not exercised on or before said last day shall terminate on said
last day.
16. MISCELLANEOUS
(a) The Option Agreement shall bind and inure to the benefit
of the parties' heirs, legal representatives, successors and permitted assigns.
(b) The Option Agreement and these Terms and Conditions
constitute the entire agreement between the parties pertaining to the subject
matter contained herein and they supersede all prior and contemporaneous
agreements, representations and understandings of the parties. No supplement,
modification or amendment of the Option Agreement shall be binding unless
executed in writing by all of the parties. No waiver of any of the provisions of
the Option Agreement shall be deemed or shall constitute a waiver of any other
provisions, whether or not similar, nor shall any waiver constitute a continuing
waiver. No waiver shall be binding unless executed in writing by the party
making the waiver.
(c) Should any portion of the Option Agreement or these Terms
and Conditions be declared invalid and unenforceable, then such portion shall be
deemed to be severable from the Option Agreement and shall not affect the
remainder hereof.
(d) All notices to be sent hereunder shall be delivered in
person or sent by United States Mall, certified and postage prepaid, to Optionee
at the address set forth
11.
<PAGE> 12
on the Facing Page of the Option Agreement or to the Company at its principal
place of business, Attention: President. Any change in the address to which
notices shall be sent under the Option Agreement to the Optionee shall be made
by the Optionee upon ten (10) days' written notice to the Company.
(e) The prevailing party in any court action brought to
interpret or enforce any provision of the Option Agreement shall be entitled to
recover, as an element of the costs of suit, and not as damages, an award of
reasonable attorneys' fees, to be fixed by the court. Such award may be made as
part of a judgment by default or as part of a judgment after trial or after
appeal.
(f) The Option Agreement shall be construed according to the
laws of the State of California. The Option Agreement is made and entered into
in Montclair, California.
(g) In consideration of the grant of the Option, all other
options for the purchase of the Company's equity securities previously granted
to Optionee (excluding any options granted to Optionee pursuant to the
Shareholders Rights Agreement dated as of the date hereof between the Company
and its shareholders) are hereby cancelled and terminated.
(h) In the event the California Department of Corporations, in
connection with an application for qualification of the Company's stock option
plan, requires any changes to be made to the form Incentive Stock Option
Agreement (attached as Exhibit J to the Series A, Series B and Series C
Preferred Stock Purchase Agreement dated as of the date hereof) for the
protection of optionees, the Company agrees to amend the Option Agreement and
these Terms and Conditions to the extent necessary to conform to such required
changes.
12.
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APPENDIX A
NOTICE OF EXERCISE OF INCENTIVE STOCK OPTION
To: HOT TOPIC, INC.
4650 Arrow Highway
Unit C-1
Montclair, California 91763
Attention: President
I, a resident of the State of ________________, hereby exercise my
incentive stock option granted by HOT TOPIC, INC., a California corporation (the
"Company"), on ______________, 199__, subject to all the terms and provisions
thereof and notify the Company of my desire to purchase _____ shares of Common
Stock of the Company at the exercise price of ________ Dollars ($ ______) per
share pursuant to said option.
I agree to complete and execute any additional documents which the
Company may request that I complete in order to comply with applicable federal,
state and local securities laws, rules and regulations.
Dated: ____________________
___________________________ ____________________________
Social Security or [name]
Taxpayer I.D. Number
Address:
____________________________
____________________________
____________________________
13.
