<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 8, 1996
REGISTRATION NO. 333-11445
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
PUMA TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 7372 77-0349154
(State or other jurisdiction (Primary (I.R.S. Employer
of Standard Identification
incorporation or organization) Industrial Number)
Classification
Code Number)
</TABLE>
2940 NORTH FIRST STREET
SAN JOSE, CA 95134
(408) 321-7650
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------------
BRADLEY A. ROWE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
PUMA TECHNOLOGY, INC.
2940 NORTH FIRST STREET
SAN JOSE, CA 95134
(408) 321-7650
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
COPIES TO:
<TABLE>
<S> <C>
ERIC J. LAPP, ESQ. MARK A. BERTELSEN, ESQ.
WILLIAM R. SCHREIBER, ESQ. JOSE F. MACIAS, ESQ.
GRAY CARY WARE & FREIDENRICH DON S. WILLIAMS, ESQ.
A Professional Corporation WILSON SONSINI GOODRICH & ROSATI
400 Hamilton Avenue Professional Corporation
Palo Alto, CA 94301 650 Page Mill Road
(415) 328-6561 Palo, Alto, CA 94304
(415) 493-9300
</TABLE>
--------------------------
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
- -------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
- -------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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- --------------------------------------------------------------------------------
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>
SUBJECT TO COMPLETION, DATED NOVEMBER 8, 1996
[LOGO]
3,000,000 Shares
Common Stock
Of the 3,000,000 shares of Common Stock, par value $0.001 per share, being
offered hereby by Puma Technology, Inc. ("Puma" or the "Company"), 2,500,000
shares are being sold by Puma and 500,000 shares are being sold by certain
stockholders of the Company (the "Selling Stockholders"). The Company will not
receive any of the proceeds from the sale of shares by the Selling
Stockholders.
Prior to this offering, there has been no public market for the Common Stock.
It is currently estimated that the initial public offering price will be
between $8.00 and $10.00 per share. See "Underwriting" for a discussion of the
factors to be considered in determining the initial public offering price. The
Company has applied to have the Common Stock approved for listing on the
Nasdaq National Market under the symbol "PUMA."
For the information concerning certain risk factors which should be considered
by prospective investors, see "Risk Factors" commencing on page 5.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<TABLE>
<S> <C> <C> <C> <C>
PROCEEDS
PRICE UNDERWRITING PROCEEDS TO TO SELLING
TO PUBLIC DISCOUNT(1) COMPANY(2) STOCKHOLDERS
Per Share $ $ $ $
Total(3) $ $ $ $
</TABLE>
(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $800,000.
(3) Certain Selling Stockholders have granted to the Underwriters a 30-day
option to purchase up to an additional 450,000 shares of Common Stock to
cover over-allotments. If all such shares are purchased, the total Price
to Public, Underwriting Discount and Proceeds to the Selling Stockholders
will be $ , $ and $ , respectively. See "Underwriting."
The shares of Common Stock are offered by the Underwriters, subject to prior
sale, when and as if delivered to and accepted by them, and subject to
approval of certain legal matters by counsel and certain other conditions. The
Underwriters reserve the right to withdraw, cancel or modify such offer and to
reject orders in whole or in part. Delivery of the shares of Common Stock
offered hereby to the Underwriters is expected to be made in New York, New
York, on or about , 1996.
<TABLE>
<S> <C>
DEUTSCHE MORGAN GRENFELL ALEX. BROWN & SONS
INCORPORATED
</TABLE>
The date of this Prospectus is , 1996.
<PAGE>
[Schematic drawing depicting the personal computer as the central device
connecting a variety of computing devices via Puma's advanced synchronization
and wireless infrared connectivity software.]
IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE INFORMATION
APPEARING ELSEWHERE IN THIS PROSPECTUS, AND UNLESS OTHERWISE INDICATED, THE
INFORMATION CONTAINED IN THIS PROSPECTUS: (I) GIVES EFFECT TO THE
REINCORPORATION OF THE COMPANY IN DELAWARE PRIOR TO THE EFFECTIVE DATE OF THIS
PROSPECTUS; (II) REFLECTS THE EXERCISE OR CONVERSION OF ALL OUTSTANDING WARRANTS
(EXCEPT THE INTEL WARRANT, AS DEFINED HEREIN), DEBENTURES AND PREFERRED STOCK TO
COMMON STOCK UPON THE CLOSING OF THE OFFERING AND (III) ASSUMES NO EXERCISE OF
THE UNDERWRITERS' OVER-ALLOTMENT OPTION.
<PAGE>
PROSPECTUS SUMMARY
THE COMPANY
Puma Technology, Inc. develops, markets and supports mobile data exchange
("MDE") software which allows users to easily access, exchange and synchronize
information stored on a variety of different computing devices, including
notebook and handheld computers, personal electronic organizers, smart phones
and smart pagers. The Company's MDE software is designed to improve the
productivity of business professionals who are increasingly relying on mobile
computing devices to address their growing needs for accessible, up-to-date
information, whether in or out of the office. Puma's TranXit product family
("TranXit") is a leading software solution for file transfer, directory
synchronization and wireless printing, specifically designed to operate over
convenient infrared connections. Puma's IntelliSync product family allows
"content-aware" data synchronization among different computing devices and,
along with TranXit, offers solutions for convenient, reliable and cost-effective
mobile data exchange. Puma currently has OEM and marketing relationships with
more than 70 hardware and software vendors, including Compaq, Gateway 2000,
Geoworks, HP, IBM, Motorola, NEC, Seiko, Sharp, Toshiba and U.S. Robotics. For
example, Puma jointly markets the IntelliSync for Pilot product with the U.S.
Robotics Pilot, a popular handheld computer. Puma's customers include AST,
Compaq, Fujitsu, Gateway 2000, Hitachi, IBM, Matsushita, Mitsubishi Electronic,
Motorola, NEC, Olivetti, Samsung, Seiko, Sharp, Texas Instruments and Toshiba.
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered...................................................... 3,000,000 shares (including 2,500,000 shares by the
Company and 500,000 shares by the Selling Stockholders)
Common Stock to be outstanding after this offering........................ 11,908,187 shares(1)
Use of Proceeds........................................................... For working capital and general corporate purposes.
Proposed Nasdaq National Market Symbol.................................... PUMA
</TABLE>
SUMMARY CONSOLIDATED AND PRO FORMA COMBINED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED PRO FORMA QUARTER ENDED
PERIOD FROM COMBINED ------------------------------------------
AUGUST 27, 1993 ------------------- FISCAL YEAR APRIL
(INCEPTION) TO JULY 31, JULY 31, ENDED JULY OCT. 31, JAN. 31, 30, JULY 31,
JULY 31, 1994 1995 1996(2) 31, 1996(3) 1995 1996 1996(3) 1996
--------------- -------- -------- ------------ -------- -------- -------- ---------
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue......................... $ 70 $ 860 $ 7,716 $8,831 $1,152 $1,752 $ 2,101 $ 2,711
Gross profit.................... 70 783 7,043 7,672 1,047 1,637 1,959 2,400
Research and development...... 529 1,840 3,107 3,469 686 676 750 995
Sales and marketing........... 175 580 2,169 2,657 265 494 652 758
General and administrative.... 326 500 1,064 1,583 160 232 236 436
In-process research and
development................. -- -- 2,680 -- -- -- 2,680 --
Operating income (loss)......... (960) (2,137) (1,977) (37) (64) 235 (2,359) 211
Net income (loss)............... $(954) $(2,146) $(2,401) $ (610) $ (127) $ 129 $(2,492) $ 89
Pro forma net income (loss) per
share (4)...................... $ (0.25) $(0.06) $(0.01) $ 0.01 $ (0.26) $ 0.01
Shares used in pro forma per
share calculation (4).......... 9,474 9,474 9,397 9,861 9,488 9,908
<CAPTION>
OCT. 31,
1996
--------
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
<S> <C>
Revenue......................... $3,202
Gross profit.................... 2,845
Research and development...... 1,201
Sales and marketing........... 878
General and administrative.... 427
In-process research and
development................. --
Operating income (loss)......... 339
Net income (loss)............... $ 227
Pro forma net income (loss) per
share (4)...................... $ 0.02
Shares used in pro forma per
share calculation (4).......... 10,112
</TABLE>
<TABLE>
<CAPTION>
AT OCTOBER 31, 1996
--------------------------------
ACTUAL PRO FORMA(5)
--------------- ---------------
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments............................................... $ 2,333 $ 2,738
Total assets.................................................................................... 6,703 7,108
Convertible debenture........................................................................... 948 --
Stockholders' equity............................................................................ 2,840 4,193
<CAPTION>
PRO FORMA
AS ADJUSTED(6)
-----------------
<S> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments............................................... $ 22,863
Total assets.................................................................................... 27,233
Convertible debenture........................................................................... --
Stockholders' equity............................................................................ 24,318
</TABLE>
- -------------
(1) Excludes (i) 1,212,362 shares of Common Stock subject to outstanding options
at a weighted average price of $3.37 per share and (ii) 140,000 shares of
Common Stock subject to an outstanding warrant at an exercise price of $5.50
per share held by Intel Corporation (the "Intel Warrant"). See
"Management--Stock Plans" and Notes 6, 7 and 10 of Notes to Consolidated
Financial Statements.
(2) Excluding the impact of in-process research and development, the net income
and pro forma net income per share for the quarter ended April 30, 1996 and
the fiscal year ended July 31, 1996 would have been $188,000 and $279,000,
respectively, and $0.02 per share and $0.03 per share, respectively.
(3) The pro forma combined statement of operations reflects the combined
operations of the Company and IntelliLink as if the acquisition, which was
completed on April 30, 1996, had been completed on August 1, 1995, excludes
the non-recurring charge of $2.7 million related to in-process research and
development resulting from the acquisition and includes an additional charge
for the amortization of goodwill and other intangible assets. See Unaudited
Pro Forma Combined Statement of Operations.
(4) See Note 1 of Notes to Consolidated Financial Statements for the method used
to determine the number of shares used in pro forma per share calculation.
(5) The pro forma balance sheet data gives effect, prior to or upon the closing
of this offering (the "Offering") to: (i) the conversion of all outstanding
shares of Preferred Stock into 4,374,726 shares of Common Stock; (ii) the
issuance of 135,000 shares of Common Stock upon the full exercise of certain
outstanding warrants at a price per share of $3.00 and the receipt of net
proceeds therefrom; (iii) the issuance of 184,536 shares of Common Stock
upon the net exercise of certain outstanding warrants at an assumed public
offering price of $9.00 per share and (iv) the issuance of approximately
342,000 shares of Common Stock of the Company upon the conversion of
principal and all accrued interest related to an outstanding 7.0%
Convertible Debenture which is convertible at approximately $2.77 per share
(the "Convertible Debenture").
(6) Adjusted to reflect the sale of the 2,500,000 shares of Common Stock offered
by the Company hereby (at an assumed initial public offering price of $9.00
per share and after deducting the estimated underwriting discount and
estimated offering expenses). See "Use of Proceeds" and "Capitalization."
3
<PAGE>
THE COMPANY
Puma Technology, Inc. ("Puma" or the "Company") develops, markets and
supports mobile data exchange ("MDE") software which allows users to easily
access, exchange and synchronize information stored on a variety of different
computing devices, including notebook and handheld computers, personal
electronic organizers, smart phones and smart pagers. The Company's MDE software
is designed to improve the productivity of business professionals who are
increasingly relying on mobile computing devices to address their growing needs
for accessible, up-to-date information, whether in or out of the office. Puma's
TranXit product family ("TranXit") is the leading software solution specifically
designed to utilize wireless infrared ("IR") connectivity technology for file
exchange, synchronization and printing. Puma's lntelliSync product family allows
"content-aware" data synchronization among computing devices and, along with
TranXit, offers solutions for convenient, reliable and cost-effective mobile
data exchange.
Business professionals are continuously seeking ways to improve productivity
and, as a result, are increasingly using the growing number of new, innovative
mobile computing devices. In order to manage information effectively, these
users need convenient connectivity and synchronization solutions for the
specific combination of devices and applications that they use. MDE software
solutions allow users to synchronize information maintained separately on
multiple devices (e.g., contact databases maintained by a mobile professional
using a handheld computer in the field and by a support colleague using a
desktop PC in the office). A software solution that links such different devices
must address multiple hardware architectures, operating systems, communications
architectures and application specific data formats and structures. Puma's
products are designed to increase productivity for business professionals by
allowing users to easily access, exchange and synchronize information on a
variety of different computing devices.
Puma's IntelliSync product family provides content-aware data
synchronization, including complete conflict resolution, between a broad range
of PC-based personal information management software ("PIMs"), contact
management and scheduling applications and a number of mobile computing devices.
Based upon the Company's proprietary database synchronization technology,
IntelliSync allows users to automatically synchronize the information on their
mobile computing device directly with various PC applications in a single step,
eliminating the need for intermediate conversions or translations. In addition,
TranXit is the industry's leading software solution for file transfer, directory
synchronization and wireless printing, specifically designed to operate over
convenient wireless IR connections. TranXit is currently shipped on the vast
majority of all IR-enabled notebook PCs shipped worldwide, and operates under
Windows for Workgroups, Windows 3.1 and Windows 95. TranXit for DOS and TranXit
for NT are expected to ship in late calendar 1996 and early calendar 1997,
respectively, and each new version of TranXit is backward compatible with all
previous versions.
The Company believes that strategic relationships with mobile computing
device manufacturers and software vendors are significant strengths of the
Company and key to future success. Puma currently has OEM, marketing and
technology relationships with more than 70 hardware and software vendors,
including Compaq, Gateway 2000, Geoworks, HP, IBM, Intel, Motorola, NEC, Seiko,
Sharp, Toshiba and U.S. Robotics. For example, Puma jointly markets the
IntelliSync for Pilot product with the U.S. Robotics Pilot, a popular handheld
computer. These relationships generally enable Puma to receive prototypes from
hardware manufacturers and software vendors prior to their market introduction.
Puma believes that it is thereby in a strong position to launch complementary
product offerings shortly after the commercial release of these companies' new
hardware and software products. These relationships also enable the Company to
offer solutions simultaneously across numerous hardware devices, operating
systems and applications.
Puma licenses its software products to more than 50 OEM customers worldwide.
In addition, Puma distributes its retail products through several distribution
channels both domestically and internationally, including major distributors,
resellers, computer dealers, retailers and mail-order companies.
Internationally, the Company is represented by 14 distributors and resellers in
Africa, Asia, Australia, Canada and Europe. Puma's customers include AST,
Compaq, Fujitsu, Gateway 2000, Hitachi, IBM, Matsushita, Mitsubishi Electronic,
Motorola, NEC, Olivetti, Samsung, Seiko, Sharp, Texas Instruments and Toshiba.
The Company was incorporated in California in August 1993 and intends to be
reincorporated in Delaware prior to the closing of the Offering. References in
this Prospectus to "Puma" or the "Company" refer to Puma Technology, Inc., a
Delaware corporation and, where applicable, its predecessor corporation, Puma
Technology, Inc., a California corporation. The Company's subsidiaries are Puma
Ireland, Inc. and IntelliLink Corp. The Company's principal executive offices
are located at 2940 North First Street, San Jose, CA 95134 and its telephone
number at that location is (408) 321-7650. The Company's World Wide Web site is
located at http://www.pumatech.com. Information contained on the Company's Web
site shall not be deemed to be part of this Prospectus.
TranXit and Magic Xchange are registered trademarks of the Company.
ClipManager,
IntelliSync, Puma Technology and SyncPro are trademarks of the Company. This
Prospectus also includes trade names, trademarks and service marks of other
companies.
4
<PAGE>
RISK FACTORS
EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE DISCUSSION IN
THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, THAT INVOLVE RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
DISCUSSED HERE. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES
INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED BELOW, AS WELL AS THOSE
DISCUSSED ELSEWHERE IN THIS PROSPECTUS. IN ADDITION TO THE OTHER INFORMATION IN
THIS PROSPECTUS, THE FOLLOWING FACTORS SHOULD BE CONSIDERED CAREFULLY IN
EVALUATING AN INVESTMENT IN THE COMMON STOCK OFFERED BY THIS PROSPECTUS.
LIMITED HISTORY OF OPERATIONS AND PROFITABILITY. Puma was organized in
August 1993 and began shipping products in October 1994. Accordingly, the
Company has a limited operating history upon which an evaluation of the Company
and its prospects can be based. The Company has only been profitable in two
quarters since inception. The Company's prospects must be considered in light of
the risks, expenses and difficulties frequently encountered by companies in
their early stages of development, particularly companies in a new and evolving
market such as the mobile data exchange software market. As of October 31, 1996,
the Company had an accumulated deficit of $5.3 million. Although the Company has
experienced increased quarterly revenue over the last five fiscal quarters in
the period ended October 31, 1996, such growth rates may not be sustainable and
are not indicative of future operating results. There can be no assurance that
any of the Company's business strategies will be successful or that the
Company's revenue growth or profitability will continue on a quarterly or annual
basis. See "Selected Consolidated and Pro Forma Combined Financial Information"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations."
POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS. The Company expects
that its future operating results will fluctuate significantly as a result of
numerous factors, including demand for the Company's products, the Company's
success in developing new products, the timing of new product introductions and
product enhancements by the Company and its competitors, market acceptance of
the Company's new and enhanced products, the emergence of new industry
standards, the timing of customer orders, the mix of products sold, competition,
the mix of distribution channels employed, the evolving and unpredictable nature
of the markets for the Company's products and mobile computing devices, and
general economic conditions. The Company's revenue is difficult to forecast in
part because the market for wireless infrared ("IR") connectivity and data
synchronization software is rapidly evolving. In addition, the Company typically
operates with a relatively small order backlog. As a result, quarterly sales and
operating results depend in part on the volume and timing of orders received
within the quarter, which are difficult to forecast. In addition, a significant
portion of the Company's expense levels is fixed in advance based in large part
on the Company's forecasts of future revenue. If revenue is below expectations
in any given quarter, the adverse impact of the shortfall on the Company's
operating results may be magnified by the Company's inability to adjust spending
to compensate for the shortfall. Therefore, a shortfall in actual revenue as
compared to estimated revenue would have an immediate adverse effect on the
Company's business, financial condition and operating results that could be
material. The Company historically has derived a substantial portion of its
revenue from OEMs. Due to the Company's planned expansion into retail and
reseller distribution channels, an increasing percentage of the Company's
licensing activity is expected to result from the sale of products through
distributors and other resellers, which sales are harder to predict and may have
lower margins than other channels. Sales through such channels may contribute to
increased fluctuations in operating results. A significant portion of the
Company's revenue in any quarter is typically derived from sales to a limited
number of customers. The Company has generally recognized a substantial portion
of its revenue in the last month of each quarter, when it typically receives
royalty reports from its OEM customers. Any significant deferral of purchases of
the Company's products by its customers could have a material adverse effect on
the Company's business, operating results and financial condition in any
particular quarter, and to the extent that significant sales occur earlier than
expected, operating results for subsequent quarters may be adversely affected.
The Company's gross margin on its service revenue is substantially lower than
its gross margin on license revenue. Any increase in service revenue would
5
<PAGE>
have a corresponding increase in cost of revenue and may have an adverse effect
on the Company's gross margins. In addition, certain of the Company's retail
products contain hardware as well as software components. The Company's cost of
revenue, therefore, may be higher than those of other software companies. The
Company may also reduce prices or increase spending in response to competition
or to pursue new market opportunities. The Company has not experienced
significant effects of seasonality to date; however, the operating results of
many software companies reflect seasonal fluctuations, and there can be no
assurance that the Company will not experience such trends in the future. For
example, sales in Europe and certain other countries typically are adversely
affected in the summer months when business activities are reduced. Because of
these factors, the Company believes that period-to-period comparisons of its
operating results are not necessarily meaningful and that such comparisons
should not be relied upon as indications of future performance. As a result of
the foregoing factors, the Company's operating results and stock price may be
subject to significant volatility, particularly on a quarterly basis. Any
shortfall in revenue or net income from levels expected by securities analysts
could have an immediate and significant adverse effect on the trading price of
the Company's Common Stock. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
PRODUCT CONCENTRATION; RISKS ASSOCIATED WITH NEW AND EVOLVING MARKETS. The
market for mobile data exchange software, including wireless IR connectivity and
advanced data synchronization software, is new and evolving. To date, Puma has
derived a substantial portion of its revenue from the licensing of its TranXit
IR connectivity software. Although additional products are currently being sold
and potential products are currently under development, the Company believes
that the TranXit product family will continue to account for a significant
portion of the Company's revenue for the foreseeable future. The life cycle of
TranXit is difficult to estimate because of, among other factors, the emerging
nature of the MDE software market and the possibility of future competition. As
a result, the Company's future operating results, particularly in the near term,
are dependent upon the continued market acceptance of TranXit. There can be no
assurance that TranXit will continue to meet with market acceptance or that the
Company will be successful in developing, introducing or marketing new or
enhanced products. A decline in the demand for TranXit, as a result of
competition, technological change or other factors, and the failure to
successfully develop, introduce or market new or enhanced products would have a
material adverse effect on the Company's business, financial condition and
results of operations.
The market for MDE software is still emerging, and there can be no assurance
that it will continue to grow or that, even if the market does grow, TranXit
will be adopted. Moreover, although demand for TranXit has grown in recent years
with the Company's OEM customers, the Company has no accurate method of
determining the extent that end-users utilize TranXit. The Company's success in
generating significant revenue in these evolving markets will depend, among
other things, on its ability to educate potential OEMs, retail partners and end
users about the benefits of the Company's IR technology, to maintain and enhance
its relationships with leading OEMs and to develop effective retail distribution
channels. The inability of the Company to continue to penetrate the existing
market for MDE products or the failure of current markets to grow or new markets
to develop or be receptive to the Company's products would have a material
adverse effect on the Company's business, operating results and financial
condition. The emergence of markets for the Company's MDE products will also be
affected by a variety of factors beyond the Company's control. In particular,
the Company's products are designed to conform to certain standard IR and data
communications specifications, many of which have not been adopted as industry
standards. There can be no assurance that these specifications will be widely
adopted or that competing specifications will not emerge which will be preferred
by OEMs. The emergence of markets for the Company's products is also critically
dependent upon continued expansion of the market for mobile computing devices
and the timely introduction and successful marketing and sale of notebook and
desktop personal computers ("PCs"), personal electronic organizers, smart phones
and pagers. In addition, there can be no assurance that IR technology itself
will be adopted as the standard or preferred technology for MDE or that
manufacturers of personal computers will elect to bundle IR technology in their
products. There can be no assurance that these or other factors beyond the
Company's control will not adversely affect the development of markets for the
Company's products.
6
<PAGE>
DEPENDENCE ON OEMS. Revenue from OEMs was 95%, 89% and 65% of revenue
during fiscal 1995, fiscal 1996 and the first quarter of fiscal 1997,
respectively. In fiscal 1995, NEC, Toshiba and Canon accounted for approximately
16%, 15% and 14% of the Company's revenue, respectively. In fiscal 1996, Toshiba
and NEC accounted for approximately 18% and 13% of the Company's revenue,
respectively. In the first quarter of fiscal 1997, Toshiba accounted for
approximately 21% of the Company's revenue. Although several OEMs are subject to
certain contractual minimum purchase obligations, there can be no assurance that
any particular OEM will satisfy the minimum obligations. Weakening demand from
any key OEM and the inability of the Company to replace revenue provided by such
OEM could have a material adverse effect on the Company's business, operating
results and financial condition. The Company maintains individually significant
receivable balances from major OEMs. If these OEMs fail to meet their payment
obligations, the Company's operating results could be materially adversely
affected. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and Note 1 of Notes to Consolidated Financial Statements.
MANAGEMENT OF GROWTH. The Company is currently experiencing rapid growth
and expansion, which has placed, and will continue to place, a significant
strain on its administrative, operational and financial resources and increased
demands on its systems and controls. This growth has resulted in a continuing
increase in the level of responsibility for both existing and new management
personnel. The Company's Chief Financial Officer has recently joined the
Company, and the Company anticipates that its continued growth will require it
to recruit, hire, train and retain a substantial number of new engineering,
managerial, sales and marketing personnel. The Company's ability to manage its
growth successfully will also require the Company to continue to expand and
improve its operational, management and financial systems and controls on a
timely basis. For example, the Company is currently in the process of evaluating
a new management information system. There can be no assurance that the Company
will be able to purchase or successfully implement such a system on a timely
basis. If the Company's management is unable to manage growth effectively, the
Company's business, operating results and financial condition will be materially
adversely affected.
UNCERTAINTIES ASSOCIATED WITH THE INTEGRATION OF INTELLILINK. In April
1996, Puma acquired IntelliLink Corp. ("IntelliLink"), a provider of advanced
data synchronization software. As a result of the acquisition the Company
acquired two additional product families, as well as other technologies. In
addition, 25 new employees joined the Company. IntelliLink had incurred a
cumulative net loss through its acquisition by Puma on April 30, 1996 of
approximately $2.5 million and earned cumulative revenue of approximately $4.2
million. In connection with the acquisition, the Company's personnel have
dedicated and will continue to dedicate substantial resources in order to
achieve the anticipated technological benefits and operating efficiencies from
integrating the two companies. Difficulties encountered in integrating the two
companies' technologies and operations could adversely affect the Company's
business, operating results and financial condition. In addition, there can be
no assurance that the Company will be able to develop products utilizing
IntelliLink technology, that anticipated research and development costs will be
sufficient to develop any such products or that any such products will achieve
market acceptance and generate significant revenue. Accordingly, the increased
operating expenses associated with IntelliLink's business could have a material
adverse effect on the Company's business, operating results and financial
condition. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
RISKS ASSOCIATED WITH NEW PRODUCT DEVELOPMENT AND TIMELY INTRODUCTION OF NEW
AND ENHANCED PRODUCTS. The markets for Puma's products are characterized by
rapidly changing technologies, evolving industry standards, frequent new product
introductions and short product life cycles. The Company first introduced its
TranXit products in October 1994. As its product families mature, the Company
expects that their gross margins may decline. The Company's future success will
depend to a substantial degree upon its ability to enhance its existing products
and to develop and introduce, on a timely and cost-effective basis, new products
and features that meet changing customer requirements and emerging and evolving
industry standards. The Company budgets amounts to expend for research and
development based on planned product introductions and enhancements; however,
actual expenditures may significantly differ from budgeted expenditures.
Inherent in the product development process
7
<PAGE>
are a number of risks. The development of new, technologically advanced software
products is a complex and uncertain process requiring high levels of innovation,
as well as the accurate anticipation of technological and market trends. The
introduction of new or enhanced products also requires the Company to manage the
transition from older products in order to minimize disruption in customer
ordering patterns, avoid excessive levels of older product inventories and
ensure that adequate supplies of new products can be delivered to meet customer
demand. There can be no assurance that the Company will successfully develop,
introduce or manage the transition to new products. The Company has in the past,
and may in the future, experience delays in the introduction of its products,
due to factors internal and external to the Company. Any future delays in the
introduction or shipment of new or enhanced products, the inability of such
products to gain market acceptance or problems associated with new product
transitions could adversely affect the Company's operating results, particularly
on a quarterly basis. See "Business--Research and Development."
DEPENDENCE ON STRATEGIC BUSINESS RELATIONSHIPS; RISKS ASSOCIATED WITH
THIRD-PARTY SERVICES. Puma believes that its success is largely dependent on
its strategic relationships with key participants in the PC and mobile computing
device industries, including Compaq, IBM, Intel, Microsoft, NEC, Sharp, Texas
Instruments, Toshiba and U.S. Robotics. These relationships generally enable
Puma to receive prototypes from hardware manufacturers and software vendors
prior to their market introduction. Puma is thereby in a stronger position to
launch complementary product offerings shortly after the commercial release of
these companies' new hardware and software products. The loss of any of these
strategic relationships or any other significant partner could materially
adversely affect the Company's product development efforts, its business,
operating results and financial condition and its ability to realize its
strategic objective to be the technological leader in its industry. In addition,
the Company relies significantly on third-party services. In particular, a
third-party service translates the Company's products into 13 different native
languages. The Company has generally been able to obtain translated, functional
versions of its products in a timely manner. However, any significant delays by
such third parties could delay new or existing shipments of products and have a
material adverse effect on the Company's business, operating results and
financial condition.
RISKS ASSOCIATED WITH DEVELOPMENT OF RETAIL DISTRIBUTION CHANNEL. The
Company intends to distribute its products increasingly through distributors,
major computer and software retailing organizations, consumer electronics
stores, discount warehouse stores and other specialty retailers. The Company
often sells on a purchase order basis, and there are often no minimum purchase
obligations on behalf of any principal distributor or retailer. Distribution and
retailing companies in the computer industry have from time to time experienced
significant fluctuations in their businesses, and there have been a number of
business failures among these entities. The insolvency or business failure of
any significant distributor or retailer of the Company's products could have a
material adverse effect on the Company's business, operating results and
financial condition. Further, certain mass market retailers have established
exclusive relationships under which such retailers will buy customer software
only from one or two intermediaries. In such instances, the price or other terms
on which the Company sells to such retailers may be materially adversely
affected by the terms imposed by such intermediaries, or the Company may be
unable to sell to such retailers on the terms which the Company deems
acceptable.
Retailers of the Company's products typically have a limited amount of shelf
space and promotional resources, and there is intense competition among consumer
software producers for adequate levels of shelf space and promotional support
from retailers. The Company expects that, as the number of consumer multimedia
and software products and computer platforms increases, this competition for
shelf space will intensify. Due to increased competition for limited shelf
space, retailers and distributors are increasingly in a better position to
negotiate favorable terms of sale, including price discounts, price protection
and product return policies. Retailers often require software publishers to pay
fees or provide other accommodations in exchange for shelf space. The Company's
products constitute a relatively small percentage of each retailer's sales
volume, and there can be no assurance that retailers will continue to purchase
the Company's products or provide the Company's products with adequate shelf
space and promotional support. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business--Sales and
Marketing."
8
<PAGE>
COMPETITION. The Company expects the market for MDE software, including
data synchronization and IR connectivity software, to the extent it develops, to
become intensely competitive. The Company currently faces direct competition
with respect to a number of its individual products from several private
companies, including Traveling Software. In addition to direct competition, the
Company faces indirect competition from existing and potential customers that
provide internally developed solutions. As a result, the Company must educate
prospective customers as to the advantage of the Company's products versus
internally developed solutions. The Company currently faces limited direct
competition from major applications and operating systems software vendors who
may choose to incorporate data synchronization and IR connectivity functionality
into their software, thereby potentially reducing the need for OEMs to include
Puma's products in their notebook and desktop PCs. For example, Microsoft's
inclusion of certain features permitting data synchronization and IR
connectivity between computers utilizing the Windows 95 operating system may
have the effect of reducing revenue from the Company's software if users of
Windows 95 perceive that their data synchronization and IR connectivity needs
are adequately met by Microsoft. Certain of the companies with which the Company
competes or may in the future compete, including internal software development
groups of its current and potential customers, have substantially greater
financial, marketing, sales and support resources and may have more "brand-name"
recognition than the Company. There can be no assurance that the Company will be
able either to develop software comparable or superior to software offered by
its current or future competitors or to adapt to new technologies, evolving
industry standards and changes in customer requirements. In addition, the PC and
mobile computing device markets experience intense price competition, and the
Company expects that, in order to remain competitive, it may have to decrease
its unit royalties on certain products. See "Business--Competition."
DEPENDENCE ON KEY PERSONNEL. Puma's success depends to a significant degree
upon the continuing contributions of its engineering, management, sales and
marketing personnel. The Company has few employment contracts with its key
personnel and does not maintain any key person life insurance policies. The loss
of key management or technical personnel could adversely affect the Company. The
Company believes that its future success will depend in large part upon its
ability to attract and retain highly-skilled engineering, management, sales and
marketing personnel. In particular, the Company is currently attempting to
recruit new engineering personnel; however, there can be no assurance that the
Company will be successful at hiring or retaining these personnel. Failure to
recruit, hire, train and retain key personnel could have a material adverse
effect on the Company's business, operating results and financial condition. See
"Management."
PROPRIETARY RIGHTS, RISKS OF INFRINGEMENT AND SOURCE CODE RELEASE. Puma
relies on a combination of patent, copyright and trademark laws, trade secrets,
confidentiality procedures and contractual provisions to protect its proprietary
rights. The Company also believes that factors such as the technological and
creative skills of its personnel, new product developments, frequent product
enhancements and name recognition are essential to establishing and maintaining
a technology leadership position. The Company seeks to protect its software,
documentation and other written materials under trade secret and copyright laws,
which afford only limited protection. The Company currently has one issued
United States patent that expires in 2012 and has three patent applications
pending. In addition, the Company has corresponding international patent
applications pending under the Patent Cooperation Treaty in countries to be
designated at a later date. There can be no assurance that the Company's patent
will not be invalidated, circumvented or challenged, that the rights granted
thereunder will provide competitive advantages to the Company or that any of the
Company's pending or future patent applications, whether or not being currently
challenged by applicable governmental patent examiners, will be issued with the
scope of the claims sought by the Company, if at all. Furthermore, there can be
no assurance that others will not develop technologies that are similar or
superior to the Company's technology or design around the patents owned by the
Company. Despite the Company's efforts to protect its proprietary rights,
unauthorized parties may attempt to copy aspects of the Company's products or to
obtain and use information that the Company regards as proprietary. Policing
unauthorized use of the Company's products is difficult, and while the Company
is unable to determine the extent to which piracy of its software products
exists, software piracy can be expected to be a persistent problem. The Company
distributes its software products in the United States, Japan, Taiwan and
9
<PAGE>
member countries of the European Union. The laws of some foreign countries in
which the Company does business, in particular Taiwan, do not ensure that the
Company's means of protecting its proprietary rights in the United States or
abroad will be adequate or that competition will not independently develop
similar technology. There can be no assurance that the Company will not
distribute its software products in the future to countries where the
enforcement of proprietary rights may be equally or more uncertain. The Company
has also entered into source code escrow agreements with a limited number of its
customers requiring release of source code in certain circumstances. Such
agreements generally provide that such parties will have a limited,
non-exclusive right to use such code in the event that there is a bankruptcy
proceeding by or against the Company, if the Company ceases to do business or if
the Company fails to meet its support obligations. The Company also provides its
source code to foreign language translation service providers and consultants to
the Company in limited circumstances. The provision of source code may increase
the likelihood of misappropriation by third parties.
The Company is not aware that it is infringing any proprietary rights of
third parties. There can be no assurance, however, that third parties will not
claim infringement by the Company of their intellectual property rights. The
Company expects that software product developers will increasingly be subject to
infringement claims as the number of products and competitors in the Company's
industry segment grows and the functionality of products in different industry
segments overlaps. Any such claims, with or without merit, could be
time-consuming to defend, result in costly litigation, divert management's
attention and resources or cause product shipment delays. In addition, such
claims could require the Company to discontinue the use of certain software
codes or processes, to cease the manufacture, use and sale of infringing
products, to incur significant litigation costs and expenses and to develop non-
infringing technology or to obtain licenses to the alleged infringing
technology. There can be no assurance that the Company would be able to develop
alternative technologies or to obtain such licenses or, if a license were
obtainable, that the terms would be commercially acceptable to the Company. In
the event of a successful claim of product infringement against the Company and
failure or inability of the Company to license the infringed or similar
technology, the Company's business, operating results and financial condition
would be materially adversely affected. See "Business--Proprietary Rights."
DEPENDENCE ON LICENSED TECHNOLOGY. Puma licenses technology on a
non-exclusive basis from several companies for use with its products and
anticipates that it will continue to do so in the future. The inability of the
Company to continue to license this technology or to license other necessary
technology for use with its products or substantial increases in royalty
payments under third-party licenses could have a material adverse effect on its
business, operating results and financial condition. In addition, the effective
implementation of the Company's products depends upon the successful operation
of these licenses in conjunction with the Company's products, and therefore any
undetected errors in products resulting from such licenses may prevent the
implementation or impair the functionality of the Company's products, delay new
product introductions and injure the Company's reputation. Such problems could
have a material adverse effect on the Company's business, operating results and
financial condition.
PRODUCT ERRORS; PRODUCT LIABILITY. Software products as complex as those
offered by Puma typically contain undetected errors or failures when first
introduced or as new versions are released. Testing of the Company's products is
particularly challenging because it is difficult to simulate the wide variety of
computing environments in which the Company's customers may deploy these
products. Accordingly, there can be no assurance that, despite testing by the
Company and by current and potential customers, errors will not be found after
commencement of commercial shipments, resulting in loss of or delay in market
acceptance, any of which could have a material adverse effect upon the Company's
business, operating results and financial condition. Further, the Company's
license agreements with its customers typically contain provisions designed to
limit the Company's exposure to potential product liability claims. Although the
Company has not experienced any product liability claims, the sale and support
of products by the Company entails the risk of such claims. The Company does not
currently maintain product liability insurance. A successful product liability
claim brought against the Company could have a material adverse effect upon the
Company's business, operating results and financial condition.
10
<PAGE>
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS. International revenue
accounted for approximately 71%, 67% and 58% of Puma's revenue in fiscal 1995,
fiscal 1996 and the first quarter of fiscal 1997, respectively, and the Company
expects that international revenue will continue to account for a significant
portion of its future revenue. Revenue from the Company's international
operations is subject to certain inherent risks, including unexpected changes in
regulatory requirements and tariffs, difficulties in staffing and managing
foreign operations, longer payment cycles, problems in collecting accounts
receivable and potentially adverse tax consequences. In addition, sales in
Europe and certain other parts of the world typically are adversely affected in
the summer months of each year when many customers and users reduce their
business activities. These seasonal factors may have a material adverse effect
on the Company's business, operating results and financial condition. Although
the Company's revenue is currently denominated in U.S. dollars, fluctuations in
currency exchange rates could cause the Company's products to become relatively
more expensive to customers in a particular country, leading to a reduction in
sales or profitability in that country. Furthermore, future international
activity may result in foreign currency denominated sales, particularly if
international revenue from distributors increases. Consequently, gains and
losses on the conversion to U.S. dollars of accounts receivable and accounts
payable arising from international operations may contribute to fluctuations in
the Company's operating results. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business--Sales and
Marketing."
Royalty income derived by the Company from customers in certain countries,
such as Japan and Taiwan, is subject to withholding income taxes. The amount and
mix of the Company's income derived from such customers will impact the
Company's provision for income taxes. Differences in the amount and mix of the
Company's income actually derived from customers subject to foreign withholding
taxes as compared to the amounts forecasted by the Company may adversely impact
the Company's tax rate. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
UNCERTAINTY AS TO USE OF PROCEEDS. The principal purposes of this offering
are to obtain additional working capital, to create a public market for the
Company's Common Stock and to facilitate future access by the Company to public
equity markets. The Company expects to use the net proceeds of the offering for
working capital and other general corporate purposes. A portion of the net
proceeds may also be used to acquire or invest in complementary businesses,
products or otherwise to obtain the right to use complementary technologies
which broaden or enhance the Company's current product offerings. There are no
current agreements or negotiations with respect to any acquisitions, investments
or other transactions. As of the date of the Prospectus, the Company has no
specific plans as to the use of the net proceeds from this offering, and will
have broad discretion in the application of the proceeds. Pending any such uses,
the net proceeds will be invested in interest-bearing securities. See "Use of
Proceeds."
NO PRIOR TRADING MARKET FOR COMMON STOCK; POTENTIAL VOLATILITY OF STOCK
PRICE. Prior to the Offering, there has been no public market for the Company's
Common Stock, and there can be no assurance that an active trading market will
develop or be sustained after the Offering. The initial public offering price
will be determined through negotiations among the Company, the Selling
Stockholders and the Representatives of the Underwriters and may not be
indicative of the market price of the Common Stock after the Offering. The
trading price of the Common Stock is likely to be highly volatile and may be
significantly affected by factors such as actual or anticipated fluctuations in
the Company's operating results, announcements of technological innovations, new
products or new contracts by the Company or its competitors, developments with
respect to patents, copyrights or proprietary rights, conditions and trends in
the software and other technology industries, adoption of new accounting
standards affecting the software industry, changes in financial estimates by
securities analysts, general market conditions and other factors. In addition,
the stock market has from time to time experienced significant price and volume
fluctuations that have particularly affected the market prices for the common
stocks of technology companies. These broad market fluctuations may materially
adversely affect the market price of the Company's Common Stock. See
"Underwriting."
CONTROL BY EXISTING STOCKHOLDERS; CERTAIN CHARTER, BYLAW AND OTHER
PROVISIONS. The Company's officers, directors, holders of 5% or more of the
Company's Common Stock and their affiliates
11
<PAGE>
will, in the aggregate, beneficially own approximately 51% of the Company's
outstanding shares after the Offering. As a result, these stockholders, acting
together, would be able to control most matters requiring approval by the
stockholders of the Company, including the election of directors. In addition,
the Company's Bylaws and indemnity agreements provide that the Company will
indemnify officers and directors against losses they may incur in legal
proceedings resulting from their service to the Company. Certain provisions of
the Company's Certificate of Incorporation and Bylaws and certain other
contractual provisions could have the effect of making it more difficult for a
third party to acquire, or of discouraging a third party from attempting to
acquire, control of the Company. Such provisions could limit the price that
certain investors might be willing to pay in the future for shares of the
Company's Common Stock. Certain of these provisions allow the Company to issue
Preferred Stock with rights senior to those of the Common Stock without any
further vote or action by the stockholders, eliminate the right of stockholders
to act by written consent, eliminate cumulative voting and impose various
super-majority voting requirements and other procedures and requirements which
could make it more difficult for stockholders to affect certain corporate
actions. These provisions could also have the effect of delaying or preventing a
change in control of the Company. See "Description of Capital Stock-- Preferred
Stock" and "Description of Capital Stock--Delaware Law and Certain Charter
Provisions."
BENEFITS OF THE OFFERING TO CURRENT STOCKHOLDERS. The completion of the
offering made by this Prospectus will benefit the selling stockholders through
the sale of 500,000 shares at a large gain. In addition, this offering will
benefit all current stockholders of the Company, including its directors and
executive officers, indirectly by, among other things, creating a public market
for the Company's Common Stock, thereby increasing liquidity and potentially
increasing the market value of such stockholders' investment in the Company.
Assuming a public offering price of $9.00 per share, following the Offering the
current stockholders of the Company will own shares having an aggregate
unrealized gain of $74.8 milion. See "Dilution."
SHARES ELIGIBLE FOR FUTURE SALE. Sales of substantial amounts of the
Company's Common Stock in the public market after the offering could adversely
affect prevailing market prices for the Common Stock. The 3,000,000 shares of
Common Stock offered hereby will be freely tradeable without restriction in the
public market. Taking into account restrictions imposed by the Securities Act of
1933, as amended (the "Securities Act"), rules promulgated by the Securities and
Exchange Commission thereunder and lock-up agreements between certain
stockholders and the Company or Deutsche Morgan Grenfell Inc., the number of
additional shares that will be available for sale in the public market, subject
in some cases to the volume and other restrictions of Rule 144 under the
Securities Act, will be as follows: (i) 57,529 additional shares will be
eligible for immediate sale as of the date of this Prospectus and (ii)
approximately 6,232,149 additional shares will be eligible for sale beginning
180 days after the date of this Prospectus. Approximately 2,606,403 remaining
shares will not be eligible for sale pursuant to Rule 144 until the expiration
of their two-year holding periods, which will expire between October 1997 and
August 1998. Deutsche Morgan Grenfell Inc. may, in its sole discretion and at
any time without notice, release all or any portion of the shares subject to
such lock-up agreements. Upon the closing of the offering, holders of 3,874,726
shares of Common Stock are entitled to certain rights with respect to the
registration of such shares under the Securities Act. In addition, the Company
intends to file a registration statement on Form S-8 under the Securities Act
approximately 180 days after the date of this Prospectus to register 1,759,212
shares of Common Stock reserved for issuance under its 1993 Stock Option Plan
and its 1996 Employee Stock Purchase Plan. As of October 31, 1996, options were
outstanding to purchase 1,212,362 shares at a weighted average exercise price
per share of $3.37. See "Description of Capital Stock--Registration Rights" and
"Shares Eligible for Future Sale."
DILUTION. Purchasers of the Common Stock offered hereby will suffer
immediate and substantial dilution in the net tangible book value of the Common
Stock from the initial public offering price. To the extent outstanding options
to purchase the Company's Common Stock or the Intel Warrant are exercised, there
will be further dilution. See "Dilution."
12
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 2,500,000 shares of
Common Stock offered by the Company hereby are estimated to be $20.1 million
assuming the shares offered hereby are sold at a public offering price of $9.00
per share and after deducting the estimated underwriting discount and estimated
offering expenses. The Company will not receive any of the proceeds from the
sale of the shares of Common Stock offered by Selling Stockholders. The
principal purposes of this initial public offering are to obtain additional
working capital, to create a public market for the Company's Common Stock, to
facilitate future access by the Company to public capital markets, to enhance
the Company's ability to use its Common Stock as consideration for acquisitions
and as a means of attracting and retaining key employees. The Company expects to
use the net proceeds of the Offering for general corporate purposes including
product development, sales and marketing and working capital. The Company may
use a portion of the net proceeds to acquire businesses, technologies or
products complementary to the Company's business. Although the Company has from
time to time engaged in discussions with respect to possible acquisitions, it
has no present understandings, commitments or agreements, nor is it currently
engaged in any discussions or negotiations with respect to any such transaction.
Pending such uses, the Company intends to invest the net proceeds from the
Offering in investment-grade, interest-bearing instruments.
DIVIDEND POLICY
The Company has never declared or paid cash dividends on its stock. The
Company currently anticipates that it will retain all future earnings for use in
the operation and expansion of its business and does not anticipate paying any
cash dividends in the foreseeable future.
13
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
October 31, 1996, (i) on an actual basis, (ii) on a pro forma basis after giving
effect to the conversion of all outstanding shares of Preferred Stock into
4,374,726 shares of Common Stock, the issuance of 135,000 shares of Common Stock
upon the full exercise of certain outstanding warrants at an exercise price per
share of $3.00 (and the receipt of net proceeds therefrom), the issuance of
184,536 shares of Common Stock upon the net exercise of certain outstanding
warrants at an assumed public offering price of $9.00 per share and the
conversion of principal and all accrued interest related to the Convertible
Debenture into approximately 342,000 shares of Common Stock of the Company and
(iii) on a pro forma as adjusted basis to reflect the sale of 2,500,000 shares
of Common Stock offered by the Company hereby (at an assumed public offering
price of $9.00 per share) and the application of the estimated net proceeds
therefrom. The information set forth below should be read in conjunction with
the consolidated financial statements and notes thereto and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained elsewhere in this Prospectus.
<TABLE>
<CAPTION>
OCTOBER 31, 1996(1)
--------------------------------------
PRO FORMA AS
ACTUAL PRO FORMA ADJUSTED
--------- ----------- --------------
(IN THOUSANDS, EXCEPT SHARE AND PER
SHARE AMOUNTS)
<S> <C> <C> <C>
Capital lease obligations, net of current portion......................... $ 19 $ 19 $ 19
Convertible debenture..................................................... 948 -- --
--------- ----------- --------------
967 19 19
--------- ----------- --------------
Stockholders' equity:
Preferred stock; $0.001 par value; 3,500,000 shares authorized actual;
2,000,000 shares authorized, none issued and outstanding pro forma and
pro forma as adjusted................................................. -- -- --
Series A convertible preferred stock, $0.001 par value; 2,000,000
shares designated, 1,468,977 shares issued and outstanding actual;
none designated, issued and outstanding pro forma and pro forma as
adjusted............................................................ 2 -- --
Series B convertible preferred stock, $0.001 par value; 1,500,000
shares designated, 1,151,057 shares issued and outstanding actual;
none designated, issued and outstanding pro forma and pro forma as
adjusted............................................................ 1 -- --
Series C convertible preferred stock, $0.001 par value; 285,715 shares
designated, issued and outstanding actual; none designated, issued
and outstanding pro forma and pro forma as adjusted................. -- -- --
Common stock, $0.001 par value; 20,000,000 shares authorized, 4,371,925
shares issued and outstanding actual; 40,000,000
shares authorized pro forma and pro forma as adjusted; 9,408,187
shares issued and outstanding pro forma, and 11,908,187 shares issued
and outstanding pro forma as adjusted................................. 4 9 12
Additional paid-in capital.............................................. 8,684 10,035 30,157
Receivable from stockholders............................................ (476) (476) (476)
Deferred stock compensation............................................. (101) (101) (101)
Accumulated deficit..................................................... (5,274) (5,274) (5,274)
--------- ----------- --------------
Total stockholders' equity............................................ 2,840 4,193 24,318
--------- ----------- --------------
Total capitalization................................................ $ 3,807 $ 4,212 $ 24,337
--------- ----------- --------------
--------- ----------- --------------
</TABLE>
- ---------
(1) EXCLUDES (I) 1,212,362 SHARES OF COMMON STOCK SUBJECT TO OUTSTANDING OPTIONS
AT A WEIGHTED AVERAGE EXERCISE PRICE OF $3.37 PER SHARE; (II) 1,509,212
SHARES OF COMMON STOCK AVAILABLE FOR ISSUANCE UNDER THE COMPANY'S 1993 STOCK
OPTION PLAN; (III) 250,000 SHARES OF COMMON STOCK RESERVED BUT UNISSUED
UNDER THE COMPANY'S 1996 EMPLOYEE STOCK PURCHASE PLAN AND (IV) 140,000
SHARES OF COMMON STOCK SUBJECT TO THE INTEL WARRANT AT AN EXERCISE PRICE OF
$5.50 PER SHARE. SEE "MANAGEMENT--STOCK PLANS" AND NOTES 6, 7 AND 10 OF
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
14
<PAGE>
DILUTION
The pro forma net tangible book value of the Company as of October 31, 1996,
was $3.6 million, or $0.39 per share of Common Stock. Pro forma net tangible
book value per share represents the amount of total tangible assets of the
Company reduced by the amount of its total liabilities and divided by the total
number of shares of Common Stock outstanding after giving effect to the
conversion of all outstanding shares of the Company's Preferred Stock into
4,374,726 shares of Common Stock upon completion of the Offering, the issuance
of 135,000 shares of Common Stock upon the full exercise of certain outstanding
warrants (at an exercise price of $3.00 per share), the issuance of 184,536
shares of Common Stock upon the net exercise of certain outstanding warrants (at
an assumed public offering price of $9.00 per share) and the conversion of
principal and all accrued interest related to the Convertible Debenture into
approximately 342,000 shares of Common Stock of the Company. After giving effect
to the sale by the Company of 2,500,000 shares offered hereby (at an assumed
initial public offering price of $9.00 per share and after deducting the
estimated underwriting discount and estimated offering expenses), the adjusted
pro forma net tangible book value of the Company as of October 31, 1996, would
have been approximately $23.8 million, or $2.00 per share. This represents an
immediate increase in such net tangible book value of $1.61 per share to
existing stockholders and an immediate dilution of $7.00 per share to new
investors. The following table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share.............................. $ 9.00
Pro forma net tangible book value per share before the Offering............ $ 0.39
Increase per share attributable to new investors........................... 1.61
---------
Pro forma net tangible book value per share after the Offering............... 2.00
---------
Net tangible book value dilution per share to new investors.................. $ 7.00
---------
---------
</TABLE>
The following table sets forth as of October 31, 1996, on a pro forma basis
to reflect the adjustments described above, the differences between the existing
stockholders and the new investors with respect to the number of shares of
Common Stock purchased from the Company, the total consideration paid to the
Company (assuming an initial public offering price of $9.00 per share before
deducting the estimated underwriting discount and estimated offering expenses)
and the average price per share paid:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
-------------------------- --------------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
------------- ----------- -------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Existing stockholders............................. 9,408,187 79.0% $ 9,834,000 30.4% $ 1.05
New investors (1)................................. 2,500,000 21.0 22,500,000 69.6 9.00
------------- ----- -------------- -----
Total......................................... 11,908,187 100.0% $ 32,334,000 100.0%
------------- ----- -------------- -----
------------- ----- -------------- -----
</TABLE>
- ---------
(1) Sales by the Selling Stockholders in the Offering will reduce the number of
shares held by existing stockholders to 8,908,187 or 74.8% of the total
number of shares of Common Stock outstanding after the Offering, and will
increase the number of shares to be purchased by the new public investors to
3,000,000 or 25.2% of the total number of shares of Common Stock outstanding
after the Offering. See "Principal and Selling Stockholders."
The foregoing tables assume no exercise of stock options or the Intel
Warrant after October 31, 1996. As of October 31, 1996, there were outstanding
options to purchase an aggregate of 1,212,362 shares of Common Stock at a
weighted average exercise price of $3.37 per share. To the extent these
securities are exercised, there will be further dilution to the new public
investors. See "Capitalization," "Management--Stock Plans," "Description of
Capital Stock--Warrants," and Notes 6 and 7 of Notes to Consolidated Financial
Statements.
15
<PAGE>
SELECTED CONSOLIDATED AND PRO FORMA COMBINED FINANCIAL INFORMATION
The following selected consolidated and pro forma combined financial data
should be read in conjunction with the Consolidated Financial Statements and
notes thereto, Unaudited Pro Forma Combined Statement of Operations and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" appearing elsewhere in this Prospectus. The consolidated statement
of operations data for the period from August 27, 1993 (inception) to July 31,
1994 and the two years ended July 31, 1995 and 1996, and the consolidated
balance sheet data as of July 31, 1995 and 1996 are derived from consolidated
financial statements of the Company that have been audited by Price Waterhouse
LLP, independent accountants, and are included elsewhere in this Prospectus. The
consolidated balance sheet data as of July 31, 1994 are derived from audited
financial statements not included in this Prospectus. The consolidated balance
sheet data at October 31, 1996 and consolidated statement of operations data for
the five quarters in the period ended October 31, 1996 are derived from
unaudited consolidated financial statements of the Company that have been
prepared on the same basis as the audited consolidated financial statements and,
in the opinion of management, include all adjustments (consisting only of normal
recurring adjustments) that the Company considers necessary for a fair
presentation of such information in accordance with generally accepted
accounting principles. The historical results are not necessarily indicative of
the results to be expected for any future period.
<TABLE>
<CAPTION>
PERIOD FROM
AUGUST 27, FISCAL YEAR ENDED PRO FORMA QUARTER ENDED
1993 COMBINED ------------------------------------------
(INCEPTION) ------------------- FISCAL YEAR APRIL
TO JULY 31, JULY 31, JULY 31, ENDED JULY OCT. 31, JAN. 31, 30, JULY 31,
1994 1995 1996(1) 31, 1996(2) 1995 1996 1996(1) 1996
----------- -------- -------- ------------ -------- -------- -------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Revenue......................... $ 70 $ 860 $ 7,716 $8,831 $1,152 $1,752 $ 2,101 $ 2,711
Cost of revenue................. -- 77 673 1,159 105 115 142 311
----------- -------- -------- ------------ -------- -------- -------- ---------
Gross profit.................... 70 783 7,043 7,672 1,047 1,637 1,959 2,400
----------- -------- -------- ------------ -------- -------- -------- ---------
Operating expenses:
Research and development...... 529 1,840 3,107 3,469 686 676 750 995
Sales and marketing........... 175 580 2,169 2,657 265 494 652 758
General and administrative.... 326 500 1,064 1,583 160 232 236 436
In-process research and
development................. -- -- 2,680 -- -- -- 2,680 --
----------- -------- -------- ------------ -------- -------- -------- ---------
Total operating expense..... 1,030 2,920 9,020 7,709 1,111 1,402 4,318 2,189
----------- -------- -------- ------------ -------- -------- -------- ---------
Operating income (loss)......... (960) (2,137) (1,977) (37) (64) 235 (2,359) 211
Interest income (expense),
net............................ 6 71 85 (64) 25 31 18 11
----------- -------- -------- ------------ -------- -------- -------- ---------
Income (loss) before provision
for income taxes............... (954) (2,066) (1,892) (101) (39) 266 (2,341) 222
Provision for income taxes...... -- (80) (509) (509) (88) (137) (151) (133)
----------- -------- -------- ------------ -------- -------- -------- ---------
Net income (loss)............... $(954) $(2,146) $(2,401) $ (610) $ (127) $ 129 $(2,492) $ 89
----------- -------- -------- ------------ -------- -------- -------- ---------
----------- -------- -------- ------------ -------- -------- -------- ---------
Pro forma net income (loss) per
share (3)...................... $ (0.25) $(0.06) $(0.01) $ 0.01 $ (0.26) $ 0.01
Shares used in pro forma per
share calculation (3).......... 9,474 9,474 9,397 9,861 9,488 9,908
<CAPTION>
OCT. 31,
1996
------------
<S> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Revenue......................... $3,202
Cost of revenue................. 357
------------
Gross profit.................... 2,845
------------
Operating expenses:
Research and development...... 1,201
Sales and marketing........... 878
General and administrative.... 427
In-process research and
development................. --
------------
Total operating expense..... 2,506
------------
Operating income (loss)......... 339
Interest income (expense),
net............................ 11
------------
Income (loss) before provision
for income taxes............... 350
Provision for income taxes...... (123)
------------
Net income (loss)............... $ 227
------------
------------
Pro forma net income (loss) per
share (3)...................... $ 0.02
Shares used in pro forma per
share calculation (3).......... 10,112
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
JULY 31, JULY 31, JULY 31, OCT. 31,
1994 1995 1996 1996
-------- -------- -------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments................................. $ 406 $2,500 $ 982 $ 2,333
Total assets...................................................................... 561 2,948 4,004 6,703
Convertible debenture............................................................. -- -- 933 948
Total stockholders' equity........................................................ 287 1,886 653 2,840
<CAPTION>
PRO FORMA
OCT. 31,
1996(4)
------------
<S> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash, cash equivalents and short $2,738
Total assets.................... 7,108
Convertible debenture........... --
Total stockholders' equity...... 4,193
</TABLE>
- ------------
(1) Excluding the impact of in-process research and development, the net income
and pro forma net income per share for the quarter ended April 30, 1996 and
the fiscal year ended July 31, 1996 would have been $188,000 and $279,000,
respectively, and $0.02 per share and $0.03 per share, respectively.
(2) The pro forma combined statement of operations data reflects the combined
operations of the Company and IntelliLink as if the acquisition, which was
completed on April 30, 1996, had been completed on August 1, 1995, excludes
the non-recurring charge of $2.7 million related to in-process research and
development resulting from the acquisition and includes an additional
charge for the amortization of goodwill and other intangible assets. The
unaudited pro forma combined statement of operations are not necessarily
indicative of the future results of operations of the Company or the
results of operations which would have resulted had the Company and
IntelliLink been combined during the period presented. See Unaudited Pro
Forma Combined Statement of Operations.
(3) See Note 1 of Notes to Consolidated Financial Statements for an explanation
of the method used to determine the number of shares used in the pro forma
per share calculation.
(4) The pro forma consolidated balance sheet data gives effect to, prior to or
upon the closing of the Offering: (i) the conversion of all outstanding
shares of Preferred Stock into 4,374,726 shares of Common Stock; (ii) the
issuance of 135,000 shares of Common Stock upon the full exercise of
certain outstanding warrants at a price per share of $3.00 and the receipt
of net proceeds therefrom; (iii) the issuance of 184,536 shares of Common
Stock upon the net exercise of certain outstanding warrants at an assumed
public offering price of $9.00 per share and (iv) the issuance of
approximately 342,000 shares of Common Stock of the Company upon the
conversion of principal and all accrued interest related to the Convertible
Debenture.
17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Puma develops, markets and supports mobile data exchange ("MDE") software,
including wireless infrared ("IR") connectivity and advanced data
synchronization software. The Company was primarily engaged in research and
development from inception until it began commercial shipments of its first
version of TranXit, TranXit 1.0, in October 1994. The Company began commercial
shipments of TranXit 2.0 and TranXit 3.0 in July 1995 and June 1996,
respectively. To date, Puma has derived a substantial portion of its revenue
from the licensing of its TranXit software, and the Company believes that its
TranXit software may continue to account for a significant portion of the
Company's revenue for the foreseeable future. See "Risk Factors--Product
Concentration; Risks Associated with New and Evolving Markets."
The Company's revenue is derived primarily from license revenue and service
revenue. License revenue is derived from the sale of software products and
royalty agreements with OEMs. Service revenue is derived from customer funded
engineering services. In fiscal 1995, fiscal 1996 and the first quarter of
fiscal 1997 service revenue was less than 10% of revenue. However, the Company
expects this percentage to fluctuate in the future. For all periods presented,
the Company has recognized revenue in accordance with the provisions of American
Institute of Certified Public Accountants Statement of Position No. 91-1
entitled "Software Revenue Recognition." License revenue is recognized upon
shipment of software if no significant obligation remains and collection of the
resulting receivable is deemed probable. Revenue from OEMs under minimum
guaranteed royalty arrangements, which are not subject to significant future
obligations, is recognized when such royalties are earned and become payable.
Royalty revenue that is subject to significant future obligations is recognized
when such obligations are fulfilled. Royalty revenue that exceeds minimum
guarantees is recognized in the period earned. Payments from customers received
before revenue recognition criteria have been met are recorded as deferred
revenue. At October 31, 1996, the Company had $1.5 million of deferred revenue.
The Company cannot predict when such revenue will be recognized or the extent to
which new agreements, which may provide for additional contract advances or
minimum royalty payments, will be executed. The Company also provides a limited
amount of telephone technical support to its customers. These activities are
generally considered insignificant post-contract customer support obligations
and related costs are accrued upon recognition of the license revenue. See Note
1 of Notes to Consolidated Financial Statements.
The Company's current customer base consists principally of large OEMs in
the PC market. Revenue from OEMs was 95%, 89% and 65% of revenue during fiscal
1995, fiscal 1996 and the first quarter of fiscal 1997, respectively. The
significant decline in the percentage of revenue derived from OEMs in the first
quarter of fiscal 1997 was primarily due to the non-OEM channels used by the
Company for sale of its newly introduced IntelliSync product, which is currently
being distributed primarily through the retail channel and direct fulfillment by
the Company. In absolute dollars, the Company's revenue from OEMs during the
first quarter of fiscal 1997 declined modestly, as compared to the fourth
quarter of fiscal 1996 due primarily to a decline in customer funded engineering
revenues. The Company believes that the mix of its OEM versus non-OEM revenue
will fluctuate in future periods depending partly upon the marketing channels
used by the Company for sale of its products currently under development. In
fiscal 1995, NEC, Toshiba and Canon accounted for approximately 16%, 15% and 14%
of the Company's revenue, respectively. In fiscal 1996, Toshiba and NEC
accounted for approximately 18% and 13% of the Company's revenue, respectively.
In the first quarter of fiscal 1997, Toshiba accounted for approximately 21% of
the Company's revenue. Although several OEMs are subject to certain contractual
minimum purchase obligations, there can be no assurance that any particular OEM
will satisfy the minimum obligations. Accordingly, the Company recognizes
revenue from minimum guaranteed royalties when such royalties are earned and
become payable. Weakening demand from any key OEM and the inability of the
Company to replace revenue provided by such OEM could have a material adverse
effect on the Company's business, operating results and financial condition. The
Company maintains
18
<PAGE>
individually significant receivable balances from major OEMs. If these OEMs fail
to meet their payment obligations, the Company's operating results could be
materially adversely affected. See "Risk Factors--Dependence on OEMs" and Note 1
of Notes to Consolidated Financial Statements.
International revenue accounted for approximately 71%, 67% and 58% of Puma's
revenue in fiscal 1995, fiscal 1996 and the first quarter of fiscal 1997,
respectively, and the Company expects that international revenue will continue
to account for a significant portion of its future revenue. Revenue from the
Company's international operations is subject to certain inherent risks,
including unexpected changes in regulatory requirements and tariffs,
difficulties in staffing and managing foreign operations, longer payment cycles,
problems in collecting accounts receivable and potentially adverse tax
consequences. In addition, revenue from sales in Europe and certain other parts
of the world typically is adversely affected in the summer months of each year
when many customers and users reduce their business activities. These seasonal
factors may have a material adverse effect on the Company's business, operating
results and financial condition. Although the Company's revenue is currently
denominated in U.S. dollars, fluctuations in currency exchange rates could cause
the Company's products to become relatively more expensive to customers in a
particular country, leading to a reduction in revenue or profitability in that
country. Furthermore, future international activity may result in foreign
currency denominated sales, particularly if international revenue from
distributors increase. Consequently, gains and losses on the conversion to U.S.
dollars of accounts receivable and accounts payable arising from international
operations may contribute to fluctuations in the Company's operating results.
See "Risk Factors--Risks Associated with International Operations."
The Company intends to distribute its products increasingly through
distributors, major computer and software retailing organizations, consumer
electronics stores, discount warehouse stores, and other specialty retailers.
Distribution and retailing companies in the computer industry have from time to
time experienced significant fluctuations in their businesses, and there have
been a number of business failures among these entities. Revenue from retail
sales is subject to several additional risks, including industry practices of
significant price discounts, price protection and product return rights and
limited shelf space. In addition, the Company's products constitute a relatively
small percentage of each retailer's sales volume, and there can be no assurance
that retailers will continue to purchase the Company's products or provide the
Company's products with adequate shelf space and promotional support. See "Risk
Factors--Risks Associated with Development of Retail Distribution Channel."
INTELLILINK ACQUISITION
On April 30, 1996, the Company completed its acquisition of IntelliLink
Corp. ("IntelliLink"), a provider of advanced data synchronization software. The
consolidated financial statements of the Company since the quarter ended July
31, 1996 include the results of IntelliLink from the date of acquisition. The
total purchase price of $3.5 million (including $1.2 million for liabilities
assumed) was quantified based partially on an independent appraisal of the
Company's Common Stock by Columbia Financial Advisors, Inc. Such appraisal
estimated the value of the Company's Common Stock issued in the IntelliLink
acquisition at a range of $1.05 to $1.25 per share. See "Experts." The purchase
price was assigned, based on another independent appraisal, to the fair value of
the assets acquired including $327,000 to tangible assets acquired, $2.7 million
to in-process research and development, $120,000 to identified intangible assets
and the remaining $356,000 to goodwill. The goodwill and other intangible assets
were capitalized and are being amortized over periods ranging from two to three
years. In connection with the IntelliLink acquisition, the former IntelliLink
stockholders and optionholders exchanged their stock and stock option rights for
shares of common stock and common stock options of Puma. See "Risk
Factors--Uncertainties Associated with the Integration of IntelliLink" and Note
2 of Notes to Consolidated Financial Statements.
As a result of the acquisition the Company acquired the IntelliLink product
families, as well as other technologies. In addition, 25 IntelliLink employees
joined the Company. IntelliLink had incurred a cumulative net loss through its
acquisition by Puma on April 30, 1996 of approximately $2.5 million on
cumulative revenues of approximately $4.2 million. In connection with the
acquisition, the Company's personnel have dedicated and will continue to
dedicate substantial resources in order to achieve the
19
<PAGE>
anticipated technological benefits and operating efficiencies from integrating
the two companies. Difficulties encountered in integrating the two companies'
technologies and operations could adversely affect the Company's business,
operating results and financial condition. In addition, there can be no
assurance that the Company will be able to develop products utilizing
IntelliLink technology, that anticipated research and development efforts be
sufficient to develop any such products or that any such products will achieve
market acceptance and generate significant revenue. Accordingly, the increased
operating expenses associated with IntelliLink's business could have a material
adverse effect on the Company's business, operating results and financial
condition. See "Risk Factors--Uncertainties Associated with the Integration of
IntelliLink."
QUARTERLY RESULTS OF OPERATIONS
Because of the significantly different levels of operations during fiscal
1994, fiscal 1995 and fiscal 1996, the Company believes that year-to-year
comparisons are not meaningful. The following tables present unaudited quarterly
consolidated statement of operations data for the five quarters in the period
ended October 31, 1996, as well as such data expressed as a percentage of the
Company's revenue for the periods indicated. This data has been derived from
unaudited consolidated financial statements that have been prepared on the same
basis as the audited consolidated financial statements and include all
adjustments (consisting only of normal recurring adjustments) that the Company
considers necessary for a fair presentation of such information. In view of the
Company's recent growth and other factors, the
20
<PAGE>
Company believes that quarter-to-quarter comparisons of its financial results
are not necessarily meaningful and should not be relied upon as an indication of
future performance. In addition, the Company's operating results may fluctuate
from quarter to quarter in the future.
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------------
OCT. 31, JAN. 31, APRIL 30, JULY 31, OCT. 31,
1995 1996 1996 (1) 1996 1996
--------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Revenue...................................................... $ 1,152 $ 1,752 $ 2,101 $ 2,711 $ 3,202
Cost of revenue.............................................. 105 115 142 311 357
--------- --------- --------- --------- ---------
Gross profit................................................. 1,047 1,637 1,959 2,400 2,845
--------- --------- --------- --------- ---------
Operating expenses:
Research and development................................... 686 676 750 995 1,201
Sales and marketing........................................ 265 494 652 758 878
General and administrative................................. 160 232 236 436 427
In-process research and development........................ -- -- 2,680 -- --
--------- --------- --------- --------- ---------
Total operating expenses................................. 1,111 1,402 4,318 2,189 2,506
--------- --------- --------- --------- ---------
Operating income (loss)...................................... (64) 235 (2,359) 211 339
Interest income, net......................................... 25 31 18 11 11
--------- --------- --------- --------- ---------
Income (loss) before provision for income taxes.............. (39) 266 (2,341) 222 350
Provision for income taxes................................... (88) (137) (151) (133) (123)
--------- --------- --------- --------- ---------
Net income (loss)............................................ $ (127) $ 129 $ (2,492) $ 89 $ 227
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Pro forma net income (loss) per share........................ $ (0.01) $ 0.01 $ (0.26) $ 0.01 $ 0.02
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Shares used in pro forma per share calculation............... 9,397 9,861 9,488 9,908 10,112
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
<CAPTION>
AS A PERCENTAGE OF REVENUE
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenue...................................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenue.............................................. 9.1 6.6 6.8 11.5 11.1
--------- --------- --------- --------- ---------
Gross profit................................................. 90.9 93.4 93.2 88.5 88.9
--------- --------- --------- --------- ---------
Operating expenses:
Research and development................................... 59.5 38.6 35.7 36.7 37.6
Sales and marketing........................................ 23.0 28.2 31.0 27.9 27.4
General and administrative................................. 13.9 13.2 11.2 16.1 13.3
In-process research and development........................ -- 127.6 -- --
---
--------- --------- --------- ---------
---------
Total operating expenses................................. 96.4 80.0 205.5 80.7 78.3
--------- --------- --------- --------- ---------
Operating income (loss)...................................... (5.5) 13.4 (112.3) 7.8 10.6
Interest income, net......................................... 2.2 1.8 0.9 0.4 0.3
--------- --------- --------- --------- ---------
Income (loss) before provision for income taxes.............. (3.3) 15.2 (111.4) 8.2 10.9
Provision for income taxes................................... (7.6) (7.8) (7.2) (4.9) (3.8)
--------- --------- --------- --------- ---------
Net income (loss)............................................ (10.9)% 7.4% (118.6)% 3.3% 7.1%
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
- ------------
(1) Excluding the impact of in-process research and development, the net income
and pro forma net income per share for the quarter ended April 30, 1996
would have been $188,000 and $0.02 per share, respectively.
21
<PAGE>
FIVE QUARTERS ENDED OCTOBER 31, 1996
REVENUE
The Company's revenue increased by 52.1%, 19.9% and 29.0% from the first to
second, second to third and third to fourth quarter, respectively, of fiscal
1996 and by 18.1% from the fourth quarter of fiscal 1996 to the first quarter of
fiscal 1997. The increases in revenue were primarily due to royalties from
increased unit shipments from the continuing market acceptance of the Company's
products. In addition, revenue from the sale of IntelliLink products contributed
approximately $539,000 to the growth in revenue during the fourth quarter of
fiscal 1996. The fourth quarter of fiscal 1996 is the first quarter in which
IntelliLink's results of operations were included following acquisition on April
30, 1996. Excluding the impact of revenue relating to Intellilink's products,
revenue for the fourth quarter of fiscal 1996 was relatively flat as compared to
the third quarter of fiscal 1996 because of timing of execution of certain
contracts which were delayed to future periods. Revenue increased during the
first quarter of fiscal 1997 as compared to the fourth quarter of fiscal 1996
primarily due to the introduction of the Company's new IntelliSync product in
August 1996. Introduction of new products and enhancements of existing products
can have a significant impact on the Company's revenue. Any delays in the
scheduled release of major new products and enhancements can have a material
adverse impact on the Company's business, operating results and financial
condition. The Company plans to introduce new versions of TranXit, IntelliSync
and several new products at various times during fiscal 1997. Any delays in
introduction of these products or failure of these products to achieve
anticipated levels of market acceptance will have an adverse impact on the
Company's business, operating results and financial condition.
COST OF REVENUE
Cost of revenue consists primarily of product media and duplication,
manuals, packaging supplies, shipping expenses and costs incurred under customer
funded software development agreements and also includes hardware components for
certain retail products. Cost of revenue as a percentage of revenue was 9.1%,
6.6%, 6.8%, 11.5% and 11.1% during the first, second, third and fourth quarters
of fiscal 1996 and the first quarter of fiscal 1997, respectively. The cost of
revenue is significantly affected by many factors, including the mix among its
OEM channel, retail channel and customer funded engineering contracts. Revenue
from OEMs generally has higher gross margins than revenue from distributors or
direct sales. Furthermore, during the first quarter of fiscal 1996, the Company
provided certain OEMs with kits for bundling with products. Commencing with the
second quarter of fiscal 1996, most of these OEMs started manufacturing these
kits at their own expense and, as a result, cost of revenue as a percentage of
revenue decreased from the first to second quarter of fiscal 1996. However, cost
of revenue as a percentage of revenue increased significantly during the fourth
quarter of fiscal 1996 as the Company included IntelliLink's operating results
in its operating results. A majority of IntelliLink's revenue is derived from
direct sales or through sales to retailers and as a result generally carry lower
gross margins. Additionally, IntelliLink derives a portion of its revenue from
customer-funded engineering contracts and the sales of certain hardware
components, both of which carry lower gross margins. The Company has
historically derived the vast majority of its revenue from OEM royalty and
license agreements. The Company plans to increase its sales to distributors and
retailers and as a result anticipates that, in the future, its gross margins may
decrease. The Company also anticipates its gross margin will fluctuate from
quarter to quarter depending upon the mix of revenue.
OPERATING EXPENSES
RESEARCH AND DEVELOPMENT. Research and development expenses consist
primarily of salaries and other related expenses for research and development
personnel, fees to outside contractors, the cost of facilities and depreciation
of capital equipment. Research and development expenses as a percentage of
revenue were 59.5%, 38.6%, 35.7%, 36.7% and 37.6% during the first, second,
third and fourth quarters of fiscal year 1996 and the first quarter of fiscal
1997, respectively. Research and development expenses increased from $686,000 in
the first quarter of fiscal 1996 to $1.2 million in the first quarter of fiscal
1997 as the Company increased its efforts to develop enhanced versions of
TranXit and to introduce other new products in the market. A significant portion
of the Company's research and development expenses are comprised of fees paid to
outside contractors which are engaged by the
22
<PAGE>
Company on a project-by-project basis. Research and development expenses for the
first quarter of fiscal 1996 were impacted by contractor expenses related to
translation of the Company's products to foreign language versions. The Company
anticipates that research and development expenses will increase in absolute
dollars as the Company continues to invest in product development. However, such
expenses may fluctuate from quarter to quarter both in absolute dollars as well
as a percentage of revenue, depending upon the status of various development
projects.
Research and development expenses generally have been expensed as incurred.
Statement of Financial Accounting Standards No. 86 requires capitalization of
certain software development costs once technological feasibility is
established. The Company defines establishment of technological feasibility as
the completion of a working model. Software development costs incurred
subsequent to the establishment of technological feasibility through the period
of general market availability of the product are capitalized, if material. To
date, all software development costs have been insignificant and expensed as
incurred.
SALES AND MARKETING. Sales and marketing expenses consist primarily of
salaries, commissions and promotional expenses and other related expenses of
sales and marketing personnel. Sales and marketing expenses as a percentage of
revenue were 23.0%, 28.2%, 31.0%, 27.9% and 27.4% during the first, second,
third and fourth quarters of fiscal 1996 and the first quarter of fiscal 1997,
respectively. Sales and marketing expenses increased from $265,000 in the first
quarter of fiscal 1996 to $878,000 in the first quarter of fiscal 1997. Sales
and marketing expenses increased in absolute dollars primarily due to the
expansion of the Company's sales force, related travel and entertainment
expenses and increased marketing activities in an effort to expand its customer
base. The Company intends to continue expanding its sales and marketing
organization to promote new products and increase its presence in the
distribution and retail channel. Accordingly, the Company anticipates that sales
and marketing expenses will continue to increase in absolute dollars.
GENERAL AND ADMINISTRATIVE. General and administrative expenses consist
primarily of salaries and other related expenses of administrative, executive
and financial personnel and other outside professional fees. General and
administrative expenses as a percentage of revenue were 13.9%, 13.2%, 11.2%,
16.1% and 13.3% during the first, second, third and fourth quarters of fiscal
1996 and the first quarter of fiscal 1997, respectively. General and
administrative expenses increased from $160,000 in the first quarter of fiscal
1996 to $427,000 in the first quarter of fiscal 1997. General and administrative
expenses increased in absolute dollars during each quarter primarily due to
increased headcount. General and administrative expenses increased during the
first quarter due to the Company's move to larger facilities to support the need
for growing infrastructure. The Company anticipates that its general and
administrative expenses will increase in absolute dollars in the future as the
Company expands its administrative staff, management information systems and
other items related to infrastructure, amortizes goodwill and other intangible
assets acquired in connection with the acquisition of IntelliLink and additional
costs associated with being a public company.
IN-PROCESS RESEARCH AND DEVELOPMENT. During the quarter ended April 30,
1996, the Company recorded a charge of $2.7 million for in-process research and
development associated with the acquisition of IntelliLink. See Note 2 of Notes
to Consolidated Financial Statements.
OPERATING INCOME (LOSS)
Operating income (loss) fluctuated from quarter to quarter during the five
quarters in the period ended October 31, 1996, as generally increasing operating
income from the Company's core business was affected by the charge for
in-process research and development in the third quarter of 1996 due to the
acquisition of IntelliLink, and due to the incorporation of IntelliLink results
in the fourth quarter of fiscal 1996. Excluding the charge for in-process
research and development, the operating income for the third quarter of fiscal
1996 would have been approximately $321,000.
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<PAGE>
INTEREST INCOME, NET
Interest income, net, represents interest earned by the Company on its cash
and short-term investments offset by interest expense on long-term debt and
capitalized leases.
PROVISION FOR INCOME TAXES
The provision for income taxes for each of the five quarters in the period
ended October 31, 1996 primarily represents foreign withholding taxes. The
foreign withholding taxes are a function of royalties earned by the Company from
certain foreign customers.
The Company currently estimates its effective tax rate for fiscal 1997 to be
approximately 35%. The Company's tax rate for fiscal 1997 is significantly
dependent on the amount and mix of income derived from customers subject to
foreign withholding taxes. See "Risk Factors--Risks Associated with
International Operations." The Company's estimation of its fiscal 1997 tax rate
is based on its current projection of the amount and mix of its pre-tax income.
Any adverse movement in such projections could cause the tax rate to increase.
FACTORS AFFECTING FUTURE OPERATING RESULTS
The Company expects that its future operating results will fluctuate
significantly as a result of numerous factors, including demand for the
Company's products, the Company's success in developing new products, the timing
of new product introductions by the Company and its competitors, market
acceptance of the Company's new and enhanced products, the emergence of new
industry standards, the timing of customer orders, the mix of products sold,
competition, the mix of distribution channels employed, the evolving and
unpredictable nature of the markets for the Company's products and mobile
computing devices generally, and general economic conditions. The Company's
revenue is difficult to forecast in part because the market for wireless IR
connectivity and data synchronization software is rapidly evolving. In addition,
the Company typically operates with a relatively small order backlog. As a
result, quarterly sales and operating results depend in part on the volume and
timing of orders received within the quarter, which are difficult to forecast.
In addition, a significant portion of the Company's expense levels is fixed in
advance based in large part on the Company's forecasts of future revenue. If
revenue is below expectations in any given quarter, the adverse impact of the
shortfall on the Company's operating results may be magnified by the Company's
inability to adjust spending to compensate for the shortfall. Therefore, a
shortfall in actual revenue as compared to estimated revenue would have an
immediate adverse effect on the Company's business, financial condition and
operating results that could be material. The Company historically has derived a
substantial portion of its revenue from OEMs. Due to the Company's planned
expansion into retail and reseller distribution channels, an increasing
percentage of the Company's licensing activity is expected to result from the
sale of products through distributors and other resellers, which sales are
harder to predict and may have lower margins than other channels. Sales through
such channels may contribute to increased fluctuation of operating results. A
significant portion of the Company's revenue in any quarter is typically derived
from sales to a limited number of customers. The Company has generally
recognized a substantial portion of its revenue in the last month of each
quarter, when it typically receives royalty reports from its OEM customers. Any
significant deferral of purchases of the Company's products by its customers
could have a material adverse effect on the Company's business, operating
results and financial condition in any particular quarter, and to the extent
that significant sales occur earlier than expected, operating results for
subsequent quarters may be adversely affected. The Company's gross margin on its
service revenue is substantially lower than its gross margin on license revenue.
Any increase in service revenue would have a corresponding increase in cost of
revenue and may have an adverse effect on the Company's gross margins. In
addition, certain of the Company's retail products contain hardware as well as
software components. The Company's expense levels, therefore, may be higher than
those of other software companies. In addition, a significant portion of the
Company's expense levels is fixed in advance based in large part on the
Company's forecasts of future sales. If sales are below expectations in any
given quarter, the adverse impact of the shortfall on the Company's operating
results may be magnified by the Company's inability to adjust spending to
compensate for the shortfall. The Company may also reduce prices or increase
spending in response to competition or to pursue new market
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<PAGE>
opportunities. The Company has not experienced seasonality to date; however, the
operating results of many software companies reflect seasonal fluctuations, and
there can be no assurance that the Company will not experience such fluctuations
in the future. For example, sales in Europe and certain other countries
typically are adversely affected in the summer months when business activities
are reduced. Because of these factors, the Company believes that
period-to-period comparisons of its operating results are not necessarily
meaningful and that such comparisons should not be relied upon as indications of
future performance. As a result of the foregoing factors, the Company's
operating results and stock price may be subject to significant volatility,
particularly on a quarterly basis. Any shortfall in revenue or net income from
levels expected by securities analysts could have an immediate and significant
adverse affect on the trading price of the Company's Common Stock. See "Risk
Factors-- Potential Fluctuations in Quarterly Operating Results."
FISCAL YEARS ENDED JULY 31, 1994, 1995 AND 1996
REVENUE
Revenue was $70,000, $860,000 and $7.7 million during the period from August
27, 1993 (inception) to July 31,1994 (the "Inception Period"), and in fiscal
1995 and fiscal 1996, respectively. The increase in revenue was primarily due to
increased unit shipments from the continuing market acceptance of the Company's
products.
COST OF REVENUE
Cost of revenue was $77,000 and $673,000 in fiscal 1995 and fiscal 1996,
respectively. The increases in the cost of revenue reflect the higher volume of
unit shipments in each year and the mix of revenue in fiscal 1996.
OPERATING EXPENSES
RESEARCH AND DEVELOPMENT. Research and development expenses were $529,000,
$1.8 million and $3.1 million during the Inception Period, in fiscal 1995 and
fiscal 1996, respectively. The increases in research and development expenses in
each of these periods were primarily attributable to increased headcount and
associated expenses incurred to develop, expand and enhance the Company's
product families.
SALES AND MARKETING. Sales and marketing expenses were $175,000, $580,000
and $2.2 million during the Inception Period, in fiscal 1995 and fiscal 1996,
respectively. The increases in sales and marketing expenses were primarily due
to the expansion of the Company's sales force and related travel, entertainment
and other marketing activities.
GENERAL AND ADMINISTRATIVE. General and administrative expenses were
$326,000, $500,000 and $1.1 million during the Inception Period, in fiscal 1995
and fiscal 1996, respectively. The increases in general and administrative
expenses were primarily the result of increased headcount and additional
expenses necessary to manage and support the Company's growth.
PROVISION FOR INCOME TAXES
No provision for federal and state income taxes has been recorded as the
Company has incurred net operating losses through July 31, 1996. The provision
for income taxes in fiscal 1995 and fiscal 1996 is comprised of foreign
withholding tax. At July 31, 1996, the Company had approximately $1.6 million of
federal net operating loss carryforwards for tax reporting purposes available to
offset future taxable income; such carryforwards expire beginning in 2008. Under
the ownership changes limitations provided by the Internal Revenue Code of 1986,
as amended (the "Code"), the amount of and benefit from net operating losses
that can be carried forward may be impaired or limited in certain circumstances.
As a result of the cumulative changes in stock ownership of the Company of more
than 50% during fiscal 1994 and again during fiscal 1995 and fiscal 1996, as
defined by the Code, annual utilization by the Company of its net operating loss
carryforwards is limited. The Company has incurred losses since
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<PAGE>
inception. The Company believes that, based on the history of such losses and
other factors, the weight of available evidence indicates that it is more likely
than not that it will not be able to realize its deferred tax assets and thus a
full valuation reserve has been recorded at July 31, 1995 and 1996. See Note 8
of Notes to Consolidated Financial Statements.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company has financed its operations and met its capital
expenditure requirements primarily from proceeds from the private sale of
Preferred and Common Stock. Through October 31, 1996, the Company has raised
approximately $6.6 million from the sale of Preferred and Common Stock. At
October 31, 1996, the Company's principal source of liquidity represented cash
and cash equivalents of $2.3 million. The Company has no bank financing
arrangements.
The Company's operating activities used cash of $724,000 during the
Inception Period, $1.4 million in fiscal 1995, $896,000 in fiscal 1996 and
$293,000 in the first quarter of fiscal 1997. The increased use of cash in
fiscal 1995 as compared with fiscal 1994 was attributable to an increased net
loss and increases in accounts receivable, offset partially by increased
deferred revenue and accounts payable. The decrease in net cash used in fiscal
1996 as compared with fiscal 1995 is primarily due to an increase in net loss,
offset by the non-cash in-process research and development charge related to the
acquisition of IntelliLink and an increase in accounts receivable.
Cash flow from investing activities used $105,000, $680,000 and $125,000 of
net cash during the Inception Period, in fiscal 1995 and the first quarter of
fiscal 1997, respectively, to purchase short-term investments and property and
equipment. Cash provided by investing activities in fiscal 1996 of $132,000 was
primarily related to proceeds from maturities of short-term investments offset
by purchases of property and equipment. Financing activities provided $1.2
million, $3.7 million and $1.8 million of net cash during the Inception Period,
fiscal 1995 and the first quarter of fiscal 1997, respectively, due primarily to
the issuance of Preferred and Common Stock. Net cash of $254,000 was used in
financing activities in fiscal 1996 primarily due to advances to a former
officer of IntelliLink.
The Company currently has no significant capital commitments other than
commitments under capital leases. See Note 9 of Notes to Consolidated Financial
Statements. The Company believes that net proceeds from the sale of the Common
Stock offered hereby, together with its current cash balances and cash generated
from operations, if any, will be sufficient to meet its working capital and
other cash requirements for at least the next twelve months.
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BUSINESS
Puma develops, markets and supports mobile data exchange ("MDE") software,
which allows users to easily access, exchange and synchronize information stored
on a variety of different computing devices such as desktop computers and mobile
computing devices, including notebook and handheld computers, personal
electronic organizers, smart phones and smart pagers. The Company's MDE software
is designed to improve the productivity of business professionals who are
increasingly relying on mobile computing devices to address their growing needs
for accessible, up-to-date information, whether in or out of the office. Puma's
TranXit product family ("TranXit") is the leading software solution specifically
designed to utilize wireless infrared ("IR") connectivity technology for file
exchange, synchronization and printing. Puma's IntelliSync product family allows
"content-aware" data synchronization among computing devices and, along with
TranXit, offers solutions for convenient, reliable and cost-effective mobile
data exchange.
INDUSTRY BACKGROUND
In recent years, significant advancements in miniaturization, visual
displays, long-life batteries and portable communications have led to the
introduction of many innovative new mobile computing devices. These highly
portable devices allow users to work and communicate as they travel and has
fueled the significant growth of mobile computing. According to International
Data Corporation ("IDC"), portable computers represented 15.2% of total personal
computer ("PC") shipments of 58.2 million units in 1995. IDC estimates that this
percentage will grow to 19.6% of 117.2 million units in the year 2000. Other
electronic consumer devices, such as personal electronic organizers and smart
phones, are also being introduced to provide data storage and information
management capabilities to the mobile business professional. The recently
introduced U.S. Robotics Pilot product is an example of a popular handheld
computer. Dataquest estimates that 1.3 million handheld computers, including
organizers and other handheld devices, were shipped worldwide in 1995, and will
grow to 5.3 million in the year 2000.
While notebooks and other mobile computing devices have increased individual
productivity, they have created certain challenges in the areas of connectivity
and synchronization of data and files stored on those devices and on desktop
computers. Until recently, users of mobile computing devices were limited to
cable and wired solutions as the only effective means to connect to their
desktop computers and printing devices. Early attempts at wireless connectivity
were based on radio frequency ("RF") technology. Although RF technology is
adequate for specialized applications, it has not been widely adopted in the
mobile computing industry because it is expensive and difficult to use, and has
little standardization, limited interoperability and many government
restrictions. Consequently, most PC notebook manufacturers have adopted IR as
the most cost-effective, efficient medium for wireless connectivity in the MDE
software market. Today, IR connectivity costs less than other connectivity
technologies, requires less space inside a device, and is based on a single,
international standard developed by the Infrared Data Association ("IrDA") which
includes approximately 150 companies including Compaq, Ericsson, HP, IBM, Intel,
Microsoft, Motorola, Nokia, Sharp and Toshiba. The Company believes the market
for IR connectivity is significant, as IDC estimates that 1.7 million IR-enabled
notebooks were shipped worldwide in 1995, and will grow to 20 million in the
year 2000. IDC also estimates that the percentage of IR-enabled notebook
computers as a percentage of all notebook computers shipped will increase from
21.2% in 1995 to 100.0% by the year 2000.
As more types of new mobile computing devices become available to business
professionals, users are faced with the difficulty of exchanging information
among these various devices. This problem of interoperability is caused by the
need to exchange information among different hardware devices, operating systems
and applications. Hardware platforms range from high-speed Pentium PCs with
hundreds of megabytes of memory and gigabytes of storage, to "shirt pocket"
organizers, with specialized processors and limited memory and storage. In
addition, these devices use numerous operating systems, such as Windows for
Workgroups, Windows 3.1, Windows 95, Windows NT, DOS and proprietary operating
systems, and utilize an even greater range of information management
applications, databases and data formats. Enabling these devices to communicate,
exchange and synchronize information is a complex and challenging task.
Accomplishing this requires data-level, or content-aware, synchronization
technology to maintain complete, up-to-date and accurate information. For
example,
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content-aware data synchronization technology allows users to exchange addresses
from the Address Book software application on a US Robotics Pilot with Lotus
Organizer on a desktop PC, updating only the fields that have been most recently
modified, rather than copying one file over another, thereby synchronizing both
databases with the latest information.
Business professionals are continuously seeking ways to improve productivity
and, as a result, are increasingly using the growing number of new, innovative
mobile computing devices. In order to manage information effectively, these
users need convenient connectivity and synchronization solutions for the
specific combination of devices and applications that they use. MDE software
solutions allow users to synchronize information maintained separately on
multiple devices (e.g., contact databases maintained by a mobile professional
using a handheld computer in the field and by a support colleague using a
desktop PC in the office). A software solution that links such different devices
must address multiple hardware architectures, operating systems, communications
architectures and application specific data formats and structures.
THE PUMA SOLUTION
Puma's MDE software products are designed to increase productivity for
business professionals by allowing users to easily access, exchange and
synchronize information stored on a variety of different computing devices.
Puma's products allow the mobile professional to access information at low cost
with easy-to-use applications, saving time and money. The TranXit product family
is specifically designed to utilize IR connectivity technology for reliable,
cost-effective file exchange, synchronization and printing. Puma's lntelliSync
product family allows users to synchronize data on handheld mobile computing
devices with data on PCs by virtue of lntelliSync's content-aware data
synchronization technology. The Puma solution includes the following
characteristics:
INTELLIGENT, CONTENT-AWARE DATA SYNCHRONIZATION. The Company's technology
provides content aware data synchronization among a growing number of handheld
devices and industry-leading personal information management software ("PIMs")
and contact management and scheduling applications such as Lotus Organizer,
Microsoft Schedule +, NetManage ECCO, Starfish Sidekick and others. This
technology seamlessly and transparently translates the information from one data
format to another as the information is synchronized. Built on a powerful data
translation engine, it can expand via device and application-specific
translators to accommodate new devices and applications.
WIDESPREAD SOLUTIONS FOR INTEROPERABILITY. Puma's products provide
connectivity and content-aware data synchronization among industry-leading PCs
and mobile computing devices, operating systems and applications. Puma products
operate with major PC operating systems including Windows 3.1, Windows for
Workgroups, Windows 95 and DOS as well as several proprietary operating systems.
Puma also provides interoperability across a wide range of industry-standard and
vendor-specific applications by supporting multiple data formats. Puma's IR
communications architecture enables robust operation across IR-enabled
platforms. TranXit is backwards compatible, allowing the latest versions of
TranXit to connect and exchange information with all previous versions across
different operating systems.
LEADING IR CONNECTIVITY SOFTWARE. TranXit and TranXit Pro are the leading
products specifically designed for file exchange and synchronization over
convenient wireless IR connections. The TranXit family fully supports IrDA
standards and was the first file-exchange software to incorporate the new Fast
IR standard (IrDA-2) for 4.0 Mbps connectivity. The TranXit family provides a
rich set of wireless file transfer, synchronization and wireless printing
features that are both easy to use and cost-effective. Puma has licensed more
than 6.5 million copies of TranXit to date and it is bundled with the vast
majority of all IR-enabled notebooks shipping worldwide.
BROAD-BASED OEM ADOPTION WORLDWIDE. Puma has achieved broad penetration
into many of the leading OEM hardware vendors, including Acer, Canon, Citizen,
Compaq, DEC, Epson, Fujitsu, Gateway 2000, Hitachi, IBM, Matsushita, Mitsubishi,
NEC, Olivetti, Samsung, Sanyo, Sharp and Zenith. This allows business
professionals to choose virtually any mobile computing device and effectively
manage data between a PC or server and a mobile computing device. The Company
believes that its development projects with leading hardware and software
vendors significantly reduce time to market for its products.
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STRATEGY
Puma's objective is to maintain its leadership position as a worldwide
provider of mobile data exchange software, including advanced data
synchronization and wireless IR connectivity software, for business
professionals. To achieve this objective, Puma has adopted the following key
strategies:
CREATE CROSS-PLATFORM STANDARD. The Company's strategy is to provide MDE
software that allows different computing devices to communicate and exchange
data. These devices are based on an increasing number of different operating
systems, processor architectures, communications architectures and applications
which utilize incompatible data formats. The Company plans to continue to work
closely with leading operating system suppliers, OEMs, semiconductor
manufacturers and applications vendors that often compete with one another. The
Company believes that its cross-platform standard will continue to be an
advantage in providing a widely-adopted MDE software solution.
DEVELOP MULTIPLE PRODUCTS FROM CORE TECHNOLOGIES. The Company intends to
leverage its core technologies and engineering experience to expand the breadth
of its software product offerings. By leveraging its advanced content-aware data
synchronization and IR connectivity technologies, Puma plans to continually
broaden its TranXit and lntelliSync product families. In addition, as innovative
new mobile computing devices are introduced into the market, Puma will leverage
its engineering expertise, core technologies and relationships with
market-leading OEMs to develop new advanced MDE software products that support
these devices.
EXPAND AND LEVERAGE STRATEGIC RELATIONSHIPS. Puma currently has OEM,
marketing and technology relationships with more than 70 hardware and software
vendors worldwide including Compaq, Gateway 2000, Geoworks, HP, IBM, Intel,
Motorola, NEC, Seiko, Sharp, Toshiba and U.S. Robotics, and plans to develop
additional relationships with computer and mobile computing device
manufacturers. These relationships generally enable Puma to receive product
prototypes from hardware manufacturers and software vendors prior to their
market introduction. The Company believes it is thereby in a strong position to
launch complementary product offerings shortly after the commercial release of
these companies' new hardware and software products.
EXPAND DISTRIBUTION CHANNELS. The Company has developed significant
brand-name recognition with its customers by licensing its products to many of
the world's leading computer and mobile computing device manufacturers. Puma
seeks to leverage this brand name recognition in order to license its products
to additional OEMs and to increase sales through major distributors, resellers,
computer dealers, retailers and mail-order companies. In addition, Puma plans to
continue to expand its co- and joint-marketing programs, channel promotions and
bundling arrangements.
INCREASE PENETRATION OF INTERNATIONAL MARKETS. The Company has established
an international distribution network by forming overseas relationships in Asia,
Australia, Europe and Canada. Puma intends to further develop its international
distribution network by forming additional distribution partnerships and
offering translations of its product family in several additional languages. The
Company believes its growing international distribution network will further its
competitive advantage over potential entrants into a market.
CUSTOMERS
Puma's current customer base consists principally of large OEMs in the PC
market. In fiscal 1995, NEC, Toshiba and Canon accounted for approximately 16%,
15% and 14% of the Company's revenue, respectively. In fiscal 1996, Toshiba and
NEC accounted for approximately 18% and 13% of the Company's revenue,
respectively. In the first quarter of fiscal 1997, Toshiba accounted for
approximately 21% of the Company's revenue. No other customer accounted for
greater than 10% of the Company's revenue in fiscal 1995, fiscal 1996 or the
first quarter of fiscal 1997.
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The Company licensed its products to more than 50 OEM customers in fiscal
1996. The following is a list of OEM customers from whom the Company recognized
more than $100,000 in revenue in fiscal 1996:
<TABLE>
<S> <C>
AST NEC
Compaq Olivetti
Fujitsu Samsung
Gateway 2000 Seiko
Hitachi Sharp
IBM Texas Instruments
Matsushita Toshiba
Mitsubishi
</TABLE>
PRODUCTS
Puma offers a wide range of MDE software products to both the OEM and retail
markets. These products allow users to wirelessly connect computing devices as
well as exchange and synchronize information across a diverse set of hardware
platforms, operating systems and applications. By combining its advanced data
synchronization and IR connectivity technologies, the Company is able to develop
a number of products designed for a specific application, operating system or
hardware platform.
<TABLE>
<CAPTION>
INTRODUCTION
PRODUCT NAME DESCRIPTION DATE
- ------------------------- ---------------------------------------------- ----------------
TRANXIT OEM product for file transfer, synchronization October 1994
and wireless printing over IR connections
<S> <C> <C>
TRANXIT PRO Retail version, including SyncPro automatic May 1996
synchronization, delta file transfer and long
file name support for Windows 95
TRANXIT PRO CONNECTIVITY TranXit Pro plus IR-adapter hardware for the May 1996
KIT desktop PC
TRANXIT FOR NT File transfer and directory synchronization Early Calendar
over IR connections for Windows NT 1997*
TRANXIT FOR DOS File transfer and synchronization over IR Late Calendar
connections for DOS 1996*
INTELLILINK Data "import" and "export" among PC-based September 1993
applications and mobile computing devices
INTELLISYNC Content-aware data synchronization among PC- August 1996
based applications and mobile computing
devices
CLIPMANAGER Productivity software application that extends Late Calendar
the Windows Clipboard capabilities 1996*
- ------------
* Expected introduction date
</TABLE>
TRANXIT. TranXit is the leading software solution for wireless file
transfer, synchronization and printing, specifically designed to operate over
convenient IR connections. Directed at the OEM market, TranXit is currently
shipped on the vast majority of all IR-enabled notebook PCs shipped worldwide.
TranXit operates under Windows for Workgroups, Windows 3.1 and Windows 95,
offering users broad operating system interoperability. TranXit has been
significantly enhanced since its original release and each new version of
TranXit is backward compatible with all previous versions.
TRANXIT PRO. TranXit Pro is the retail version of the OEM TranXit software
product. Sold as both an upgrade for TranXit to existing users and as a separate
solution to new users, TranXit Pro adds additional features such as SyncPro for
enhanced and automatic data synchronization, a virtual Windows clipboard for
collaborative processing between two PCs, delta file transfer for enhanced
performance and long file-name support for Windows 95.
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TRANXIT PRO CONNECTIVITY KIT. The TranXit Pro Connectivity Kit combines
TranXit Pro with an IrDA compliant serial IR adapter for a desktop PC. A
complete solution for an IR notebook user, the TranXit Pro Connectivity Kit
provides convenient notebook-to-desktop wireless IR connectivity.
TRANXIT FOR NT. TranXit for NT brings the features and flexibility of the
Company's TranXit/TranXit Pro products to the Windows NT operating system.
TranXit for NT is interoperable with all other versions of the TranXit family.
TRANXIT FOR DOS. Much of the horizontal computing market has migrated to
graphical user interface operating systems, such as Windows for Workgroups,
Windows 3.1 and Windows 95. There are, however, a large number of vertical
market hardware devices, such as those used for data collection or factory
automation, that remain based upon the DOS operating system. TranXit for DOS
provides the necessary connectivity and file transfer capabilities that allows
these devices to interoperate with PCs. TranXit for DOS is interoperable with
all other versions of the TranXit family.
INTELLILINK. IntelliLink provides data "import" and "export" between a
broad range of PC-based contact management and scheduling applications, and a
number of mobile computing devices.
LNTELLISYNC. IntelliSync provides content-aware data synchronization,
including complete conflict resolution, between a broad range of PC-based PIMs,
contact management and scheduling applications, as well as a number of mobile
computing devices. Based upon the Company's proprietary database synchronization
technology, IntelliSync allows users to automatically synchronize their mobile
computing devices directly with various PC applications in a single step,
eliminating the need for intermediate conversions or translations.
CLIPMANAGER. ClipManager is a productivity software application program for
both notebook and desktop PCs. It extends the capabilities of the standard
Windows Clipboard, providing a clipboard of user-definable depth (for multiple
cut and pastes), as well as the ability to organize frequently used clip
objects, such as logos, charts and standard paragraphs of text, into "books" for
immediate and convenient access directly from Windows applications.
FUTURE PRODUCTS
TRANXIT 97. TranXit 97, specifically designed for Windows 95 and Windows
NT, will be a 32-bit application that extends the functionality of TranXit and
Tranxit Pro. Its features will include an enhanced user interface tailored to
Windows 95 and Windows NT; broad compatibility with both new and existing
IR-enabled notebook and desktop PCs; support for the Fast IR standard (IrDA-2)
for 4.0 Mbps connectivity; additional PC-to-PC file transfer capabilities;
enhanced, automated directory synchronization; support for additional
connectivity media including local and wide area networks; backward
compatibility to existing versions of TranXit and TranXit Pro; and content-aware
data synchronization among PIM, contact management and scheduling applications.
LNTELLISYNC FOR WINDOWS. lntelliSync for Windows will provide content-aware
data synchronization, including complete conflict resolution, among PC-based
PIM, contact management and scheduling applications and a number of mobile
computing devices. lntelliSync for Windows will allow one-step, automatic
synchronization between mobile computing devices and multiple PC applications,
eliminating the need for intermediate conversions or translations.
The markets for Puma's products are characterized by rapidly changing
technologies, evolving industry standards, frequent new product introductions
and short product life cycles. The Company first introduced its TranXit products
in October 1994. As its product families mature, the Company expects that their
gross margins may decline. The Company's future success will depend to a
substantial degree upon its ability to enhance its existing products and to
develop and introduce, on a timely and cost-effective basis, new products and
features that meet changing customer requirements and emerging and evolving
industry standards. The Company budgets amounts to expend for research and
development based on planned product introductions and enhancements; however,
actual expenditures may significantly differ from budgeted expenditures.
Inherent in the product development process are a number of risks. The
development of new, technologically advanced software products is a complex and
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uncertain process requiring high levels of innovation, as well as the accurate
anticipation of technological and market trends. The introduction of new or
enhanced products also requires the Company to manage the transition from older
products in order to minimize disruption in customer ordering patterns, avoid
excessive levels of older product inventories and ensure that adequate supplies
of new products can be delivered to meet customer demand. There can be no
assurance that the Company will successfully develop, introduce or manage the
transition to new products. The Company has in the past, and may in the future,
experience delays in the introduction of its products, due to factors internal
and external to the Company. Any future delays in the introduction or shipment
of new or enhanced products, the inability of such products to gain market
acceptance or problems associated with new product transitions could adversely
affect the Company's operating results, particularly on a quarterly basis. See
"Risk Factors--Risks Associated with New Product Development and Timely
Introduction of New and Enhanced Products."
TECHNOLOGY
Puma's software products allow the exchange and synchronization of data
across diverse platforms, operating systems and applications. The Company has
developed two complementary proprietary technologies for mobile data exchange:
content-aware data synchronization and IR connectivity. These complementary
technologies each provide an easy to use graphical user interface to configure
and run IR connectivity and data synchronization operations. The user interface
balances ease of use with the flexibility needed to meet user customization
requirements, reflecting the extensive prior experience of the Company's
engineers in developing user interfaces for consumer product applications
including entertainment software.
CONTENT-AWARE DATA SYNCHRONIZATION. The Company's content-aware data
synchronization technology operates at both the file and record level to
synchronize data among different software applications and hardware platforms
during data transfer. The Company's synchronization technology allows users to
synchronize not only files, but also the data within those files, and to
synchronize databases by field or record, not just copy one database file from
one to another. This advanced data synchronization technology is composed of
three main components that collectively work to enable the effective transfer of
data across supported applications and platforms:
SYNCHRONIZATION ENGINE. Puma's synchronization engine is the central
component responsible for controlling the flow of data throughout the entire
synchronization process. It directs translator modules to retrieve, add,
delete, change and distribute data records or fields on demand.
INTERMEDIATE DATA REPRESENTATION. Puma's synchronization technology makes
extensive use of modularity to maximize reusability for the translator
modules. The synchronization engine communicates with all translator modules
using a common "dialect", referred to as intermediate data representation.
Intermediate data representation stipulates rules for exchanging common types
of data imposing restrictions on data content (i.e., the number and type of
fields in each application). The existence of a common data representation
makes it possible for a new translator to immediately synchronize with any
supported application or mobile computing device.
TRANSLATORS. Each translator module is responsible for interfacing with one
application or mobile computing device. When operating under Windows, a
translator is packaged as a separate Dynamic Link Library ("DLL") for maximum
reusability. The development of new translators (as well as the maintenance
of existing modules) is greatly eased by the existence of the translator
framework, a collection of powerful C++ classes which supply software
engineers with the necessary abstractions to quickly and easily develop
translator modules to meet expanding market needs.
IR CONNECTIVITY. Puma's IR connectivity software enables the wireless
transfer of data among notebook and desktop PCs, printers and mobile computing
devices. TranXit is designed to support IrDA standards, and was the first
file-exchange software to incorporate the new Fast IR standard (IrDA-2) for 4.0
Mbps connectivity.
COMMUNICATIONS ARCHITECTURE. The Company's software is based upon an
extensive, proprietary, network and device independent communications
architecture, enabling access to a variety of
32
<PAGE>
mobile computing devices through a flexible and simple application program
interface ("API") that speeds the development of new features. A layered,
modular design allows the architecture to leverage existing published data
transfer protocols (IrDA, Windows Sockets), when available, and to create
proprietary data transfer protocols to provide connectivity to a broad range
of devices without extensive modification of the software.
The Company's IR communications architecture isolates hardware
implementation details from the rest of the protocol stack, enabling quick
support of new IR hardware implementations and fast adoption of new IR standards
and extensions. The architecture supports multiple vendors' implementation of
IrDA protocol stacks for migration to new operating systems and platforms.
Puma's communication protocols are designed to operate across a variety of
network and operating system environments, enabling mobile data exchange among
them. Puma software currently supports data transfer among Windows for
Workgroups, Windows 3.1 and Windows 95. Puma has also worked with Microsoft to
ensure that the Microsoft IR driver supports mobile data exchange among
operating systems and IR devices.
SALES AND MARKETING
Puma primarily sells its products through more than 50 OEM customers
worldwide. In fiscal 1995, NEC, Toshiba and Canon accounted for approximately
16%, 15% and 14% of the Company's revenue, respectively. In fiscal 1996, Toshiba
and NEC accounted for approximately 18% and 13% of the Company's revenue,
respectively. In the first quarter of fiscal 1997, Toshiba accounted for
approximately 21% of the Company's revenue.
Puma strives to be both a marketing and a technology partner with its OEM
customers. Puma's sales and marketing organization sells the Company's products
directly to its OEM partners, and then works with them on joint marketing and
channel programs. Puma works closely with OEM partners on their new hardware
products by providing technical input to the OEM, thereby helping to ensure that
Puma's software products will work successfully with the OEM's hardware
products. Puma also trains and educates the OEM's sales and marketing
organizations on Puma's products, allowing them to act as Puma's "virtual" sales
force to their channels and direct customers.
Puma distributes its retail products through several distribution channels
both domestically and internationally. In the United States, Puma's sales
organization works directly with major distributors, resellers, computer
dealers, retailers and mail order companies to distribute its retail packaged
products. In order to further develop its brand name recognition, Puma plans to
continue to expand its joint marketing programs, marketing channel promotions
and bundling arrangements with its strategic partners. See "Risk Factors--Risks
Associated with Development of Retail Distribution Channel."
Revenue from OEMs was approximately 95%, 89% and 65% of revenue during
fiscal 1995, fiscal 1996 and the first quarter of fiscal 1997, respectively. In
fiscal 1995, NEC, Toshiba and Canon accounted for approximately 16%, 15% and 14%
of the Company's revenue, respectively. In fiscal 1996, Toshiba and NEC
accounted for approximately 18% and 13% of the Company's revenue, respectively.
In the first quarter of fiscal 1997, Toshiba accounted for approximately 21% of
the Company's revenue. Although several OEMs are subject to certain contractual
minimum purchase obligations, there can be no assurance that any particular OEM
will satisfy the minimum obligations. Weakening demand from any key OEM and the
inability of the Company to replace revenue provided by such OEM could have a
material adverse effect on the Company's business, operating results and
financial condition. The Company maintains individually significant receivable
balances from major OEMs. If these OEMs fail to meet their payment obligations,
the Company's operating results could be materially adversely affected. See
"Risk Factors--Dependence on OEMs."
International revenue represented approximately 71%, 67% and 58% in fiscal
1995, fiscal 1996 and the first quarter of fiscal 1997, respectively. Puma
markets and sells through selected distributors and republishers that focus on
specific geographic and market segment areas. These international partners
operate as an extension of Puma's marketing and sales organizations, developing
the appropriate sales channels in their regions. They also work with local
resellers as well as local offices of Puma's OEM
33
<PAGE>
customers to develop specific marketing and channel promotions for their
regions. As of October 31, 1996, the Company was represented by 14 distributors
and resellers in Africa, Asia, Australia, Canada and Europe and is continuing to
expand its international reach as appropriate distributors or republishers are
found. See "Risk Factors--Risks Associated with International Operations."
COMPETITION
The Company expects the market for MDE software, including data
synchronization and IR connectivity software to the extent it develops, to
become intensely competitive. The Company currently faces direct competition
with respect to a number of its individual products from several private
companies, including Traveling Software. In addition to direct competition, the
Company faces indirect competition from existing and potential customers that
provide internally developed solutions. As a result, the Company must educate
prospective customers as to the advantage of the Company's products versus
internally developed solutions. The Company currently faces limited direct
competition from major applications and operating systems software vendors who
may choose to incorporate data synchronization and IR connectivity functionality
into their operating systems software, thereby potentially reducing the need for
OEMs to include Puma's products in their notebook and desktop PCs. For example,
Microsoft's inclusion of certain features permitting data synchronization and IR
connectivity between computers utilizing the Windows 95 operating system may
have the effect of reducing revenue from the Company's software if users of
Windows 95 perceive that their data synchronization and IR connectivity needs
are adequately met by Microsoft. Certain of the companies with which the Company
competes or may in the future compete, including internal software development
groups of its current and potential customers, have substantially greater
financial, marketing, sales and support resources and may have more "brand-name"
recognition than the Company. There can be no assurance that the Company will be
able either to develop software comparable or superior to software offered by
its current or future competitors or to adapt to new technologies, evolving
industry standards and changes in customer requirements. In addition, the PC and
mobile computing device markets experience intense price competition, and the
Company expects that, in order to remain competitive, it may have to decrease
its unit royalties on certain products. See "Risk Factors--Competition."
The principal competitive factors affecting the market for the Company's
software are compatibility, functionality, reliability, OEM relationships and
price. The Company believes it competes favorably overall with respect to these
factors.
The Company believes that users will want to be able to utilize IR
connectivity and data synchronization functionality with a wide variety of
mobile computing devices and software applications, and that its standards-based
approach will continue to allow it to compete favorably with larger companies
whose products may not be able to support such a degree of interoperability.
Puma's strategic relationships with hardware and software vendors enable it to
provide interoperability among a broader range of applications than many of its
current and potential competitors.
CUSTOMER SUPPORT
The Company's service and support organization provides secondary technical
support to OEMs, primary technical support to retailers and end users and
education and training services to OEMs and retailers. The Company's current
OEMs typically have software maintenance agreements with the Company that
provide for one or more of the following services:
EDUCATION AND TRAINING. The Company offers training courses designed to
educate OEMs and retailers about its products. Training classes are provided at
the Company's offices in San Jose, California. In fiscal 1996, the Company held
training courses for OEMs on eight occasions and for retailers on seven
occasions. The Company believes its commitment to OEM and retailer education has
accelerated the market acceptance of its products.
TECHNICAL SUPPORT. The Company offers technical support to customers who
have entered into agreements to license the Company's products. The Company
provides service and support through its internal technical support
organization. Technical support includes the maintenance of the Company's
products in accordance with specifications contained in the Company's guide for
such products, as well
34
<PAGE>
as access to technical support personnel by telephone, fax and e-mail. Customers
under license agreements are typically entitled to certain minor product updates
and modifications, primarily bug fixes. The Company's OEMs and some of its
retail channel partners provide telephone and initial support to end users.
RESEARCH AND DEVELOPMENT
The Company seeks to capitalize on its expertise in data synchronization and
IR connectivity technology by developing products for new applications and
increasing the functionality of existing products. The Company believes its core
technology is widely applicable, and it plans to continue to develop new
products based on its core technology.
As of October 31, 1996, the Company's engineering group consisted of 49
full-time employees and full-time equivalent consultants who were engaged in
product development. Product maintenance and customer support responsibilities
are shared by engineering group employees on an as-needed basis. In fiscal 1995,
fiscal 1996 and the first quarter of fiscal 1997 research and development
expenses were $1.8 million, $3.1 million and $1.2 million, respectively.
The markets for Puma's products are characterized by rapidly changing
technologies, evolving industry standards, frequent new product introductions
and short product life cycles. The Company first introduced its TranXit products
in October 1994. As its product families mature, the Company expects that their
gross margins may decline. The Company's future success will depend to a
substantial degree upon its ability to enhance its existing products and to
develop and introduce, on a timely and cost-effective basis, new products and
features that meet changing customer requirements and emerging and evolving
industry standards. The Company budgets for research and development based on
planned product introductions and enhancements; however, actual expenditures may
significantly differ from budgeted expenditures. Inherent in the product
development process are a number of risks. The development of new,
technologically advanced software products is a complex and uncertain process
requiring high levels of innovation, as well as the accurate anticipation of
technological and market trends. The introduction of new or enhanced products
also requires the Company to manage the transition from older products in order
to minimize disruption in customer ordering patterns, avoid excessive levels of
older product inventories and ensure that adequate supplies of new products can
be delivered to meet customer demand. There can be no assurance that the Company
will successfully develop, introduce or manage the transition to new products.
The Company has in the past, and may in the future, experienced delays in the
introduction of its products, due to factors internal and external to the
Company. Any future delays in the introduction or shipment of new or enhanced
products, the inability of such products to gain market acceptance or problems
associated with new product transitions could adversely affect the Company's
operating results, particularly on a quarterly basis. See "Risk Factors--Risks
Associated with Product Development and Timely Introduction of New and Enhanced
Products."
PROPRIETARY RIGHTS
Puma relies on a combination of patent, copyright and trademark laws, trade
secrets, confidentiality procedures and contractual provisions to protect its
proprietary rights. The Company also believes that factors such as the
technological and creative skills of its personnel, new product developments,
frequent product enhancements and name recognition are essential to establishing
and maintaining a technology leadership position. The Company seeks to protect
its software, documentation and other written materials under trade secret and
copyright laws, which afford only limited protection. The Company currently has
one issued United States patent that expires in 2012 and has three patent
applications pending. In addition, the Company has corresponding international
patent applications pending under the Patent Cooperation Treaty in countries to
be designated at a later date. There can be no assurance that the Company's
patent will not be invalidated, circumvented or challenged, that the rights
granted thereunder will provide competitive advantages to the Company or that
any of the Company's pending or future patent applications, whether or not being
currently challenged by applicable governmental patent examiners, will be issued
with the scope of the claims sought by the Company,
35
<PAGE>
if at all. Furthermore, there can be no assurance that others will not develop
technologies that are similar or superior to the Company's technology or design
around the patents owned by the Company. Despite the Company's efforts to
protect its proprietary rights, unauthorized parties may attempt to copy aspects
of the Company's products or to obtain and use information that the Company
regards as proprietary. Policing unauthorized use of the Company's products is
difficult, and while the Company is unable to determine the extent to which
piracy of its software products exists, software piracy can be expected to be a
persistent problem. In addition, the laws of some foreign countries do not
ensure that the Company's means of protecting its proprietary rights in the
United States or abroad will be adequate or that competition will not
independently develop similar technology. The Company has entered into source
code escrow agreements with a limited number of its customers and resellers
requiring release of source code in certain circumstances. Such agreements
generally provide that such parties will have a limited, non-exclusive right to
use such code in the event that there is a bankruptcy proceeding by or against
the Company, if the Company ceases to do business or if the Company fails to
meet its support obligations. The Company also provides its source code to
foreign language translation service providers and consultants to the Company in
limited circumstances. The provision of source code may increase the likelihood
of misappropriation by third parties.
The Company is not aware that it is infringing any proprietary rights of
third parties. There can be no assurance, however, that third parties will not
claim infringement by the Company of their intellectual property rights. The
Company expects that software product developers will increasingly be subject to
infringement claims as the number of products and competitors in the Company's
industry segment grows and the functionality of products in different industry
segments overlaps. Any such claims, with or without merit, could be time
consuming to defend, result in costly litigation, divert management's attention
and resources or cause product shipment delays. In addition, such claims could
require the Company to discontinue the use of certain software codes or
processes, to cease the manufacture, use and sale of infringing products, to
incur significant litigation costs and expenses and to develop non-infringing
technology or to obtain licenses to the alleged infringing technology. There can
be no assurance that the Company would be able to develop alternative
technologies or to obtain such licenses or, if a license were obtainable, that
the terms would be commercially acceptable to the Company. In the event of a
successful claim of product infringement against the Company and failure or
inability of the Company to license the infringed or similar technology, the
Company's business, operating results and financial condition would be
materially adversely affected. See "Risk Factors--Proprietary Rights Risks of
Infringement and Source Code Release."
EMPLOYEES
As of October 31, 1996, the Company had 92 employees and full-time
equivalent consultants, including 24 in sales and marketing, 49 in engineering,
13 in finance and administration and six in customer service. All of the
Company's employees are located in the United States and none are represented by
a labor union. The Company has experienced no work stoppages and believes its
relationship with its employees is good.
Competition for qualified personnel in the Company's industry is intense.
The Company believes that its future success will depend in part on its
continued ability to hire, train and retain qualified personnel.
FACILITIES
The Company's principal administrative, engineering, manufacturing,
marketing and sales facilities total approximately 19,800 square feet and are
located in a single building in San Jose, California under a lease that expires
in June 1997. The Company also leases approximately 6,200 square feet in a
single building in Nashua, New Hampshire under a lease that expires in December
1998.
Management believes that its current facilities are adequate for its needs
through the next twelve months, and that, should it be needed, suitable
additional space will be available to accommodate expansion of the Company's
operations on commercially reasonable terms.
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<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS, DIRECTORS AND KEY MEMBERS OF MANAGEMENT
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------ --- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Bradley A. Rowe 36 President, Chief Executive Officer and Director
Stephen A. Nicol 36 Senior Vice President, Sales and Director
M. Bruce Nakao 52 Senior Vice President, Finance and Administration, and Chief Financial Officer
Michael M. Clair(1) 48 Chairman of the Board
Tyrone F. Pike 42 Director
Robert D. Rutner, DDS(1) 38 Director
</TABLE>
Other key members of management of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------ --- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Masanari Arai 36 Vice President, Business Development
Michael A. Blanchette 43 Vice President, Technology and Chief Technical Officer
Kevin E. Flood 44 Vice President, Engineering
Steven R. Magidson 48 Vice President, Marketing
</TABLE>
- ---------
(1) Member of Compensation Committee and Audit Committee.
MR. ROWE co-founded the Company in August 1993 and has served as President
since October 1993 and Chief Executive Officer since March 1995. He has also
served as a Director of the Company since August 1993. Prior to founding the
Company, from January 1991 to July 1993, he held various management positions at
SystemSoft Corporation, a PC system software supplier, including Vice President
of Worldwide Sales and General Manager of Desktop Computing. In June 1988 Mr.
Rowe co-founded Extar Technologies, a manufacturer's representative of PC
products, where he held a number of management positions, including Vice
President of Sales and President until December 1990. From November 1983 to June
1988, Mr. Rowe served in various sales positions at Western Digital Corporation,
a storage management company, including Director of Western Area Sales. Mr. Rowe
holds a B.S. degree in engineering and management science from Princeton
University.
MR. NICOL co-founded the Company in August 1993 and has served as Senior
Vice President, Sales since its establishment. He has also served as a Director
since August 1993. Prior to founding the Company he served in several capacities
at SystemSoft Corporation, including as Director of Sales for Japan and Asia
Pacific from July 1992 to July 1993 and as Sales Manager for the Eastern United
States from November 1991 to July 1992. Mr. Nicol co-founded Extar Technologies
in June 1988 where he served until November 1991 as Vice President of Sales.
Previously, Mr. Nicol served as OEM Manager for Western Digital and computer
sales representative for Hewlett-Packard. He holds an A.B. degree in political
science from Princeton University.
MR. NAKAO joined the Company in June 1996 as Chief Financial Officer and
Senior Vice President, Finance and Administration. Prior to joining the Company,
from May 1986 to June 1996, he served in several capacities at Adobe Systems
Incorporated, a software company, most recently as its Senior Vice President,
Finance and Administration, Chief Financial Officer and Treasurer. He holds a
B.A. degree in business and economics from the University of Washington and an
M.B.A. degree from Stanford University.
MR. CLAIR became a Director of the Company in November 1994 and has served
as Chairman of the Board since March, 1995. Mr. Clair was a founder of SynOptics
Communications (now Bay Networks), a computer networking company, and from
January 1987 to November 1992, served as Vice President Sales and Marketing and
then as Senior Vice President of Sales and Customer Service of SynOptics. Mr.
Clair has more than 25 years' experience in data processing, data and voice
communications and
37
<PAGE>
local area networking. He spent the early part of his career with Tymshare, a
computer time-sharing company, and ROLM, a manufacturer of digital PBX
equipment, in a variety of sales and marketing positions. He holds a B.S. degree
in business and an M.B.A. degree from the University of Buffalo. Mr. Clair is a
director of several private companies in Silicon Valley.
MR. PIKE became a Director of the Company in October 1996. Since March 1993,
Mr. Pike has served as a Director of Citrix Systems, a supplier of multi-user
application server products. In August 1996 Mr. Pike founded Switchsoft Systems,
a supplier of open virtual network management software for switches and routers
and has served as Chairman of the Board and Chief Executive Officer since its
inception. From January 1994 to August 1996, Mr. Pike served in various
positions at UB Networks, a computer networking company, including Senior Vice
President and Chief Technical Officer. Prior to joining UB Networks, Mr. Pike
served as a partner of Pike Associates from September 1992 to January 1994. From
March 1992 to September 1992, Mr. Pike served as President and Chief Executive
Officer of Global Village Communications, a networking communications company.
From May 1991 to June 1992 he served as Manager, Strategic Planning & Business
Development of Intel Corporation, a semiconductor company. From April 1983 to
May 1991, Mr. Pike served as Founder, Chairman of the Board and President of
LANSystems, a computer networking company, of which he served as a Director
until February 1994. Mr. Pike holds an A.B. degree in Architecture from
Princeton University
DR. RUTNER became a Director of the Company in October 1993. He has
practiced dentistry since August 1985 as proprietor of the Serra Park Dental
Group. He holds a B.S. degree in biochemistry from the University of California
at Davis, an M.S. degree in biochemistry from the University of California at
Davis and a D.D.S. degree from Georgetown University. Dr. Rutner is a director
of several private companies in Silicon Valley.
MR. ARAI joined the Company in April 1995 as Vice President, Product
Marketing. From April 1984 to January 1995 he served in various positions at IBM
Japan Ltd., a subsidiary of IBM, Inc. located in Tokyo, Japan, including
computer software engineer and, most recently, Staff Planning Manager in the
ThinkPad Development Organization, a group that executed a worldwide marketing
plan for the ThinkPad. Mr. Arai holds an M.S. degree in computer science from
Toyohashi University of Technology in Toyohashi, Japan.
MR. BLANCHETTE joined IntelliLink Corporation in March 1992, where he served
as President and Director of Engineering until the merger with the Company in
May 1996. Prior to joining IntelliLink, from April 1989 to March 1992, he served
in various management positions at Alsys, a software tools supplier, including
President and Vice President of Engineering. From 1984 to 1989, Mr. Blanchette
was employed by Wang Laboratories in various research and development positions,
including Director of Engineering in charge of programming language products.
Mr. Blanchette holds an M.S. degree in computer science from Boston University.
MR. FLOOD joined the Company as Vice President, Engineering in March 1995.
From August 1987 until he joined the Company, Mr. Flood served as President of
AI Squared, Inc., a company which he founded in 1987 to develop diagnostic
artificial intelligence technology and which he sold to Intelligence Vehicle
Highway Systems in 1994. From October 1980 to July 1987, he held several
management positions in research and development and product support at Wang
Laboratories. Mr. Flood holds a B.A. degree in history from the University of
Colorado.
MR. MAGIDSON joined the Company as Vice President, Marketing in September
1995. Prior to joining the Company, from November 1991 to August 1995, Mr.
Magidson was an independent consultant providing technical, marketing, and
strategic planning contract services to a variety of hardware and software
developers in the mobile computing and connectivity market. In April 1989, he
joined Xircom, a supplier of mobile networking products, serving as Vice
President of Marketing until October 1991. Mr. Magidson has over 25 years of
experience in the computer industry and is a frequent speaker at technical
symposia. He holds a B.A. degree in journalism from Rutgers University and an
M.S. degree in computer science from West Coast University.
38
<PAGE>
BOARD COMMITTEES
The Board of Directors has a Compensation Committee, currently composed of
Mr. Clair and Dr. Rutner, which makes recommendations to the Board concerning
salaries and incentive compensation for officers and employees of the Company.
The Board of Directors also has an Audit Committee, currently composed of Mr.
Clair and Dr. Rutner, which reviews the results and scope of the audit and other
accounting related services.
DIRECTOR COMPENSATION
Directors do not receive any cash compensation for their services as members
of the Board of Directors or members of committees of the Board of Directors,
although they are reimbursed for their out-of-pocket expenses incurred in
attending Board and committee meetings. Directors are eligible to receive stock
option grants under the Company's 1993 Stock Option Plan. On December 2, 1994,
Michael Clair, a director of the Company, was granted an option to purchase
100,000 shares of Common Stock of the Company under the Option Plan at an
exercise price of $0.20 per share which vests over three years, with 1/3 of the
option shares becoming vested at the first anniversary of the date of grant and
1/36 vesting each successive month thereafter. On March 17, 1995, Mr. Clair was
granted an option to purchase 25,000 shares of Common Stock of the Company, at
an exercise price of $0.20 per share, and on October 23, 1996 Mr. Pike was
granted an option to purchase 30,000 shares of Common Stock of the Company at an
exercise price of $7.50 per share. Both options were granted under the Option
Plan and vest over four years, with 1/4 of the option shares vesting at the
first anniversary and 1/48 vesting each successive month thereafter. The options
have a term of 10 years. In addition, the Company entered into a consulting
agreement effective October 1, 1994 with MacClair Associates, of which Mr. Clair
is President, pursuant to which MacClair Associates receives $1,000 per quarter.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation
received for services rendered to the Company during the fiscal year ended July
31, 1996, by the Chief Executive Officer of the Company and the other most
highly compensated executive officer whose total salary for the fiscal year
ended July 31, 1996 exceeded $100,000 (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL AWARDS
COMPENSATION ----------------------
-------------- SHARES UNDERLYING
NAME AND PRINCIPAL POSITION SALARY OPTIONS GRANTED
- ------------------------------------------------------------------------- -------------- ----------------------
<S> <C> <C>
Bradley A. Rowe ......................................................... $ 122,667 100,000
President and Chief Executive Officer
Stephen A. Nicol ........................................................ 122,667 100,000
Senior Vice President, Sales
</TABLE>
39
<PAGE>
OPTION GRANTS
The following table provides information concerning grants of options to
purchase the Company's Common Stock made to each of the named Executive Officers
during the fiscal year ended July 31, 1996:
OPTION GRANTS IN FISCAL 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
NUMBER OF RATES OF STOCK PRICE
SHARES % OF TOTAL APPRECIATION FOR OPTION
UNDERLYING OPTIONS GRANTED TERM (3)
OPTIONS TO EMPLOYEES IN EXERCISE PRICE EXPIRATION ------------------------
NAME GRANTED FISCAL 1996 (1) PER SHARE (2) DATE 5% 10%
- -------------------------- ----------- ---------------- --------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Bradley A. Rowe........... 100,000 8.7% $ 6.05 7/22/01 $ 96,955 $ 280,781
Stephen A. Nicol.......... 100,000 8.7% $ 5.50 7/22/06 345,892 876,558
</TABLE>
- ----------
(1) Excluding options to purchase 98,617 shares of the Company's Common Stock
assured in connection with the acquisition of IntelliLink, all options
granted in fiscal 1996 were granted under the 1993 Option Plan. The Board of
Directors has discretion, subject to plan limits, to modify the terms of
options and to reprice the options. Each option is fully exercisable from
the time of grant, subject to the Company's right to repurchase any unvested
shares at the original exercise price in the event of the optionee's
termination. Shares generally vest at the rate of 1/4 after twelve months
and 1/48 of the total number of shares each month thereafter. See "--Stock
Plans."
(2) The exercise price per share of options granted represented the fair market
value of the underlying shares of Common Stock on the dates the respective
options were granted as determined by the Company's Board of Directors. The
Company's Common Stock was not traded publicly at the time of the option
grants to the Named Executive Officers.
(3) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. The assumed
5% and 10% rates of stock price appreciation are mandated by rules of the
Securities and Exchange Commission and do not represent the Company's
estimate or projection of the future Common Stock price.
OPTION EXERCISES AND HOLDINGS
The following table sets forth certain information regarding unexercised
stock options held by each of the Named Executive Officers as of July 31, 1996:
FISCAL 1996 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING
VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
JULY 31, 1996 (#) JULY 31, 1996 ($)(1)
------------------------------- -------------------------------
NAME EXERCISABLE (2) UNEXERCISABLE EXERCISABLE (2) UNEXERCISABLE
- ----------------------------------------------- --------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
Bradley A. Rowe................................ 100,000 -- -- --
Stephen A. Nicol............................... 100,000 -- -- --
</TABLE>
- ----------
(1) Calculated on the basis of the fair market value of the underlying
securities at July 31, 1996 of $5.50 per share, as determined by the
Company's Board of Directors, minus the aggregate exercise price.
(2) All options are fully exercisable, subject to the Company's right to
repurchase any unvested shares at the original exercise price in the event
of the optionee's termination. Shares generally vest at the rate of 1/4
after twelve months from the date of grant and 1/48 of the total number of
shares each month thereafter.
40
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company did not have a compensation committee until September 1996,
prior to which time all decisions concerning executive compensation were made by
the entire Board, of which Messrs. Rowe and Nicol are members. Messrs. Rowe and
Nicol abstained from all deliberations concerning their own compensation during
this period. The Compensation Committee currently consists of Mr. Clair and Dr.
Rutner. No member of the Board of Directors or Compensation Committee of the
Company serves as a member of the Board of Directors or Compensation Committee
of an entity that has one or more executive officers serving as a member of the
Company's Board of Directors or Compensation Committee. The Company has entered
into certain transactions with Mr. Clair and Dr. Rutner. See "Director
Compensation" and "Certain Transactions."
STOCK PLANS
1993 STOCK OPTION PLAN. The Company's 1993 Stock Option Plan (the "Option
Plan") was adopted by the Company's Board of Directors and its stockholders in
October 1993. A total of 3,500,000 shares of Common Stock have been reserved for
issuance under the Option Plan, (including 1,000,000 shares of common stock
authorized by the Board of Directors on September 3, 1996). The Option Plan
provides for grants of "incentive stock options" within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"), to employees
(including officers and employee directors), and for grants of nonstatutory
options to employees, non-employee directors and consultants. The Option Plan is
currently being administered by the Board of Directors of the Company, which
determines the optionees and the terms of the options granted, including the
exercise price, number of shares subject to the option and the exercisability
thereof. Unless sooner terminated by the Board of Directors, the Option Plan
will continue until all of the shares subject to the plan have been issued and
all have been issued and all restrictions on such shares have lapsed. However,
no incentive stock options may be granted more than 10 years after the date of
the most recent stockholder approval of a change to the share reserve of the
Option Plan.
The exercise price of incentive stock options granted under the Option Plan
must be not less than the fair market value of the Common Stock on the date of
grant, and the exercise price of nonstatutory options must be not less than 85%
of the fair market value of the Common Stock on the date of grant. With respect
to any optionee who owns stock representing more than 10% of the voting power of
all classes of the Company's outstanding capital stock, the exercise price of
any incentive stock option must be equal to at least 110% of the fair market
value of the Common Stock on the date of grant, and the term of the option must
not exceed five years. The terms of incentive stock options may not exceed ten
years, although there is no limit as to the term of nonstatutory stock options.
The aggregate fair market value of Common Stock (determined as of the date of
the option grant) for which an incentive stock option may for the first time
become exercisable in any calendar year may not exceed $100,000.
As of October 31, 1996, the Company issued 876,793 shares of Common Stock
upon exercise of options granted under the Option Plan, (of which 25,980 shares
had been repurchased by the Company) and options to purchase 1,113,995 shares of
Common Stock, at a weighted average exercise price of $3.49 per share, were
outstanding. There are currently 1,509,212 shares available for future option
grants.
INTELLILINK CORP. 1992 INCENTIVE STOCK OPTION PLAN In connection with the
Company's acquisition of IntelliLink Corp. ("IntelliLink"), the Company assumed
options granted under IntelliLink's 1992 Incentive Stock Option Plan (the
"IntelliLink Plan"), and such options became exercisable for shares of the
Company's Common Stock. Options granted under the IntelliLink Plan are incentive
stock options which generally have a six-year term. Generally, options granted
under the IntelliLink Plan became exercisable as the underlying shares vest.
Such shares generally vest in four equal annual installments following the date
of option grant, subject to the optionee's continued employment. No additional
options will be granted under the IntelliLink Plan. As of October 31, 1996, no
shares of the Company's Common Stock had been issued upon the exercise of
options granted under the IntelliLink Plan, and
41
<PAGE>
options to purchase 98,367 shares of the Company's Common Stock were outstanding
at a weighted average exercise price of $2.06 per share. The Company does not
intend to issue options under the IntelliLink Plan in the future.
1996 EMPLOYEE STOCK PURCHASE PLAN The Company's 1996 Employee Stock
Purchase Plan (the "Purchase Plan") was adopted by the Company's Board of
Directors in September 1996 and approved by the stockholders of the Company in
September 1996. A total of 250,000 shares of Common Stock has been reserved for
issuance under the Purchase Plan. The Purchase Plan, which is intended to
qualify under Section 423 of the Code, is administered by the Board of Directors
or by a committee appointed by the Board. Employees (including officers and
employee directors of the Company) of the Company or any parent or subsidiary
designated by the Board for participation in the Purchase Plan are eligible to
participate in the Purchase Plan if they are customarily employed for more than
20 hours per week and more than five months per year. The Purchase Plan will be
implemented by sequential 24-month offerings. Each offering will generally be
comprised of four six-month purchase periods, with shares purchased on the last
day of each purchase period (a "Purchase Date"). The Company has not yet offered
or sold shares of Common Stock to employees pursuant to the Purchase Plan, but
intends to initiate the first offering under the Purchase Plan concurrent with
the Offering. The initial purchase period will terminate on August 31, 1997.
Thereafter, purchase periods will begin on March 1 and September 1 of each year.
The Purchase Plan permits eligible employees to purchase Common Stock through
payroll deductions, which may not exceed 10% of an employee's compensation. The
price at which stock may be purchased under the Purchase Plan is equal to 85% of
the lower of the fair market value of the Company's Common Stock on the first
day of the offering period or the Purchase Date. Employees may end their
participation in the offering at any time during the offering period, and
participation ends automatically on termination of employment with the Company.
In addition, participants generally may not purchase more than 5,000 shares in
an offering or stock having a value (measured at the beginning of the offering)
greater then $25,000 in any calendar year.
CHANGE OF CONTROL ARRANGEMENTS
The Option Plan provides that, in the event of (i) certain mergers or
consolidations to which the Company is a party in which the stockholders of the
Company do not retain beneficial ownership of at least a majority of the voting
stock of the Company or its successor, (ii) the sale, exchange or transfer of
all or substantially all of the assets of the Company other than to one or more
subsidiary corporations, or (iii) a liquidation or dissolution of the Company
(collectively, a "Transfer of Control"), the Board of Directors of the Company
may provide for the acquiring or successor corporation to assume or substitute
new options for the options outstanding under the Option Plan. To the extent
that the options outstanding under the Option Plan are not assumed, substituted
for, or exercised prior to such event, they will terminate. As of October 31,
1996, currently unvested options exercisable into 25,000 shares of Common Stock
will become fully vested on the effective date of the Company's initial public
offering and currently unvested options exercisable into 91,791 shares of Common
Stock will become fully vested on a Transfer of Control.
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<PAGE>
CERTAIN TRANSACTIONS
Between January 31, 1994 and December 2, 1994 the Company sold an aggregate
of 739,668 shares of its Series A Preferred Stock at a purchase price of $1.00
per share. Between July 15, 1994 and December 28, 1994, the Company sold an
aggregate of 104,187 Units at a purchase price of $40.00 per Unit. Each Unit was
composed of seven shares of its Series A Preferred Stock and eleven shares of
its Series B Preferred Stock and also, in some cases, warrants for ten shares of
Common Stock. The Company also issued warrants to purchase its Common Stock at
an exercise price of $3.00 per share to certain Unit purchasers. On August 15,
1996, the Company sold an aggregate of 285,715 shares of its Series C Preferred
Stock to a small number of investors, including Intel Corporation, at a purchase
price of $5.60 per share. The investors in these transactions included the
following officers, directors and holders of more than 5% of the voting
securities of the Company.
<TABLE>
<CAPTION>
SHARES OF PREFERRED STOCK UNIT TOTAL SHARES
------------------------------- FINANCING AS CONVERTED
NAME SERIES A SERIES B SERIES C WARRANTS OTHER (1)
- ------------------------------------- --------- --------- --------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Greylock Equity Limited
Partnership......................... 437,500 687,500 -- 135,000(2) 592,243(3) 2,289,743
One & Co............................. 344,750 112,750 -- 102,500 -- 904,750
Funds Affiliated with CSK Capital
Venture Co., Ltd. (4)............... 175,000 275,000 133,929 -- -- 758,929
Robert D. Rutner, DDS (5)............ 100,000 -- -- -- -- 200,000
Audrey MacLean and Michael M. Clair,
as trustees or their successors, of
the Audrey MacLean and Michael Clair
Trust Agreement UAD 12/1/90 (6)..... 17,500 27,500 -- -- -- 62,500
</TABLE>
- ----------
(1) Upon the closing of the Offering, each share of the Company's Series A
Preferred Stock will be converted into two shares of Common Stock and each
share of the Company's Series B Preferred Stock and Series C Preferred Stock
will be converted into one share of Common Stock.
(2) If Greylock elects to exercise its Unit Financing Warrant pursuant to the
net exercise provision contained in its warrant, 90,000 shares of the
Company's Common Stock will be issued prior to the closing of the Offering
based upon an assumed offering price of $9.00 per share.
(3) In connection with the acquisition of IntelliLink on April 30, 1996, in
exchange for securities of IntelliLink held by Greylock Equity Limited
Partnership ("Greylock"), the Company issued to Greylock (i) a warrant to
purchase 250,243 shares of the Company's Common Stock at an exercise price
of $5.60 per share (alternatively, Greylock may exercise its warrant for a
total of 94,536 shares of the Company's Common Stock prior to the closing of
this Offering at an assumed offering price of $9.00 per share) and (ii) a
$850,000 promissory note bearing interest at 7.0% per annum and convertible
into shares of the Company's Common Stock at the rate of approximately $2.77
per share, or approximately 342,000 shares at the closing of the Offering.
(4) Includes shares held by CSK Venture Capital Co., Ltd., as Investment Manager
for each of the following funds: CSK-1(A) Investment Fund, CSK-1(B)
Investment Fund and CSK-2 Investment Fund.
(5) Dr. Rutner is a director of the Company.
(6) Michael Clair, a director of the Company, is a trustee of the Audrey MacLean
and Michael Clair Trust Agreement UAD 12/1/90.
The Company's Certificate of Incorporation limits the liability of its
directors for monetary damages arising from a breach of their fiduciary duty as
directors, except to the extent otherwise required by the Delaware General
Corporation Law. Such limitation of liability does not affect the availability
of equitable remedies such as injunctive relief or rescission.
43
<PAGE>
The Company's Bylaws provide that the Company shall indemnify its directors
and officers to the fullest extent permitted by Delaware law, including in
circumstances in which indemnification is otherwise discretionary under Delaware
law. The Company has also entered into indemnification agreements with its
officers and directors containing provisions that may require the Company, among
other things, to indemnify such officers and directors against certain
liabilities that may arise by reason of their status or service as directors or
officers (other than liabilities arising from willful misconduct of a culpable
nature), to advance their expenses incurred as a result of any proceeding
against them as to which they could be indemnified, and to obtain directors; and
officers' insurance if available on reasonable terms.
For a description of the compensation of officers of the Company and the
eligibility of officers and directors of the Company to participate in the
Company's employee benefit plans. See "Management-- Executive Compensation" and
"--Stock Plans."
All transactions between the Company and its officers, directors, principal
stockholders and other affiliates have been and will be on terms no less
favorable to the Company than could be obtained from unaffiliated parties. To
date, the Company has made no loans to officers, directors, principal
stockholders or other affiliates other than advances of reimbursable expenses.
All such future transactions will be approved by a majority of the Company's
independent and disinterested directors.
44
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's outstanding Common Stock as of October 31, 1996 by:
(i) each of the directors and Named Executive Officers of the Company; (ii) all
directors and executive officers of the Company as a group; (iii) each other
person known by the Company to own beneficially more than 5% of the Company's
Common Stock and (iv) each other Selling Stockholder.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED SHARES BENEFICIALLY OWNED
BEFORE THE OFFERING SHARES AFTER THE OFFERING
--------------------------- BEING ---------------------------
OFFICERS AND DIRECTORS NUMBER PERCENT (1)(2) OFFERED NUMBER PERCENT (1)(2)
- ---------------------------------------------- ----------- -------------- --------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Bradley A. Rowe (3)........................... 1,372,000 14.6% -- 1,372,000 11.5%
Stephen A. Nicol (3).......................... 680,500 7.3 -- 680,500 5.7
Michael M. Clair (4).......................... 346,500 3.7 -- 346,500 2.9
Robert D. Rutner, DDS......................... 300,000 3.2 -- 300,000 2.5
Tyrone F. Pike (5)............................ 30,000 * -- 30,000 *
All current directors and executive officers
as a group (6 persons) (6)................... 2,979,000 30.5 -- 2,979,000 25.0
OTHER 5% STOCKHOLDERS
- ----------------------------------------------
Greylock Equity Limited Partnership (7) 2,089,036 21.4 286,197 1,797,839 15.1
755 Page Mill Road, Suite A100
Palo Alto, California 94304
One & Co. (8) ................................ 904,750 9.7 -- 904,750 7.6
c/o Welch & Forbes
45 School Street
Boston, Massachusetts 02108
Funds affiliated with CSK Venture Capital Co.,
Ltd. (9) .................................... 758,929 8.2 139,010 619,919 5.2
6th Floor, First Akiyama Bldg.
2-3-22 Toranomon, Minato-Ku
Tokyo 105, Japan
OTHER SELLING STOCKHOLDERS
- ----------------------------------------------
C. Bruce Johnstone (10) ...................... 200,000 2.2 36,633 163,367 1.4
P.H. Morton (11) ............................. 100,000 1.1 18,317 81,683 *
Stephen L. LaVaute & Blanca Maria
Isabel LaVaute Trust dated 4/6/83,
as amended 9/22/92, Stephen L. LaVaute,
Trustee (12)................................. 50,000 * 9,158 40,842 *
Jerome or JoAnne Robertson (13) .............. 50,000 * 9,158 40,842 *
Agora Marketing International, Inc. (14) 5,000 * 916 4,084 *
Greg Dalcher (15) ............................ 3,336 * 611 2,725 *
</TABLE>
- ----------
* Less than 1%
(1) Assumes no exercise of Underwriters' over-allotment option.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of Common Stock subject to options or warrants held by that person
that are currently exercisable or will become exercisable within 60 days
after October 31, 1996 are deemed outstanding, while such shares are not
deemed outstanding for purposes of computing percentage ownership of any
other person. Options granted under the Option Plan are fully exercisable
from the date of grant, subject to the
45
<PAGE>
Company's right to repurchase any unvested shares at the original exercise
price upon termination of employment. See "Management Executive Compensation
Stock Plans." Unless otherwise indicated in the footnotes below, the persons
and entities named in the table have sole voting and investment power with
respect to all shares beneficially owned, subject to community property laws
where applicable. Unless otherwise indicated, the address of each of the
individuals listed in the table is: c/o Puma Technology, Inc., 2940 North
First Street, San Jose, California 95134.
(3) Includes 100,000 shares subject to options which are exercisable within 60
days of October 31, 1996.
(4) Includes 125,000 shares subject to options which are exercisable within 60
days of October 31, 1996, 16,000 shares registered in the names of children
of Mr. Clair, and 105,500 shares registered in the name of the Audrey
MacLean and Michael M. Clair, as Trustees, or their successors, of the
Audrey MacLean and Michael Clair Trust Agreement UAD 12/1/90, of which Mr.
Clair is a trustee.
(5) Represents shares subject to options which are exercisable within 60 days of
October 31, 1996.
(6) Includes 531,122 shares subject to options which are exercisable within 60
days of October 31, 1996.
(7) Includes 184,536 shares issuable upon the net exercise of outstanding
warrants at an assumed public offering price of $9.00 and 342,000 shares
issuable upon the conversion of the Convertible Debenture. If the
Underwriters' over-allotment option is exercised in full, an additional
291,745 shares would be offered for sale in the Offering. Greylock Equity GP
Limited Partnership, the General Partner of Greylock Equity Limited
Partnership, and specifically Henry F. McCance, the Managing Partner of
Greylock Equity GP Limited Partnership, may be deemed to be the beneficial
owners of the portfolio securities owned by Greylock Equity Limited
Partnership. However, Greylock Equity GP Limited Partnership and Henry F.
McCance disclaim beneficial ownership with respect to portfolio securities
owned by Greylock Equity Limited Partnership, to the extent such ownership
exceeds their respective pecuniary interests therein.
(8) Includes 90,000 shares issuable upon the full exercise of outstanding
warrants at an exercise price of $3.00 per share prior to the closing of the
Offering. Also includes 71,875 shares and warrants exerciseable for 6,250
shares at an exercise price of $3.00 per share prior to the closing of the
Offering held by Francis W. Hatch and Serene M. Hatch, respectively. One &
Co. acts as investment manager for the shares held by these stockholders.
Kenneth S. Safe, Jr. and John K. Spring, general partners of One & Co, may
be deemed to be the beneficial owners of the portfolio securities owned by
One & Co. However, Kenneth S. Safe, Jr. and John K. Spring disclaim
beneficial ownership with respect to portfolio securities owned by One & Co
to the extent that such ownership exceeds their pecuniary interest therein.
(9) Includes 232,143 shares held by CSK Venture Capital Co., Ltd., as Investment
Manager of CSK-1(A) Investment Fund, 232,143 shares held by CSK Venture
Capital Co., Ltd., as Investment Manager of CSK-1(B) Investment Fund and
294,643 shares held by CSK Venture Capital Co., Ltd., as Investment Manager
of CSK-2 Investment Fund (the "Funds"). CSK Venture Capital Co., Ltd.,
investment manager for the Funds, and specifically Isao Okawa and Masahiro
Aozono, the representative directors of CSK Venture Capital Co., Ltd., may
be deemed to be the beneficial owners of the securities owned by the Funds.
However, CSK Venture Capital Co., Ltd., Isao Okawa and Masahiro Aozono
disclaim beneficial ownership with respect to securities owned by the Funds
to the extent such ownership exceeds their respective pecuniary interests
therein. If the Underwriters' over-allotment option is exercised in full, an
additional 141,705 shares would be offered for sale in the Offering.
(10) If the Underwriters' over-allotment option is exercised in full, an
additional 3,367 shares would be offered for sale in the Offering.
(11) If the Underwriters' over-allotment option is exercised in full, an
additional 1,683 shares would be offered for sale in the Offering.
(12) If the Underwriters' over-allotment option is exercised in full, an
additional 9,336 shares would be offered for sale in the Offering.
(13) If the Underwriters' over-allotment option is exercised in full, an
additional 842 shares would be offered for sale in the Offering.
(14) If the Underwriters' over-allotment option is exercised in full, an
additional 933 shares would be offered for sale in the Offering.
(15) If the Underwriters' over-allotment option is exercised in full, an
additional 389 shares would be offered for sale in the Offering.
46
<PAGE>
DESCRIPTION OF CAPITAL STOCK
Puma has authorized capital of 40,000,000 shares of Common Stock, par value
$0.001 per share, and 2,000,000 shares of Preferred Stock, par value $0.001 per
share.
COMMON STOCK
Excluding the shares of Common Stock to be issued upon the conversion of all
outstanding Preferred Stock at the closing of the Offering and including an
aggregate of approximately 661,536 shares of Common Stock to be issued upon the
exercise of certain outstanding warrants and the conversion of the Convertible
Debenture prior to the closing of the Offering, there were 5,033,461 shares of
Common Stock outstanding held of record by 84 stockholders at October 31, 1996.
Upon the closing of the offering, there will be 11,908,187 shares of Common
Stock outstanding, assuming the conversion of all the outstanding shares of
Preferred Stock into 4,374,726 shares of Common Stock, the issuance of 135,000
shares of Common Stock upon the full exercise of certain outstanding warrants at
a price per share of $3.00 and the receipt of net proceeds therefrom, the
issuance of 184,536 shares of Common Stock upon the net exercise of certain
outstanding warrants at an assumed public offering price of $9.00 per share and
the issuance of approximately 342,000 shares of Common Stock upon the conversion
of principal and all accrued interest related to the Convertible Debenture.
Holders of Common Stock are entitled to receive ratably such dividends, if
any, as may be declared by the Board of Directors out of funds legally available
therefore, subject to any preferential dividend rights of outstanding Preferred
Stock. Upon the liquidation, dissolution, or winding up of the Company, the
holders of Common Stock are entitled to share ratably in all assets remaining
after payment of liabilities, subject to the prior liquidation rights of any
outstanding Preferred Stock. Upon the closing of the offering, the Common Stock
will have no preemptive, subscription, redemption or conversion rights. The
outstanding shares of Common Stock are, and the shares offered by the Company in
the offering will be, when issued and paid for, fully paid and nonassessable.
The rights, preferences and privileges of holders of Common Stock are subject
to, and may be adversely affected by, the rights of the holders of shares of any
series of Preferred Stock which the Company may designated and issue in the
future.
PREFERRED STOCK
Upon the closing of the offering, all outstanding shares of Preferred Stock
will be converted into 4,374,726 shares of Common Stock and automatically
retired. Thereafter, the Board of Directors will be authorized, without further
stockholder approval, to issue up to 2,000,000 shares of Preferred Stock in one
or more series. Each series of Preferred Stock shall have such rights,
preferences, privileges and restrictions, including voting rights, dividend
rights, conversion rights, redemption privileges and liquidation preferences, as
shall be determined by the Board of Directors.
The issuance of Preferred Stock may have the effect of delaying or
preventing a change in control of the Company. The issuance of Preferred Stock
could decrease the amount of earnings and assets available for distribution to
the holders of the Common Stock or could adversely affect the rights and powers,
including voting rights, of the holders of the Common Stock. In certain
circumstances, such issuance could have the effect of decreasing the market
price of the Common Stock. As of the closing of the offering, no shares of
Preferred Stock will be outstanding and the Company currently has no plans to
issue any shares of Preferred Stock.
WARRANTS
Between July 15, 1994 and September 25, 1994, the Company issued warrants to
purchase its Common Stock to several investors in connection with the issuance
of its Series A and Series B Preferred Stock (the "Unit Financing Warrants").
The Unit Financing Warrants are exercisable into an aggregate of up to 135,000
shares of Common Stock at an exercise price of $3.00 per share, and each warrant
will expire upon the closing of the Offering. On December 28, 1994, the Company
issued a warrant to purchase Common Stock to Greylock in connection with its
purchase of Series A and Series B Preferred Stock of the Company (the "Greylock
Unit Financing Warrant"). The Greylock Unit Financing
47
<PAGE>
Warrant, which expires upon the closing of the Offering, is exercisable into up
to 135,000 shares of Common Stock at an exercise price of $3.00 per share.
Alternatively, Greylock may net exercise its warrant into 90,000 shares of
Common Stock at an assumed public offering price of $9.00 per share.
In connection with the acquisition by the Company of IntelliLink in April
1996, the Company issued to Greylock a warrant to purchase Common Stock (the
"Greylock Acquisition Warrant") and a debenture convertible into Common Stock
(the "Greylock Debenture") in exchange for similar securities for shares of
IntelliLink Common Stock held by Greylock. The Greylock Acquisition Warrant,
which expires upon the closing of the Offering, is exercisable into up to
250,243 shares of Common Stock at $5.60 per share. Alternatively, Greylock may
net exercise its warrant into 94,536 shares of Common Stock at an assumed public
offering price of $9.00 per share. The Greylock Debenture, which has a principal
amount of $850,000 and accrues interest at 7.0% per annum from January 1995 as
to $600,000 of the principal balance and from July 1995 as to $250,000 of the
principal balance, automatically converts into approximately 342,000 shares of
Common Stock at a conversion price of approximately $2.77 on the closing of the
Offering.
In August 1996, the Company issued a warrant to Intel Corporation in
connection with the issuance of its Series C Preferred Stock. This warrant,
which expires in August 2001, is exercisable into up to 140,000 shares of Common
Stock at an exercise price of $5.50 per share and contains a net exercise
provision.
REGISTRATION RIGHTS
Upon the closing of the offering, the holders of 3,874,726 shares of Common
Stock (collectively, the "Registrable Securities"), are entitled to certain
rights with respect to the registration of such shares under the Securities Act
of 1933, as amended (the "Securities Act"). In the event that the Company
proposes to register any of its securities under the Securities Act, the holders
of the Registrable Securities are entitled to notice of such registration and
are entitled to include their Registrable Securities in such registration,
subject to certain marketing and other limitations. Beginning six months after
the effective date of the offering, the holders of at least a majority of the
Registrable Securities have the right to require the Company on occasion to
register all or a portion of their shares with registration rights on Form S-3,
after such form becomes available to the Company, subject to certain conditions
and limitations. For example, the Company may, in certain circumstances, defer
such registration, and the underwriters involved in such registrations have the
right, subject to certain limitations, to limit the number of shares included in
such registrations.
DELAWARE LAW AND CERTAIN CHARTER PROVISIONS
The Company is a Delaware corporation and will be subject to Section 203 of
the Delaware General Corporation Law (the "Delaware Law"), an anti-takeover law.
In general, Section 203 of the Delaware Law prevents an "interested stockholder"
(defined generally as a person owning 15% or more of a corporation's outstanding
voting stock) from engaging in a "business combination" (as defined in the
Delaware law) with a Delaware corporation for three years following the date
such person became an interested stockholder, subject to certain exceptions such
as the approval of the board of directors and of the holders of at least
two-thirds of the outstanding shares of voting stock not owned by the interested
stockholder. The existence of this provision could have the effect of
discouraging takeover attempts, including attempts that might result in a
premium over the market price for the shares of Common Stock.
The Company's Certificate of Incorporation provides that, upon the closing
of the Offering, any action required or permitted to be taken by the
stockholders of the Company may be taken only at a duly called annual or special
meeting of the stockholders and does not provide for cumulative voting in the
election of directors. The Certificate of Incorporation and Bylaws restrict the
right of stockholders to change the size of the Board of Directors and to fill
vacancies on the Board of Directors. The Bylaws also establish procedures,
including advance notice procedures, with regard to the nomination, other than
by or at the direction of the Board of Directors, of candidates for elections as
directors or for stockholder proposals to be submitted at stockholder meetings.
The amendment of any of these provisions would require approval by holders of
66.67% or more of the outstanding Common Stock.
48
<PAGE>
These and other provisions could have the effect of making it more difficult
for a third party to effect a change in the control of the Board of Directors.
This may discourage another person or entity from making a tender offer for the
Company's Common Stock, including offers at a premium over the market price of
the Common Stock, and might result in a delay in changes in control of
management. In addition, these provisions could have the effect of making it
more difficult for proposals favored by the stockholders to be presented for
stockholder consideration.
The Company has also included in its Certificate of Incorporation provisions
to eliminate the personal liability of its directors for monetary damages
resulting from breaches of their fiduciary duty to the extent permitted by the
Delaware Law and to indemnify its directors and officers to the fullest extent
permitted by Section 145 of the Delaware Law.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is Harris Trust
Company of California. Its telephone number is (213) 239-0671.
SHARES ELIGIBLE FOR FUTURE SALE
Prior to the Offering, there has not been any public market for the Common
Stock and there can be no assurance that a significant public market for the
Common Stock will be developed or be sustained after the Offering. Sales of
substantial amounts of Common Stock in the public market after this Offering, or
the possibility of such sales occurring, could adversely affect prevailing
market prices for the Common Stock or the future ability of the Company to raise
capital through an offering of equity securities.
After the Offering, the Company will have outstanding 11,908,187 shares of
Common Stock. Of these shares, the 3,000,000 shares offered hereby will be
freely tradeable in the public market without restriction under the Securities
Act, unless such shares are held by "affiliates" of the Company, as that term is
defined in Rule 144 under the Securities Act.
The remaining 8,908,187 shares of Common Stock outstanding upon completion
of the Offering will be "restricted securities" as that term is defined in Rule
144 ("Restricted Shares"). The Restricted Shares were issued and sold by the
Company in private transactions in reliance upon exemptions from registration
under the Securities Act. Restricted Shares may be sold in the public market
only if they are registered or if any qualify for an exemption from registration
under Rules 144 or 701 under the Securities Act, which are summarized below.
Pursuant to certain "lock-up" agreements, all of the executive officers,
directors and certain stockholders and employees of the Company, who
collectively hold an aggregate of approximately 8,403,783 shares, have agreed
not to offer, sell, contract to sell, grant any option to purchase or otherwise
dispose of any such shares for a period of 180 days from the date of this
Prospectus. The Company has also entered into an agreement with Deutsche Morgan
Grenfell Inc. that it will not offer, sell or otherwise dispose of Common Stock
for a period of 180 days from the date of this Prospectus, other than pursuant
to existing stock option plans. As a result of such lock-up agreements,
approximately 6,232,149 of the Restricted Shares will be eligible for immediate
sale beginning 181 days after the date of this Prospectus (of which 2,606,403
shares will be subject to certain volume, manner of sale and other limitations
under Rule 144). Of the approximately 504,404 Restricted Shares held by existing
stockholders of the Company not subject to lock-up agreements, 57,529 shares
will be eligible for immediate sale in the public market under Rule 144(k).
Following the expiration of such lock-up periods, certain shares issued upon
exercise of options granted by the Company prior to the date of this Prospectus
will also be available for sale in the public market pursuant to Rule 701 under
the Securities Act. Rule 701 permits resales of such shares in reliance upon
Rule 144 but without compliance with certain restrictions, including the holding
period requirement, imposed under Rule 144. In general, under Rule 144 as
currently in effect, beginning 90 days after the date of this Prospectus, a
person (or persons whose shares of the Company are aggregated) who has
beneficially owned Restricted Shares for at least two years (including the
holding period of any prior
49
<PAGE>
owner who is not an affiliate of the Company) would be entitled to sell within
any three-month period a number of shares that does not exceed the greater of
(i) one percent of the then outstanding shares of Common Stock (approximately
119,000 shares immediately after the Offering), or (ii) the average weekly
trading volume of the Common Stock during the four calendar weeks preceding the
filing of a Form 144 with respect to such sale. Sales under Rule 144 are also
subject to certain manner of sale and notice requirements and to the
availability of current public information about the Company. Under Rule 144(k),
a person who is not deemed to have been an affiliate of the Company at any time
during the 90 days preceding a sale and who has beneficially owned the shares
proposed to be sold for at least three years (including the holding period of
any prior owner who is not an affiliate of the Company) is entitled to sell such
shares without complying with the manner of sale, public information, volume
limitation or notice provisions of Rule 144.
As of October 31, 1996, options to purchase 1,113,995 shares of Common Stock
were outstanding under the Company's 1993 Stock Option Plan. All such shares are
subject to lock-up agreements for a period of 180 days from the date of this
Prospectus and thereafter pursuant to Rule 701. As of October 31, 1996, there
were 1,509,212 shares available for future option grants under its 1993 Stock
Option Plan. Options to purchase 98,367 shares of Common Stock assumed in the
acquisition of IntelliLink were also outstanding. Moreover, on September 3,
1996, the Board of Directors of the Company, subject to stockholder approval,
adopted the 1996 Employee Stock Purchase Plan, under which 250,000 additional
shares have been reserved for issuance.
The Company intends to file after the effective date of the Offering a
Registration Statement on Form S-8 to register an aggregate of 1,759,212 shares
of Common Stock reserved for issuance under its 1993 Stock Option Plan and 1996
Employee Stock Purchase Plan. Such Registration Statement will become effective
automatically upon filing. Shares issued under the foregoing plans, after the
filing of Registration Statement on Form S-8, may be sold in the open market,
subject, in the case of certain holders, to the Rule 144 limitations applicable
to affiliates, the above-referenced lock-up agreements and vesting restrictions
imposed by the Company. In addition, after the Offering, holders of
approximately 3,874,726 shares of Common Stock and 140,000 shares of Common
Stock issuable upon the exercise of the Intel Warrant will be entitled to
certain rights to cause the Company to register the sale of such shares under
the Securities Act. See "Description of Capital Stock--Registration Rights."
50
<PAGE>
UNDERWRITING
The Underwriters named below, for whom Deutsche Morgan Grenfell Inc. and
Alex. Brown & Sons Incorporated are acting as representatives (the
"Representatives"), have severally agreed, subject to the terms and conditions
contained in the Underwriting Agreement (the form of which is filed as an
exhibit to the Company's Registration Statement, of which this Prospectus is a
part), to purchase from the Company and the Selling Stockholders the respective
number of shares of Common Stock indicated below opposite their respective
names. The Underwriters are committed to purchase all of the shares, if they
purchase any.
<TABLE>
<CAPTION>
NUMBER OF
SHARES
-----------
<S> <C>
Deutsche Morgan Grenfell Inc...............................................................
Alex. Brown & Sons Incorporated............................................................
-----------
Total.................................................................................. 3,000,000
-----------
-----------
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters thereunder are subject to approval of certain legal matters by
counsel and to various other conditions.
The Representatives have advised the Company that the Underwriters propose
initially to offer the Common Stock to the public on the terms set forth on the
cover page of this Prospectus. The Underwriters may allow to selected dealers
(who may include the Underwriters) a concession of not more than $ per share.
The selected dealers may reallow a concession of not more than $ to certain
other dealers. After the initial public offering, the price and concessions and
re-allowances to dealers and other selling terms may be changed by the
Representatives. The Common Stock is offered subject to receipt and acceptance
by the Underwriters, and to certain other conditions, including the right to
reject orders in whole or in part. The Underwriters do not intend to sell any of
the shares of Common Stock offered hereby to accounts for which they exercise
discretionary authority.
The Selling Stockholders have granted an option to the Underwriters to
purchase up to a maximum of 450,000 additional shares of Common Stock to cover
over-allotments, if any, at the public offering price, less the underwriting
discount set forth on the cover page of this Prospectus. Such option may be
exercised at any time until 30 days after the date of the Underwriting
Agreement. To the extent the Underwriters exercise this option, each of the
Underwriters will be committed, subject to certain conditions, to purchase such
additional shares in approximately the same proportion as set forth in the above
table. The Underwriters may purchase such shares only to cover over-allotments
made in connection with the Offering.
In connection with the Offering, the Company and the directors, executive
officers and certain stockholders have agreed not to offer or sell any Common
Stock until the expiration of 180 days following the date of the final
Prospectus without the prior written consent of Deutsche Morgan Grenfell Inc.
The Underwriting Agreement provides that the Company and the Selling
Stockholders will indemnify the several Underwriters against certain liabilities
including civil liabilities under the Securities Act of 1933, as amended, or
will contribute to payments the Underwriters may be required to make in respect
thereof.
In August 1996, the Company issued 17,857 shares of the Company's Series C
Preferred Stock to The Quattrone Family Trust, Frank P. Quattrone and Denise A.
Foderaro Trustees (the "Quattrone Trust") which will convert automatically into
17,857 shares of Common Stock upon the completion of the Offering. Frank
Quattrone, the Chief Executive Officer of DMG Technology Group, a division of
Deutsche Morgan Grenfell Inc., is a trustee of the Quattrone Trust.
51
<PAGE>
Prior to the Offering, there has been no public market for the Common Stock.
The initial public offering price has been determined by negotiation between the
Company, the Selling Stockholders and the Representatives. The principal factors
to be considered in determining the public offering price include the
information set forth in this Prospectus and otherwise available to the
Representatives; the history and the prospects for the industry in which the
Company will compete; the ability of the Company's management; the prospectus
for future earnings of the Company; the present state of the Company's
development and its current financial condition; the general condition of the
securities markets at the time of the Offering; and the recent market prices of,
and the demand for, publicly traded common stock of generally comparable
companies. Each of the Representatives has informed the Company that it
currently intends to make a market in the shares subsequent to the effectiveness
of the Offering, but there can be no assurance that the Representatives will
take any action to make a market in any securities of the Company.
LEGAL MATTERS
The validity of the securities offered hereby and general corporate legal
matters will be passed upon for the Company by Gray Cary Ware & Freidenrich, A
Professional Corporation, Palo Alto, California. Wilson Sonsini Goodrich &
Rosati, Professional Corporation, Palo Alto, California is acting as counsel for
the Underwriters in connection with certain legal matters relating to the sale
of the Common Stock offered hereby.
EXPERTS
The Consolidated Financial Statements of the Company as of July 31, 1995,
and 1996 and for the period from August 27, 1993 (inception) to July 31, 1994
and each of the two years in the period ended July 31, 1996 and the financial
statements of IntelliLink Corp. for each of the three years in the period ended
December 31, 1995 included in this Prospectus have been so included in reliance
on the reports of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
In connection with accounting for acquisition of IntelliLink, the Company
obtained an appraisal of its Common Stock issued in such acquisition from
Columbia Financial Advisors, Inc. Such appraisal estimated the fair market value
of the Company's Common Stock issued in the IntelliLink acquisition at a range
of $1.05 and $1.25 per share and was given on the authority of said firm as
experts in valuation of securities.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission a
Registration Statement (which term shall include any amendments thereto) on Form
S-1 under the Securities Act with respect to the Common Stock offered hereby.
This Prospectus, which constitutes a part of the Registration Statement, does
not contain all of the information set forth in the Registration Statement,
certain items of which are contained in exhibits to the Registration Statement
as permitted by the rules and regulations of the Commission. For further
information with respect to the Company and the Common Stock offered hereby,
reference is made to the Registration Statement, including the exhibits thereto,
and the financial statements and notes filed as a part thereof. Statements made
in this Prospectus concerning the contents of any document referred to herein
are not necessarily complete. With respect to each such document filed with the
Commission as an exhibit to the Registration Statement, reference is made to the
exhibit for a more complete description of the matter involved. The Registration
Statement, including the exhibits thereto and the financial statements and notes
filed as a part thereof, as well as such reports and other information filed
with the Commission, may be inspected without charge at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the regional offices of the Commission located at Seven World
Trade Center, 13th Floor, New York, New York 10048 and Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
all or any part thereof may be obtained from the Commission upon the payment of
certain fees prescribed by the Commission. Such reports and other information
may also be inspected without charge at a Web site maintained by the Commission.
The address of such site is http://www.sec.gov.
52
<PAGE>
PUMA TECHNOLOGY, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
PUMA TECHNOLOGY, INC.
Report of Independent Accountants........................................................................ F-2
Consolidated Balance Sheet............................................................................... F-3
Consolidated Statement of Operations..................................................................... F-4
Consolidated Statement of Stockholders' Equity........................................................... F-5
Consolidated Statement of Cash Flows..................................................................... F-6
Notes to Consolidated Financial Statements............................................................... F-7
INTELLILINK CORP.
Report of Independent Accountants........................................................................ F-18
Statement of Operations.................................................................................. F-19
Statement of Stockholders' Deficit....................................................................... F-20
Statement of Cash Flows.................................................................................. F-21
Notes to Financial Statements............................................................................ F-22
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
Unaudited Pro Forma Combined Statement of Operations..................................................... F-28
Notes to Unaudited Pro Forma Combined Statement of Operations............................................ F-30
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Puma Technology, Inc.
The reincorporation described in Note 10 to the Consolidated Financial
Statements has not been consummated at November 7, 1996. When it has been
consummated, we will be in a position to furnish the following report:
"In our opinion, the accompanying consolidated balance sheet and the
related consolidated statements of operations, of stockholders' equity
and of cash flows present fairly, in all material respects, the
financial position of Puma Technology, Inc. and its subsidiaries at July
31, 1995 and 1996, and the results of their operations and their cash
flows for the period from August 27, 1993 (inception) to July 31, 1994
and for the years ended July 31, 1995 and 1996 in conformity with
generally accepted accounting principles. These financial statements are
the responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with generally
accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe our
audits provide a reasonable basis for the opinion expressed above."
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
San Jose, California
August 20, 1996, except for Note 10
which is as of September 4, 1996
F-2
<PAGE>
PUMA TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT PER SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
OCTOBER 31,
1996
JULY 31, ------------
--------------------
1995 1996 (UNAUDITED)
--------- ---------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents......................................................... $ 2,000 $ 982 $ 2,333
Short-term investments............................................................ 500 -- --
Accounts receivable, net.......................................................... 125 1,837 2,483
Inventories....................................................................... 24 165 176
Other current assets.............................................................. 48 114 624
--------- --------- ------------
Total current assets........................................................ 2,697 3,098 5,616
Property and equipment, net......................................................... 251 449 514
Other assets........................................................................ -- 457 573
--------- --------- ------------
$ 2,948 $ 4,004 $ 6,703
--------- --------- ------------
--------- --------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.................................................................. $ 227 $ 682 $ 752
Accrued liabilities............................................................... 171 645 609
Deferred revenue.................................................................. 628 1,042 1,514
Current portion of capital lease obligations...................................... 20 21 21
--------- --------- ------------
Total current liabilities................................................... 1,046 2,390 2,896
Capital lease obligations, net of current portion................................... 16 28 19
Convertible debenture............................................................... -- 933 948
--------- --------- ------------
Total liabilities........................................................... 1,062 3,351 3,863
--------- --------- ------------
Commitments (Note 9)
Stockholders' equity:
Stock subscription................................................................ -- 1,582 --
Preferred stock, $0.001 par value; 3,500 shares authorized at July 31, 1995 and
1996 and October 31, 1996; 2,000 shares authorized, none issued and outstanding
at October 31, 1996 pro forma (unaudited)........................................ -- --
Series A convertible preferred stock, $0.001 par value; 2,000 shares designated;
1,469 shares issued and outstanding at July 31, 1995 and 1996 and October 31,
1996 (liquidation preference of $1.00 per share); none issued and outstanding
at October 31, 1996 pro forma (unaudited)...................................... 2 2 2
Series B convertible preferred stock, $0.001 par value; 1,500 shares designated;
1,151 shares issued and outstanding at July 31, 1995 and 1996 and October 31,
1996 (liquidation preference of $3.00 per share); none issued and outstanding
at October 31, 1996 pro forma (unaudited)...................................... 1 1 1
Series C convertible preferred stock, $0.001 par value; 286 shares designated;
none issued and outstanding at July 31, 1995 and 1996; 286 shares issued and
outstanding at October 31, 1996 (liquidation preference of $5.60 per share);
none issued and outstanding at October 31, 1996 pro forma (unaudited).......... -- -- --
Common Stock, $0.001 par value; 20,000 shares authorized; 2,722, 4,297 and 4,372
shares issued and outstanding at July 31, 1995 and 1996 and October 31, 1996;
40,000 shares authorized, 9,408 shares issued and outstanding at October 31, 1996
pro forma (unaudited)............................................................ 3 4 4
Additional paid-in capital........................................................ 4,982 6,686 8,684
Receivable from stockholders...................................................... (2) (2,013) (476)
Deferred stock compensation....................................................... -- (108) (101)
Accumulated deficit............................................................... (3,100) (5,501) (5,274)
--------- --------- ------------
Total stockholders' equity.................................................. 1,886 653 2,840
--------- --------- ------------
$ 2,948 $ 4,004 $ 6,703
--------- --------- ------------
--------- --------- ------------
<CAPTION>
PRO FORMA
1996
------------
<S> <C>
Current assets:
Cash and cash equivalents......................................................... $ 2,738
Short-term investments............................................................ --
Accounts receivable, net.......................................................... 2,483
Inventories....................................................................... 176
Other current assets.............................................................. 624
------------
Total current assets........................................................ 6,021
Property and equipment, net......................................................... 514
Other assets........................................................................ 573
------------
$ 7,108
------------
------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.................................................................. $ 752
Accrued liabilities............................................................... 609
Deferred revenue.................................................................. 1,514
Current portion of capital lease obligations...................................... 21
------------
Total current liabilities................................................... 2,896
Capital lease obligations, net of current portion................................... 19
Convertible debenture............................................................... --
------------
Total liabilities........................................................... 2,915
------------
Commitments (Note 9)
Stockholders' equity:
Stock subscription................................................................ --
Preferred stock, $0.001 par value; 3,500 shares authorized at July 31, 1995 and
1996 and October 31, 1996; 2,000 shares authorized, none issued and outstanding
at October 31, 1996 pro forma (unaudited)........................................ --
Series A convertible preferred stock, $0.001 par value; 2,000 shares designated;
1,469 shares issued and outstanding at July 31, 1995 and 1996 and October 31,
1996 (liquidation preference of $1.00 per share); none issued and outstanding
at October 31, 1996 pro forma (unaudited)...................................... --
Series B convertible preferred stock, $0.001 par value; 1,500 shares designated;
1,151 shares issued and outstanding at July 31, 1995 and 1996 and October 31,
1996 (liquidation preference of $3.00 per share); none issued and outstanding
at October 31, 1996 pro forma (unaudited)...................................... --
Series C convertible preferred stock, $0.001 par value; 286 shares designated;
none issued and outstanding at July 31, 1995 and 1996; 286 shares issued and
outstanding at October 31, 1996 (liquidation preference of $5.60 per share);
none issued and outstanding at October 31, 1996 pro forma (unaudited).......... --
Common Stock, $0.001 par value; 20,000 shares authorized; 2,722, 4,297 and 4,372
shares issued and outstanding at July 31, 1995 and 1996 and October 31, 1996;
40,000 shares authorized, 9,408 shares issued and outstanding at October 31, 1996
pro forma (unaudited)............................................................ 9
Additional paid-in capital........................................................ 10,035
Receivable from stockholders...................................................... (476)
Deferred stock compensation....................................................... (101)
Accumulated deficit............................................................... (5,274)
------------
Total stockholders' equity.................................................. 4,193
------------
$ 7,108
------------
------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE>
PUMA TECHNOLOGY, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PERIOD FROM
AUGUST 27,
1993 THREE MONTHS
(INCEPTION) YEAR ENDED JULY 31, ENDED OCTOBER 31,
TO JULY 31, -------------------- --------------------
1994 1995 1996 1995 1996
------------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue................................................. $ 70 $ 860 $ 7,716 $ 1,152 $ 3,202
Cost of revenue......................................... -- 77 673 105 357
------ --------- --------- --------- ---------
Gross profit............................................ 70 783 7,043 1,047 2,845
------ --------- --------- --------- ---------
Operating expenses:
Research and development.............................. 529 1,840 3,107 686 1,201
Sales and marketing................................... 175 580 2,169 265 878
General and administrative............................ 326 500 1,064 160 427
In-process research and development................... -- -- 2,680 -- --
------ --------- --------- --------- ---------
Total operating expenses........................ 1,030 2,920 9,020 1,111 2,506
------ --------- --------- --------- ---------
Operating income (loss)................................. (960) (2,137) (1,977) (64) 339
Interest income......................................... 9 77 110 27 28
Interest expense........................................ (3) (6) (25) (2) (17)
------ --------- --------- --------- ---------
Loss before provision for income taxes.................. (954) (2,066) (1,892) (39) 350
Provision for income taxes.............................. -- (80) (509) (88) (123)
------ --------- --------- --------- ---------
Net income (loss)....................................... $ (954) $ (2,146) $ (2,401) $ (127) $ 227
------ --------- --------- --------- ---------
------ --------- --------- --------- ---------
Pro forma net income (loss) per share (unaudited)....... $ (0.25) $ (0.01) $ 0.02
--------- --------- ---------
--------- --------- ---------
Shares used in pro forma per share
calculation (unaudited)................................ 9,474 9,397 10,112
--------- --------- ---------
--------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
PUMA TECHNOLOGY, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
CONVERTIBLE
PREFERRED STOCK COMMON STOCK ADDITIONAL RECEIVABLE DEFERRED
STOCK --------------- --------------- PAID-IN FROM STOCK ACCUMULATED
SUBSCRIPTION SHARES AMOUNT SHARES AMOUNT CAPITAL STOCKHOLDERS COMPENSATION DEFICIT
------ ------ ------ ------ ------ ---------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of Common Stock
to founders............. $ -- -- $-- 3,045 $3 $ 73 $ (28) $ -- $ --
Issuance of Series A
convertible preferred
stock................... -- 818 1 -- -- 817 -- -- --
Issuance of Series B
convertible preferred
stock................... -- 125 -- -- -- 375 -- -- --
Net loss................. -- -- -- -- -- -- -- -- (954)
-- --
------ ------ ------ ---------- ------------ ------ -----------
Balance at July 31,
1994.................... -- 943 1 3,045 3 1,265 (28) -- (954)
Issuance of Common Stock
upon exercise of Stock
options................. -- -- -- 220 -- 57 -- -- --
Issuance of Series A
convertible preferred
stock, net of issuance
costs................... -- 651 1 -- -- 641 -- -- --
Issuance of Series B
convertible preferred
stock, net of issuance
costs................... -- 1,026 1 -- -- 3,026 -- -- --
Repurchase of unvested
founder Common Stock.... -- -- -- (543) -- (7) 26 -- --
Net loss................. -- -- -- -- -- -- -- -- (2,146)
-- --
------ ------ ------ ---------- ------------ ------ -----------
Balance at July 31,
1995.................... -- 2,620 3 2,722 3 4,982 (2) -- (3,100)
Issuance of Common Stock
upon exercise of stock
options................. -- -- -- 580 -- 321 (53) -- --
Issuance of Common Stock
in connection with
acquisition of
IntelliLink............. -- -- -- 1,019 1 1,273 (194) -- --
Loan to former officer of
IntelliLink Corp........ -- -- -- -- -- -- (184) -- --
Repurchase of unvested
Common Stock............ -- -- -- (24) -- (5) 2 -- --
Deferred compensation
related to stock
options................. -- -- -- -- -- 115 -- (108) --
Subscription for Series C
convertible preferred
stock................... 1,582 -- -- -- -- -- (1,582) -- --
Net loss................. -- -- -- -- -- -- -- -- (2,401)
-- --
------ ------ ------ ---------- ------------ ------ -----------
Balance at July 31,
1996.................... 1,582 2,620 3 4,297 4 6,686 (2,013) (108) (5,501)
Issuance of Series C
convertible preferred
stock, net of issuance
costs (unaudited)....... (1,582) 286 -- -- -- 1,582 1,582 -- --
Issuance of Common Stock
upon exercise of stock
options (unaudited)..... -- -- -- 76 -- 241 -- -- --
Issuance of warrants
(unaudited)............. -- -- -- -- -- 175 -- -- --
Repurchase of unvested
Common Stock
(unaudited)............. -- -- -- (1) -- -- -- -- --
Loan to stockholder
(unaudited)............. -- -- -- -- -- -- (45) -- --
Amortization of deferred
compensation
(unaudited)............. -- -- -- -- -- -- -- 7 --
Net income (unaudited)... -- -- -- -- -- -- -- -- 227
-- --
------ ------ ------ ---------- ------------ ------ -----------
Balance at October 31,
1996 (unaudited)........ $ -- 2,906 $3 4,372 $4 $8,684 $(476) $(101) $(5,274)
-- --
-- --
------ ------ ------ ---------- ------------ ------ -----------
------ ------ ------ ---------- ------------ ------ -----------
<CAPTION>
TOTAL
-------
<S> <C>
Issuance of Common Stock
to founders............. $ 48
Issuance of Series A
convertible preferred
stock................... 818
Issuance of Series B
convertible preferred
stock................... 375
Net loss................. (954)
-------
Balance at July 31,
1994.................... 287
Issuance of Common Stock
upon exercise of Stock
options................. 57
Issuance of Series A
convertible preferred
stock, net of issuance
costs................... 642
Issuance of Series B
convertible preferred
stock, net of issuance
costs................... 3,027
Repurchase of unvested
founder Common Stock.... 19
Net loss................. (2,146)
-------
Balance at July 31,
1995.................... 1,886
Issuance of Common Stock
upon exercise of stock
options................. 268
Issuance of Common Stock
in connection with
acquisition of
IntelliLink............. 1,080
Loan to former officer of
IntelliLink Corp........ (184)
Repurchase of unvested
Common Stock............ (3)
Deferred compensation
related to stock
options................. 7
Subscription for Series C
convertible preferred
stock................... --
Net loss................. (2,401)
-------
Balance at July 31,
1996.................... 653
Issuance of Series C
convertible preferred
stock, net of issuance
costs (unaudited)....... 1,582
Issuance of Common Stock
upon exercise of stock
options (unaudited)..... 241
Issuance of warrants
(unaudited)............. 175
Repurchase of unvested
Common Stock
(unaudited)............. --
Loan to stockholder
(unaudited)............. (45)
Amortization of deferred
compensation
(unaudited)............. 7
Net income (unaudited)... 227
-------
Balance at October 31,
1996 (unaudited)........ $ 2,840
-------
-------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
PUMA TECHNOLOGY, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE
MONTHS
PERIOD FROM ENDED
AUGUST 27,
1993 YEAR ENDED JULY 31, OCTOBER
(INCEPTION) 31,
TO JULY 31, -------------------- ---------
1994 1995 1996
------------- --------- --------- 1995
---------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)........................................................... $ (954) $ (2,146) $ (2,401) $ (127)
Adjustments to reconcile net income (loss) to net cash used in operating
activities:
Depreciation and amortization........................................... 17 73 217 30
In-process research and development..................................... -- -- 2,680 --
Other................................................................... -- 56 42 --
Changes in assets and liabilities:
Accounts receivable................................................... -- (125) (1,637) (705)
Inventories........................................................... -- (24) (105) (14)
Other assets.......................................................... (31) (17) (82) (17)
Accounts payable...................................................... 9 218 17 (10)
Accrued liabilities................................................... 85 86 272 177
Deferred revenues..................................................... 150 478 101 78
------------- --------- --------- ---------
Net cash used in operating activities............................... (724) (1,401) (896) (588)
------------- --------- --------- ---------
Cash flows from investing activities:
Purchase of property and equipment........................................ (105) (180) (317) (60)
Purchase of short term investments........................................ -- (500) -- --
Maturities of short-term investments...................................... -- -- 500 --
Cash used in acquisition of IntelliLink Corp., net........................ -- -- (51) --
------------- --------- --------- ---------
Net cash provided by (used in) investing activities................. (105) (680) 132 (60)
------------- --------- --------- ---------
Cash flows from financing activities:
Principal payments under capital lease obligations........................ (6) (14) (22) (2)
Principal repayments on notes payable..................................... -- -- (119) --
Note advances to stockholder.............................................. -- -- (184) --
Net proceeds from issuance of convertible preferred stock................. 1,193 3,669 -- --
Net proceeds from issuance of Common Stock................................ 48 20 71 47
------------- --------- --------- ---------
Net cash provided by (used in) financing activities................. 1,235 3,675 (254) 45
------------- --------- --------- ---------
Net increase (decrease) in cash and cash equivalents........................ 406 1,594 (1,018) (603)
Cash and cash equivalents at the beginning of the period.................... -- 406 2,000 2,000
------------- --------- --------- ---------
Cash and cash equivalents at the end of the period.......................... $ 406 $ 2,000 $ 982 $ 1,397
------------- --------- --------- ---------
------------- --------- --------- ---------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid............................................................. $ 3 $ 6 $ 7 $ 2
Income taxes paid......................................................... -- 80 509 44
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES:
Property and equipment acquired under capital leases...................... 36 20 -- --
Common Stock issued in connection with the acquisition
of IntelliLink Corp...................................................... -- -- 1,274 --
Common Stock paid by cancelation of accounts payable...................... -- -- 197 --
Issuance of warrants for technology....................................... -- -- -- --
<CAPTION>
1996
---------
<S> <C>
Cash flows from operating activities:
Net income (loss)........................................................... $ 227
Adjustments to reconcile net income (loss) to net cash used in operating
activities:
Depreciation and amortization........................................... 119
In-process research and development..................................... --
Other................................................................... 22
Changes in assets and liabilities:
Accounts receivable................................................... (646)
Inventories........................................................... (11)
Other assets.......................................................... (510)
Accounts payable...................................................... 70
Accrued liabilities................................................... (36)
Deferred revenues..................................................... 472
---------
Net cash used in operating activities............................... (293)
---------
Cash flows from investing activities:
Purchase of property and equipment........................................ (125)
Purchase of short term investments........................................ --
Maturities of short-term investments...................................... --
Cash used in acquisition of IntelliLink Corp., net........................ --
---------
Net cash provided by (used in) investing activities................. (125)
---------
Cash flows from financing activities:
Principal payments under capital lease obligations........................ (9)
Principal repayments on notes payable..................................... --
Note advances to stockholder.............................................. (45)
Net proceeds from issuance of convertible preferred stock................. 1,582
Net proceeds from issuance of Common Stock................................ 241
---------
Net cash provided by (used in) financing activities................. 1,769
---------
Net increase (decrease) in cash and cash equivalents........................ 1,351
Cash and cash equivalents at the beginning of the period.................... 982
---------
Cash and cash equivalents at the end of the period.......................... $ 2,333
---------
---------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid............................................................. $ 2
Income taxes paid......................................................... 147
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES:
Property and equipment acquired under capital leases...................... --
Common Stock issued in connection with the acquisition
of IntelliLink Corp...................................................... --
Common Stock paid by cancelation of accounts payable...................... --
Issuance of warrants for technology....................................... 175
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE>
PUMA TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- THE COMPANY AND A SUMMARY OF ITS SIGNIFICANT ACCOUNTING POLICIES:
THE COMPANY
Puma Technology, Inc. (the "Company") was incorporated in California on
August 27, 1993 and was subsequently reincorporated in Delaware (see Note 10).
The Company develops, markets and supports mobile data exchange software which
allows user to easily access, exchange and synchronize information stored on a
variety of different computing devices.
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries, IntelliLink Corp. ("IntelliLink")
and Puma Ireland, Inc. All significant intercompany accounts and transactions
have been eliminated.
USE OF ESTIMATES AND ASSUMPTIONS
The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates.
REVENUE RECOGNITION
The Company recognizes revenue in accordance with the American Institute of
Certified Public Accountants' Statement of Position 91-1 on software revenue
recognition.
Revenue is comprised of license revenue and service revenue. License revenue
is derived from the sale of software products and royalty agreements with
original equipment manufacturers (OEMs). Service revenue is derived from
customer funded engineering services. To date, service revenue has been less
than 10% of revenue.
License revenue is recognized upon shipment of the software if no
significant obligation remains and collection of the resulting receivable is
deemed probable. The Company currently sells its products primarily to OEMs and
to a lesser extent to distributors and resellers in the United States, Asia,
Australia, Canada and Europe. The Company grants distributors and resellers
certain rights of return and price protection on unsold merchandise held by
those distributors and resellers. Accordingly, reserves for estimated future
returns and credits for price protection are provided for upon revenue
recognition. Such reserves are based on historical rates of returns and
allowances, distributor inventory levels and other factors.
Revenue from OEMs under minimum guaranteed royalty arrangements, which are
not subject to significant future obligations, is recognized when such royalties
are earned and become payable. Royalty revenue that is subject to significant
future obligations is recognized when such obligations are fulfilled. Royalty
revenue that exceeds minimum guarantees is recognized in the period earned.
Payments from customers received in advance of revenue recognition are recorded
as deferred revenue.
The Company provides a limited amount of telephone technical support to
customers. These activities are generally considered insignificant postcontract
customer support obligations and related costs are accrued upon recognition of
the license revenue.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt instruments with a maturity of
three months or less at the date of purchase to be cash equivalents.
SHORT TERM INVESTMENTS
The Company accounts for its marketable securities in accordance with
Statement of Financial Accounting Standards No. 115 (FAS 115), "Accounting for
Certain Investments in Debt and Equity
F-7
<PAGE>
PUMA TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 -- THE COMPANY AND A SUMMARY OF ITS SIGNIFICANT ACCOUNTING
POLICIES: (CONTINUED)
Securities", which requires the Company to classify debt and equity securities
into one of three categories: held to maturity, trading or available for sale.
The Company has classified its investments as available for sale. The cost of
securities sold is based on the specific identification method.
INVENTORIES
Inventories consist principally of infrared hardware components supplied by
third-party vendors and software and related documentation, which are stated at
the lower of cost (first-in, first-out) or market.
SOFTWARE DEVELOPMENT COSTS
Software development costs incurred prior to the establishment of
technological feasibility are included in research and development and are
expensed as incurred. The Company defines establishment of technological
feasibility as the completion of a working model. Software development costs
incurred subsequent to the establishment of technological feasibility through
the period of general market availability of the product are capitalized, if
material. To date, all software development costs have been expensed as
incurred.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation and amortization is
computed using the straight-line method over the estimated useful lives of the
assets, generally three to five years, or in the case of leased assets the life
of the lease, if shorter.
OTHER ASSETS
Other assets are primarily comprised of intangibles and goodwill.
Amortization is computed on the straight-line basis over the expected lives of
the assets ranging from two to three years. Accumulated amortization was $45,000
at July 31, 1996.
INCOME TAXES
Income taxes are computed using the asset and liability method. Under the
asset and liability method, deferred income tax assets and liabilities are
determined based on the differences between the financial reporting and tax
bases of the assets and liabilities and are measured using the currently enacted
tax rates and laws.
CONCENTRATION OF CREDIT RISK AND EXPORT SALES
Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash, cash equivalents,
short-term investments and trade accounts receivable. The Company places its
cash, cash equivalents and short-term investments primarily in money market
accounts and commercial paper. The Company, by policy, limits the amount of
credit exposure for cash and cash equivalents to any one issuer.
The Company performs ongoing credit evaluations of its customers and to date
has not experienced any material losses. During fiscal 1995, NEC, Toshiba and
Canon accounted for approximately 16%, 15% and 14% of revenue, respectively.
Toshiba and NEC accounted for approximately 18% and 13% of fiscal 1996 revenue,
respectively. At July 31, 1996, three customers accounted for approximately 28%,
18% and 11% of accounts receivable.
Revenue from export sales to customers outside the United States, primarily
Asia, were approximately 71% and 67% of fiscal 1995 and fiscal 1996 revenue,
respectively. The Company's sales are generally denominated in US dollars. The
Company does not undertake any foreign currency hedging activities.
F-8
<PAGE>
PUMA TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 -- THE COMPANY AND A SUMMARY OF ITS SIGNIFICANT ACCOUNTING
POLICIES: (CONTINUED)
PRO FORMA NET LOSS PER SHARE (UNAUDITED)
Pro forma net loss per share is computed using the weighted average number
of common shares, preferred shares (on an as converted basis) and common
equivalent shares outstanding during the period (using the treasury stock
method, if dilutive). Pursuant to the requirements of the Securities and
Exchange Commission, common shares, convertible preferred stock (using the as
converted method) and stock options and warrants (using the treasury stock
method and the assumed initial public offering price) issued during the twelve
month period prior to the offering have been included in the computation as if
they were outstanding for all periods presented.
Historical net loss per share data has not been presented since such amounts
are not deemed to be meaningful due to the significant change in the Company's
capital structure which will occur upon the completion of the initial public
offering.
PRO FORMA BALANCE SHEET (UNAUDITED)
If the offering contemplated by this prospectus (the "Offering") is
consummated, all shares of convertible preferred stock outstanding at the
closing date will automatically convert into an aggregate of approximately
4,375,000 shares of Common Stock; the 270,000 warrants issued in connection with
sales of preferred stock will be exercised partially for cash proceeds of
$405,000 and partially on a net basis for an aggregate of 225,000 shares of
Common Stock; the 250,000 warrants issued in connection with the acquisition of
IntelliLink will be fully exercised on a net basis for approximately 95,000
shares of Common Stock; and the 7% convertible subordinated debenture and
related accrued interest issued in connection with the acquisition of
IntelliLink will automatically convert into approximately 342,000 shares of
Common Stock.
The pro forma effect of the above mentioned transactions has been reflected
in the accompanying unaudited pro forma balance sheet as of October 31, 1996.
INTERIM RESULTS (UNAUDITED)
The accompanying balance sheet as of October 31, 1996, the statements of
operations and of cash flows for the three months ended October 31, 1995 and
1996 and the statement of stockholders' equity for the three months ended
October 31, 1996 are unaudited. In the opinion of management, these statements
have been prepared on the same basis as the audited financial statements and
include all adjustments, consisting only of normal recurring adjustments,
necessary for the fair presentation of the results of the interim periods. The
data disclosed in these consolidated financial statements, including notes to
the consolidated financial statements, at such date and for such periods are
unaudited.
RECENT PRONOUNCEMENTS
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123 (FAS 123), "Accounting for Stock-Based
Compensation" which established a fair value based method of accounting for
stock-based compensation plans and requires additional disclosures for those
companies who elect not to adopt the new method of accounting. The Company will
be required to adopt FAS 123 in fiscal 1997. The Company's intention is to
continue to account for employee stock awards in accordance with APB Opinion No.
25 and to adopt the "disclosure only" alternative described in FAS 123.
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121 (FAS 121), "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed of," which
requires the Company to review for impairment of long lived assets, certain
identifiable intangibles, and goodwill related to those assets whenever events
or changes in circumstances indicate that the carrying amount of an asset might
not be recoverable. In certain
F-9
<PAGE>
PUMA TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 -- THE COMPANY AND A SUMMARY OF ITS SIGNIFICANT ACCOUNTING
POLICIES: (CONTINUED)
situations, an impairment loss would be recognized. FAS 121 will become
effective for the Company's year ending July 31, 1997. The Company has studied
the implications of FAS 121 and, based on its initial evaluation, does not
expect its adoption to have a material impact on the Company's financial
condition or results of operations.
NOTE 2 -- ACQUISITION OF INTELLILINK CORP.:
On March 6, 1996, the Company agreed to acquire IntelliLink, a developer of
advanced synchronization software, in a transaction accounted for as a purchase.
The IntelliLink acquisition was completed on April 30, 1996. The consolidated
financial statements of the Company include the results of operations of
IntelliLink since the date of acquisition. Pursuant to the acquisition, (i) all
shares of outstanding common and preferred stock of IntelliLink were exchanged
for 769,000 shares of the Company's Common Stock, (ii) outstanding options to
purchase IntelliLink Common Stock were exchanged for options to acquire 99,000
shares of the Company's Common Stock, (iii) the Company issued a 7% convertible
subordinated debenture for $850,000 in a replacement of a debenture owed by
IntelliLink for the same principal amount, and (iv) the Company issued a warrant
to purchase 250,000 shares of the Company's Common Stock at $5.60 per share in
replacement of a similar warrant outstanding for IntelliLink Common Stock.
Additionally, in conjunction with the IntelliLink acquisition, the Company
issued 250,000 shares of Common Stock to two former officers and principal
stockholders of IntelliLink in exchange for cancellation of debt owed to them by
IntelliLink and notes receivable of $194,000. The shares vest over a two year
period. The notes receivable bear interest at 8% per annum.
The shares of Common Stock issued in connection with the IntelliLink
acquisition were valued based on an independent appraisal obtained by the
Company. The total purchase price of approximately $3,483,000 (including
$1,207,000 for liabilities assumed) was assigned, based on an independent
appraisal, to the fair value of the assets acquired, including $327,000 to
tangible assets acquired, $2,680,000 to in-process research and development,
$120,000 to identified intangible assets and the remaining $356,000 to goodwill.
The in-process research and development was expensed at the acquisition date.
The 7% convertible subordinated debenture is due January 23, 1998. The
outstanding principal and accrued interest thereon will automatically convert
into Common Stock based on a conversion price of approximately $2.77 per share,
subject to antidilution adjustment, on the earlier of: (i) the acquisition of
the Company by another entity or (ii) the effective date of an initial public
offering of the Company's Common Stock in which proceeds to the Company are not
less than $6.00 per share. At July 31, 1996, the debenture and related interest
was convertible into approximately 337,000 shares of Common Stock.
The warrants to purchase Common Stock are exercisable until the earlier of:
(i) January 23, 1998, (ii) the acquisition of the Company by another entity or
(iii) the effective date of an initial public offering of the Company's Common
Stock in which proceeds to the Company are not less than $6.00 per share.
In conjunction with the acquisition, the Company entered into a loan
agreement with a former officer of IntelliLink under which the Company provided
an initial loan of $150,000 in May 1996. Additionally, the Company is required
to make 23 monthly advances of $11,000. Amounts outstanding under the agreement
bear interest at 8% and are secured by 175,000 shares of the Company's Common
Stock. All principal and accrued but unpaid interest is due and payable on the
earlier of: (i) April 30, 2000, (ii) the acquisition of the Company by another
entity, or (iii) the effective date of an initial public offering of the
Company's Common Stock or the end of any associated lockup period, if
applicable. As of July 31, 1996, the Company has made advances of $184,000 under
the agreement.
F-10
<PAGE>
PUMA TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 -- ACQUISITION OF INTELLILINK CORP.: (CONTINUED)
Unaudited pro forma information, which reflects the results of operations
for the years ended July 31, 1995 and 1996 as if the acquisition of IntelliLink
had occurred as of August 1, 1994 and after giving effect to certain
adjustments, including amortization of goodwill and other intangibles, and
excluding the effect of a nonrecurring charge of $2,680,000 of in-process
research and development directly attributable to the acquisition of
IntelliLink, is as follows (in thousands, except per share data):
<TABLE>
<CAPTION>
YEAR ENDED
JULY 31,
--------------------
1995 1996
--------- ---------
(UNAUDITED)
<S> <C> <C>
Pro forma revenue.................................................................. $ 2,431 $ 8,831
Pro forma net (loss)............................................................... (3,107) (610)
Pro forma net (loss) per share..................................................... $ (0.06)
</TABLE>
NOTE 3 -- BALANCE SHEET COMPONENTS:
Cash equivalents and short-term investments include available-for-sale
securities as follows (in thousands):
<TABLE>
<CAPTION>
JULY 31,
--------------------
1995 1996
--------- ---------
OCTOBER 31,
------------
1996
------------
(UNAUDITED)
------------
<S> <C> <C> <C>
Cash equivalents:
Commercial paper..................................................... $ 1,317 $ 568 $ 1,500
Money market funds................................................... 296 208 304
--------- --------- ------------
$ 1,613 $ 776 $ 1,804
--------- --------- ------------
--------- --------- ------------
Short-term investments:
Commercial paper..................................................... $ 500 $ -- $ --
--------- --------- ------------
--------- --------- ------------
</TABLE>
Realized gains or losses on sales of available-for-sale securities were
immaterial for the years ended July 31, 1995 and 1996. There were no unrealized
holding gains or losses on such securities at July 31, 1995 and 1996. The
short-term investments have maturities of less than one year.
Accounts receivable, net consist of the following (in thousands):
<TABLE>
<CAPTION>
JULY 31,
--------------------
1995 1996
--------- ---------
OCTOBER 31,
------------
1996
------------
(UNAUDITED)
------------
<S> <C> <C> <C>
Accounts receivable.................................................... $ 125 $ 2,021 $ 2,747
Less: allowance for doubtful accounts and sales returns................ -- (184) (264)
--------- --------- ------------
$ 125 $ 1,837 $ 2,483
--------- --------- ------------
--------- --------- ------------
</TABLE>
F-11
<PAGE>
PUMA TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3 -- BALANCE SHEET COMPONENTS: (CONTINUED)
Property and equipment consist of the following (in thousands):
<TABLE>
<CAPTION>
JULY 31,
--------------------
1995 1996
--------- ---------
OCTOBER 31,
-------------
1996
-------------
(UNAUDITED)
-------------
<S> <C> <C> <C>
Computer equipment and software.......................................... $ 267 $ 522 $ 610
Furniture and office equipment........................................... 73 245 282
--------- --------- ------
340 767 892
Less: accumulated depreciation and amortization.......................... (89) (318) (378)
--------- --------- ------
$ 251 $ 449 $ 514
--------- --------- ------
--------- --------- ------
</TABLE>
At July 31, 1995, July 31, 1996 and October 31, 1996 the Company had
$56,000, $94,000 and $94,000 (unaudited) of equipment under capital leases,
respectively, and related accumulated amortization of $20,000, $48,000 and
$54,000 (unaudited), respectively.
Accrued liabilities consist of the following (in thousands):
<TABLE>
<CAPTION>
JULY 31,
--------------------
1995 1996
--------- ---------
OCTOBER 31,
-------------
1996
-------------
(UNAUDITED)
-------------
<S> <C> <C> <C>
Accrued compensation..................................................... $ 65 $ 278 $ 266
Other accrued liabilities................................................ 106 367 343
--------- --------- -----
$ 171 $ 645 $ 609
--------- --------- -----
--------- --------- -----
</TABLE>
NOTE 4 -- CONVERTIBLE PREFERRED STOCK:
SERIES A AND B CONVERTIBLE PREFERRED STOCK
CONVERSION
At the option of the stockholder, each share of Series A preferred stock is
convertible into two shares of Common Stock and each share of Series B preferred
stock is convertible into one share of Common Stock, subject to adjustment for
antidilution. The Series A and B preferred stock will automatically convert into
Common Stock in the event of the closing of an underwritten public offering of
the Company's Common Stock at a minimum price of $6.00 per share and an
aggregate offering price of not less than $10,000,000 or upon the affirmative
vote of 51% of each of the Series A and B stockholders.
VOTING
Except as required by law, the Series A and B stockholders have voting
rights equal to Common Stock on an as-converted basis.
DIVIDENDS
Series A and B stockholders are entitled to receive noncumulative dividends
when and as declared by the Board of Directors at a rate of $0.10 and $0.30 per
share, respectively, per annum. The Company may make no distributions to holders
of Common Stock until Series A and B dividends have been paid. No dividends have
been declared by the Board of Directors from August 27, 1993 (inception) through
July 31, 1996.
LIQUIDATION
In the event of any liquidation or dissolution of the Company, the Series A
and B stockholders are entitled to receive $1.00 and $3.00 per share,
respectively, adjusted for antidilution, and any declared but
F-12
<PAGE>
PUMA TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 4 -- CONVERTIBLE PREFERRED STOCK: (CONTINUED)
unpaid dividends prior and in preference to any distributions to the holders of
Common Stock. The remaining assets, if any, shall be distributed ratably among
the holders of the Common Stock and the Series A and B preferred stock, based on
the number of shares held assuming conversion of the preferred stock.
SERIES C CONVERTIBLE PREFERRED STOCK
In July 1996, the Company agreed to issue approximately 286,000 shares of
Series C convertible preferred stock to a group of investors at $5.60 per share.
These shares were subsequently issued on August 14, 1996. Series C stockholders
are entitled to receive annual noncumulative dividends when and as declared by
the Board of Directors at a rate of $0.56 per share and in the event of
liquidation or dissolution of the Company, $5.60 per share plus any declared but
unpaid dividends, and voting rights equal to stockholders of Common Stock on an
as-converted basis. Each share of the Series C preferred stock is convertible
into one share of Common Stock, subject to adjustment for antidilution, at the
stockholders option. The shares automatically convert into Common Stock upon the
closing of an initial public offering on the same terms as the Series A and B
preferred stock.
The Company has disclosed its obligation to issue Series C convertible
preferred stock in its July 31, 1996 balance sheet as a stock subscription of
$1,582,000 with a corresponding contra amount included in "Receivable from
stockholders".
NOTE 5 -- COMMON STOCK:
In October 1993, the Company issued 3,045,000 shares of its Common Stock to
founders which vest over three years. During the year ended July 31, 1995,
unvested shares of 543,000 issued to founders were repurchased by the Company at
the original issue price. At July 31, 1996, unvested shares aggregated 113,000.
At July 31, 1996, the Company had reserved approximately 6,054,000 shares of
its Common Stock for future issuance upon conversion of Common Stock equivalent
securities.
NOTE 6 -- COMMON STOCK WARRANTS:
In conjunction with certain equity offerings during the period from August
27, 1993 (inception) to July 31, 1994 and fiscal 1995, the Company issued
114,000 and 156,000 warrants, respectively, for the purchase of Common Stock.
Each warrant is convertible into one share of Common Stock at $3.00 per share.
The warrants are exercisable immediately and expire no more than five years from
the date of grant. As of July 31, 1996, no warrants have been exercised. Of
these warrants outstanding, 135,000 expire the earlier of the closing of an
initial public offering in which gross proceeds to the Company are not less than
$6.00 per share, or the acquisition of the Company by another entity. All other
warrants outstanding expire the earlier of the closing of an initial public
offering in which gross proceeds to the Company are not less than $10,000,000,
the acquisition of the Company by another entity, or after the fair value of the
Company's Common Stock is equal to or greater than $6.00 per share. In addition,
commencing two years after the issuance date, 50% of the warrants will expire
once the fair value of the Company's Common Stock is equal to or greater than
$4.50 per share but less than $6.00 per share. The fair value of the Company's
Common Stock will be determined by the Board of Directors.
In July 1996, the Company agreed to issue a warrant to purchase 140,000
shares of its Common Stock at $5.50 per share to one of its Series C
stockholders in exchange for rights to certain technology. These warrants were
subsequently issued in August 1996. The aggregate value of the warrant has been
estimated by the Company at $175,000 and will be accounted for as purchased
technology. The warrant is exercisable immediately and expires at the earlier of
August 1999 or the acquisition of the Company by another entity. The purchased
technology will be amortized over its estimated life.
F-13
<PAGE>
PUMA TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7 -- STOCK OPTIONS:
In October 1993, the Board of Directors and stockholders adopted the 1993
Stock Option Plan (the Plan) which provides for granting of incentive stock
options (ISOs) and nonqualified stock options (NSOs) to purchase shares of
Common Stock to employees, consultants and advisors of the Company. To date, the
Company has not granted any significant options to consultants or advisors. ln
accordance with the Plan, the stated exercise price shall be not less than 100%
and 85% of the estimated fair market value of Common Stock on the date of grant
for ISOs and NSOs, respectively, as determined by the Board of Directors. The
Plan provides that the options shall be exercisable over a period not to exceed
ten years. Options generally vest 25% one year after date of grant and 1/48th
each month thereafter for the next 36 months. The Plan provides that the options
may be exercised prior to the options becoming vested. If the optionee's
employment is terminated for any reason, the Company has the right to repurchase
any unvested shares. At July 31, 1996, the options authorized under the Plan
aggregated 2,500,000 (see Note 10).
Activity under the Plan is summarized as follows (in thousands, except per
share amounts):
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
----------------------------
SHARES PRICE PER SHARE
----------- ---------------
<S> <C> <C>
Options granted........................................................................ 216 $0.025-$0.20
Options canceled....................................................................... (8) $0.20
-----
Balance at July 31, 1994............................................................... 208 $0.025-$0.20
Options granted........................................................................ 597 $0.20
Options canceled....................................................................... (30) $0.20
Options exercised...................................................................... (220) $0.025-$0.20
-----
Balance at July 31, 1995............................................................... 555 $0.025-$0.20
Options granted........................................................................ 1,144 $0.20-$6.05
Options canceled....................................................................... (80) $0.20-$2.50
Options exercised...................................................................... (580) $0.025-$1.25
-----
Balance at July 31, 1996............................................................... 1,039 $0.20-$6.05
Options granted (unaudited)............................................................ 181 $7.50
Options canceled (unaudited)........................................................... (31) $0.20-$4.00
Options exercised (unaudited).......................................................... (76) $0.20-$3.25
-----
Balance at October 31, 1996 (unaudited)................................................ 1,113 $0.20-$7.50
-----
-----
</TABLE>
At July 31, 1996, a total of 103,000 options were vested, and 540,000 shares
were subject to repurchase and options to purchase approximately 661,000 shares
were available for future grants (See Note 10.)
In addition to the options outstanding under the Plan, the Company issued
options to purchase approximately 99,000 shares of its Common Stock in exchange
for outstanding options of IntelliLink. These options are exercisable at prices
from $0.41 to $4.01 per share. At July 31, 1996, options to purchase 21,000
shares were vested.
At October 31, 1996, approximately 159,000 options were vested,
approximately 478,000 shares were subject to the Company's right of repurchase
and approximately 1,509,000 shares were available for future grants (see Note
10).
F-14
<PAGE>
PUMA TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7 -- STOCK OPTIONS: (CONTINUED)
Based on an independent appraiser's valuation report, management believes
that the exercise price for certain options granted during fiscal 1996 was below
the estimated fair value of the Company's Common Stock at the dates of grant.
Accordingly, the Company will recognize approximately $115,000 of compensation
expense over the options' four-year vesting periods.
NOTE 8 -- INCOME TAXES:
The income tax provision for the period from August 27, 1993 to July 31,
1994 and the years ended July 31, 1995 and 1996 is summarized as follows (in
thousands):
<TABLE>
<CAPTION>
PERIOD FROM
AUGUST 27,
1993 YEAR ENDED JULY 31,
(INCEPTION)
TO JULY 31, --------------------
1994 1995 1996
------------- --------- ---------
<S> <C> <C> <C>
Current:
Federal................................................................ $ -- $ -- $ --
State.................................................................. -- -- --
Foreign withholding tax................................................ -- 80 509
------------- --------- ---------
$ -- $ 80 $ 509
------------- --------- ---------
------------- --------- ---------
</TABLE>
Deferred tax assets are summarized as follows (in thousands):
<TABLE>
<CAPTION>
JULY 31,
--------------------
1995 1996
--------- ---------
<S> <C> <C>
Net operating loss carryforwards................................................ $ 860 $ 550
Research and development credit carryforwards................................... 220 300
Foreign tax credit carryforwards................................................ 80 589
Reserves and allowances......................................................... 50 161
Research and development........................................................ 123 600
--------- ---------
Total deferred tax assets................................................... 1,333 2,200
Deferred tax asset valuation allowance.......................................... (1,333) (2,200)
--------- ---------
$ -- $ --
--------- ---------
--------- ---------
</TABLE>
The Company has incurred losses from inception through fiscal 1996.
Management believes that, based on the history of such losses and other factors,
the weight of available evidence indicates that it is more likely than not that
the Company will not be able to realize its deferred tax assets and thus a full
valuation reserve has been recorded at July 31, 1995 and 1996.
F-15
<PAGE>
PUMA TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8 -- INCOME TAXES: (CONTINUED)
A reconciliation of the income tax provision to the amount computed by
applying the statutory federal income tax rate to loss before income tax
provision is summarized as follows (in thousands):
<TABLE>
<CAPTION>
PERIOD FROM
AUGUST 27,
1993 YEAR ENDED JULY 31,
(INCEPTION)
TO --------------------
JULY 31, 1994 1995 1996
------------- --------- ---------
<S> <C> <C> <C>
Amounts computed at statutory federal rate........................... $ (324) $ (702) $ (644)
Foreign withholding taxes............................................ -- 80 509
In-process research and development not deductible................... -- -- 911
Utilization of tax loss carryforwards................................ -- -- (322)
Future benefits not currently recognized............................. 324 702 55
------ --------- ---------
$ -- $ 80 $ 509
------ --------- ---------
------ --------- ---------
</TABLE>
At July 31, 1996, the Company had federal net operating loss carryforwards
of $1,600,000 which expire beginning in 2008. The Company also has $150,000 of
federal and state research and development credit carryforwards and $589,000 of
foreign tax credit carryforwards. At July 31, 1996, IntelliLink had
preacquisition federal net operating loss carryforwards of approximately
$400,000. Utilization of approximately $1,400,000 of the Company's net operating
losses and credits is subject to an annual limitation of $360,000 due to
ownership change limitations provided by the Internal Revenue Code of 1986 and
similar state provisions and may be further limited should another ownership
change occur. The annual limitation may result in the expiration of the net
operating losses and credits before utilization. At July 31, 1996, IntelliLink's
pre acquisition net operating loss carryforwards were subject to an annual
limitation of approximately $180,000 per year due to change in ownership of
IntelliLink resulting from its acquisition by the Company.
The Company's effective tax rate for the three months ended October 31, 1996
was approximately 35% and has been based primarily on the Company's estimate of
the amount and mix of its fiscal 1997 income subject to foreign withholding
taxes.
NOTE 9 -- COMMITMENTS:
The Company leases certain computer equipment and office equipment under
long-term lease agreements that are classified as capital leases. The leases
expire over the next four years and include options to purchase the equipment at
the end of the lease terms.
The Company leases its facilities under operating leases that expire at
various dates through December 1998. The leases provide for escalating lease
payments. The Company subleases one of its facilities under a noncancelable
operating lease that expires in 1997. Future minimum lease receipts under this
sublease total approximately $171,000.
F-16
<PAGE>
PUMA TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9 -- COMMITMENTS: (CONTINUED)
Future minimum lease payments, net of sublease income, at July 31, 1996 were
as follows (in thousands):
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
----------- -----------
<S> <C> <C>
Fiscal year ending July 31,
1997..................................................................................... $ 28 $ 269
1998..................................................................................... 11 39
1999..................................................................................... 11 --
2000..................................................................................... 2 --
--- -----
Total minimum lease payments............................................................. 52 $ 308
-----
-----
Less amount representing interest........................................................ (3)
---
Present value of future minimum lease payments........................................... 49
Less current portion of capital lease obligations........................................ (21)
---
Long-term capital lease obligations...................................................... $ 28
---
---
</TABLE>
Total rent expense was approximately $35,000, $122,000 and $293,000 for the
period from inception to July 31, 1994 and for the years ended July 31, 1995 and
1996, respectively. The 1996 rental expense was offset by approximately $72,000
of sublease income.
NOTE 10 -- SUBSEQUENT EVENTS:
REINCORPORATION AND STOCK PLANS
On September 3, 1996, the Company's Board of Directors authorized management
of the Company to file a Registration Statement with the Securities and Exchange
Commission covering the proposed sale of shares of its Common Stock to the
public. In addition, the Company's Board of Directors authorized the
reincorporation of the Company in Delaware, increased the authorized shares of
Common Stock to 40,000,000, increased the number of options authorized and
available under the Company's 1993 Stock Option Plan by 1,000,000 and approved
the adoption of the 1996 Employee Stock Purchase Plan pursuant to which 250,000
shares of the Company's Common Stock have been reserved for future issuance. All
of the above items will be effected prior to the effective date of the Company's
initial public offering. All per share amounts have been adjusted on the
accompanying financial statements to reflect the reincorporation in Delaware.
F-17
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
IntelliLink Corp.
In our opinion, the accompanying statements of operations, of stockholders'
deficit and of cash flows of IntelliLink Corp. present fairly, in all material
respects, the results of its operations and its cash flows for each of the three
years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Boston, Massachusetts
August 7, 1996
F-18
<PAGE>
INTELLILINK CORP.
STATEMENT OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------- --------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Revenue:
License revenue.................................................. $ 300 $ 758 $ 1,262 $ 448 $ 375
Service revenue.................................................. 476 229 269 4 18
--------- --------- --------- --------- ---------
Total revenue.................................................. 776 987 1,531 452 393
--------- --------- --------- --------- ---------
Cost of revenue:
Cost of license revenue.......................................... 45 124 371 137 74
Cost of service revenue.......................................... 102 443 291 111 166
--------- --------- --------- --------- ---------
Total cost of revenue.......................................... 147 567 662 248 240
--------- --------- --------- --------- ---------
Gross profit................................................... 629 420 869 204 153
--------- --------- --------- --------- ---------
Operating expenses:
Research and development......................................... 292 325 497 78 50
Sales and marketing.............................................. 315 440 681 245 161
General and administrative....................................... 186 458 495 121 124
--------- --------- --------- --------- ---------
Total operating expenses....................................... 793 1,223 1,673 444 335
--------- --------- --------- --------- ---------
Operating loss..................................................... (164) (803) (804) (240) (182)
Interest income.................................................... 8 14 23 1 5
Interest expense................................................... (8) (38) (162) (28) (48)
--------- --------- --------- --------- ---------
Net loss........................................................... $ (164) $ (827) $ (943) $ (267) $ (225)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-19
<PAGE>
INTELLILINK CORP.
STATEMENT OF STOCKHOLDERS' DEFICIT
(IN THOUSANDS)
<TABLE>
<CAPTION>
SERIES A CONVERTIBLE
PREFERRED STOCK COMMON STOCK ADDITIONAL
------------------------ ------------------------ PAID-IN ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT
----------- ----------- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1992.................. -- $ -- 200 $ 2 $ -- $ (249)
Issuance of Common Stock...................... -- -- 21 -- -- --
Net loss...................................... -- -- -- -- -- (164)
----- ----- ----------- ----- ----- -------------
Balance at December 31, 1993.................. -- -- 221 2 -- (413)
Issuance of Common Stock upon exercise of
stock options................................ -- -- 1 -- 1 --
Net loss...................................... -- -- -- -- -- (827)
----- ----- ----------- ----- ----- -------------
Balance at December 31, 1994.................. -- -- 222 2 1 (1,240)
Conversion of Common Stock to Series A
convertible preferred stock.................. 2,215 3 (222) (2) (1) --
Issuance of warrants to purchase Series A
convertible preferred stock.................. -- -- -- -- 128 --
Issuance of warrants to stockholder to
purchase Series B convertible preferred
stock........................................ -- -- -- -- 127 --
Dividend on Preferred Stock................... -- -- -- -- -- (110)
Net loss...................................... -- -- -- -- -- (943)
----- ----- ----------- ----- ----- -------------
Balance at December 31, 1995.................. 2,215 3 -- -- 255 (2,293)
Net loss (unaudited).......................... -- -- -- -- -- (225)
----- ----- ----------- ----- ----- -------------
Balance at March 31, 1996 (unaudited)......... 2,215 $ 3 -- $ -- $ 255 $ (2,518)
----- ----- ----------- ----- ----- -------------
----- ----- ----------- ----- ----- -------------
<CAPTION>
TOTAL
---------
<S> <C>
Balance at December 31, 1992.................. $ (247)
Issuance of Common Stock...................... --
Net loss...................................... (164)
---------
Balance at December 31, 1993.................. (411)
Issuance of Common Stock upon exercise of
stock options................................ 1
Net loss...................................... (827)
---------
Balance at December 31, 1994.................. (1,237)
Conversion of Common Stock to Series A
convertible preferred stock.................. --
Issuance of warrants to purchase Series A
convertible preferred stock.................. 128
Issuance of warrants to stockholder to
purchase Series B convertible preferred
stock........................................ 127
Dividend on Preferred Stock................... (110)
Net loss...................................... (943)
---------
Balance at December 31, 1995.................. (2,035)
Net loss (unaudited).......................... (225)
---------
Balance at March 31, 1996 (unaudited)......... $ (2,260)
---------
---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-20
<PAGE>
INTELLILINK CORP.
STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------- --------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Cash flows from operating activities:
Net loss............................................................ $ (164) $ (827) $ (943) $ (267) $ (225)
Adjustments to reconcile net loss to net cash provided by (used
in) operating activities:
Depreciation and amortization................................... 6 17 67 13 15
Issuance of warrants and notes payable for consulting
services....................................................... -- 35 127 127 --
Changes in assets and liabilities:
Accounts receivable........................................... (45) 45 (41) (38) 27
Inventories................................................... -- (54) 14 (8) 19
Interest receivable........................................... (8) (14) 14 14 --
Accounts payable.............................................. 34 211 67 79 91
Accrued officer compensation.................................. 130 241 4 (158) (105)
Accrued liabilities........................................... 53 143 66 (105) 15
Deferred revenue.............................................. (13) 211 (96) (75) 207
--------- --------- --------- --------- ---------
Net cash provided by (used in) operating activities......... (7) 8 (721) (418) 44
--------- --------- --------- --------- ---------
Cash flows from investing activities:
Purchases of property and equipment............................... (11) (15) (27) (10) (2)
Restricted short-term investment.................................. -- -- (100) (100) --
Loans to officer.................................................. (64) (88) -- (3) --
Repayment of notes receivable from officer........................ -- -- 21 -- --
--------- --------- --------- --------- ---------
Net cash used in investing activities....................... (75) (103) (106) (113) (2)
--------- --------- --------- --------- ---------
Cash flows from financing activities:
Proceeds from line of credit and long-term debt................... 124 75 928 588 --
Principal payments of long-term debt.............................. (75) -- (7) -- (3)
Proceeds from issuance of notes payable to stockholders........... 48 20 65 56 --
Repayments of notes payable and capital lease obligations......... (6) (8) (26) (2) (1)
Dividends paid.................................................... -- -- (110) (60) --
Proceeds from issuance of Common Stock............................ -- 1 -- -- --
--------- --------- --------- --------- ---------
Net cash provided by financing activities................... 91 88 850 582 (4)
--------- --------- --------- --------- ---------
Net increase (decrease) in cash..................................... 9 (7) 23 51 38
Cash at the beginning of the year................................... -- 9 2 2 25
--------- --------- --------- --------- ---------
Cash at the end of the year......................................... $ 9 $ 2 $ 25 $ 53 $ 63
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid..................................................... $ 8 $ 38 $ 119 $ 26 $ 24
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING
ACTIVITIES:
Fixed assets acquired under capital leases........................ 13 -- 28 -- --
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-21
<PAGE>
INTELLILINK CORP.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 -- THE COMPANY AND A SUMMARY OF ITS SIGNIFICANT ACCOUNTING POLICIES
THE COMPANY
IntelliLink Corp. ("IntelliLink") was incorporated in New Hampshire on July
23, 1992. IntelliLink develops, markets and supports advanced data
synchronization software. Its principal market is the domestic consumer market.
ACQUISITION OF THE COMPANY
On April 30, 1996, IntelliLink was acquired by Puma Technology, Inc.
("Puma") (Note 10). Pursuant to Securities and Exchange Commission financial
statement requirements, an audited balance sheet of IntelliLink has not been
presented.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
REVENUE RECOGNITION
IntelliLink's license revenue is derived from product licensing fees and
royalties relating to sales of IntelliLink's packaged software products.
IntelliLink's service revenue is derived from customer funding under software
development agreements and from annual maintenance contracts.
Revenue from product licensing fees is recognized upon shipment from
IntelliLink, net of allowances for estimated returns, provided that no
significant vendor obligations remain and collection of the related receivable
is probable. IntelliLink provides a limited amount of free telephone support to
end-users, the costs of which are insignificant. Revenue from annual maintenance
contracts is recognized ratably over the term of the contract.
Revenue from customer-funded software development agreements is recognized
on a percentage of completion basis, measured by the percentage of labor cost
incurred to date to estimated total labor cost for each contract, provided that
no significant acceptance criteria exist. Nonrefundable advances pursuant to
software development agreements can generally be applied to reduce future
royalties due to IntelliLink by the customer upon sale of products incorporating
such developed software. Royalties in excess of payments made to IntelliLink
during development of the software are recognized as revenue when earned based
upon product shipments to end-users.
SOFTWARE DEVELOPMENT COSTS
Software development costs incurred prior to the establishment of
technological feasibility are expensed as incurred. IntelliLink defines
technological feasibility as the completion of a working model. Software
development costs incurred subsequent to the establishment of technological
feasibility through the period of general market availability of the product are
capitalized, if material. To date, all software development costs have been
expensed as incurred.
DEPRECIATION AND AMORTIZATION
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets, generally three to seven years. Equipment held under
capital lease obligations is amortized on a straight-line basis over the shorter
of the life of the related asset or the lease term. Repair and maintenance costs
are expensed as incurred. Depreciation and amortization expense relating to
fixed assets, exclusive of amortization of equipment under capital lease
obligations, was $1,000, $10,000 and
F-22
<PAGE>
INTELLILINK CORP.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 -- THE COMPANY AND A SUMMARY OF ITS SIGNIFICANT ACCOUNTING
POLICIES: (CONTINUED)
$16,000 for the years ended December 31, 1993, 1994 and 1995, respectively.
Amortization expense relating to equipment under capital lease obligations
amounted to $5,000, $7,000 and $8,000 for the years ended December 31, 1993,
1994 and 1995, respectively.
In connection with the issuance of the 10% convertible subordinated
debentures (Note 4), IntelliLink capitalized certain debt issuance costs. The
related amortization expense, amounting to approximately $4,000 during the year
ended December 31, 1995, is being charged to interest expense using the
effective interest method over the term of the related debt.
CONCENTRATION OF CREDIT RISK
Financial instruments which potentially expose IntelliLink to concentrations
of credit risk include accounts receivable. At December 31, 1994, IntelliLink
had accounts receivable of $48,000 due from one customer. At December 31, 1995,
IntelliLink had accounts receivable of $25,000, $23,000 and $31,000,
respectively, due from three customers. IntelliLink does not require collateral
and performs ongoing credit evaluations of its customers and to date has not
experienced any material losses.
INTERIM RESULTS (UNAUDITED)
The accompanying statements of operations and of cash flows for the three
months ended March 31, 1995 and 1996 and the statement of stockholders' deficit
for the three months ended March 31, 1996 are unaudited. In the opinion of
management, these statements have been prepared on the same basis as the audited
financial statements and include all adjustments, consisting only of normal
recurring adjustments, necessary for the fair statement of results of the
interim periods.
RECENT DEVELOPMENTS
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123 (FAS 123), "Accounting for Stock-Based
Compensation" which established a fair value based method of accounting for
stock-based compensation plans and requires additional disclosures for those
companies who elect not to adopt the new method of accounting. IntelliLink will
be required to adopt FAS 123 in fiscal 1996. IntelliLink's intention is to
continue to account for employee stock awards in accordance with APB Opinion No.
25 and to adopt the "disclosure only" alternative described in FAS 123.
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121 (FAS 121), "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed of," which
requires IntelliLink to review for impairment of long-lived assets, certain
identifiable intangibles, and goodwill related to those assets whenever events
or changes in circumstances indicate that the carrying amount of an asset might
not be recoverable. In certain situations, an impairment loss would be
recognized. FAS 121 will become effective for IntelliLink's year ending December
31, 1996. IntelliLink has studied the implications of FAS 121 and, based on its
initial evaluation, does not expect its adoption to have a material impact on
its financial condition or results of operations.
NOTE 2 -- RELATED PARTY TRANSACTIONS:
IntelliLink has an unsecured note receivable totaling $197,000 at December
31, 1995 from an officer and stockholder of IntelliLink which is due on demand.
Interest is due annually at 8% per annum. Related interest income for the years
ended December 31, 1993, 1994 and 1995 was $8,000, $14,000 and $16,000,
respectively.
F-23
<PAGE>
INTELLILINK CORP.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 -- RELATED PARTY TRANSACTIONS: (CONTINUED)
IntelliLink has notes payable totaling $116,000 at December 31, 1995 due to
certain other stockholders and officers of IntelliLink. The notes are unsecured
and are payable on demand. Interest on the notes is payable annually at 8% per
annum. Related interest expense for the years ended December 31, 1993, 1994 and
1995 was $2,000, $5,000 and $7,000, respectively.
NOTE 3 -- LINE OF CREDIT:
In June 1995, IntelliLink entered into an agreement with a bank to establish
a revolving line of credit facility. The facility allows for total borrowings up
to $90,000 and is secured by a certificate of deposit in the amount of $100,000
held at the bank. Borrowings on the line of credit bear interest at prime (8.5%
at December 31, 1995) plus 2%.
NOTE 4 -- LONG-TERM DEBT:
In August 1993, IntelliLink entered into a $100,000 working capital
installment note payable with a significant customer. The note bears interest at
10% per annum and is secured by substantially all assets of IntelliLink. The
note is convertible at the option of the holder into a warrant to purchase
280,000 shares of Common Stock of IntelliLink at an exercise price of $0.01 per
share. The note matured in August 1995 and at December 31, 1995, IntelliLink was
in default of the note. In April 1996, the note was converted into Common Stock
in connection with the acquisition of IntelliLink (Note 10).
In July and August 1994, IntelliLink issued convertible subordinated
debentures totaling $50,000. The notes mature in twenty four months and bear
interest at 8% per annum. The debentures may be converted into Common Stock at
any time at the option of the holder at a conversion rate defined in the notes.
In April 1996, the debentures were converted into Common Stock in connection
with the acquisition of IntelliLink (Note 10).
In January and July 1995, IntelliLink issued convertible subordinated
debentures totaling $600,000 and $250,000, respectively. The debentures mature
in January and July 1998, respectively, and bear interest at 10% per annum. The
debentures are convertible, at the option of the holder, into Series A preferred
stock at the rate of $0.69 per share. In April 1996, in connection with the
acquisition of IntelliLink, the debentures were exchanged for a debenture issued
by Puma in the same principal amount and convertible into Puma Common Stock.
In May 1995, IntelliLink borrowed $50,000 from a bank under an installment
note payable maturing in April 2000. The note bears interest at prime (8.5% at
December 31, 1995) plus 3% and is secured by substantially all assets of
IntelliLink.
Maturities of long-term debt for the next five years are as follows (in
thousands):
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31, AMOUNT
- ---------------------------------------------------------------- -----------
<S> <C>
1996 $ 162
1997 12
1998 862
1999 12
2000 5
</TABLE>
NOTE 5 -- STOCKHOLDERS' DEFICIT:
On January 20, 1995, IntelliLink amended and restated its certificate of
incorporation to (i) increase the authorized number of shares of Common Stock,
$0.01 par value, from 1,500,000 shares to 9,000,000 shares and (ii) authorize
the issuance of up to 6,000,000 shares of convertible preferred stock, $0.01 par
value. The authorized shares of convertible preferred stock include 4,000,000
shares designated as
F-24
<PAGE>
INTELLILINK CORP.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 5 -- STOCKHOLDERS' DEFICIT: (CONTINUED)
Series A convertible preferred stock (the "Series A preferred") and 1,500,000
shares designated as Series B convertible preferred stock (the "Series B
preferred"). The remaining authorized shares of convertible preferred stock have
not been designated.
In addition, on January 20, 1995, each share of outstanding Common Stock was
converted into ten shares of Series A preferred stock. In connection with the
conversion, IntelliLink authorized a ten-for-one stock split for all outstanding
Common Stock options and warrants. All Common Stock option and warrant share and
per share amounts included in the financial statements have been adjusted to
give retroactive effect to the stock split.
CONVERSION
Each share of Series A and Series B preferred stock is convertible into
Common Stock at the option of the holder at a conversion price per share defined
in the amended and restated articles of incorporation. In connection with the
acquisition of IntelliLink, each share of IntelliLink's Series A and Series B
preferred stock outstanding immediately prior to April 30, 1996 was exchanged
for shares of Puma Common Stock (Note 10). At December 31, 1995, IntelliLink had
reserved a total of 2,215,000 shares of Common Stock for the conversion of the
outstanding Series A preferred stock.
DIVIDENDS
The holders of the Series B preferred stock were entitled to receive, out of
any funds legally available, dividends at a rate of 10% of the Series B
conversion price, as defined in the amended and restated articles of
incorporation, per annum, payable in preference and priority to the payment of
any dividends on the Series A preferred stock or Common Stock. Dividends are
payable when and if declared by the Board of Directors and are noncumulative.
Dividends of $110,000 were declared and paid to the holders of the Series A
preferred stock during the year ended December 31, 1995.
WARRANTS
In January 1995, in connection with the issuance of the 10% convertible
subordinated debentures (Note 4), IntelliLink issued warrants for the purchase
of 1,449,000 shares of Series B preferred stock. The warrants were issued with
an aggregate exercise price of $1,440,000 and expire on January 23, 1998. Upon
the acquisition of IntelliLink (Note 10), the warrants were exchanged for
warrants to purchase Puma Common Stock. IntelliLink has accounted for the value
ascribed to the warrants, totaling $128,000, as a discount on the related debt.
Such discount is being amortized as interest expense over the term of the debt.
At December 31, 1995, IntelliLink had reserved 1,449,000 shares of Series B
preferred stock and 1,449,000 shares of Common Stock for issuance upon exercise
of the warrants and conversion of the related preferred stock, respectively.
On February 1, 1995, IntelliLink issued warrants to a stockholder of
IntelliLink for the purchase of 550,000 shares of Series A preferred stock in
exchange for consulting services. The warrants are exercisable at a price of
$0.001 per share and expire on February 28, 2002. The value of $127,000 ascribed
to the warrants was recorded as additional paid-in capital and as a charge to
operations for consulting services. In April 1996, these warrants were exercised
and exchanged for Puma stock in connection with the acquisition of IntelliLink
(Note 10). At December 31, 1995, IntelliLink had reserved 550,000 shares of
Series A preferred stock and 550,000 shares of Common Stock for issuance upon
exercise of the warrants and conversion of the related preferred stock,
respectively.
NOTE 6 -- STOCK OPTIONS:
The 1992 Incentive Stock Option Plan (the "Plan") provides for the grant of
incentive stock options for the purchase of up to an aggregate of 400,000 shares
of IntelliLink's Common Stock by employees, directors, and consultants.
Incentive stock options may be granted at not less than the fair market value of
IntelliLink's Common Stock at the date of the option grant and for a term not to
exceed ten years. For
F-25
<PAGE>
INTELLILINK CORP.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 6 -- STOCK OPTIONS: (CONTINUED)
holders of more than 10% of IntelliLink's total combined voting power of all
classes of stock, incentive stock options may be granted at not less than 110%
of the fair market value of IntelliLink's Common Stock at the date of the option
grant and for a term not to exceed five years. On April 30, 1996, these stock
options were converted to options to purchase Puma Common Stock in connection
with the acquisition of IntelliLink (Note 10).
A summary of the Plan activity is as follows:
<TABLE>
<CAPTION>
NUMBER OF OPTION PRICE
SHARES PER SHARE
----------- --------------
<S> <C> <C>
Outstanding at December 31, 1992..................................................... 59,000 $0.10
Granted.............................................................................. 22,000 $0.88
-----------
Outstanding at December 31, 1993..................................................... 81,000 $ 0.10-$0.88
Granted.............................................................................. 35,000 $0.88
Exercised............................................................................ (1,000 ) $1.00
Canceled............................................................................. (2,000 ) $ 0.10-$0.88
-----------
Outstanding at December 31, 1994..................................................... 113,000 $ 0.10-$0.88
Granted.............................................................................. 75,000 $1.00
-----------
Outstanding at December 31, 1995..................................................... 188,000 $ 0.10-$1.00
-----------
-----------
Exercisable at December 31, 1995..................................................... 84,000
-----------
-----------
</TABLE>
At December 31, 1995, IntelliLink had 211,000 shares of its Common Stock
available for future grant under the Plan and had reserved 399,500 shares of
Common Stock for issuance under the Plan.
NOTE 7 -- INCOME TAXES:
Prior to January 20, 1995, IntelliLink had elected to be taxed as an S
corporation for federal income tax reporting purposes as provided in Section
1362 (a) of the Internal Revenue Code. As such, the corporate income or loss and
tax credits were passed through to the stockholders and reported in their
personal tax returns. In connection with the conversion of Common Stock into
Series A preferred stock in January 1995 (Note 5), IntelliLink's election to be
treated as an S corporation terminated. As a result, the income or loss of
IntelliLink subsequent to January 20, 1995 will be subject to corporate income
tax. At the time of conversion IntelliLink recorded a net deferred tax asset of
$186,000, comprised primarily of certain accrued expenses that have not been
recognized for tax reporting purposes, and a corresponding valuation allowance.
No federal or state taxes were provided during the period from January 20, 1995
to December 31, 1995 as a result of losses incurred.
Deferred tax assets at December 31, 1995 are summarized as follows (in
thousands):
<TABLE>
<S> <C>
Net operating loss carryforwards.................................... $ 93
Nondeductible reserves and accrued expenses......................... 463
Depreciation........................................................ 1
---------
Total deferred tax assets......................................... 557
Deferred tax asset valuation allowance.............................. (557)
---------
$ --
---------
---------
</TABLE>
IntelliLink has incurred losses since its change to a C Corporation.
Management believes that, based on the history of such losses and other factors,
the weight of the available evidence indicates that it is more likely than not
that IntelliLink will not be able to realize its deferred tax assets and thus, a
full valuation reserve has been recorded at December 31, 1995.
F-26
<PAGE>
INTELLILINK CORP.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 7 -- INCOME TAXES: (CONTINUED)
As of December 31, 1995, IntelliLink has net operating loss carryforwards of
approximately $225,000 which may be used to offset future federal and state
taxable income and tax liabilities through 2010. Under the Internal Revenue
Code, certain substantial changes in the Company's ownership may limit the
annual amount of net operating loss carryforwards that can be utilized to offset
future taxable income or tax liability. The acquisition of IntelliLink by Puma
in April 1996 created such a change.
NOTE 8 -- INDUSTRY SEGMENT, SIGNIFICANT CUSTOMERS AND EXPORT SALES:
IntelliLink operates in a single industry segment which is the development,
marketing and sale of software products.
During the year ended December 31, 1993, two customers accounted for 14% and
21% of total revenue, respectively. During the year ended December 31, 1994,
three customers accounted for 10%, 13% and 15% of total revenue, respectively.
One customer accounted for 16% of total revenue for the year ended December 31,
1995.
Export sales for the years ended December 31, 1993, 1994 and 1995 were not
significant.
NOTE 9 -- LEASING ARRANGEMENTS AND COMMITMENTS:
IntelliLink leases certain office equipment under a long-term lease
agreement that is classified as a capital lease and expires in five years.
IntelliLink also has various noncancelable operating leases for office space
that expire in various years.
Future minimum lease payments at December 31, 1995 were as follows (in
thousands):
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
----------- -----------
<S> <C> <C>
Fiscal year ending December 31,
1996.................................................................. $ 8 $ 80
1997.................................................................. 8 93
1998.................................................................. 8 93
1999.................................................................. 8 4
2000.................................................................. 8 --
--- -----
Total minimum lease payments.......................................... 40 $ 270
-----
-----
Less: Amount representing interest.................................... (13)
---
Present value of future minimum lease payments........................ $ 27
---
---
</TABLE>
Total rent expense under the operating leases for the years ended December
31, 1993, 1994 and 1995 was $16,000, $32,000 and $35,000, respectively.
NOTE 10 -- SUBSEQUENT EVENT:
On March 6, 1996, IntelliLink and Puma signed a letter of intent to merge
the two companies. In accordance with the terms of the letter of intent and
definitive agreement, each share of IntelliLink's preferred and Common Stock
issued and outstanding immediately prior to April 30, 1996, the effective date
of the merger, was converted into .2495 shares of Puma Common Stock and
IntelliLink was merged with the effect that it became a wholly-owned subsidiary
of Puma. In connection with the merger, IntelliLink's outstanding working
capital installment note payable totaling $100,000 and the 8% convertible
subordinated debentures (Note 4) were deemed to have been fully converted or
exercised immediately prior to the effective date of the agreement and each
resulting share of IntelliLink stock was converted into .2495 shares of Puma
Common Stock.
F-27
<PAGE>
PUMA TECHNOLOGY, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
The following unaudited pro forma combined statement of operations gives
effect to the acquisition by Puma Technology, Inc. ("Puma" or the "Company") of
IntelliLink Corp. ("IntelliLink") in a transaction accounted for as a purchase.
The unaudited pro forma combined statement of operations is based on the
individual statements of operations of Puma for the year ended July 31, 1996,
appearing elsewhere in this prospectus, and IntelliLink for the period from
August 1, 1995 through April 30, 1996. IntelliLink's operating results for the
three months ended July 31, 1996 are included in Puma's historical consolidated
statement of operations for the year ended July 31, 1996. Adjustments have been
made to such information to give effect to the April 30, 1996 acquisition of
IntelliLink Corp., as if the acquisition had occurred on August 1, 1995.
The following unaudited pro forma combined statement of operations is not
necessarily indicative of the future results of operations of the Company or the
results of operations which would have resulted had the Company and IntelliLink
been combined during the period presented. In addition, the pro forma results
are not intended to be a projection of future results. The unaudited pro forma
combined statement of operations should be read in conjunction with the
consolidated financial statements of Puma and subsidiaries and the financial
statements of IntelliLink, including the notes thereto, appearing elsewhere in
this Prospectus.
F-28
<PAGE>
PUMA TECHNOLOGY, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED JULY 31, 1996
-----------------------------------------------------
PUMA INTELLILINK PRO FORMA PRO FORMA
ACTUAL ACTUAL (1) ADJUSTMENTS (2) COMBINED
--------- ----------- ---------------- -----------
<S> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Revenue..................................................... $ 7,716 $ 1,115 $ -- $ 8,831
Cost of revenue............................................. 673 486 -- 1,159
--------- ----------- ------- -----------
Gross profit................................................ 7,043 629 -- 7,672
--------- ----------- ------- -----------
Operating expenses:
Research and development.................................. 3,107 362 -- 3,469
Selling and marketing..................................... 2,169 488 -- 2,657
General and administrative................................ 1,064 385 134(a) 1,583
In-process research and development....................... 2,680 -- (2,680)(b) --
--------- ----------- ------- -----------
Total operating expenses.................................... 9,020 1,235 (2,546) 7,709
--------- ----------- ------- -----------
Operating loss.............................................. (1,977) (606) 2,546 (37)
Interest income (expense), net.............................. 85 (149) -- (64)
--------- ----------- ------- -----------
Loss before provision for income taxes...................... (1,892) (755) 2,546 (101)
Provision for income taxes.................................. (509) -- -- (509)
--------- ----------- ------- -----------
Net loss.................................................... $ (2,401) $ (755) $ 2,546 $ (610)
--------- ----------- ------- -----------
--------- ----------- ------- -----------
Pro forma net loss per share (1)............................ $ (0.06)
-----------
-----------
Share and share equivalents used in pro forma per share
computation................................................ 9,474
-----------
-----------
</TABLE>
See accompanying notes.
F-29
<PAGE>
PUMA TECHNOLOGY, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
NOTE 1 -- BASIS OF PRESENTATION:
The unaudited pro forma combined statement of operations has been prepared
to reflect the acquisition of IntelliLink by Puma, as if the acquisition had
occurred on August 1, 1995.
Puma completed the acquisition of IntelliLink on April 30, 1996 and
consequently, Puma's results of operations for the year ended July 31, 1996
include IntelliLink's results of operations for the three months ended July 31,
1996. Accordingly, in preparing the pro forma combined statement of operations,
the Company combined its results of operations for the year ended July 31, 1996
with IntelliLink's results of operations for the nine months ended April 30,
1996.
NOTE 2 -- PRO FORMA ADJUSTMENTS:
Based on an independent appraisal, the total purchase price of $3,483,000
(including $1,207,000 for liabilities assumed) was assigned to the fair value of
the net assets acquired, including $327,000 to tangible assets acquired,
$2,680,000 to in-process research and development, $120,000 to identified
intangible assets and the remaining $356,000 to goodwill.
The following adjustments were applied to the historical statement of
operations to arrive at the pro forma combined statement of operations:
(a) Reflects the additional amortization expense of $134,000 related to
intangible assets resulting from the acquisition of IntelliLink over
their estimated useful lives.
(b) Eliminates the nonrecurring write-off of in-process research and
development directly attributable to the acquisition of IntelliLink.
F-30
<PAGE>
[PUMA TECHNOLOGY, INC. LOGO]
Making Your Data Mobile
[Picture of Calendar and picture of woman in office.]
Before Leaving the Office
Puma's software allows users to update their mobile computing
devices with the latest contact, calendar and to-do information.
[Picture of person using notebook computer away from the office
and picture of a conversation at the office.]
<TABLE>
<S> <C>
Away from the Office, users can enter new At the Same Time, in the office,
information or make changes on their colleagues can make additions and changes
mobile computing devices. to shared information, often using
different software applications.
</TABLE>
[Picture of meeting and close-up of hands on the keyboard of a mobile computing
device.]
Back at the Office
Puma's software lets users synchronize the changes at the push of a button.
Puma's "content-aware" data synchronization capabilities automatically detect
data conflicts for easy resolution.
<PAGE>
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR A SOLICITATION OF ANY OFFER TO BUY, THE COMMON STOCK IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
The Company............................................................... 4
Risk Factors.............................................................. 5
Use of Proceeds........................................................... 13
Dividend Policy........................................................... 13
Capitalization............................................................ 14
Dilution.................................................................. 15
Selected Consolidated and Pro Forma Combined Financial Data............... 16
Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. 18
Business.................................................................. 27
Management................................................................ 37
Certain Transactions...................................................... 44
Principal and Selling Stockholders........................................ 46
Description of Capital Stock.............................................. 48
Shares Eligible for Future Sale........................................... 50
Underwriting.............................................................. 52
Legal Matters............................................................. 53
Experts................................................................... 53
Additional Information.................................................... 53
Index to Financial Statements............................................. F-1
</TABLE>
UNTIL , 1996, (25 DAYS FROM THE DATE OF THIS PROSPECTUS) ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
[LOGO]
3,000,000 SHARES
COMMON STOCK
DEUTSCHE MORGAN GRENFELL
ALEX. BROWN & SONS
INCORPORATED
PROSPECTUS
, 1996
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses, other than the underwriting
discounts and commissions, payable by the Registrant in connection with the sale
of the Common Stock being registered. All amounts shown are estimates except for
the registration fee, the NASD filing fee and the Nasdaq National Market fee.
<TABLE>
<CAPTION>
TO BE PAID BY
REGISTRANT
-------------
<S> <C>
Registration fee............................................................... 11,897
NASD filing fee................................................................ 3,950
Nasdaq National Market fee..................................................... 45,429
Blue sky qualification fees and expenses....................................... 8,500
Printing and engraving expenses................................................ 120,000
Legal fees and expenses........................................................ 250,000
Accounting fees and expenses................................................... 290,000
Transfer agent and registrar fees.............................................. 15,000
Miscellaneous.................................................................. 55,224
-------------
Total...................................................................... $ 800,000
-------------
-------------
</TABLE>
ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Section 145 of the Delaware General Corporation Law ("Delaware Law") permits
the indemnification of officers, directors, and other corporate agents under
certain circumstances and subject to certain limitations. The Registrant's
Certificate of Incorporation (Exhibit 3.2) and Bylaws (Exhibit 3.4) provide that
the Registrant shall indemnify its directors, officers, employees, and agents to
the full extent permitted by Delaware Law, including in circumstances in which
indemnification is otherwise discretionary under Delaware law. In addition, the
Registrant has entered into separate indemnification agreements (Exhibit 10.4)
with its directors and officers which would require the Registrant, among other
things, to indemnify them against certain liabilities which may arise by reason
of their status or service (other than liabilities arising from willful
misconduct of a culpable nature). These indemnification provisions may be
sufficiently broad to permit indemnification of the Registrant's officers and
directors for liabilities (including reimbursement of expenses incurred) arising
under the Securities Act of 1933, as amended (the "Securities Act").
At present, there is no pending litigation or proceeding involving a
director, officer, employee or other agent of the Registrant in which
indemnification is being sought nor is the Registrant aware of any threatened
litigation that may result in a claim for indemnification by any director,
officer, employee or other agent of the Registrant.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
(a) Since August 27, 1993, (inception) Registrant has sold and issued the
following unregistered securities:
(1) Between August 28 and October 30, 1993, Registrant issued 3,045,000
shares of Common Stock to its founders for aggregate cash
consideration of $76,125, 542,850 shares of which were repurchased by
the Company at the original issuance price per share, or an aggregate
of $13,571.
(2) Between January 31, 1994 and December 2, 1994 Registrant sold an
aggregate of 739,668 shares of its Series A Preferred Stock to
sophisticated investors for aggregate cash consideration of $739,668.
II-1
<PAGE>
(3) Between July 15, 1994 and December 28, 1994, Registrant sold an
aggregate of 104,187 Units to sophisticated investors. Each Unit was
composed of seven shares of its Series A Preferred Stock and eleven
shares of its Series B Preferred Stock. Registrant also issued
warrants to purchase 270,000 shares of its Common Stock at an
exercise price of $3.00 per share to certain Unit purchasers.
Registrant received aggregate cash consideration of $4,167,480.
(4) On December 2, 1994, in exchange for certain consulting services,
Registrant issued 5,000 shares of its Series B Preferred Stock.
(5) On April 30, 1996, in connection with the acquisition of all of the
outstanding securities of IntelliLink Corp. ("IntelliLink"), the
Registrant issued to former IntelliLink securityholders (i) 768,962
shares of its Common Stock, (ii) a $850,000 debenture, which bears
interest at 7.0% per annum beginning January 1, 1995 as to $600,000
of the principal balance and July 31, 1995 as to the remaining
principal balance, and which is convertible into its Common Stock at
a rate of $2.766531 per share, and (iii) warrants to purchase 250,243
shares of its Common Stock at an exercise price of $5.60 per share.
In addition, the Registrant assumed outstanding options to purchase
98,617 shares of its Common Stock under IntelliLink's 1992 Incentive
Stock Option Plan.
(6) On August 15, 1996, Registrant sold to sophisticated investors an
aggregate of 285,715 shares of its Series C Preferred Stock and
warrants to purchase 140,000 shares of its Common Stock at an
exercise price of $5.50 per share. Registrant received aggregate cash
consideration of $1,600,004.
(7) From March 22, 1994 to October 31, 1996, Registrant issued options
to purchase an aggregate of 2,136,915 shares of Common Stock under
its Stock Option Plan, of this total 876,793 shares have been
exercised, of which 25,980 shares have been repurchased by the
Company.
(b) The issuances of securities described in Item 10(a)(1) through (6) were
deemed to be exempt from registration under the Securities Act in
reliance on Section 4(2) of the Securities Act as transactions by an
issuer not involving any public offering. The issuances of Securities
described in Item 10(a)(7) were deemed to be exempt from registration
under the Securities Act in reliance on Rule 701 promulgated thereunder
as transactions pursuant to a compensatory benefit plan or a written
contract relating to compensation.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------------ ----------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement (draft dated November 8, 1996).
2.1 Agreement and Plan of Merger by and between Puma Technology, Inc., a California
corporation, and Puma Technology, Inc., a Delaware corporation.
3.1** Articles of Incorporation of the Puma Technology, Inc., a California corporation.
3.2 Certificate of Incorporation of Puma Technology, Inc., a Delaware corporation.
3.3** Bylaws of Puma Technology, Inc., a California corporation.
3.4 Bylaws of Puma Technology, Inc., a Delaware corporation.
4.1 Specimen Stock Certificate of the Registrant.
5.1 Opinion of Gray Cary Ware & Freidenrich, A Professional Corporation.
10.1 1993 Stock Option Plan and forms of stock option agreements used thereunder.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------------ ----------------------------------------------------------------------------------
10.2 Puma Technology, Inc. 1996 Employee Stock Purchase Plan and form of notice of
exercise used thereunder.
<C> <S>
10.3** Lease Agreement dated October 18, 1995, between the Registrant and Photonics
Corporation.
10.4** Form of Indemnity Agreement for directors and officers.
10.5+** Software License Agreement dated as of May 30, 1995, between the Registrant and
Toshiba Corporation.
10.6+** Software License Agreement dated as of September 14, 1995, between the Registrant
and NEC Technologies, Inc. and Amendment No. 1 thereto dated October 25, 1995 and
Amendment No. 2 thereto dated January 10, 1996.
10.7+** Software License Agreement dated as of May 23, 1995, between the Registrant and
NEC Corporation and Amendment No. 1 thereto dated February 19, 1996.
10.8+** Software License Agreement dated as of May 20, 1996 between the Registrant and NEC
Corporation.
10.9** IntelliLink Corp. 1992 Incentive Stock Option Plan and forms of stock agreements
used thereunder.
10.10** Agreement and Plan of Merger dated April 30, 1996 among the Registrant,
IntelliLink Corp. and certain securityholders of IntelliLink Corp.
11.1 Statement Regarding Computation of Pro Forma Net Loss Per Share.
21.1** Subsidiaries of the Registrant.
23.1 Consent of Independent Accountants.
23.2 Consent of Independent Accountants.
23.3 Consent of Gray Cary Ware & Freidenrich, A Professional Corporation (included in
Exhibit 5.1)
23.4 Consent of Columbia Financial Advisors, Inc.
24.1** Power of Attorney (included on page II-5 hereof).
27.1** Financial Data Schedule (filed in EDGAR format only).
</TABLE>
- ---------
* To be filed by amendment.
** Previously filed.
+ Confidential treatment has been requested for portions of this exhibit.
(B) FINANCIAL STATEMENT SCHEDULES.
Schedule II - Valuation and Qualifying Accounts
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification by the Registrant for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions referenced in Item 14 of
this Registration Statement or otherwise, the Registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act, 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
II-3
<PAGE>
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered hereunder, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective; and
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of Prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and this Offering of such securities at the time shall be
deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
In accordance with 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 of filing on Amendment No. 2 to Form S-1 and authorized this
Registration Statement to be signed on its behalf by the undersigned, in the
City of Palo Alto, County of Santa Clara, State of California, on the 8th day of
November, 1996.
PUMA TECHNOLOGY, INC.
By: /s/ BRADLEY A. ROWE
-----------------------------------
Bradley A. Rowe
President and Chief Executive
Officer
(PRINCIPAL EXECUTIVE OFFICER)
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated:
<TABLE>
<C> <S> <C>
SIGNATURE TITLE DATE
- ------------------------------------------------------ --------------------------------- ----------------------
/s/ BRADLEY A. ROWE President, Chief Executive
------------------------------------------- Officer and Director November 8, 1996
Bradley A. Rowe (PRINCIPAL EXECUTIVE OFFICER)
/s/ STEPHEN A. NICOL*
------------------------------------------- Senior Vice President, Sales and November 8, 1996
Stephen A. Nicol Director
Senior Vice President, Finance
/s/ M. BRUCE NAKAO* and Administration and Chief
------------------------------------------- Financial Officer (PRINCIPAL November 8, 1996
M. Bruce Nakao FINANCIAL AND ACCOUNTING
OFFICER)
/s/ MICHAEL M. CLAIR*
------------------------------------------- Chairman of the Board November 8, 1996
Michael M. Clair
/s/ ROBERT D. RUTNER*
------------------------------------------- Director November 8, 1996
Robert D. Rutner
------------------------------------------- Director
Tyrone F. Pike
*By:
/s/ BRADLEY A. ROWE
-------------------------------------------
Bradley A. Rowe,
ATTORNEY-IN-FACT
</TABLE>
II-5
<PAGE>
PUMA TECHNOLOGY, INC.
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD/ BALANCE AT CHARGED TO
YEAR ENDED BEGINNING OF COSTS AND END OF
JULY 31, PERIOD/YEAR EXPENSES DEDUCTIONS PERIOD/YEAR
------------- -------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Allowance for Doubtful Accounts and Sales
Returns................................... 1994 $ -- $ -- $ -- $ --
Allowance for Doubtful Accounts and Sales
Returns................................... 1995 $ -- $ -- $ -- $ --
Allowance for Doubtful Accounts and Sales
Returns................................... 1996 $ -- $ 184 $ -- $ 184
</TABLE>
S-1
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------------ -----------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement (draft dated November 8, 1996).
2.1 Agreement and Plan of Merger by and between Puma Technology, Inc., a California
corporation, and Puma Technology, Inc., a Delaware corporation.
3.1** Articles of Incorporation of the Puma Technology, Inc., a California corporation.
3.2 Certificate of Incorporation of Puma Technology, Inc., a Delaware corporation.
3.3** Bylaws of Puma Technology, Inc., a California corporation.
3.4 Bylaws of Puma Technology, Inc., a Delaware corporation.
4.1 Specimen Stock Certificate of the Registrant.
5.1 Opinion of Gray Cary Ware & Freidenrich, A Professional Corporation.
10.1 1993 Stock Option Plan and forms of stock option agreements used thereunder.
10.2 Puma Technology, Inc. 1996 Employee Stock Purchase Plan and form of notice of
exercise used thereunder.
10.3** Lease Agreement dated October 18, 1995, between the Registrant and Photonics
Corporation.
10.4** Form of Indemnity Agreement for directors and officers.
10.5+** Software License Agreement dated as of May 30, 1995, between the Registrant and
Toshiba Corporation.
10.6+** Software License Agreement dated as of September 14, 1995, between the Registrant
and NEC Technologies, Inc. and Amendment No. 1 thereto dated October 25, 1995 and
Amendment No. 2 thereto dated January 10, 1996.
10.7+** Software License Agreement dated as of May 23, 1995, between the Registrant and NEC
Corporation and Amendment No. 1 thereto dated February 19, 1996.
10.8+** Software License Agreement dated as of May 20, 1996 between the Registrant and NEC
Corporation.
10.9** IntelliLink Corp. 1992 Incentive Stock Option Plan and forms of stock agreements
used thereunder.
10.10** Agreement and Plan of Merger dated April 30, 1996 among the Registrant, IntelliLink
Corp. and certain securityholders of IntelliLink Corp.
11.1 Statement Regarding Computation of Pro Forma Net Loss Per Share.
21.1** Subsidiaries of the Registrant.
23.1 Consent of Independent Accountants.
23.2 Consent of Independent Accountants.
23.3 Consent of Gray Cary Ware & Freidenrich, A Professional Corporation (included in
Exhibit 5.1)
23.4 Consent of Columbia Financial Advisors, Inc.
24.1** Power of Attorney (included on page II-5 hereof).
27.1** Financial Data Schedule (filed in EDGAR format only).
</TABLE>
- ---------
* To be filed by amendment.
** Previously filed.
+ Confidential treatment has been requested for portions of this exhibit.
<PAGE>
WSGR DRAFT
11/8/96
3,000,000 Shares
PUMA TECHNOLOGY, INC.
Common Stock
UNDERWRITING AGREEMENT
December __, 1996
Deutsche Morgan Grenfell/C.J. Lawrence Inc.
Alex. Brown & Sons Incorporated
c/o Deutsche Morgan Grenfell/C.J. Lawrence Inc.
31 West 52nd Street, 25th Floor
New York, New York 10019
Morgan Grenfell & Co., Limited
Alex. Brown & Sons Incorporated
c/o Morgan Grenfell & Co., Limited
6-8 Bishopsgate
Podium Floor
London EC2P 2AT
England
Ladies and Gentlemen:
Puma Technology, Inc., a Delaware corporation (the "COMPANY"), proposes to
issue and sell to the several Underwriters (as defined below), and certain
stockholders of the Company (the "SELLING STOCKHOLDERS") named in Schedule I
hereto severally propose to sell to the several Underwriters, an aggregate of
3,000,000 shares (the "FIRM SHARES") of the Company's Common Stock, $0.001 par
value per share (the "COMMON STOCK"), of which 2, 500,000 shares are to be
issued and sold by the Company and 500,000 shares are to be sold by the Selling
Stockholders.
It is understood that, subject to the conditions hereinafter stated,
2,250,000 Firm Shares (the "U.S. FIRM SHARES") will be sold to the several U.S.
Underwriters named in Schedule II hereto (the "U.S. UNDERWRITERS") in connection
with the offering and sale of such U.S. Firm Shares in the United States to
United States Persons (as such term is defined in the Agreement Between U.S. and
International Underwriters of even date herewith, the "INTERSYNDICATE
AGREEMENT"), and 750,000 Firm Shares (the "INTERNATIONAL FIRM SHARES") will be
sold to the several International Underwriters named in Schedule III hereto (the
"INTERNATIONAL UNDERWRITERS") in connection with the offering and sale of such
International Firm Shares outside the United States to persons other than United
States Persons. Deutsche Morgan Grenfell/C. J. Lawrence Inc. and Alex. Brown &
Sons Incorporated shall act as representatives (the "U.S. REPRESENTATIVES") of
the several U.S. Underwriters, and Morgan Grenfell & Co., Limited and Alex.
Brown & Sons Incorporated shall act as representatives (the "INTERNATIONAL
<PAGE>
REPRESENTATIVES") of the several International Underwriters. The U.S.
Underwriters and the International Underwriters are hereinafter collectively
referred to as the "UNDERWRITERS."
In addition, the Selling Stockholders propose to grant to the several U.S.
Underwriters an option to purchase up to an additional 450,000 shares (the
"OPTION SHARES") of Common Stock from them solely for the purpose of covering
over-allotments in connection with the sale of the Firm Shares. The Firm Shares
and the Option Shares are hereinafter collectively referred to as the "SHARES."
1. SALE AND PURCHASE OF THE SHARES. On the basis of the representations,
warranties and agreements contained in, and subject to the terms and conditions
of, this Agreement:
(a) (i) The Company agrees to issue and sell an aggregate of
2,500,000 Firm Shares to the several Underwriters, (ii) each Selling Stockholder
agrees to sell to the several Underwriters the number of Firm Shares set forth
opposite such Selling Stockholder's name under the column "Number of Firm Shares
To Be Sold" in Schedule I hereto, and (iii) each of the Underwriters agrees,
severally and not jointly, to purchase from the Company and the Selling
Stockholders, at U.S.$____ per share (the "INITIAL PRICE"), the respective
number of Firm Shares set forth opposite the name of such Underwriter in
Schedules II and III hereto.
(b) The Selling Stockholders grant to the several U.S. Underwriters
an option to purchase at the Initial Price, severally and not jointly, all or
any part of the Option Shares set forth opposite each Selling Stockholder's name
under the column "Number of Option Shares To Be Sold" in Schedule I hereto. The
number of Option Shares to be purchased by each U.S. Underwriter shall be the
same percentage (adjusted by the U.S. Representatives to eliminate fractions) of
the total number of Option Shares to be purchased by the U.S. Underwriters as
such U.S. Underwriter is purchasing of the U.S. Firm Shares. Such option may be
exercised only to cover over-allotments in the sales of the Firm Shares by the
Underwriters and may be exercised in whole or in part at any time on or before
12:00 noon, New York City time, on the second business day before the Firm
Shares Closing Date (as defined below), and only once thereafter within 30 days
after the date of this Agreement, in each case upon written or telegraphic
notice, or verbal or telephonic notice confirmed by written or telegraphic
notice, by the U.S. Representatives to an attorney-in-fact for the Selling
Stockholders no later than 12:00 noon, New York City time, on the second
business day before the Firm Shares Closing Date or at least three business days
before the Option Shares Closing Date (as defined below), as the case may be,
setting forth the number of Option Shares to be purchased and the time and date
(if other than the Firm Shares Closing Date) of such purchase.
2. DELIVERY AND PAYMENT. Delivery by the Company and the Selling
Stockholders of the Firm Shares to you for the respective accounts of the
Underwriters, and payment of the purchase price for the Firm Shares to be sold
by the Company shall be made by certified or official bank check or checks
payable to the order of the Company, and payment for the Firm Shares to be sold
by the Selling Stockholders shall be made by certified or official bank check or
checks payable to the order of __________, as custodian for the Selling
Stockholders (the "Custodian"), in each case payable in federal funds or other
funds immediately available in New York City shall take place at 10:00 a.m., New
York City time, on the third business day following the date of this Agreement
(or the fourth business day if permitted by Rule 15c6-1(c) promulgated under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")), or at such
time on such other date, not later than 10 business days after the date of this
Agreement, as shall be agreed upon by you and the Company (such time and date of
delivery and payment are called the "FIRM SHARES CLOSING DATE").
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In the event the option with respect to the Option Shares is exercised,
delivery by the certain Selling Stockholders of the Option Shares to you for
the respective accounts of the U.S. Underwriters and payment of the purchase
price by certified or official bank check or checks payable in federal funds or
other funds immediately available in New York City to the Custodian shall take
place at the time and on the date (which may be the same date as, but in no
event shall be earlier than, the Firm Shares Closing Date) specified in the
notice referred to in Section l(b) above (such time and date of delivery and
payment are called the "OPTION SHARES CLOSING DATE"). The Firm Shares Closing
Date and the Option Shares Closing Date are called, individually, a "CLOSING
DATE" and, collectively, the "CLOSING DATES."
Certificates evidencing the Shares shall be registered in such names and
shall be in such denominations as you shall request at least two full business
days before the Firm Shares Closing Date or, in the case of Option Shares, on
the day of notice of exercise of the option as described in Section l(b) above
and shall be made available to you for checking and packaging, at such place as
is designated by you, on the full business day before the Firm Shares Closing
Date (or the Option Shares Closing Date in the case of the Option Shares).
3. REGISTRATION STATEMENT AND PROSPECTUS; PUBLIC OFFERING. The Company
has prepared in conformity with the requirements of the Securities Act of 1933,
as amended (the "SECURITIES ACT"), and the published rules and regulations
thereunder (the "RULES") adopted by the Securities and Exchange Commission (the
"COMMISSION") a registration statement on Form S-1 (No. 333-______), including a
preliminary prospectus, relating to the Shares. The Registration Statement (as
hereinafter defined) contains two prospectuses to be used in connection with the
offering and sale of the Shares: the U.S. prospectus (the "U.S. PROSPECTUS"),
to be used in connection with the offering and sale of Shares in the United
States to United States Persons, and the international prospectus (the
"INTERNATIONAL PROSPECTUS"), to be used in connection with the offering and sale
of Shares outside the United States to persons other than United States Persons.
The International Prospectus is identical to the U.S. Prospectus except for the
outside front and outside back cover pages. The Company has filed with the
Commission the Registration Statement and such amendments thereof as may have
been required to the date of this Agreement. Copies of such Registration
Statement (including all amendments thereof) and of the related preliminary
prospectus have heretofore been delivered by the Company to you. The term
"PRELIMINARY PROSPECTUS" as used hereinafter means any preliminary prospectus
(as described in Rule 430 of the Rules) relating to the Shares included at any
time as a part of the Registration Statement. The Registration Statement as
amended at the time it becomes effective (the "EFFECTIVE DATE"), including all
exhibits and information, if any, deemed to be part of the Registration
Statement pursuant to Rule 424(b), Rule 430A and Rule 434 of the Rules, is
hereinafter referred to as the "REGISTRATION STATEMENT." The term "PROSPECTUS"
means the U.S. Prospectus and the International Prospectus relating to the
Shares in the respective forms first used to confirm sales of the Shares
(whether such prospectus was included in the Registration Statement at the time
of effectiveness or was subsequently filed with the Commission pursuant to
Rule 424(b) of the Rules). If the Company has filed an abbreviated registration
statement to register additional shares of Common Stock pursuant to Rule 462(b)
under the Securities Act (the "RULE 462 REGISTRATION STATEMENT"), then any
reference herein to the term "Registration Statement" shall be deemed to include
such Rule 462 Registration Statement.
The Company and the Selling Stockholders understand that the Underwriters
propose to make a public offering of the Shares, as set forth in and pursuant to
the Prospectus, as soon after the Effective Date and the date of this Agreement
as you deem advisable. The Company and the Selling Stockholders hereby confirm
that the Underwriters and dealers have been authorized to distribute or cause to
be distributed each preliminary prospectus and are authorized to distribute the
Prospectus (as from time to time amended or supplemented if the Company
furnishes amendments or supplements thereto to the Underwriters).
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4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to each of the Underwriters and each of the Selling Stockholders as
follows:
(a) The Registration Statement has been prepared in conformity with
the requirements of the Securities Act and the Rules. Copies of such
Registration Statement have been delivered by the Company to you as the
representatives of the Underwriters. The Registration Statement has become
effective, no stop order suspending the effectiveness of the Registration
Statement is in effect, and no proceedings for such purpose are pending before
or threatened by the Commission. Each preliminary prospectus filed as part of
the registration statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the Securities Act, complied when
so filed in all material respects with the Securities Act and the Rules.
(b) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware. The
Company is duly qualified to transact business and is in good standing as a
foreign corporation in each jurisdiction in which the character or location of
its assets or properties (owned, leased or licensed) or the conduct or nature of
its business makes such qualification necessary, except for such jurisdictions
where the failure to be so qualified or be in good standing would not have a
material adverse effect on the assets or properties, business, results of
operations, prospects or financial condition of the Company. The execution and
delivery of the Agreement and Plan of Merger dated as of _________, 1996 (the
"MERGER AGREEMENT") between Puma Technology, Inc., a California corporation (the
"CALIFORNIA CORPORATION"), and the Company, effecting the reincorporation of the
California Corporation under the laws of the State of Delaware, was duly
authorized by all necessary corporate action on the part of each of the
California Corporation and the Company. Each of the California Corporation and
the Company had all corporate power and authority to execute and deliver the
Merger Agreement, to file the Merger Agreement with the Secretary of State of
California and the Secretary of State of Delaware and to consummate the
reincorporation contemplated by the Merger Agreement, and the Merger Agreement
at the time of execution and filing constituted a valid and binding obligation
of each of the California Corporation and the Company, enforceable in accordance
with its terms. Each subsidiary of the Company (a "SUBSIDIARY," and
collectively the "SUBSIDIARIES") has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its state or other
jurisdiction of incorporation. Each Subsidiary is duly qualified to transact
business and is in good standing as a foreign corporation in each jurisdiction
in which the character or location of its assets or properties (owned, leased or
licensed) or the conduct or nature of its business makes such qualification
necessary, except for such jurisdictions where the failure to be so qualified or
be in good standing would not have a material adverse affect on the assets or
properties, business, results of operations or financial condition of the
Company. The Company does not control, directly or indirectly, any corporation,
partnership, joint venture, association or other business organization other
than the Subsidiaries.
(c) The Company and each of the Subsidiaries have all requisite
corporate power and authority, and all necessary authorizations, approvals,
consents, orders, licenses, certificates and permits of and from, and has made
all declarations and filings with, all governmental or regulatory bodies or any
other person or entity, including any and all authorizations, approvals,
consents, orders, licenses, certificates and permits required under any foreign,
federal, state or local law, to own, lease, license and use its assets and
properties and to conduct its businesses as now being conducted and as proposed
to be conducted as described in the Registration Statement and the Prospectus.
The Company has no reason to believe that any authorizations, approvals,
consents, orders, licenses, certificates, permits or other approvals for which
it has applied or intends to apply will not be granted in due course and without
unusual limitation or delay, or that such licenses will not be sufficient in all
material respects to permit the Company to conduct its business as described in
the Registration Statement and the Prospectus. The Company and each of the
Subsidiaries have fulfilled and performed in all material respects all
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of their obligations with respect to such authorizations, approvals, consents,
orders, licenses, certificates and permits, and neither the Company nor any
Subsidiary is in violation of any term or provision of any such authorizations,
approvals, consents, orders, licenses, certificates or permits, nor has any
event occurred which allows, or after notice or lapse of time would allow,
revocation or termination thereof or which could result in any material
impairment of the rights of the holder thereof. No such authorization,
approval, consent, order, license, certificate or permit contains a materially
burdensome restriction other than as disclosed in the Registration Statement and
the Prospectus. Neither the Company nor any of the Subsidiaries has any reason
to believe that any governmental or regulatory body is considering modifying,
limiting, conditioning, suspending, revoking or not renewing any such
authorizations, approvals, consents, orders, licenses, certificates or permits
of the Company or any of the Subsidiaries or that such governmental or
regulatory bodies are investigating the Company or any of the Subsidiaries or
related parties.
(d) The Company and its Subsidiaries own, or have enforceable rights
to use, all trademarks, trademark applications, trade names, service marks,
copyrights, copyright applications, licenses, know-how and other similar
rights, technology and proprietary knowledge (collectively, "INTANGIBLES")
necessary for the conduct of the business of the Company as described in the
Registration Statement and the Prospectus. Neither the Company nor any of the
Subsidiaries has received any notice of, and they are not aware, of, any
infringement of, or conflict with rights of others with respect to, any
Intangibles which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a material adverse effect upon the
assets or properties, business, results of operations, prospects or financial
condition of the Company. The Intangibles are free and clear of all liens and
encumbrances of every nature and kind. Except as disclosed in the Registration
Statement and the Prospectus, neither the Company nor any of the Subsidiaries
has violated or infringed any patent, trademark, tradename, trade secret or
copyright held by others or any license, authorization or permit held by them,
in any manner which may materially adversely affect the Intangibles or the
business of the Company. Except in connection with transactions entered into in
the ordinary course of business, neither the Company nor any of the Subsidiaries
has granted any licenses or any other rights or has any obligations to grant
licenses or any other rights to any Intangibles. Neither the Company nor any of
the Subsidiaries has made any material claim of violation or infringement by
others of rights to, or in connection with, the Intangibles, and the Company
knows of no basis for making any such claim. There are no interferences or
other contested proceedings, either pending or, to the best knowledge of the
Company, threatened, in the United States Copyright Office, the United States
Patent Trademark Office or any foreign, state or local court or before any other
government agency or tribunal, relating to any pending application with respect
to the Intangibles.
(e) The Company and each of the Subsidiaries have (i) good and valid
title to each of the items of personal property and good, marketable and
insurable fee title to all real property reflected in its financial statements
referred to in subsection (t) of this Section 4 or referred to in the
Registration Statement and the Prospectus as being owned by it and (ii) valid
and enforceable leasehold interests in each of the items of real and personal
property which are referred to in the Registration Statement and the Prospectus
as being leased by it, in each case free and clear of all liens, encumbrances,
claims, security interests, defects or rights of way of any nature except as
described in the Registration Statement and the Prospectus. No financing
statement under the Uniform Commercial Code with respect to any assets of the
Company or the Subsidiaries has been filed in any jurisdiction, and neither the
company nor any of the Subsidiaries has signed any such financing statement or
any security agreement authorizing any secured party thereunder to file any such
financing statement. All real property of the Company and the Subsidiaries
reflected in the financial statements referred in subsection (t) of this
Section 4 or referred to in the Registration Statement and the Prospectus as
being owned by the Company or the Subsidiaries is in good condition and conforms
in all material respects with all applicable building, zoning, land use and
other laws, ordinances, codes, orders and regulations, and the use of such real
property conforms
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in all material respects with such laws, ordinances, codes, orders and
regulations, and all necessary occupancy, certificates and permits for the
lawful use and occupancy thereof and the equipment thereof have been used. All
real and personal property leased by the Company is held under valid, subsisting
and enforceable leases with such exceptions as are not material and do not
interfere with the use made or proposed to be made of such property by the
Company or the Subsidiaries, as applicable. All notices of violations of laws,
ordinances, codes, orders or regulations issued by any governmental authority
having jurisdiction over or affecting any such real property have been complied
with by the Company or the Subsidiaries, as applicable.
(f) Except as described in the Registration Statement and the
Prospectus, there is no pending or, to the best knowledge of the Company,
threatened, lawsuit or claim with respect to the Company or any of the
Subsidiaries which (i) involves a claim by or against the Company or any of the
Subsidiaries, as applicable, of more than $10,000, (ii) seeks injunctive relief
that could have an adverse effect on the Company or (iii) could materially and
adversely affect the performance by the Company or any of the Subsidiaries of
their obligations pursuant to this Agreement or the transactions contemplated
hereby. Neither the Company nor any of the Subsidiaries is in default under
any judgment, order or decree of any court, administrative agency or commission
or other governmental authority or instrumentality, domestic or foreign,
applicable to it or any of its respective properties, assets, operations or
businesses. There is no legal, regulatory, governmental or other proceeding or
investigation before any court or before or by any public body or board pending
or, to the best knowledge of the Company, threatened (and the Company does not
know of any basis therefor) against or involving the assets, properties or
business of the Company or the assets, properties or business of any of the
Subsidiaries, that would materially adversely affect the value or the operation
of any such assets or properties in the hands of the Company or the Subsidiaries
or the business, results of operations, prospects or financial condition of the
Company.
(g) Neither the Company nor any of the Subsidiaries has at any time
engaged in the handling, manufacture, treatment, storage, use or generation of
any Hazardous Materials (as defined below) upon any real property owned or
leased by it. Neither the Company nor any of the Subsidiaries been a party to
any litigation in which it is alleged, nor have any of them at any time received
written notice of any allegation or investigation of the possibility, that any
of them or any of their assets is or was subject to any liability, clean-up or
other obligation arising out of or relating to any discharge, or the storage,
handling or disposal, of any Hazardous Material. There has been no discharge at
any time by the Company or any of the Subsidiaries of any Hazardous Material
that the Company or any of the Subsidiaries has reported or is or was obligated
to report to any governmental agency, the occurrence of which may have a
material adverse effect on the Company. For the purposes of this Agreement,
"HAZARDOUS MATERIAL" means any substance: (i) the presence of which requires
investigation or remediation under any foreign, federal, state or local statute,
regulation, ordinance, order, action, policy or common law, (ii) that is or
becomes defined as a "hazardous waste," "hazardous substance," pollutant or
contaminant under any foreign, federal, state or local statute, regulation, rule
or ordinance or amendments thereto including, without limitation the
Comprehensive Environmental Response Compensation and Liability Act (42 U.S.C.
9601 ET SEQ.) and/or the Resource Conservation and Recovery Act (42 U.S.C.
section 6901 ET SEQ.), (iii) that is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic, or otherwise hazardous and is
or becomes regulated by any governmental authority, agency, department,
commission, board, agency or instrumentality of the United States or of any
state or any political subdivision thereof or (iv) which contains
polychlorinated biphenyls (PCBs), asbestos, urea formaldehyde foam insulation or
radon gas.
(h) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, and except as described
therein, (i) there has not been any material adverse change, or any
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development involving a prospective material adverse change, in the assets or
properties, business, results of operations, prospects or financial condition of
the Company or the Subsidiaries, whether or not arising from transactions in the
ordinary course of business, (ii) neither the Company nor any of the
Subsidiaries has sustained any loss or interference with its assets, businesses
or properties (whether owned or leased) from fire, explosion, earthquake, flood
or other calamity, whether or not covered by insurance, or from any labor
dispute or any court or legislative or other governmental action, order or
decree that would have a material adverse effect on the Company, and (iii) and
since the date of the latest balance sheets included in the Registration
Statement and the Prospectus, except as reflected therein, neither the Company
nor any of the Subsidiaries has (A) issued any securities or incurred any
liability or obligation, direct or contingent, for borrowed money, except such
liabilities or obligations incurred in the ordinary course of business,
(B) entered into any transaction not in the ordinary course of business, or
(C) declared or paid any dividend or made any distribution on any shares of its
stock or redeemed, purchased or otherwise acquired or agreed to redeem, purchase
or otherwise acquire any shares of its stock.
(i) There is no document or contract of a character required to be
described in the Registration Statement or Prospectus or to be filed as an
exhibit to the Registration Statement which is not described or filed as
required. Each agreement filed as an exhibit to the Registration Statement is
in full force and effect and is valid and enforceable by and against the Company
or the Subsidiaries, as applicable, in accordance with its terms, assuming the
due authorization, execution and delivery thereof by each of the other parties
thereto, except for agreements that have expired by their terms or have been
fully performed. Neither the Company, nor, to the best knowledge of the
Company, any other party is in default, nor is any Subsidiary party thereto in
default, in the observance or performance of any term or obligation to be
performed by it under any such agreement or other material obligation,
agreement, covenant, or condition contained in any other indenture, mortgage,
deed of trust, loan agreement, lease or other agreement or instrument, and no
event has occurred which with notice or lapse of time or both would constitute
such a default, in any such case in which a default or event would have a
material adverse effect on the assets or properties, business, results of
operations, prospects or financial condition of the Company. No default exists,
and no event has occurred that with notice or lapse of time or both would
constitute a default in the due performance and observance of any term, covenant
or condition by the Company or any of the Subsidiaries of any other agreement or
instrument to which the Company or any of the Subsidiaries is now a party or by
which it or its properties or business may be bound or affected which default or
event would have a material adverse effect on the assets or properties,
business, results of operations, prospects or financial condition of the
Company.
(j) Neither the Company nor any of the Subsidiaries is in violation
of any term or provision of its charter or bylaws or of any judgment, decree,
order, statute, rule or regulation where the consequences of such violation
would have a material adverse effect on the assets or properties, business,
results of operations, prospects or financial condition of the Company. There
are no judgments, decrees, orders, statutes, rules or regulations required to be
described in the Registration Statement or Prospectus that are not described as
required.
(k) There is no labor strike, dispute or work stoppage or lockout
pending, or, to the best knowledge of the Company, threatened, against or
affecting the Company or the Subsidiaries, and no such labor strike, dispute,
work stoppage or lockout has occurred in the past with respect to any employees
of the Company or the Subsidiaries. No union organization campaign is in
progress with respect to the employees of the Company or the Subsidiaries, and
no question concerning representation exists with respect to such employees. No
unfair labor practice charge or complaint against the Company or the
Subsidiaries is pending or, to the best knowledge of the Company, threatened,
before the National Labor Relations Board or similar foreign authorities, and no
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such charge or complaint against the Company or any of the Subsidiaries has been
filed in the past. There is no pending or, to the best knowledge of the
Company, threatened grievance that, if adversely decided, would have a material
adverse effect on the business, results of operations, prospects or financial
condition of the Company. No charges with respect to or relating to the Company
or the Subsidiaries are pending before the Equal Employment Opportunity
Commission or any state, local or foreign agency responsible for the prevention
of unlawful employment practices, and no such charges have been filed in the
past with respect to the Company or any of the Subsidiaries.
(l) Each of the Company and the Subsidiaries has correctly and timely
filed all necessary federal, state, local and foreign income, property and
franchise tax returns and paid all taxes required to be shown as due thereon and
all assessments received by it to the extent that the same are material and have
become due. Neither the Company nor any of its officers has any knowledge of
any tax deficiency of the Company or any of the Subsidiaries or any tax
proceeding or action pending or threatened against the Company or any of the
Subsidiaries that would materially adversely affect the business, financial
position, stockholders' equity or results of operations, present or prospective,
of the Company. There are no liens for taxes on the assets of the Company or
the Subsidiaries, except for taxes not yet due. There are no audits pending of
the Company's or any of the Subsidiaries' tax returns (federal, state, local or
foreign), and there are no claims which have been or, to the best knowledge of
the Company, may be asserted relating to any such tax returns which, if
determined adversely, would result in the assertion by any governmental agency
of any deficiency material to the Company. There have been no waivers of any
statute of limitations by the Company or any of the Subsidiaries relating to tax
returns (federal, state, local or foreign). The Internal Revenue Service has
not asserted or threatened to assert any assessment, claim or liability for
taxes due or to become due in connection with any review or examination of the
tax returns of the Company or any of the Subsidiaries for any year.
(m) None of the Company, any Subsidiary or any officer or director
purporting to act on behalf of the Company or any Subsidiary has during the past
five years (i) made any contributions to any candidate for political office, or
failed to disclose fully any such contributions, in violation of law, (ii) made
any payment to any foreign, federal, state or local governmental officer or
official, or other person charged with similar public or quasi-public duties,
other than payments required or allowed by applicable law, (iii) made any
payment outside the ordinary course of business to any purchasing or selling
agent or person charged with similar duties of any entity to which the company
or such Subsidiary as applicable, sells (or has in the past sold) or from which
the Company, such Subsidiary or any officer or director purporting to act on
behalf of the Company or any Subsidiary, as applicable, buys (or has in the past
bought) products for the purpose of influencing such agent or person to buy
products from or sell products to the Company or such Subsidiary, as applicable
or (iv) engaged in any transaction, maintained any bank account or used any
corporate funds except for transactions, bank accounts and funds which have been
and are reflected in the normally maintained books and records of the Company or
such Subsidiary, as applicable.
(n) Each of the Company and the Subsidiaries has adequate liability
and other insurance policies insuring it against the risks of loss arising out
of or related to its businesses, as described in the Registration Statement and
Prospectus, issued by insurers of recognized financial responsibility. Neither
the Company nor any Subsidiary has been refused any insurance coverage sought
or applied for, and neither the Company nor any Subsidiary has any reason to
believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would not materially
and adversely affect the condition, financial or otherwise, or the earnings,
business or operations of the Company and the Subsidiaries, taken as a whole,
except as described in or contemplated by the Prospectus.
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(o) The Company and each of the Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is (or was)
taken with respect to any differences.
(p) On the date the Registration Statement became effective, or any
post-effective amendment thereto shall become effective, on the date of the
Prospectus or of any supplement or amendment to the Prospectus is filed with the
Commission, and on each Closing Date, the Registration Statement and the
Prospectus (and any amendment thereof or supplement thereto) complied or will
comply in all material respects with the applicable provisions of the Securities
Act and the Rules and the Exchange Act and the rules and regulations of the
Commission thereunder; on the dates referred to above, neither the Registration
Statement nor the Prospectus, nor any amendment thereof or supplement thereto,
contained or will contain any untrue statement of a material fact or will omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading. When any related preliminary prospectus
was first filed with the Commission (whether filed as part of the Registration
Statement or any amendment thereto or pursuant to Rule 424(a) of the Rules) and
when any amendment thereof or supplement thereto was first filed with the
Commission, such preliminary prospectus as amended or supplemented complied in
all material respects with the applicable provisions of the Securities Act and
the Rules and did not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in
light of the circumstances in which they were made, not misleading.
Notwithstanding the foregoing, the Company makes no representation or warranty
as to the paragraph with respect to stabilization on the inside front cover page
of the Prospectus and the statements contained under the caption "Underwriting"
in the Prospectus. The Company acknowledges that the statements referred to in
the previous sentence constitute the only information furnished in writing by
you on behalf of the several Underwriters specifically for inclusion in the
Registration Statement, any preliminary prospectus or the Prospectus.
(q) The Company has all requisite corporate power and authority to
enter into, deliver and perform this Agreement and to issue and sell the Shares
to be sold by the Company. All necessary corporate action has been duly and
validly taken by the Company to authorize the execution, delivery and
performance of this Agreement and the issuance and sale of the Shares to be sold
by the Company. This Agreement has been duly and validly authorized, executed
and delivered by the Company and constitutes the legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except (A) as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
and (B) to the extent that rights to indemnity or contribution under this
Agreement may be limited by federal and state securities laws or the public
policy underlying such laws.
(r) Neither the execution, delivery and performance of this Agreement
by the Company nor the consummation of any of the transactions contemplated
hereby (including, without limitation, the issuance and sale by the Company of
the Shares to be sold by the Company) will give rise to a right to terminate or
accelerate the due date of any payment due under, or conflict with or result in
the breach of any term or provision of, or constitute a default (or an event
which with notice or lapse of time or both would constitute a default) under, or
require a consent or waiver under, or result in the execution or imposition of
any lien, charge or encumbrance upon any properties or assets of the Company or
any Subsidiary pursuant to the terms of any indenture,
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mortgage, deed of trust, note or other agreement or instrument to which the
Company or any Subsidiary is a party or by which it or any of its properties or
businesses is bound, or any franchise, license, permit, judgment, decree, order,
statute, rule or regulation applicable to the Company or any Subsidiary or
violate any provision of the charter or by-laws of the Company or any
Subsidiary, except for such consents or waivers which have already been obtained
and are in full force and effect.
(s) No authorization, approval, consent, order, license, certificate,
permit or order is required of or from any court or governmental or regulatory
agency or body under any foreign, federal, state or local law for the execution,
delivery and performance of this Agreement or for the consummation of the
transactions contemplated hereby, except such as have been obtained or as may be
required by the securities or Blue Sky laws of the various states in connection
with the offer and sale of the Shares. This Agreement has been presented to any
and all governmental agencies or authorities to the extent required by any
applicable law, rule or regulation and this Agreement and the transactions
contemplated hereby were approved by or on behalf of such governmental agencies
or authorities to the extent required by any such law, rule or regulation and
such approvals have not been revoked, modified or rescinded.
(t) The consolidated financial statements and the pro forma combined
financial statements of the Company, including all notes and schedules thereto,
included in the Registration Statement and Prospectus present fairly the
consolidated financial position, results of operations and cash flows, and
stockholders' equity and the other information purported to be shown therein of
the Company and its Subsidiaries at the respective dates and for the respective
periods to which they apply. Such consolidated financial statements and the pro
forma combined financial statements and the related notes and schedules thereto
have been prepared in conformity with generally accepted accounting principles,
consistently applied throughout the periods involved, and all adjustments
necessary for a fair presentation of the results for such periods have been
made. The other financial and statistical information and data set forth in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto) is, in all material respects, accurately presented and prepared on a
basis consistent with such financial statements and the books and records of the
Company. No other financial statements are required by the Securities Act to be
included in the Registration Statement or the Prospectus.
(u) Price Waterhouse LLP, whose reports are filed with the Commission
as a part of the Registration Statement and Prospectus, are and, during the
periods covered by their reports were, independent public accounts as required
by the Securities Act and the Rules.
(v) The Company has authorized and outstanding capital stock as set
forth in the Registration Statement and the Prospectus. All of the outstanding
shares of Common Stock have been duly and validly authorized and duly and
validly issued and are fully paid and nonassessable, and none of them was issued
in violation of any preemptive or other similar right. The Shares, when issued
and sold pursuant to this Agreement, will be duly and validly issued, fully paid
and nonassessable, and none of them will be issued in violation of any
preemptive or other similar rights. Except as disclosed in the Registration
Statement and the Prospectus, there is no outstanding subscription, option,
warrant or other right calling for the issuance of, and there is no commitment,
plan or arrangement to issue, any share of stock of the Company or any security
convertible into, or exercisable or exchangeable for, such stock. The Common
Stock and the Shares conform in all material respects to the descriptions
thereof contained in the Registration Statement and the Prospectus.
(w) All of the outstanding shares of capital stock of the
Subsidiaries have been duly and validly issued. All of the outstanding shares
of capital stock of the Subsidiaries are owned by the Company, directly or
indirectly, free and clear of any liens, charges or encumbrances, such shares of
capital stock are fully paid and
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nonassessable, and none of them was issued in violation of any preemptive or
other similar right. Except as disclosed in the Registration Statement and the
Prospectus, there is no outstanding subscription, option, warrant or other right
calling for the issuance of, and there is no commitment, plan or arrangement to
issue, any share of capital stock of any Subsidiary or any security convertible
into, or exercisable or exchangeable for, such stock.
(x) Except as described in the Registration Statement and Prospectus,
there are no persons with registration or other similar rights to have any
securities registered pursuant to the Registration Statement or otherwise
registered by the Company or any Subsidiary under the Securities Act. There is
no owner of any securities of the Company who has any rights, not effectively
satisfied or waived, to require registration of any shares of capital stock of
the Company in connection with the filing of the Registration Statement.
(y) All outstanding shares of Common Stock, and all securities
convertible into or exercisable or exchangeable for Common Stock, are subject to
valid and binding agreements (collectively, the "LOCK-UP AGREEMENTS") that
restrict the holders thereof from selling, making any short sale of, granting
any option for the purchase of, or otherwise transferring or disposing of, any
of such shares of Common Stock, or any such securities convertible into or
exercisable or exchangeable for Common Stock, for a period of 180 days after the
date of the Prospectus without the prior written consent of the Company or
Deutsche Morgan Grenfell/C.J. Lawrence Inc.
(z) The Company (i) has notified each holder of a currently
outstanding option issued under the Company's 1993 Stock Option Plan or
IntelliLink Corp.'s 1992 Incentive Stock Option Plan ( the "OPTION PLANS") and
each person who has acquired shares of Common Stock pursuant to the exercise of
any option granted under the Option Plans that pursuant to the terms of the
Option Plans, none of such options or shares may be sold or otherwise
transferred or disposed of for a period of 180 days after the date of the
Prospectus and (ii) has imposed a stop-transfer instruction with the Company's
transfer agent in order to enforce the foregoing lock-up provision imposed
pursuant to the Option Plans.
(aa) No transaction has occurred between or among the Company or any
Subsidiary and any of their officers or directors or any affiliate or affiliates
of any such officer or director that is required to be described in and is not
described in the Registration Statement and the Prospectus.
(bb) The Common Stock has been authorized for listing on the Nasdaq
National Market upon official notice of issuance.
(cc) The Company is not and, after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as described in
the Prospectus, will not be an "investment company" or an entity "controlled" by
an "investment company," as such terms are defined in the Investment Company Act
of 1940, as amended.
(dd) Neither the Company nor any of its directors, officers or
controlling persons has taken or will take, directly or indirectly, any action
resulting in a violation of Rule 10b-6 under the Exchange Act, or designed to
cause or result under the Securities Act or otherwise in, or which has
constituted or which reasonably might be expected to constitute, the
stabilization or manipulation of the price of any securities of the Company or
facilitation of the sale or resale of the Shares.
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(ee) Neither the Company nor any of the Subsidiaries has incurred any
liability for finder's or broker's fees or agent's commissions in connection
with the execution and delivery of this Agreement, the offer and sale of the
Shares or the transactions contemplated hereby.
(ff) The Company is not required to register as a "broker" or "dealer"
in accordance with the provisions of the Exchange Act or the rules and
regulations promulgated thereunder.
(gg) The Company has complied with all of the requirements and filed
the required forms, if any, as specified in Florida Statutes Section 517.075.
5. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS. Each of
the Selling Stockholders represents and warrants to each of the Underwriters
that:
(a) This Agreement has been duly authorized, executed and delivered
by or on behalf of such Selling Stockholder and constitutes a valid and binding
obligation upon such Selling Stockholder.
(b) The execution and delivery by such Selling Stockholder of, and
the performance by such Selling Stockholder of its obligations under, this
Agreement, the Custody Agreement signed by such Selling Stockholder and
_______________, as Custodian, relating to the deposit of the Shares to be sold
by such Selling Stockholder (the "CUSTODY AGREEMENT"), and the Power of
Attorney, appointing certain individuals as such Selling Stockholder's
attorneys-in-fact to the extent set forth therein, relating to the transactions
contemplated hereby and by the Registration Statement (the "POWER OF ATTORNEY"),
will not contravene any provision of applicable law, or the certificate or
articles of incorporation or bylaws of such Selling Stockholder (if such Selling
Stockholder is a corporation), the partnership agreement of such Selling
Stockholder (if such Selling Stockholder is a partnership) or any agreement or
other instrument binding upon such Selling Stockholder or any judgment, order or
decree of any governmental body, agency or court having jurisdiction over such
Selling Stockholder, and no consent, approval, authorization or order of or
qualification with any governmental body or agency is required for the
performance by such Selling Stockholder of its obligations under this Agreement
or the Custody Agreement or Power of Attorney of such Selling Stockholder,
except such as may be required by the securities or Blue Sky laws of the various
states in connection with the offer and sale of the Shares.
(c) All consents, approvals, authorizations and orders necessary for
the execution and delivery by such Selling Stockholder of this Agreement, the
Custody Agreement and the Power of Attorney of such Selling Stockholder or the
sale and delivery of the Shares to be sold by such Selling Stockholder, have
been obtained.
(d) Such Selling Stockholder has, and on each Closing Date will have,
good and marketable title to the Shares to be sold by such Selling Stockholder,
free and clear of all liens, encumbrances, equities or claims, and the legal
right and power, and all authorization and approval required by law, to enter
into this Agreement, the Custody Agreement and the Power of Attorney and to
sell, transfer and deliver the Shares to be sold by such Selling Stockholder.
(e) The Shares to be sold by such Selling Stockholder pursuant to
this Agreement have been duly authorized and are validly issued, fully paid and
nonassessable.
(f) The Custody Agreement and the Power of Attorney have been duly
authorized, executed and delivered by such Selling Stockholder and are valid and
binding agreements of such Selling Stockholder.
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(g) Delivery of the certificates for the Shares to be sold by such
Selling Stockholder pursuant to this Agreement will pass valid and marketable
title to such Shares free and clear of any security interests, claims, liens,
equities and other encumbrances.
(h) All information furnished by or on behalf of such Selling
Stockholder for use in the Registration Statement is, and on each Closing Date
will be, true, correct, and complete, and does not, and on such Closing Date
will not, contain any untrue statement of a material fact or omit to state any
material fact necessary to make such information not misleading, and all
information furnished in writing by or on behalf of such Selling Stockholder for
use in the Prospectus is, and on such Closing Date will be, true, correct, and
complete, and does not, and on such Closing Date will not, contain any untrue
statement of a material fact or omit to state any material fact necessary to
make such information not misleading in the light of the circumstances under
which they were made.
(i) Such Selling Stockholder has reviewed the Registration Statement
and related Prospectus and (i) each part of the Registration Statement, when
such part became effective, did not contain and each such part, as amended or
supplemented, if applicable, will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, and (ii) the Prospectus does not
contain and, as amended or supplemented, if applicable, will not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, except that the representations and
warranties set forth in this subsection (i) do not apply to statements or
omissions in the Registration Statement or the Prospectus based upon information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use therein.
(j) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal Responsibility
Act of 1982 with respect to the transactions herein contemplated, such Selling
Stockholder has delivered to the Custodian a properly completed and executed
U.S. Treasury Department Form W-9 (or other applicable form or statement
specified by Treasury Department regulations in lieu thereof).
(k) Certificates in negotiable form representing all of the Shares to
be sold by such Selling Stockholder hereunder have been placed in custody
pursuant to the Custody Agreement, duly executed and delivered by such Selling
Stockholder to the Custodian, and such Selling Stockholder has duly executed and
delivered a Power of Attorney.
(l) The Shares represented by the certificates held in custody for
such Selling Stockholder under the Custody Agreement are, as a result of the
obligations of such Selling Stockholder under this Agreement, subject to the
interests of the Underwriters hereunder to the extent of such obligations. The
arrangements made by such Selling Stockholder for such custody, and the
appointment by such Selling Stockholder of the attorneys-in-fact by the Power of
Attorney, are to that extent irrevocable. The obligations of the Selling
Stockholders hereunder shall not be terminated by operation of law, whether by
the death or incapacity of any individual Selling Stockholder or, in the case of
an estate or trust, by the death or incapacity of any executor or trustee or the
termination of such estate or trust, or in the case of a partnership or
corporation, by the dissolution of such partnership or corporation, or by the
occurrence of any other event. If any individual Selling Stockholder or any
such executor or trustee should die or become incapacitated, or if any such
estate or trust should be terminated, or if any such partnership or corporation
should be dissolved, or if any other such event should occur, before the
delivery of the Shares hereunder, certificates representing the Shares shall
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be delivered by or on behalf of the Selling Stockholders in accordance with the
terms and conditions of this Agreement and of the Custody Agreements. Actions
taken by the attorneys-in-fact of the Selling Stockholders pursuant to the
Powers of Attorney shall be as valid as if such death, incapacity, termination,
dissolution or other event had not occurred, regardless of whether or not the
Custodian, the attorneys-in-fact of the Selling Stockholders, or any of them,
shall have received notice of such death, incapacity, termination, dissolution
or other event.
(m) During the period beginning from the date hereof and continuing
to and including the date 180 days after the date of the Prospectus, each
Selling Stockholder agrees not to offer, sell, contract to sell or otherwise
dispose of, except as provided hereunder, any securities of the Company that are
substantially similar to the Shares, including but not limited to any securities
that are convertible into or exchangeable for, or that represent the right to
receive, Common Stock or any such substantially similar securities (other than
pursuant to the Option Plans, or upon the conversion or exchange of convertible
or exchangeable securities outstanding as of the date of this Agreement),
without the prior written consent of Deutsche Morgan Grenfell/C.J. Lawrence
Inc.; provided, however, that this Agreement shall not supersede any separate
agreement executed by the Selling Stockholder and delivered to you with respect
to the securities of the Company.
6. CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS. The obligations of the
Underwriters under this Agreement are several and not joint. The respective
obligations of the Underwriters to purchase the Shares are subject to each of
the following terms and conditions:
(a) The Prospectus shall have been timely filed with the Commission
in accordance with subsection (a) of Section 7 of this Agreement.
(b) No order preventing or superseding the use of any preliminary
prospectus or the Prospectus shall have been or shall be in effect and no order
suspending the effectiveness of the Registration Statement shall be in effect
and no proceedings for such purpose shall be pending before or threatened by the
Commission, and any requests for additional information on the part of the
Commission (to be included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to your satisfaction.
(c) The representations and warranties of the Company contained in
this Agreement and in the certificates delivered pursuant to subsections (e) and
(f) of this Section 6 shall be true and correct when made and on and as of each
Closing Date as if made on such date, and the Company shall have performed all
covenants and agreements and satisfied all the conditions contained in this
Agreement required to be performed or satisfied by it at or before such Closing
Date.
(d) There shall not have occurred any material adverse change, or any
development involving a prospective material adverse change, in the condition,
financial or otherwise, or in the earnings, business or operations of the
Company from that set forth in the Prospectus.
(e) You shall have received on each Closing Date a certificate
addressed to you and dated such Closing Date, of the chief executive or
president and the chief financial officer or chief accounting officer of the
Company to the effect that the signers of such certificate have carefully
examined the Registration Statement, the Prospectus and this Agreement and that
the representations and warranties of the Company in this Agreement are true and
correct on and as of such Closing Date with the same effect as if made on such
Closing Date and that the Company has performed all covenants and agreements and
satisfied all conditions contained in this Agreement that are required to be
performed or satisfied by it at or prior to such Closing Date.
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(f) You shall have received on each Closing Date a certificate, dated
such Closing Date and signed by the Selling Stockholders (or by their
attorney-in-fact on their behalf), to the effect that such Selling Stockholder
has carefully examined the Registration Statement, the Prospectus and this
Agreement and that the representations and warranties of the Selling
Stockholders in this Agreement are true and correct on and as of such Closing
Date with the same effect as if made on such Closing Date and that each Selling
Stockholder has performed all covenants and agreements and satisfied all
conditions contained in this Agreement that are required to be performed or
satisfied by it at or prior to such Closing Date.
(g) The Underwriters shall have received, on each of the date hereof
and on each Closing Date, a letter dated the date hereof or such Closing Date,
as the case may be, in form and substance satisfactory to the Underwriters, from
Price Waterhouse LLP, independent public accountants, containing statements and
information of the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain financial
information contained in the Registration Statement and the Prospectus;
provided, however, that the letter delivered on the Closing Date shall use a
"cut-off date" not earlier than the date hereof.
(h) You shall have received on each Closing Date from Gray Cary Ware
& Freidenrich, counsel for the Company, an opinion, addressed to you and dated
such Closing Date, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware. The Company is duly qualified to transact business and
is in good standing as a foreign corporation in each jurisdiction in
which the character or location of its assets or properties (owned,
leased or licensed) or the conduct or nature of its business makes
such qualification necessary, except for such jurisdictions where the
failure to be so qualified or be in good standing would not have a
material adverse effect on the assets or properties, business, results
of operations, prospects or financial condition of the Company.
(ii) Each of Company's Subsidiaries has been duly incorporated
and is validly existing as a corporation in good standing under the
laws of its state or other jurisdiction of incorporation, except for
such jurisdictions where the failure to be so qualified or be in good
standing would not have a material adverse affect on the assets or
properties, business, results of operations or financial condition of
the Company. All of the outstanding shares of capital stock of the
Subsidiaries are owned by the Company, directly or indirectly, free
and clear of any liens, charges or encumbrances, and such shares of
capital stock have been duly authorized and validly issued and are
fully paid and nonassessable, and none of them was issued in violation
of any preemptive or other similar right. To the best of such
counsel's knowledge, there is no outstanding subscription, option,
warrant or other right calling for the issuance of, and there is no
commitment, plan or arrangement to issue, any share of capital stock
of any Subsidiary or any security convertible into, exercisable for,
or exchangeable for such stock. To the best of such counsel's
knowledge, the Company does not control, directly or indirectly, any
corporation, partnership, joint venture, association or other business
organization other than the Subsidiaries.
(iii) The Company and each of the Subsidiaries have all
requisite corporate power and authority and all necessary
authorizations, approvals, consents orders, licenses, certificates and
permits of and from, and has made all declarations and filings with,
all governmental or regulatory bodies or any other person or entity,
including any and all authorizations, approvals, consents, orders,
licenses, certificates and permits required under applicable law to
own, lease and license its assets and properties and to conduct its
business as now being conducted and as proposed to be conducted as
described in the
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Registration Statement and the Prospectus. The Company has all
requisite corporate power and authority and all necessary
authorizations, approvals, consents, orders, licenses, certificates
and permits to enter into, deliver and perform this Agreement and to
issue and sell the Shares to be sold by the Company, other than the
those authorizations, approvals, consents, orders, licenses,
certificates and permits required under state and foreign securities
laws.
(iv) The Company has authorized and issued capital stock as set
forth in the Registration Statement and the Prospectus. The
certificates evidencing the Shares are in due and proper legal form
and have been duly authorized for issuance by the Company. All of
the outstanding shares of Common Stock of the Company have been duly
and validly authorized and have been duly and validly issued and are
fully paid and nonassessable, and none of them was issued in violation
of any preemptive or other similar right. The Shares, when issued and
sold pursuant to this Agreement, will be duly and validly issued,
fully paid and nonassessable, and none of them will have been issued
in violation of any preemptive or other similar right. To the best of
such counsel's knowledge, except as disclosed in the Registration
Statement and the Prospectus, there is no outstanding subscription,
option, warrant or other right calling for the issuance of, and there
is no commitment, plan or arrangement to issue, any share of stock of
the Company or any security convertible into, or exercisable or
exchangeable for, such stock. The Common Stock and the Shares conform
in all material respects to the descriptions thereof contained in the
Registration Statement and the Prospectus.
(v) All necessary corporate action has been duly and validly
taken by the Company to authorize the execution, delivery and
performance of this Agreement and the issuance and sale of the Shares
to be sold by the Company. This Agreement has been duly and validly
authorized, executed and delivered by the Company and constitutes the
legal, valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except (A) as such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent transfer or conveyance, reorganization, receivership,
moratorium or other similar laws then or thereafter in effect relating
to or affecting the rights of creditors generally and by general
equitable principles regardless of whether enforcement is considered
in proceedings at law or in equity (including the possible
unavailability of specific performance or injunctive relief and the
general discretion of the court or tribunal considering the matter)
and (B) to the extent that rights to indemnity or contribution under
this Agreement may be unenforceable under certain circumstances under
law or court decisions with respect to a liability where
indemnification or contribution is contrary to law or public policy.
(vi) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the
transactions contemplated hereby (including, without limitation, the
issuance and sale by the Company of the Shares to be sold by the
Company) will give rise to a right to terminate or accelerate the due
date of any payment due under, or conflict with or result in the
breach of any term or provision of, or constitute a default (or any
event which with notice or lapse of time or both would constitute a
default) under, or require a consent or waiver under, or result in the
execution or imposition of any lien, charge or encumbrance upon any
properties or assets of the Company or any Subsidiary, pursuant to the
express terms of any indenture, mortgage, deed of trust, note or other
agreement or instrument filed as an exhibit to the Registration
Statement or otherwise known to such counsel and to which the Company
or any Subsidiary is a party or by which it or any of its properties
or businesses is bound, or any franchise, license, permit, judgment,
decree, order, statute, rule or regulation binding upon or applicable
to the Company or any Subsidiary or violate any provision of the
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charter or by-laws of the Company or any Subsidiary, except for such
consents or waivers which have already been obtained and are in full
force and effect.
(vii) Except as described in the Registration Statement and the
Prospectus, to the best of such counsel's knowledge, no default
exists, and no event has occurred that with notice or lapse of time or
both would constitute a default in the due performance and observance
of any term, covenant or condition by the Company of any indenture,
mortgage, deed of trust, note or any other agreement filed as an
exhibit to the Registration Statement, where, the consequences of such
default would have a material and adverse effect on the assets,
properties or business of the Company.
(viii) To the best of such counsel's knowledge, neither the
Company nor any of the Subsidiaries is in violation of any term or
provision of any franchise, license, permit, judgment, decree, order,
statute, rule or regulation, where the consequences of such violation
would have a material adverse effect on the assets, properties or
businesses of the Company.
(ix) No authorization, approval, consent, order, license,
certificate, permit or order is required of or from any court or
governmental or regulatory agency or body under foreign federal, state
or local law for the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby
or any other transaction described in the Registration Statement to be
entered into prior to or contemporaneously with the sale of the
Shares, except (A) as disclosed in the Registration Statement,
(B) such as have been obtained and (C) such as are required under
state and foreign securities laws.
(x) To the best of such counsel's knowledge, there is no
litigation or governmental, regulatory or other proceeding or
investigation before any court or before or by any public body or
board pending or threatened against the Company or any of the
Subsidiaries which is required to be disclosed in the Prospectus and
which is not so disclosed.
(xi) The statements (A) in the Prospectus under the captions
"Risk Factors -- Proprietary Rights, Risk of Infringement and Source
Code Release," "Risk Factors -- Control by Exisiting Stockholders;
Certain Charter, Bylaws and Other Provision," "Risk Factors -- Shares
Eligible for Future Sale," "Dividend Policy," "Management," "Certain
Transactions," "Description of Capital Stock" and "Shares Eligible for
Future Sale" and (B) in the Registration Statement in Items 14 and 15,
in each case insofar as such statements constitute a summary of
documents referred to therein or matters of law, are fair summaries in
all material respects and accurately present the information called
for by the Securities Act and the Rules with respect to such documents
and matters. To the best of such counsel's knowledge, all contracts
and other documents required to be filed as exhibits to, or described
in, the Registration Statement have been so filed with the Commission
or are fairly described in the Registration Statement, as the case may
be.
(xii) The Registration Statement, all preliminary prospectuses
and the Prospectus and each amendment or supplement thereto (except
for the financial statements and schedules and other financial and
statistical data derived therefrom, as to which such counsel expresses
no opinion) comply as to form in all material respects with the
requirements of the Securities Act and the Rules.
(xiii) The Registration Statement has become effective under the
Securities Act, and, to the best of such counsel's knowledge, no stop
order suspending the effectiveness of the Registration
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Statement has been issued and no proceedings for that purpose have
been instituted or are threatened, pending or contemplated.
(xiv) The Company is not and, after giving effect to the
offering and sale of the Shares and the applications of the proceeds
thereof as described in the Prospectus, will not be an "investment
company" or an entity "controlled" by an "investment company," as such
terms are defined in the Investment Company Act of 1940, as amended.
(xv) The Shares have been duly approved for listing on the
Nasdaq National Market.
(xvi) To the best of such counsel's knowledge, there are no
persons with registration or other similar rights to have any
securities registered pursuant to the Registration Statement or
otherwise registered by the Company under the Securities Act, except
as disclosed in the Registration Statement and the Prospectus.
In addition, such opinion shall include a statement to the effect that such
counsel has acted as counsel for the Company in connection with the preparation
of the Registration Statement and Prospectus and, based upon the foregoing, no
facts have come to the attention of such counsel which lead such counsel to
believe that, under the Securities Act and the Rules, (i) the Registration
Statement at the time it became effective contained any untrue of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (ii) the Prospectus,
as amended or supplemented, contains any untrue statement of material fact or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (in each case except with respect to the financial statements and
notes and schedules thereto and other financial and statistical data derived
therefrom, as to which such counsel need make no statement).
To the extent deemed advisable by such counsel, they may rely as to matters
of fact on certificates of officers of the Company and public officials and on
the opinions of other counsel satisfactory to you as to matters which are
governed by laws other than the laws of the States of California and Delaware
and the federal laws of the United States; provided, however, that such counsel
shall state that in their opinion that they believe the Underwriters and they
are justified in relying on such other opinions. Copies of such certificates
and other opinions shall be furnished upon request to you and counsel for the
Underwriters.
(i) You shall have received on each Closing Date from Gray Cary Ware
& Freidenrich, counsel for the Selling Stockholders, an opinion, addressed to
you and dated such Closing Date, to the effect that:
(i) this Agreement has been duly authorized, executed and
delivered by or on behalf of each of the Selling Stockholders;
(ii) the execution and delivery by each Selling Stockholder of,
and the performance by such Selling Stockholder of its obligations under,
this Agreement, the Custody Agreement and the Power of Attorney of such
Selling Stockholder will not contravene any provision of applicable law, or
the certificate or articles of incorporation or bylaws of such Selling
Stockholder (if such Selling Stockholder is a corporation), or the
partnership agreement of such Selling Stockholder (if such Selling
Stockholder is a partnership) or, to the best of such counsel's knowledge,
any agreement or other instrument binding upon such Selling Stockholder or,
to the best of such counsel's knowledge, any judgment, order or decree of
any governmental body, agency or court having jurisdiction over such
Selling Stockholder, and no consent,
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approval, authorization or order of or qualification with any governmental
body or agency is required for the performance by such Selling Stockholder
of its obligations under this Agreement, the Custody Agreement or the Power
of Attorney of such Selling Stockholder, except such as may be required by
the securities or Blue Sky laws of the various states in connection with
offer and sale of the Shares;
(iii) each of the Selling Stockholders has the legal right and
power, and all authorization and approval required by law or contract, to
enter into this Agreement, the Custody Agreement and the Power of Attorney
of such Selling Stockholder and to sell, transfer and deliver the Shares to
be sold by such Selling Stockholder; and each of the Selling Stockholders
has good and marketable title to the Shares to be sold by such Selling
Stockholder, and such sale, transfer and delivery is not subject to any
right of first refusal or other contractual restriction and each of the
certificates evidencing such Shares is in proper legal form;
(iv) each of the Custody Agreement and the Power of Attorney of
each Selling Stockholder has been duly authorized, executed and delivered
by such Selling Stockholder and is a valid and binding agreement of such
Selling Stockholder; and
(v) delivery of the certificates for the Shares to be sold by
each Selling Stockholder pursuant to this Agreement will pass valid and
marketable title to such Shares free and clear of any security interests,
claims, liens, equities and other encumbrances.
(j) All proceedings taken in connection with the sale of the Firm
Shares and the Option Shares as herein contemplated shall be reasonably
satisfactory in form and substance to you and counsel for the Underwriters, and
the Underwriters shall have received from Wilson Sonsini Goodrich & Rosati a
favorable opinion, addressed to you and dated such Closing Date, with respect to
the Shares, the Registration Statement and the Prospectus, and such other
related matters, as you may reasonably request, and the Company shall have
furnished to Wilson Sonsini Goodrich & Rosati such documents as they may
reasonably request for the purpose of enabling them to pass upon such matters.
(k) The Company shall have furnished or caused to be furnished to you
such further certificates and documents as you shall have reasonably requested.
(l) The "lock-up" agreements between you and certain stockholders,
officers and directors of the Company relating to sales of shares of Common
Stock of the Company or any securities convertible into or exercisable or
exchangeable for such Common Stock, delivered to you on or before the date
hereof, shall be in full force and effect on the Closing Date.
(m) The Company shall have complied with the provisions of subsection
(b) of Section 7 with respect to the furnishing of Prospectuses on the business
day following the date of this Agreement.
(n) The Shares shall have been approved for listing, upon official
notice of issuance, on the Nasdaq National Market.
7. COVENANTS OF THE COMPANY. The Company covenants and agrees with each
Underwriter as follows:
(a) The Company shall prepare the Prospectus in a form approved by
you and file such Prospectus pursuant to Rule 424(b) the Securities Act not
later than the Commission's close of business on the second
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business day following the execution and delivery of this Agreement, or, if
applicable, such earlier time as may be required by Rule 430A(a)(3) under the
Securities Act, and shall promptly advise you (i) when any amendment to the
Registration Statement shall have become effective, (ii) of any request by the
Commission for any amendment to the Registration Statement or the Prospectus or
for any additional information, (iii) of the prevention or suspension of the use
of any preliminary prospectus or the Prospectus or of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or the institution or threatening of any proceeding for that purpose
and (iv) of the receipt by the Company of any notification with respect to the
suspension of the qualification of the Shares for sale in any jurisdiction or
the initiation or threatening of any proceeding for such purpose. The Company
shall not file or prepare any amendment of the Registration Statement or
supplement to the Prospectus unless the Company has furnished to you a copy for
your review within a reasonable amount of time prior to filing or use any such
proposed amendment or supplement to which you reasonably object. The Company
shall use its best efforts to prevent the issuance of any such stop order and,
if issued, to obtain as soon as possible the withdrawal thereof.
(b) Prior to 10:00 a.m., New York City time, on the business day
following the date of this Agreement and from time to time, to furnish the
Underwriters with copies of the Prospectus at such locations and in such
quantities as you may reasonably request. If, at any time when a prospectus
relating to the Shares is required to be delivered under the Securities Act and
the Rules, any event occurs as a result of which the Prospectus as then amended
or supplemented would include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, or if it shall
be necessary to amend or supplement the Prospectus to comply with the Securities
Act or the Rules, the Company shall promptly, subject to the second sentence of
subsection (a) of this Section 7, prepare and file with the Commission and
furnish (at the Company's expense) to the Underwriters and to any dealers in the
Shares an amendment or supplement which shall correct such statement or omission
or an amendment which shall effect such compliance.
(c) The Company shall make generally available to its security
holders and to you as soon as practicable, but not later than 45 days after the
end of the 12-month period beginning at the end of the fiscal quarter of the
Company during which the Effective Date occurs (or 90 days if such 12-month
period coincides with the Company's fiscal year), an earnings statement of the
Company, covering such 12-month period, which shall satisfy the provisions of
Section 11(a) of the Securities Act. The Company may satisfy this requirement
by complying with Rule 158 of the Rules.
(d) The Company shall furnish to you and counsel for the
Underwriters, without charge, three signed copies of the Registration Statement
(including all exhibits thereto and amendments thereof) and to each other
Underwriter a copy of the Registration Statement (without exhibits thereto) and
all amendments thereof and, so long as delivery of a prospectus by an
Underwriter or dealer may be required by the Securities Act or the Rules, as
many copies of any preliminary prospectus and the Prospectus and any amendments
thereof and supplements thereto as you may reasonably request.
(e) The Company shall cooperate with you and counsel for the
Underwriters in endeavoring to qualify the Shares for offer and sale under the
laws of such jurisdictions as you may designate and shall maintain such
qualifications in effect so long as required for the distribution of the Shares;
PROVIDED, HOWEVER, that the Company shall not be required in connection
therewith, as a condition thereof, to qualify as a foreign corporation or to
execute a general consent to service of process in any jurisdiction or to
subject itself to taxation as doing business in any jurisdiction. In each
jurisdiction in which the Shares have been so qualified, the Company will
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file such statements and reports as may be required by the laws of such
jurisdiction to continue such qualification in effect for a period of not less
than one year from the Effective Date.
(f) For a period of five years after the date of this Agreement, the
Company shall supply to you, and to each other Underwriter who may so request in
writing, copies of such financial statements and other periodic and special
reports as the Company may from time to time distribute generally to the holders
of any class of its capital stock and to furnish to you a copy of each annual or
other report it shall be required to file with the Commission (including the
Report on Form SR required by Rule 463 of the Rules).
(g) Without the prior written consent of Deutsche Morgan
Grenfell/C.J. Lawrence Inc., for a period of 180 days after the date of the
Prospectus, the Company shall not issue, sell or register with the Commission
(other than on Form S-8 or on any successor form), or otherwise dispose of,
directly or indirectly, any equity securities of the Company (or any securities
convertible into or exercisable or exchangeable for equity securities of the
Company), except for the issuance of the Shares pursuant to the Registration
Statement and the issuance of shares pursuant to the Company's Option Plans. In
the event that during this period, (i) any shares are issued pursuant to the
Company's Option Plans or (ii) any registration is effected on Form S-8 or on
any successor form, the Company shall obtain the written agreement of each
grantee or purchaser or holder of such registered securities that, for a period
of 180 days after the date of the Prospectus, such person will not, without the
prior written consent of Deutsche Morgan Grenfell/C.J. Lawrence Inc., offer for
sale, sell, distribute, grant any option for the sale of, or otherwise dispose
of, directly or indirectly, or exercise any registration rights with respect to,
any shares of Common Stock (or any securities convertible into, exercisable for,
or exchangeable for any shares of Common Stock) owned by such person.
(h) The Company agrees: (i) to enforce the terms of each Lock-up
Agreement, (ii) issue stop-transfer instructions to the transfer agent for the
Common Stock with respect to any transaction or contemplated transaction that
would constitute a breach of or default under the applicable Lock-up Agreement
and (iii) upon written request of Deutsche Morgan Grenfell/C.J. Lawrence Inc.,
to release from the Lock-up Agreements those shares of Common Stock held by
those holders set forth in such request. In addition, except with the prior
written consent of Deutsche Morgan Grenfell/C.J. Lawrence Inc., the Company
agrees (i) not to amend or terminate, or waive any right under, any Lock-up
Agreement, or take any other action that would directly or indirectly have the
same effect as an amendment or termination, or waiver of any right under, any
Lock-up Agreement, that would permit any holder of shares of Common Stock, or
securities convertible into or exercisable or exchangeable for Common Stock, to
sell, make any short sale of, grant any option for the purchase of, or otherwise
transfer or dispose of, any of such shares of Common Stock or other securities
prior to the expiration of 180 days after the date of the Prospectus, and
(ii) not to consent to any sale, short sale, grant of an option for the purchase
of, or other disposition or transfer of shares of Common Stock, or securities
convertible into or exercisable or exchangeable for Common Stock, subject to a
Lock-up Agreement.
(i) The Company will place a restrictive legend on any shares of
Common Stock acquired pursuant to the exercise, after the date hereof and prior
to the expiration of the 180-day period after the date of the Prospectus, of any
option granted under the Option Plans, which legend shall restrict the transfer
of such shares prior to the expiration of such 180-day period. In addition, the
Company agrees that, without the prior written consent of Deutsche Morgan
Grenfell/C.J. Lawrence Inc, it will not release any stockholder or option holder
from the market standoff provision imposed by the Company pursuant to the terms
of the Option Plans earlier than 180 days after the date of the Prospectus.
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(j) On or before completion of this offering, the Company shall make
all filings required under applicable securities laws and by The Nasdaq Stock
Market (including any required registration under the Exchange Act).
(k) To use its best efforts to maintain the listing of the Common
Stock on the Nasdaq National Market.
(l) Prior to a Closing Date, the Company will not issue, directly or
indirectly, without the prior written consent of Deutsche Morgan Grenfell/C.J.
Lawrence Inc., which shall not be unreasonably withheld, any press release or
other communication or hold any press conference with respect to the Company or
its activities or this offering, other than press releases issued in the
ordinary course of the Company's business with respect to the Company's
operations
(m) The Company will comply with all of the provisions of any
undertakings contained in the Prospectus or the Registration Statement.
(n) The Company will apply the net proceeds from the sale of the
Shares substantially in accordance with the description set forth in the
Prospectus.
(o) Except as stated in this Agreement and in the Prospectus, the
Company will not take directly or indirectly (except for any action taken by the
Underwriters) any action designed to or that might reasonably be expected to
cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Shares.
(p) The Company will not make any payments or distributions to its
shareholders for the purpose of funding, directly or indirectly, any tax
liabilities of its shareholders.
8. EXPENSES. The Company and each of the Selling Stockholders covenant
and agree to pay, or reimburse if paid by you, whether or not the transactions
contemplated hereby are consummated or this Agreement is terminated, all costs
and expenses incident to the public offering of the Shares and the performance
of the obligations of the Company and the Selling Stockholders under this
Agreement, including: (i) the fees, disbursements and expenses of the Company's
counsel, the Company's accountants and counsel for the Selling Stockholders in
connection with the registration and delivery of the Shares under the Securities
Act and all other expenses in connection with the preparation, printing, filing
and distribution of the Registration Statement including all exhibits thereto,
each preliminary prospectus, the Prospectus, all amendments and supplements to
the Registration Statement and the Prospectus, and the printing, filing and
distribution of this Agreement; (ii) the costs and expenses relating to the
preparation, transfer and delivery of the Shares to the Underwriters, including
the cost of printing certificates representing the Shares; (iii) the costs and
expenses relating to the registration or qualification of the Shares for offer
and sale under the securities or Blue Sky laws of the various jurisdictions
referred to in subsection (e) of Section 7, including the reasonable fees and
disbursements of counsel for the Underwriters in connection with such
registration and qualification, and the preparation, printing, distribution and
shipment of preliminary and supplementary Blue Sky memoranda; (iv) the cost of
furnishing (including costs of shipping and mailing) to you and to the
Underwriters copies of each preliminary prospectus, the Prospectus and all
amendments or supplements to the Prospectus, and of the several documents
required by this Section to be so furnished, as may be reasonably requested for
use in connection with the offering and sale of the Shares by the Underwriters
or by dealers to whom Shares may be sold; (v) all fees and expenses of the
National Association of Securities Dealers, Inc. in connection with its review
of the terms of the public offering,
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including the fees and disbursements of counsel for Underwriters in connection
with such review; (vi) the furnishing (including costs of shipping and mailing)
to you and to the Underwriters of copies of all reports and information required
by subsection (f) of Section 7; (vii) all fees and expenses in connection with
the preparation and filing of the registration statement on Form 8-A relating to
the Common Stock and all costs and expenses relating to the listing of the
Shares for quotation on the Nasdaq National Market; (viii) the cost and charges
of any transfer agent or registrar; (ix) all transfer taxes, if any, with
respect to the sale and delivery of the Shares by the Company to the
Underwriters; and (x) costs and expenses incident to the performance of its
obligations hereunder that are not otherwise specifically provided for in this
Section. Subject to the provisions of Section 11, the Underwriters agree to
pay, whether or not the transactions contemplated hereby are consummated or this
Agreement is terminated, all costs and expenses incident to the performance of
the obligations of the Underwriters under this Agreement not payable by the
Company pursuant to the preceding sentence, including, without limitation, the
fees and disbursements of counsel for the Underwriters. The provisions of this
Section shall not supersede or otherwise affect any agreement that the Company
and the Selling Stockholders may otherwise have for the allocation of such
expenses among themselves.
: INDEMNIFICATION. (a) The Company agrees to indemnify and hold
harmless each Underwriter, each of their respective officers, directors,
partners, employees, agents and counsel, and each person, if any, who controls
any Underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act from and against any and all losses, claims,
damages and liabilities, joint or several (including any legal and other
expenses incurred in connection with, and any amount paid in settlement of,
defending or investigating any action, suit or proceeding or any claim
asserted), to which they, or any of them, may become subject under the
Securities Act, the Exchange Act or other foreign, federal or state law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained in
any preliminary prospectus, the Registration Statement or the Prospectus, or any
amendment thereof or supplement thereto, or arise out of or are based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading;
PROVIDED, HOWEVER, that such indemnity shall not inure to the benefit of any
Underwriter (or any officers, directors, partners, employees, agents, counsel or
any person controlling such Underwriter) on account of any losses, claims,
damages or liabilities arising from the sale of the Shares to any person by such
Underwriter if such untrue statement or omission or alleged untrue statement or
omission was made in such preliminary prospectus, the Registration Statement or
the Prospectus, or such amendment or supplement, in reliance upon and in
conformity with the information furnished in writing to the Company by you on
behalf of any Underwriter specifically for use therein as described in
subsection (p) of Section 4. This indemnity agreement will be in addition to
any liability which the Company may otherwise have.
(b) Each of the Selling Stockholders agrees, severally and not
jointly, to indemnify and hold harmless each Underwriter, each of their
respective officers, directors, partners, employees, agents and counsel, and
each person, if any, who controls any Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act from and
against any and all losses, claims, damages and liabilities, joint or several
(including any legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claim
asserted), to which they, or any of them, may become subject under the
Securities Act, the Exchange Act or other foreign, federal or state law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained in
any preliminary prospectus, the Registration Statement or the Prospectus, or any
amendment thereof or supplement thereto, or arise out of or are based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to
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the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in any preliminary prospectus, the Registration
Statement or the Prospectus or any such amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by such
Selling Stockholder expressly for use therein.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, each Selling Stockholder, each person, if any,
who controls the Company within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, each director of the Company, and each
officer of the Company who signs the Registration Statement, from and against
any and all losses, claims, damages and liabilities, joint or several (including
any legal and other expenses incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim asserted), to which
they, or any of them, may become subject under the Securities Act, the Exchange
Act or other foreign, federal or state law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any preliminary prospectus, the
Registration Statement or the Prospectus, or any amendment thereof or supplement
thereto, or arise out of or are based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, but only insofar as such losses, claims,
damages or liabilities arise out of or are based upon any untrue statement or
omission or alleged untrue statement or omission which was made in any
preliminary prospectus, the Registration Statement or the Prospectus, or any
amendment thereof or supplement thereto, in reliance upon and in conformity with
information furnished in writing to the Company by you on behalf of such
Underwriter specifically for use therein.
(d) Any party that proposes to assert the right to be indemnified
under this Section will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim is to
be made against an indemnifying party or parties under this Section, notify each
such indemnifying party in writing of the commencement of such action, suit or
proceeding, enclosing a copy of all papers served, but the omission so to notify
such indemnifying party of any such action, suit or proceeding shall not relieve
it from any liability that it may have to any indemnified party for contribution
or otherwise than under this Section. In case any such action, suit or
proceeding shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate in, and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof and the approval by the indemnified party of such
counsel, the indemnifying party shall not be liable to such indemnified party
for any legal or other expenses, except as provided below and except for the
reasonable costs of investigation subsequently incurred by such indemnified
party in connection with the defense thereof. The indemnified party shall have
the right to employ its counsel in any such action, but the fees and expenses of
such counsel shall be at the expense of such indemnified party unless (i) the
employment of counsel by such indemnified party has been authorized in writing
by the indemnifying parties, (ii) the indemnified party shall have reasonably
concluded that there may be a conflict of interest between the indemnifying
parties and the indemnified party in the conduct of the defense of such action
(in which case the indemnifying parties shall not have the. right to direct the
defense of such action on behalf of the indemnified party) or (iii) the
indemnifying parties shall not have employed counsel to assume the defense of
such action within a reasonable time after notice of the commencement thereof,
in each of which cases the fees and expenses of counsel shall be at the expense
of the indemnifying parties. An indemnifying party shall not be liable for any
settlement of any action, suit, proceeding or claim effected without its written
consent, PROVIDED, HOWEVER, that such consent has not been unreasonably
withheld.
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10. CONTRIBUTION. In order to provide for just and equitable contribution
in circumstances in which the indemnification provided for in subsections (a),
(b) and (c) of Section 9 is due in accordance with its terms but for any reason
is held to be unavailable to an indemnified party, the Company, the Selling
Stockholders and the Underwriters shall contribute to the aggregate losses,
claims, damages and liabilities (including any investigation, legal and other
expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted, but after
deducting any contribution received by the Company from persons other than the
Underwriters, such as persons who control the Company within the meaning of the
Securities Act, officers of the Company who signed the Registration Statement
and directors of the Company, who may also be liable for contribution) to which
the Company, the Selling Stockholders and one or more of the Underwriters may be
subject in such proportion as is appropriate to reflect the relative benefits
received by the indemnifying party or parites on the one hand and the
indemnified party or parties on the other from the offering of the Shares or, if
such allocation is not permitted by applicable law or indemnification is not
available as a result of the indemnifying party not having received notice as
provided in Section 9 hereof, in such proportion as is appropriate to reflect
not only the relative benefits referred to above but also the relative fault of
the indemnifiying party or parties on the one hand and the indemnified party or
parties on the other in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Company, the Selling Stockholders and the Underwriters shall be deemed to be
in the same proportion as (x) the total proceeds from the offering (net of
underwriting discounts but before deducting expenses) received by each of the
Company and the Selling Stockholders, as set forth in the table on the cover
page of the Prospectus, bear to (y) the underwriting discounts received by the
Underwriters, as set forth in the table on the cover page of the Prospectus.
The relative fault of the Company, the Selling Stockholders or the Underwriters
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact related to information supplied by
the Company, the Selling Stockholders or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company, the Selling Stockholders and
the Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 10 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to above. Notwithstanding the provisions of this Section 10, (i) in no
case shall any Underwriter (except as may be provided in the [Syndicate
Agreement]) be liable or responsible for any amount in excess of the
underwriting discount applicable to the Shares purchased by such Underwriter
hereunder, and (ii) the Company and the Selling Stockholders shall be liable and
responsible for any amount in excess of such underwriting discount; PROVIDED,
HOWEVER that no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 10, each person, if any, who
controls an Underwriter within the meaning of Section 15 of the Securities Act
or Section 20(a) of the Exchange Act, each Selling Stockholder, each officer of
the Company who shall have signed the Registration Statement, and each director
of the Company shall have the same rights to contribution as the Company,
subject in case to clauses (i) and (ii) in the immediately preceding sentence of
this Section 10. Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding against such
party in respect of which a claim for contribution may be made against another
party or parties, under this Section, notify such party or parties from whom
contribution may be sought, but the omission so to notify such party or parties
from whom contribution may be sought shall not relieve the party or parties from
any obligation it or they may have hereunder or otherwise than under this
Section, except to the extent of any material prejudice resulting from such
failure to notify. No party shall be liable for contribution with respect to
any action, suit proceeding or claim settled without its written consent;
PROVIDED, HOWEVER that such written consent has not been unreasonably
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withheld. The Underwriters' obligations to contribute pursuant to this
Section 10 are several in proportion to their respective underwriting
commitments and not joint.
11. TERMINATION. This Agreement may be terminated by you with respect to
the Shares to be purchased on a Closing Date by notifying the Company at any
time in the event of one of the following:
(a) in your sole and absolute discretion and judgment at or before
any Closing Date: (i) if the Company shall have sustained a material loss by
fire, flood, accident, hurricane, earthquake, theft, sabotage or other calamity
or malicious act which, whether or not said loss shall have been insured, will
make it inadvisable to proceed with the offering; (ii) if there has been, since
the respective dates as of which information is given in the Registration
Statement and the Prospectus, any material adverse change in the business,
operations, earnings, prospects, properties or financial condition of the
Company, whether or not arising in the ordinary court of business; (iii) if on
or prior to such date, any domestic or international event or act or occurrence
has materially disrupted, or in your opinion will in the future materially
disrupt, the securities markets; (iv) if there has occurred any new outbreak or
material escalation of hostilities or other calamity or crisis the effect of
which on the financial markets of the United States is such as to make it, in
your judgment, inadvisable to proceed with the offering; (v) if there shall be
such a material adverse change in general financial, political or economic
conditions or the effect of international conditions on the financial markets in
the United States is such as to make it, in your judgment, inadvisable or
impracticable to market the Shares; (vi) if trading in the Shares has been
suspended by the Commission or trading generally on the New York Stock Exchange,
Inc., the American Stock Exchange, Inc. or the Nasdaq National Market has been
suspended or limited, or minimum or maximum ranges for prices for securities
shall have been fixed, or maximum ranges for prices for securities have been
required, by said exchanges or by order of the Commission, the National
Association of Securities Dealers, Inc., or any other governmental or regulatory
authority; or (vii) if a banking moratorium has been declared by any state or
federal authority, or
(b) at or before any Closing Date, that any of the conditions
specified in Section 6 shall not have been fulfilled when and as required by
this Agreement.
If this Agreement is terminated pursuant to any of its provisions, the
Company and the Selling Stockholders shall not be under any liability to any
Underwriter, and no Underwriter shall be under any liability to the Company or
the Selling Stockholders, except that (i) if this Agreement is terminated by you
or the Underwriters because of any failure, refusal or inability on the part of
the Company or the Selling Stockholders to comply with the terms or to fulfill
any of the conditions of Agreement, the Company and the Selling Stockholders
will reimburse the Underwriters for all out-of-pocket expenses (including the
reasonable fees and disbursements of counsel for the Underwriters) incurred by
them in connection with the proposed purchase and sale of the Shares or in
contemplation of performing their obligations hereunder and (ii) no Underwriter
who shall have failed or refused to purchase the Shares agreed to be purchased
by it under this Agreement, without some reason sufficient hereunder to justify
cancellation or termination of its obligations under this Agreement, shall be
relieved of liability to the Company and the Selling Stockholders or to the
other Underwriters for damages occasioned by its failure or refusal.
12. SUBSTITUTION OF UNDERWRITERS. If one or more of the Underwriters
shall fail (other than for a reason sufficient to justify the cancellation or
termination of this Agreement under Section 11) to purchase on any Closing Date
the Shares agreed to be purchased on such Closing Date by such Underwriter or
Underwriters, you may find one or more substitute underwriters to purchase such
Shares or make such other arrangements as you may deem advisable or one or more
of the remaining Underwriters may agree to purchase such Shares in such
-26-
<PAGE>
proportions as may be approved by you, in each case upon the terms set forth in
this Agreement. If no such arrangements have been made by the close of business
on the business day following such Closing Date,
(a) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall not exceed 10% of the Shares that all
the Underwriters are obligated to purchase on such Closing Date, then each of
the nondefaulting Underwriters shall be obligated to purchase such Shares on the
terms set forth in proportion to their respective obligations hereunder;
provided, however, that in no event shall the maximum number of Shares that any
Underwriter has agreed to purchase pursuant to Section 1 be increased pursuant
to this Section 12 by more than one-ninth of such number of Shares without the
written consent of such Underwriter, or
(b) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall exceed 10 % of the Shares that all the
Underwriters are obligated to purchase on such Closing Date, then the Company
shall be entitled to an additional business day within which it may, but is not
obligated to, find one or more substitute underwriters reasonably satisfactory
to you to purchase such Shares upon the terms set forth in this Agreement.
In any such case, either you or the Company shall have the right to
postpone the applicable Closing Date for a period of not more than five business
days in order that necessary changes and arrangements (including any amendments
or supplements to the Registration Statement or Prospectus) may be effected by
you and the Company. If the number of Shares to be purchased on such Closing
Date by such defaulting Underwriter or Underwriters shall exceed 10% of the
Shares that all the Underwriters are obligated to purchase on such Closing Date,
and none of the nondefaulting Underwriters or the Company shall make
arrangements pursuant to this Section 12 within the period stated for the
purchase of the Shares that the defaulting Underwriters agreed to purchase, this
Agreement shall terminate with respect to the Shares to be purchased on such
Closing Date without liability on the part of any nondefaulting Underwriter to
the Company and without liability on the part of the Company, except in both
cases as provided in Sections 8, 9, 10 and 11. The provisions of this
Section shall not in any way affect the liability of any defaulting Underwriter
to the Company or the nondefaulting Underwriters arising out of such default. A
substitute underwriter hereunder shall become an Underwriter for all purposes of
this Agreement.
13. MISCELLANEOUS. The respective agreements, representations,
warranties, indemnities and other statements of the Company or its officers, the
Selling Stockholders and of the Underwriters set forth in or made pursuant to
this Agreement shall remain in full force and effect, regardless of any
indemnification made by or on behalf of any Underwriter, the Selling
Stockholders or the Company or any of the officers, directors or controlling
persons referred to in Sections 9 and 10 hereof, and shall survive delivery of
and payment for the Shares. The provisions of Sections 8, 9, 10 and 11 shall
survive the termination or cancellation of this Agreement.
This Agreement has been and is made for the benefit of the
Underwriters, the Company and the Selling Stockholders and their respective
successors and assigns, and, to the extent expressed herein, for the benefit of
persons controlling any of the Underwriters, the Selling Stockholders or the
Company, and directors and officers of the Company, and their respective
successors and assigns, and no other shall acquire or have any right under or by
virtue of this Agreement. The term "successors and assigns" shall not include
any purchaser of Shares from any Underwriter merely because of such purchase.
All notices and communications hereunder shall be in writing and
mailed or delivered or by telephone or telegraph if subsequently confirmed in
writing, (a) if to you, c/o Deutsche Morgan Grenfell/C.J. Lawrence
-27-
<PAGE>
Inc., 31 West 52nd Street, New York, New York 10019, and (b) if to the Company,
to its agent for service as such agent's address appears on the cover page of
the Registration Statement.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to principles of conflict of
laws.
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
Please confirm that the foregoing Underwriting Agreement correctly
sets forth the agreement among us.
Very truly yours,
PUMA TECHNOLOGY, INC.
By:
------------------------------------------
Name:
Title:
The Selling Stockholders named in Schedule I
hereto, acting severally
---------------------------------------------
Attorney-in-Fact
-28-
<PAGE>
Confirmed, , 1996
--------------
DEUTSCHE MORGAN GRENFELL/C.J. LAWRENCE INC.
ALEX. BROWN & SONS INCORPORATED
Acting severally on behalf of themselves
and the several U.S. Underwriters named
in Schedule II annexed hereto.
By: DEUTSCHE MORGAN GRENFELL/C.J. LAWRENCE INC.
By:
----------------------
Name:
Title:
MORGAN GRENFELL & CO., LIMITED
ALEX. BROWN & SONS INCORPORATED
Acting severally on behalf of themselves
and the International Underwriters named
in Schedule III annexed hereto.
By: MORGAN GRENFELL & CO., LIMITED
By:
----------------------
Name:
Title:
-29-
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
NUMBER OF FIRM NUMBER OF OPTION
SELLING STOCKHOLDER SHARES TO BE SOLD SHARES TO BE SOLD
------------------------------------------------------------------------ ------------------- -------------------
<S> <C> <C>
Greylock Equity Limited Partnership . . . . . . . . . . . . . . . . . . . 286,197 291,745
Funds affiliated with CSK Venture Capital Co., Ltd. . . . . . . . . . . . 139,010 141,705
C. Bruce Johnstone . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,633 3,367
P.H. Morton . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,317 1,683
Steven L. LaVaute & Blanca Maria Isabel LaVaute Trust
dated 4/6/83, as amended 9/22/92, Stephen L. LaVaute,
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,158 9,336
Jerome or JoAnne Robertson . . . . . . . . . . . . . . . . . . . . . . . 9,158 842
Agora Marketing International, Inc. . . . . . . . . . . . . . . . . . . . 916 933
Greg Dalcher . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 611 389
--------- ---------
Total . . . . . . . . . . . . . . . . . . . . . . . . 500,000 450,000
</TABLE>
Schedule I to Underwriting Agreement
S-1
<PAGE>
SCHEDULE II
U.S. UNDERWRITERS
NUMBER OF FIRM SHARES
UNDERWRITER TO BE PURCHASED
- ---------------------------------------------------------- ---------------------
------------
Deutsche Morgan Grenfell/C.J. Lawrence Inc.. . . . . . . .
Alex. Brown & Sons Incorporated . . . . . . . . . . . . .
---------------------
Total . . . . . . . . . . . . . . . . . . . 2,250,000
Schedule II to Underwriting Agreement
S-II
<PAGE>
SCHEDULE III
INTERNATIONAL UNDERWRITERS
NUMBER OF FIRM SHARES
UNDERWRITER TO BE PURCHASED
- ---------------------------------------------------------- ---------------------
------------
Morgan Grenfell & Co. Limited. . . . . . . . . . . . . . .
Alex. Brown & Sons Incorporated . . . . . . . . . . . . .
---------------------
Total . . . . . . . . . . . . . . . . . . . . 750,000
Schedule III to Underwriting Agreement
S-III
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Merger Agreement") is entered into
as of October , 1996 by and between Puma Technology, Inc., a California
corporation ("Puma California"), and Puma Technology Delaware Corporation, a
Delaware corporation ("Puma Delaware").
WITNESSETH:
WHEREAS, Puma Delaware is a corporation duly organized and existing under
the laws of the State of Delaware;
WHEREAS, Puma California is a corporation duly organized and existing under
the laws of the State of California;
WHEREAS, on the date of this Merger Agreement, Puma Delaware has authority
to issue 1,000 shares of Common Stock, par value $0.001 per share (the "Puma
Delaware Common Stock"), of which 1,000 shares are issued and outstanding and
owned by Puma California;
WHEREAS, on the date of this Merger Agreement, Puma California has
authority to issue 10,000,000 shares of Common Stock (the "Puma California
Common Stock"), of which 4,294,590 shares are issued and outstanding, and
3,785,715 shares of Preferred Stock (the "Puma California Preferred Stock"), of
which 2,905,749 shares are issued and outstanding;
WHEREAS, the respective Boards of Directors for Puma Delaware and Puma
California have determined that, for the purpose of effecting the
reincorporation of Puma California in the State of Delaware, it is advisable and
to the advantage of said two corporations and their shareholders that Puma
California merge with and into Puma Delaware upon the terms and conditions
herein provided; and
WHEREAS, the respective Boards of Directors of Puma Delaware and Puma
California, the stockholders of Puma California, and the sole stockholder of
Puma Delaware have adopted and approved this Merger Agreement;
NOW, THEREFORE, in consideration of the mutual agreements and covenants set
forth herein, Puma California and Puma Delaware hereby agree to merge as
follows:
1. MERGER. Puma California shall be merged with and into Puma Delaware,
and Puma Delaware shall survive the merger ("Merger"), effective upon the date
when this Merger Agreement is made effective in accordance with applicable law
(the "Effective Date").
1
<PAGE>
2. GOVERNING DOCUMENTS. The Certificate of Incorporation of Puma
Delaware shall be amended to read in full as follows:
FIRST: The name of the Corporation is Puma Technology, Inc. (hereinafter
sometimes referred to as the "Corporation").
SECOND: The address of the registered office of the Corporation in the State
of Delaware is Incorporating Services, Ltd., 15 East North Street, in
the City of Dover, County of Kent. The name of the registered agent
at that address is Incorporating Services, Ltd.
THIRD: 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 Delaware.
FOURTH:
A. CLASSES OF STOCK. The Corporation is authorized to issue two classes
of stock to be designated, respectively, "Preferred Stock" and "Common
Stock." The total number of shares of all classes of stock which the
Corporation is authorized to issue is Forty Four Million Nine Hundred
Five Thousand Seven Hundred Forty Nine (44,905,749). The total number
of shares of Preferred Stock the Corporation shall have authority to
issue is Four Million Nine Hundred Five Thousand Seven Hundred Forty
Nine (4,905,749), $0.001 par value per share, and the total number of
shares of Common Stock the Corporation shall have authority to issue
is Forty Two Million (42,000,000), $0.001 par value per share.
B. RIGHTS, PREFERENCES AND RESTRICTIONS OF PREFERRED STOCK. The
Preferred Stock authorized by this Certificate of Incorporation may be
issued from time to time in series. The first series of Preferred
Stock shall be designated "Series A Preferred Stock," which series
shall consist of 1,468,977 shares. The second series of Preferred
Stock shall be designated "Series B Preferred Stock," which series
shall consist of 1,151,057 shares. The third series of Preferred
Stock shall be designated "Series C Preferred Stock," which series
shall consist of 285,715 shares. The relative rights, preferences,
privileges and restrictions granted to or imposed upon the shares of
the Series A Preferred Stock, the Series B Preferred Stock and the
Series C Preferred Stock are as follows:
1. DIVIDENDS.
(a) The holders of outstanding Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock shall be entitled to
receive in any fiscal year, when and as declared by the Board of Directors, out
of any assets at the time legally available therefor, distributions (as defined
below) in cash at the rate
2
<PAGE>
per annum of $0.10 per share of Series A Preferred Stock, $0.30 per share of
Series B Preferred Stock and $0.56 per share of Series C Preferred Stock. Such
distributions may be payable quarterly or otherwise as the Board of Directors
may from time to time determine. Distributions may be declared and paid upon
common shares in any fiscal year of the Corporation only if distributions shall
have been paid to or declared and set apart upon all shares of Preferred Stock
at the annual rate for each quarter of such fiscal year of the Corporation
including the quarter in which such distributions upon common shares are
declared. The right to such distributions on Preferred Stock shall not be
cumulative and no right shall accrue to holders of Preferred Stock by reason of
the fact that distributions on said shares are not declared in any prior year,
nor shall any undeclared or unpaid distribution bear or accrue interest.
(b) For purposes of this Paragraph 1, unless the context
otherwise requires, "distribution" shall mean the transfer of cash or property
without consideration, whether by way of dividend or otherwise, payable other
than in common stock, or the purchase or redemption of shares of the Corporation
(other than repurchases of common stock held by employees or consultants of the
Corporation upon termination of their employment or services pursuant to
agreements providing for such repurchase) for cash or property, including any
such transfer, purchase or redemption by a subsidiary of the Corporation.
(c) Each holder of shares of Preferred Stock shall be deemed to
have consented, for purposes of Sections 502 and 506 of the General Corporation
Law of the State of California, to distributions made by the Corporation in
connection with the repurchase of shares of common stock issued to or held by
employees or consultants upon termination of their employment or services
pursuant to agreements providing for such repurchase.
2. PREFERENCE ON LIQUIDATION.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the assets and funds of the
Corporations shall be distributed as follows: First, the holders of shares of
the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred
Stock then outstanding shall be entitled to be paid, out of the assets of the
Corporation available for distribution to its shareholders, whether from
capital, surplus or earnings, before any payment shall be made in respect of the
Corporation's common stock, an amount equal to $1.00 for each outstanding share
of Series A Preferred Stock, $3.00 for each outstanding share of Series B
Preferred Stock, and $5.60 for each outstanding share of Series C Preferred
Stock plus all declared and unpaid dividends with respect to each such series to
the date fixed for distribution. After setting apart or paying in full the
preferential amount due the holders of the Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock, all remaining assets and funds of
the Corporation available for distribution to its shareholders shall be
distributed ratably on a per share basis among the holders of common stock, the
holders of Series A Preferred Stock, the holders of Series B Preferred Stock,
and the holders of the Series
3
<PAGE>
C Preferred Stock as if fully converted to common stock. If upon liquidation,
dissolution or winding up of the Corporation, the assets of the Corporation
available for distribution to its shareholders shall be insufficient to pay the
holders of the Series A Preferred Stock, the holders of Series B Preferred Stock
and the holders of the Series C Preferred Stock the full amounts to which they
shall be entitled pursuant to this Paragraph, the holders of the Series A
Preferred Stock, the holders of Series B Preferred Stock and the holders of the
Series C Preferred Stock shall share ratably in any distribution of assets
according to the respective amounts which would be payable in respect of the
shares held by them upon such distribution if all amounts payable on or with
respect to said shares were paid in full. The merger or consolidation of the
Corporation into or with another corporation in which the shareholders of the
Corporation shall own less than 50% of the voting securities of the surviving
corporation or the sale, transfer or lease (but not including a transfer or
lease by pledge or mortgage to a bona fide lender) of all or substantially all
of the assets of the Corporation shall be deemed to be a liquidation,
dissolution or winding up of the Corporation as those terms are used in this
Paragraph 2.
(b) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the Corporation shall, within ten
(10) days after the date the Board of Directors approves such action, or twenty
(20) days prior to any shareholders' meeting called to approve such action, or
twenty (20) days after the commencement of any involuntary proceeding, whichever
is earlier, give each holder of shares of Preferred Stock initial written notice
of the proposed action. Such initial written notice shall describe the material
terms and conditions of such proposed action, including a description of the
stock, cash and property to be received by the holders of Preferred Stock upon
consummation of the proposed action and the date of delivery thereof. If any
material change in the facts set forth in the initial notice shall occur, the
Corporation shall promptly give written notice to each holder of shares of
Preferred Stock of such material change.
(c) The Corporation shall not consummate any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation before the
expiration of thirty (30) days after the mailing of the initial notice or ten
(10) days after the mailing of any subsequent written notice, whichever is
later; provided that any such 30-day or 10-day period may be shortened upon the
written consent of the holders of all of the outstanding shares of Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, each
series consenting as a class.
(d) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation which will involve the distribution
of assets other than cash, the Corporation shall promptly engage competent
independent appraisers to determine the value of the assets to be distributed to
the holders of shares of Series A Preferred Stock, the holders of shares of
Series B Preferred Stock, the holders of the Series C Preferred Stock, and the
holders of shares of common stock (it being understood that with respect to the
valuation of securities, the Corporation shall engage such appraiser as shall be
approved by the holders of a majority of shares of the Corporation's outstanding
Series A Preferred Stock, Series B
4
<PAGE>
Preferred Stock and Series C Preferred Stock, each voting as a single class).
The Corporation shall, upon receipt of such appraiser's valuation, give prompt
written notice to each holder of shares of Preferred Stock of the appraiser's
valuation.
3. VOTING. Except as otherwise required by law, the shares of
Preferred Stock shall be voted equally with the shares of the Corporation's
common stock at any annual or special meeting of shareholders of the
Corporation, or may act by written consent in the same manner as the
Corporation's common stock, upon the following basis: each holder of shares of
Preferred Stock shall be entitled to such number of votes for the Preferred
Stock held by him on the record date fixed for such meeting, or on the effective
date of such written consent, as shall be equal to the largest number of whole
shares of the Corporation's common stock into which all of his shares of
Preferred Stock are convertible immediately after the close of business on the
record date fixed for such meeting or the effective date of such written
consent.
4. CONVERSION RIGHTS.
(a) Each share of Series A Preferred Stock, Series B Preferred
Stock, and Series C Preferred Stock shall be convertible, at the option of the
holder thereof, at any time after the issuance of such share (the "Initial
Issuance Date") and without payment of further consideration into fully paid and
nonassessable shares of common stock of the Corporation. Each share of Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock shall
automatically be converted into fully paid and nonassessable shares of common
stock of the Corporation at any time after the Initial Issuance Date immediately
upon the closing of a sale of the Corporation's securities in a firm commitment
underwritten registered public offering with proceeds to the Corporation of at
least Ten Million Dollars ($10,000,000) and an offering price per share to the
public equal to or greater than Six Dollars ($6.00) per share appropriately
adjusted for stock dividends, stock splits, stock combinations and the like. In
addition, each share of Series A Preferred Stock shall automatically be
converted into fully paid and nonassessable shares of common stock of the
Corporation at any time after the Initial Issuance Date immediately upon the
approval of the conversion of the Series A Preferred Stock into common stock by
vote or written consent of the holders of at least fifty-one percent (51%) of
the outstanding shares of Series A Preferred Stock. Each share of Series B
Preferred Stock shall automatically be converted into fully paid and
nonassessable shares of common stock of the Corporation at any time after the
Initial Issuance Date immediately upon the approval of the conversion of the
Series B Preferred Stock into common stock by vote or written consent of the
holders of at least fifty-one percent (51%) of the outstanding shares of
Series B Preferred Stock. Each share of Series C Preferred Stock shall
automatically be converted into fully paid and nonassessable shares of common
stock of the Corporation at any time after the Initial Issuance Date immediately
upon the approval of the conversion of the Series C Preferred Stock into common
stock by vote or written consent of the holders of at least fifty-one percent
(51%) of the outstanding shares of Series C Preferred Stock.
5
<PAGE>
(b) The number of shares of common stock into which each share
of Series A Preferred Stock may be converted shall be determined by dividing
$1.00 by the Conversion Price for the series (determined as hereinafter
provided) in effect at the time of the conversion. The Conversion Price per
share at which shares of common stock shall be initially issuable upon
conversion shall be, in the case of any shares of Series A Preferred Stock,
$0.50, subject to adjustment as provided in Paragraph 5 hereof. The number of
shares of common stock into which each share of Series B Preferred Stock may be
converted shall be determined by dividing $3.00 by the Conversion Price for the
series (determined as hereinafter provided) in effect at the time of the
conversion. The Conversion Price per share at which shares of common stock
shall be initially issuable upon conversion shall be, in the case of any shares
of Series B Preferred Stock, $3.00, subject to adjustment as provided in
Paragraph 5 hereof. The number of shares of common stock into which each share
of Series C Preferred Stock may be converted shall be determined by dividing
$5.60 by the Conversion Price for the series (determined as hereinafter
provided) in effect at the time of the conversion. The Conversion Price per
share at which shares of common stock shall be initially issuable upon
conversion shall be, in the case of any shares of Series C Preferred Stock,
$5.60, subject to adjustment as provided in Paragraph 5 hereof.
(c) The holder of any shares of Preferred Stock may exercise the
conversion rights after the Initial Issuance Date as to such shares or any part
thereof by delivering to the Corporation during regular business hours, at the
office of any transfer agent of the Corporation for the Preferred Stock, or at
the principal office of the Corporation or at such other place as may be
designated by the Corporation, the certificate or certificates for the shares to
be converted, duly endorsed for transfer to the Corporation (if required by it),
accompanied by written notice stating that the holder elects to convert such
shares. Conversion shall be deemed to have been effected on the date when such
delivery is made, and such date is referred to herein as the "Conversion Date."
As promptly as practicable thereafter the Corporation shall issue and deliver to
or upon the written order of such holder, at such office or other place
designated by the Corporation, a certificate or certificates for the number of
full shares of common stock to which such holder is entitled and a check for
cash with respect to any fractional interest in a share of common stock as
provided in Subparagraph (d) of this Paragraph 4. The holder shall be deemed to
have become a shareholder of record on the applicable Conversion Date unless the
transfer books of the Corporation are closed on the date, in which event he
shall be deemed to have become a shareholder of record on the next succeeding
date on which the transfer books are open, but the Conversion Price for such
series shall be that in effect on the Conversion Date. Upon conversion of only
a portion of the number of shares of Series A Preferred Stock, Series B
Preferred Stock or Series C Preferred Stock represented by a certificate
surrendered for conversion, the Corporation shall issue and deliver to or upon
the written order of the holder of the certificate so surrendered for
conversion, at the expense of the Corporation, a new certificate covering the
number of shares of Series A Preferred Stock, Series B Preferred Stock or Series
C Preferred Stock, as the case may be, representing the unconverted portion of
the certificate so surrendered.
6
<PAGE>
(d) No fractional shares of common stock or script shall be
issued upon conversion of shares of Preferred Stock. If more than one share of
Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock
shall be surrendered for conversion at any one time by the same holder, the
number of full shares of common stock issuable upon conversion thereof shall be
computed on the basis of the aggregate number of shares of Series A Preferred
Stock, Series B Preferred Stock or Series C Preferred Stock, as the case may be,
so surrendered. Instead of any fractional shares of common stock which would
otherwise be issuable upon conversion of any shares of Series A Preferred Stock,
Series B Preferred Stock or Series C Preferred Stock, the Corporation shall pay
a cash adjustment in respect of such fractional interest equal to the fair
market value of such fractional interest as determined by the Corporation's
Board of Directors.
(e) The Corporation shall pay any and all issue and other taxes
that may be payable with respect to any issue or delivery of shares of common
stock on conversion of Preferred Stock pursuant hereto. The Corporation shall
not, however, be required to pay any tax which may be payable with respect to
any transfer involved in the issue and delivery of shares of common stock in a
name other than that in which the Preferred Stock so converted were registered,
and no such issue or delivery shall be made unless and until the person
requesting such issue has paid to the Corporation the amount of any such tax, or
has established, to the satisfaction of the Corporation, that such tax has been
paid.
(f) The Corporation shall at all times reserve and keep
available out of its authorized but unissued common stock, solely for the
purpose of effecting the conversion of the Preferred Stock, the full number of
shares of common stock deliverable upon the conversion of all Preferred Stock
from time to time outstanding. The Corporation shall from time to time (subject
to obtaining necessary director and shareholder approval), in accordance with
the laws of the State of California, increase the authorized amount of its
common stock if at any time the authorized number of shares of its common stock
remaining unissued shall not be sufficient to permit the conversion of all of
the shares of Preferred Stock at the time outstanding.
(g) All shares of common stock which may be issued upon
conversion of the shares of Preferred Stock will, upon issuance by the
corporation, be without payment of further consideration, validly issued, fully
paid and nonassessable and free from all taxes, liens and charges with respect
to the issuance thereof.
(h) In case any shares of Preferred Stock shall be converted
pursuant to Paragraph 4 hereof, the shares so converted shall resume the status
of authorized but unissued shares of Preferred Stock.
5. ADJUSTMENT OF CONVERSION PRICE. The Conversion Price as to all
authorized shares of each series of Preferred Stock, whether or not then
outstanding, shall be subject to adjustment from time to time as follows:
7
<PAGE>
(a) STOCK SPLITS, DIVIDENDS AND COMBINATIONS. In case the
Corporation shall at any time subdivide the outstanding shares of common stock,
or shall issue a stock dividend on its outstanding common stock, the Conversion
Price in effect immediately prior to such subdivision or the issuance of such
dividend shall be proportionately decreased, and in case the Corporation shall
at any time combine the outstanding shares of common stock, the Conversion Price
in effect immediately prior to such combination shall be proportionately
increased, effective at the close of business on the date of such subdivision,
dividend or combination.
(b) NONCASH DIVIDENDS, STOCK PURCHASE RIGHTS, CAPITAL
REORGANIZATIONS AND DISSOLUTIONS. In case:
(i) the Corporation shall take a record of the holders of
its common stock for the purpose of entitling them to receive a dividend,
or any other distribution, payable otherwise than in cash; or
(ii) the Corporation shall take a record of the holders of
its common stock for the purpose of entitling them to subscribe for or purchase
any shares of stock of any class or to receive any other rights; or
(iii) of any capital reorganization of the Corporation,
reclassification of the capital stock of the Corporation (other than a
subdivision or combination of its outstanding shares of common stock),
consolidation or merger of the Corporation with or into another corporation
or conveyance of all or substantially all of the assets of the Corporation
to another corporation; or
(iv) of the voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then, and in any such case, the Corporation shall cause to be mailed to the
transfer agent for the Series A Preferred Stock, the Series B Preferred Stock
and the Series C Preferred Stock, and to the holders of record of the
outstanding Preferred Stock at least ten (10) days prior to the date hereinafter
specified, a notice stating the date on which such a record is to be taken for
the purpose of such dividend, distribution or rights, or such reclassification,
reorganization, consolidation, merger, conveyance, dissolution, liquidation or
winding up is to take place and the date, if any is to be fixed, as of which
holders of common stock of record shall be entitled to exchange their shares of
common stock for securities or other property deliverable upon such
reclassification, reorganization, consolidation, merger, conveyance,
dissolution, liquidation or winding up.
(c) ISSUANCES AT LESS THAN THE CONVERSION PRICE. Upon the
issuance by the Corporation of common stock, or any right or option to purchase
common stock or stock convertible into common stock, or any obligation or any
share of stock convertible into or exchangeable for common stock for a
consideration per share less than the Conversion Price in effect immediately
prior to the time of such
8
<PAGE>
issue or sale other than an issuance of stock or securities pursuant to
Subparagraph 5(a) or the issuance of shares of common stock upon conversion of
any Preferred Stock, then forthwith upon such issue or sale, the Conversion
Price shall be reduced to a price (calculated to the nearest cent) determined
separately for each series of Preferred Stock by dividing:
(i) an amount equal to the sum of (x) the number of shares
of common stock outstanding immediately prior to such issue or sale
multiplied by the then existing Conversion Price of the Series A Preferred
Stock, Series B Preferred Stock or Series C Preferred Stock, as the case
may be, (y) the number of shares of common stock issuable upon conversion
or exchange of any obligations or of any shares of stock of the Corporation
outstanding immediately prior to such issue or sale multiplied by the then
existing Conversion Price of the Series A Preferred Stock, Series B
Preferred Stock or Series C Preferred Stock, as the case may be, and (z) an
amount equal to the aggregate "consideration actually received" by the
Corporation upon such issue or sale by
(ii) the sum of the number of shares of common stock
outstanding immediately after such issue or sale and the number of shares
of common stock issuable upon conversion or exchange of any obligations or
of any shares of stock of the Corporation outstanding immediately after
such issue or sale.
For purposes of this Paragraph (c), the following provisions will be
applicable:
(A) In the case of an issue or sale for cash of shares of
common stock, the "consideration actually received" by the Corporation therefor
shall be deemed to be the amount of cash received, before deducting therefrom
any commissions or expenses paid by the Corporation.
(B) In case of the issuance (otherwise than upon conversion
or exchange of obligations or shares of stock of the Corporation) of additional
shares of common stock for a consideration other than cash or a consideration
partly other than cash, the amount of the consideration other than cash received
by the Corporation for such shares shall be deemed to be the value of such
consideration as determined by the Board of Directors.
(C) In case of the issuance by the Corporation in any
manner of any rights to subscribe for or to purchase shares of common stock, or
any options for the purchase of shares of common stock or stock convertible into
common stock, all shares of common stock or stock convertible into common stock
to which the holders of such rights or options shall be entitled to subscribe
for or purchase pursuant to such rights or options shall be deemed "outstanding"
as of the date of the offering of such rights or the granting of such options,
as the case may be, and the minimum aggregate consideration named in such rights
or options for the shares of common stock or stock convertible into common stock
covered thereby, plus the
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<PAGE>
consideration, if any, received by the Corporation for such rights or options,
shall be deemed to be the "consideration actually received" by the Corporation
(as of the date of the offering of such rights or the granting of such options,
as the case may be) for the issuance of such shares.
(D) In case of the issuance or issuances by the Corporation
in any manner of any obligations or of any shares of stock of the Corporation
that shall be convertible into or exchangeable for common stock, all shares of
common stock issuable upon the conversion or exchange of such obligations or
shares shall be deemed issued as of the date such obligations or shares are
issued, and the amount of the "consideration actually received" by the
Corporation for such additional shares of common stock shall be deemed to be the
total of (X) the amount of consideration received by the Corporation upon the
issuance of such obligations or shares, as the case may be, plus (Y) the minimum
aggregate consideration, if any, other than such obligations or shares,
receivable by the Corporation upon such conversion or exchange, except in
adjustment of dividends.
(E) The amount of the "consideration actually received" by
the Corporation upon the issuance of any rights or options referred to in
Subparagraph (C) above or upon the issuance of any obligations or shares which
are convertible or exchangeable as described in Subparagraph (D) above, and the
amount of the consideration, if any, other than such obligations or shares so
convertible or exchangeable, receivable by the Corporation upon the exercise,
conversion or exchange thereof shall be determined in the same manner provided
in Subparagraphs (A) and (B) above with respect to the consideration received by
the Corporation in case of the issuance of additional shares of common stock;
provided, however, that if such obligations or shares of stock so convertible or
exchangeable are issued in payment or satisfaction of any dividend upon any
stock of the Corporation other than common stock, the amount of the
"consideration actually received" by the Corporation upon the original issuance
of such obligations or shares or stock so convertible or exchangeable shall be
deemed to be the value of such obligations or shares of stock, as of the date of
the adoption of the resolution declaring such dividend, as determined by the
Board of Directors at or as of that date. On the expiration of any rights or
options referred to in Subparagraph (C), or the termination of any right of
conversion or exchange referred to in Subparagraph (D), or any change in the
number of shares of common stock deliverable upon exercise of such options or
rights or upon conversion of or exchange of such convertible or exchangeable
securities, the Conversion Price then in effect shall forthwith be readjusted to
such Conversion Price as would have obtained had the adjustments made upon the
issuance of such options, rights or convertible or exchangeable securities been
made upon the basis of the delivery of only the number of shares of common stock
actually delivered or to be delivered upon the exercise of such rights or
options or upon the conversion or exchange of such securities.
(F) Anything herein to the contrary notwithstanding, the
Corporation shall not be required to make any adjustment of the Conversion Price
in the case of
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(i) the grant of options to purchase, or the issue of
common stock to officers, directors, employees or consultants of the
Corporation and its subsidiaries pursuant to stock options or stock
purchase plans or agreements, whether "qualified" for tax purposes or not,
and such unexercised options granted to officers, employees and consultants
shall be considered shares of stock outstanding for purposes of
Subparagraphs 5(c)(i) and (ii) above, except that for purposes of the
calculations made pursuant to Subparagraphs 5(c)(i) and (ii) above, the
number of such option shares shall be multiplied by the exercise price of
such options rather than by the then existing Conversion Price, unless said
exercise price is equal to or greater than such Conversion Price, in which
event the number of option shares shall be multiplied by the then existing
Conversion Price of the Series A Preferred Stock, Series B Preferred Stock
or Series C Preferred Stock, as the case may be;
(ii) any shares of common stock acquired in conjunction
with the purchase of Series A Preferred Stock, Series B Preferred Stock or
Series C Preferred Stock;
(iii) any shares of common stock or Preferred Stock that
may be issued upon exercise of any option or warrant outstanding on the
date this Agreement and Plan of Merger is filed.
(G) Anything herein to the contrary notwithstanding,
the Corporation shall not be required to make any adjustment of the
Conversion Price for Series B Preferred Stock in the case of the issuance of
units consisting of both Series A Preferred Stock and Series B Preferred
Stock at an issuance price equal to or more than $1.60 per share of common
stock into which all such preferred stock may be converted at issuance.
(H) In the event the Corporation shall declare a
distribution payable in securities of other persons, evidences of
indebtedness issued by the Corporation or other persons or options or rights
not referred to in Subparagraph 5(c) above, then, in each such case, the
holders of the Preferred Stock shall be entitled to the distribution at the
rate provided for in Paragraph 1 above before any distribution shall be made
to the holders of the Corporation's common stock, and no adjustment to the
Conversion Price provided for in this Paragraph 5 shall be applicable.
For purposes of the foregoing, the per share consideration with respect to
the sale or issuance of Preferred Stock shall be the price per share received by
the Corporation, prior to the payment of any expenses, commissions, discounts
and other applicable costs.
(d) NONIMPAIRMENT. The Corporation will not, by amendment of
its Articles of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to
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be observed or performed hereunder by the Corporation, but will at all times in
good faith assist in the carrying out of all the provisions of this Paragraph 5
and in the taking of all such action as may be necessary or appropriate in order
to protect the conversion rights of the holders of the Preferred Stock against
impairment.
(e) NOTICE OF ADJUSTMENT. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Paragraph 5,
the Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof, and prepare and furnish to
each holder of Preferred Stock affected thereby a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Corporation shall, upon the written
request at any time of any holder of Preferred Stock, furnish or cause to be
furnished to such holder a like certificate setting forth (A) such adjustment or
readjustment, (B) the Conversion Price at the time in effect for the Preferred
Stock held by such holder, and (C) the number of shares of common stock and the
amount, if any, of other property which at the time would be received upon the
conversion of his shares.
6. CHANGES. So long as any shares of Series A Preferred Stock,
Series B Preferred Stock or Series C Preferred Stock are outstanding, the
Corporation shall not, without first obtaining the approval by vote or written
consent, in the manner provided by law, of the holders of at least fifty-one
percent (51%) of the total number of shares of Series A Preferred Stock
outstanding, at least fifty-one percent (51%) of the total number of shares of
Series B Preferred Stock outstanding, at least fifty-one percent (51%) of the
total number of shares of Series C Preferred Stock outstanding, and at least
fifty-one percent (51%) of the total number of common shares outstanding,
undertake any of the following actions:
(a) amend the provisions of the Corporation's Articles of
Incorporation; or
(b) sell, lease, convey, exchange, transfer or otherwise dispose
of all or substantially all of its assets (other than for the purposes of
securing payment of any contract or obligation); or
(c) license any of its technology in such a manner as to have
the same economic effect as a sale or disposition of all or substantially all of
the assets of the Corporation; or
(d) make any "distribution," as defined in Subparagraph 1(b),
with respect to the common stock; or
(e) merge or consolidate with or into any other corporation
except into or with a wholly owned subsidiary.
7. STATUS OF CONVERTED OR REDEEMED STOCK. In the event any shares
of Preferred Stock shall be converted pursuant to Section 3 or Section 4 hereof
or
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<PAGE>
shall be repurchased or otherwise acquired by the Corporation in any manner
whatsoever, such shares shall be retired and canceled promptly after the
acquisition thereof. Such shares shall not be reissued as shares of Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock or shares
of any other series of Preferred Stock. Upon such cancellation, and upon the
filing of any certificates required or appropriate under applicable law, the
number of authorized shares of Preferred Stock as set forth in Article FOURTH,
Section A shall be reduced by the number of such shares so canceled.
FIFTH: The following provisions are inserted for the management of the
business and the conduct of the affairs of the Corporation, and for
further definition, limitation and regulation of the powers of the
Corporation and of its directors and stockholders:
A. The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors. In addition to the
powers and authority expressly conferred upon them by statute or by
this Certificate of Incorporation or the Bylaws of the Corporation,
the directors are hereby empowered to exercise all such powers and do
all such acts and things as may be exercised or done by the
Corporation.
B. The directors of the Corporation need not be elected by written ballot
unless the Bylaws so provide.
C. On and after the closing date of the first sale of the Corporation's
Common Stock pursuant to a firmly underwritten registered public
offering (the "IPO"), any action required or permitted to be taken by
the stockholders of the Corporation must be effected at a duly called
annual or special meeting of stockholders of the Corporation and may
not be effected by any consent in writing by such stockholders. Prior
to such sale, unless otherwise provided by law, any action which may
otherwise be taken at any meeting of the stockholders may be taken
without a meeting and without prior notice, if a written consent
describing such actions is signed by the holders of outstanding shares
having not less than the minimum number of votes which would be
necessary to authorize or take such action at a meeting at which all
shares entitled to vote thereon were present and voted.
D. Special meetings of stockholders of the Corporation may be called only
(1) by the Board of Directors pursuant to a resolution adopted by a
majority of the total number of authorized directors (whether or not
there exist any vacancies in previously authorized directorships at
the time any such resolution is presented to the Board for adoption)
or (2) by the holders of not less than ten percent (10%) of all of the
shares entitled to cast votes at the meeting.
SIXTH:
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A. The number of directors shall initially be set at four (4) and,
thereafter, shall be fixed from time to time exclusively by the Board
of Directors pursuant to a resolution adopted by a majority of the
total number of authorized directors (whether or not there exist any
vacancies in previously authorized directorships at the time any such
resolution is presented to the Board for adoption). Subject to the
rights of the holders of any series of Preferred Stock then
outstanding, a vacancy resulting from the removal of a director by the
stockholders as provided in Article SIXTH, Section C below may be
filled at a special meeting of the stockholders held for that purpose.
B. Subject to the rights of the holders of any series of Preferred Stock
then outstanding, newly created directorships resulting from any
increase in the authorized number of directors or any vacancies in the
Board of Directors resulting from death, resignation or other cause
(other than removal from office by a vote of the stockholders) may be
filled only by a majority vote of the directors then in office, though
less than a quorum, and directors so chosen shall hold office for a
term expiring at the next annual meeting of stockholders at which the
term of office to which they have been elected expires, and until
their respective successors are elected, except in the case of the
death, resignation, or removal of any director. No decrease in the
number of directors constituting the Board of Directors shall shorten
the term of any incumbent director.
C. Subject to the rights of the holders of any series of Preferred Stock
then outstanding, any directors, or the entire Board of Directors, may
be removed from office at any time, with or without cause, but only by
the affirmative vote of the holders of at least a majority 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, voting together as a single class. Vacancies in the Board
of Directors resulting from such removal may be filled by a majority
of the directors then in office, though less than a quorum, or by the
stockholders as provided in Article SIXTH, Section A above. Directors
so chosen shall hold office for a term expiring at the next annual
meeting of stockholders at which the term of office to which they have
been elected expires, and until their respective successors are
elected, except in the case of the death, resignation, or removal of
any director.
SEVENTH: The Board of Directors is expressly empowered to adopt, amend or
repeal By-Laws of the Corporation. Any adoption, amendment or repeal
of By-Laws of the Corporation by the Board of Directors shall require
the approval of a majority of the total number of authorized directors
(whether or not there exist any vacancies in previously authorized
directorships at the time any resolution providing for adoption,
amendment or repeal is presented to the Board). The
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<PAGE>
stockholders shall also have power to adopt, amend or repeal the
By-Laws of the Corporation. Any adoption, amendment or repeal of By-
Laws of the Corporation by the stockholders shall require, in addition
to any vote of the holders of any class or series of stock of the
Corporation required by law or by this Certificate of Incorporation,
the affirmative vote of the holders of at least sixty-six and two-
thirds percent (66-2/3%) of the voting power of all of the then
outstanding shares of the capital stock of the Corporation entitled to
vote generally in the election of directors, voting together as a
single class.
EIGHTH: A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach
of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which
involved intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the Delaware General Corporation Law, or (iv) for
any transaction from which the director derived an improper personal
benefit.
If the Delaware General Corporation Law is hereafter amended to
authorize the further elimination or limitation of the liability of a
director, then the liability of a director of the Corporation shall be
eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended.
Any repeal or modification of the foregoing provisions of this Article
EIGHTH by the stockholders of the Corporation shall not adversely
affect any right or protection of a director of the Corporation
existing at the time of such repeal or modification.
NINTH: The Corporation reserves the right to amend or repeal any provision
contained in this Certificate of Incorporation in the manner
prescribed by the laws of the State of Delaware and all rights
conferred upon stockholders are granted subject to this reservation;
PROVIDED, HOWEVER, that, notwithstanding any other provision of this
Certificate of Incorporation or any provision of law which might
otherwise permit a lesser vote or no vote, but in addition to any vote
of the holders of any class or series of the stock of this Corporation
required by law or by this Certificate of Incorporation, the
affirmative vote of the holders of at least 66-2/3% of the voting
power of all of the then outstanding shares of the capital stock of
the Corporation entitled to vote generally in the election of
directors, voting together as a single class, shall be required to
amend or repeal this Article NINTH, Article FIFTH, Article SIXTH,
Article SEVENTH or Article EIGHTH.
The Certificate of Incorporation of Puma Delaware, as amended herein, shall
continue to be the Certificate of Incorporation of Puma Delaware as the
surviving
15
<PAGE>
Corporation without change or amendment until further amended in accordance with
the provisions thereof and applicable laws. The By-Laws of Puma Delaware, in
effect on the Effective Date, shall continue to be the By-Laws of Puma Delaware
as the surviving Corporation without change or amendment until further amended
in accordance with the provisions thereof and applicable laws.
1. DIRECTORS AND OFFICERS. The directors and officers of Puma
California shall become the directors and officers of Puma Delaware upon the
Effective Date and the members of the audit committee, compensation committee
and pricing committee of Puma California shall become the members of such
committees for Puma Delaware.
2. SUCCESSION. On the Effective Date, Puma Delaware shall succeed
to Puma California in the manner of and as more fully set forth in Section 259
of the General Corporation Law of the State of Delaware.
3. FURTHER ASSURANCES. From time to time, as and when required by
Puma Delaware or by its successors and assigns, there shall be executed and
delivered on behalf of Puma California such deeds and other instruments, and
there shall be taken or caused to be taken by it such further and other action,
as shall be appropriate or necessary in order to vest, perfect or confirm, of
record or otherwise, in Puma Delaware the title to and possession of all the
property, interests, assets, rights, privileges, immunities, powers, franchises
and authority of Puma California, and otherwise to carry out the purposes of
this Merger Agreement and the officers and directors of Puma Delaware are fully
authorized in the name and on behalf of Puma California or otherwise to take any
and all such action and to execute and deliver any and all such deeds and other
instruments.
4. STOCK CERTIFICATES. On and after the Effective Date, all of the
outstanding certificates which prior to that time represented shares of Puma
California stock shall be deemed for all purposes to evidence ownership of and
to represent the shares of Puma Delaware stock into which the shares of Puma
California stock represented by such certificates have been converted as herein
provided. The registered owner on the books and records of Puma Delaware or its
transfer agent of any such outstanding stock certificate shall, until such
certificate shall have been surrendered for transfer or otherwise accounted for
to Puma Delaware or its transfer agent, have and be entitled to exercise any
voting and other rights with respect to and to receive any dividend and other
distributions upon the shares of Puma Delaware stock evidenced by such
outstanding certificate as above provided.
5. OPTIONS, WARRANTS AND CONVERTIBLE DEBENTURES. Upon the Effective
Date, each outstanding option, warrant, convertible debenture or other right to
purchase shares of Puma California stock, including those options granted under
the 1993 Stock Option Plan (the "Option Plan") of Puma California, shall be
converted into and become an option, warrant, debenture or right to purchase the
same number of shares of Puma Delaware stock, at a price per share equal to the
exercise price of
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<PAGE>
the option, warrant or right to purchase Puma California stock, and upon the
same terms and subject to the same conditions as set forth in the Option Plan
and other agreements entered into by Puma California pertaining to such options,
warrants, debentures or rights. A number of shares of Puma Delaware stock shall
be reserved for purposes of such options, warrants, debentures and rights equal
to the number of shares of Puma California stock so reserved as of the Effective
Date. As of the Effective Date, Puma Delaware shall assume all obligations of
Puma California under agreements pertaining to such options, warrants,
debentures and rights, including the Option Plan, and the outstanding options,
warrants, debentures or other rights, or portions thereof, granted pursuant
thereto.
6. OTHER EMPLOYEE BENEFIT PLANS. As of the Effective Date, Puma
Delaware hereby assumes all obligations of Puma California under any and all
employee benefit plans in effect as of said date or with respect to which
employee rights or accrued benefits are outstanding as of said date.
7. OUTSTANDING COMMON STOCK OF PUMA DELAWARE. Forthwith upon the
Effective Date, the One Hundred (100) shares of Puma Delaware Common Stock
presently issued and outstanding in the name of Puma California shall be
canceled and retired and resume the status of authorized and unissued shares of
Puma Delaware Common Stock, and no shares of Puma Delaware Common Stock or other
securities of Puma Delaware shall be issued in respect thereof.
8. COVENANTS OF PUMA DELAWARE. Puma Delaware covenants and agrees
that it will, on or before the Effective Date:
a. Qualify to do business as a foreign corporation in the State
of California, and in all other states in which Puma California is so qualified
and in which the failure so to qualify would have a material adverse impact on
the business or financial condition of Puma Delaware. In connection therewith,
Puma Delaware shall irrevocably appoint an agent for service of process as
required under the provisions of Section 2105 of the California Corporations
Code and under applicable provisions of state law in other states in which
qualification is required hereunder.
b. File any and all documents with the California Franchise Tax
Board necessary to the assumption by Puma Delaware of all of the franchise tax
liabilities of Puma California.
9. AMENDMENT. At any time before or after approval and adoption by
the stockholders of Puma California, this Merger Agreement may be amended in any
manner as may be determined in the judgment of the respective Boards of
Directors of Puma Delaware and Puma California to be necessary, desirable or
expedient in order to clarify the intention of the parties hereto or to effect
or facilitate the purposes and intent of this Merger Agreement.
10. ABANDONMENT. At any time before the Effective Date, this Merger
Agreement may be terminated and the Merger may be abandoned by the
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<PAGE>
Board of Directors of either Puma California or Puma Delaware or both,
notwithstanding approval of this Merger Agreement by the sole stockholder of
Puma Delaware and the stockholders of Puma California.
11. COUNTERPARTS. In order to facilitate the filing and recording of
this Merger Agreement, the same may be executed in any number of counterparts,
each of which shall be deemed to be an original.
IN WITNESS WHEREOF, this Merger Agreement, having first been duly approved
by resolution of the Board of Directors of Puma California and Puma Delaware, is
hereby executed on behalf of each of said two corporations by their respective
officers thereunto duly authorized.
PUMA TECHNOLOGY DELAWARE CORPORATION, a
Delaware corporation
By:
------------------------------------
Bradley A. Rowe, President and
Chief Executive Officer
By:
------------------------------------
Steven Nicol, Secretary
PUMA TECHNOLOGY, INC. a California
corporation
By:
------------------------------------
Bradley A. Rowe, President and
Chief Executive Officer
By:
------------------------------------
Steven Nicol, Secretary
18
<PAGE>
CERTIFICATE OF SECRETARY
OF
PUMA TECHNOLOGY DELAWARE CORPORATION
(a Delaware corporation)
I, Steven Nicol, the Secretary of Puma Technology Delaware Corporation, a
Delaware corporation (the "Corporation"), hereby certify that the Agreement and
Plan of Merger to which this Certificate is attached was duly signed on behalf
of the Corporation by its Secretary under the corporate seal of the Corporation
and was duly approved and adopted by a unanimous vote of the outstanding stock
entitled to vote thereon by written consent of the sole stockholder of the
Corporation dated August , 1996.
Executed effective on the day of October, 1996.
----------------------------------------
Steven Nicol, Secretary
<PAGE>
CERTIFICATE OF APPROVAL OF
AGREEMENT AND PLAN OF MERGER OF
PUMA TECHNOLOGY, INC.
(a California corporation)
Bradley A. Rowe and Steven Nicol certify that:
1. They are the duly elected and acting President and Secretary,
respectively of Puma Technology, Inc., a California corporation (the
"Corporation").
2. This Certificate is attached to the Agreement and Plan of Merger dated
as of October , 1996, providing for the merger of the Corporation with and
into a Delaware corporation.
3. The Agreement and Plan of Merger in the form attached hereto (the
"Merger Agreement") was approved by the Board of Directors of the Corporation at
a meeting duly noticed and held on August 15, 1996.
4. The total number of outstanding shares of the Corporation entitled to
vote on the merger was 4,294,590 shares of Common Stock, 1,468,977 shares of
Series A Preferred Stock, 1,151,057 shares of Series B Preferred Stock, and
285,715 shares of Series C Preferred Stock.
5. The principal terms of the Merger Agreement were approved by an
affirmative vote which exceeded the vote required, such vote being a majority of
the outstanding shares of the Corporation, a majority of the total number of
outstanding shares of Common Stock and at least 51% of the outstanding shares of
the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred
Stock, voting together as a single class.
Dated: October , 1996.
----------------------------------------
Bradley A. Rowe, President
----------------------------------------
Steven Nicol, Secretary
<PAGE>
The undersigned, Bradley A. Rowe, President, and Steven Nicol, Secretary,
of Puma Technology, Inc., a California corporation, 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 their knowledge.
Executed at San Jose, California, on October , 1996.
----------------------------------------
Bradley A. Rowe, President
----------------------------------------
Steven Nicol, Secretary
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
OF
PUMA TECHNOLOGY, INC.
(Pursuant to Section 245 of General Corporation Law of the State of Delaware)
Puma Technology, Inc. a corporation organized and existing under the
General Corporation Law of the State of Delaware, February 1993, (the
"Corporation") certifies as follows:
1. The Corporation's Restated Certificate of Incorporation was duly
adopted by the Board of Directors at a regular meeting in accordance with
Section 245 of the Corporation Law.
2. The Corporation's Restated Certificate of Incorporation only restates
and integrates and does not further amend the provisions of the Corporation's
Certificate of Incorporation as theretofore amended or supplemented, and there
is no discrepancy between those provisions and the provisions of the Restated
Certificate.
3. The Corporation's Certificate of Incorporation is restated to read in
full as follows:
FIRST: The name of the Corporation is Puma Technology, Inc.
SECOND: The address of the registered office of the Corporation in the
State of Delaware is Incorporating Services, Ltd., 15 East North
Street, in the City of Dover, County of Kent. The name of the
registered agent at that address is Incorporating Services, Ltd.
THIRD: 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 Delaware.
FOURTH:
A. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is Forty-Two Million
(42,000,000) consisting of Forty Million (40,000,000) shares of
Common Stock, par value one-tenth of one cent ($.001) per share
(the "Common Stock") and Two Million (2,000,000) shares of
Preferred Stock, par value one-tenth of one cent ($.001) per
share (the "Preferred Stock").
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B. The Preferred Stock authorized by this Certificate of
Incorporation may be issued from time to time in series. The
Board of Directors is authorized to determine, alter or eliminate
any or all of the rights, preferences, privileges and
restrictions granted to or imposed upon any wholly unissued
series of Preferred shares, and to fix, increase or decrease the
number of shares comprising any such series and the designation
thereof, or any of them, and to provide for the rights and terms
of redemption or conversion of the shares of any such series.
FIFTH: The following provisions are inserted for the management of the
business and the conduct of the affairs of the Corporation, and
for further definition, limitation and regulation of the powers
of the Corporation and of its directors and stockholders:
A. The business and affairs of the Corporation shall be managed by
or under the direction of the Board of Directors. In addition to
the powers and authority expressly conferred upon them by statute
or by this Certificate of Incorporation or the Bylaws of the
Corporation, the directors are hereby empowered to exercise all
such powers and do all such acts and things as may be exercised
or done by the Corporation.
B. The directors of the Corporation need not be elected by written
ballot unless the Bylaws so provide.
C. On and after the closing date of the first sale of the
Corporation's Common Stock pursuant to a firmly underwritten
registered public offering (the "IPO"), any action required or
permitted to be taken by the stockholders of the Corporation must
be effected at a duly called annual or special meeting of
stockholders of the Corporation and may not be effected by any
consent in writing by such stockholders. Prior to such sale,
unless otherwise provided by law, any action which may otherwise
be taken at any meeting of the stockholders may be taken without
a meeting and without prior notice, if a written consent
describing such actions is signed by the holders of outstanding
shares having not less than the minimum number of votes which
would be necessary to authorize or take such action at a meeting
at which all shares entitled to vote thereon were present and
voted.
D. Special meetings of stockholders of the Corporation may be called
only (1) by the Board of Directors pursuant to a resolution
adopted by a majority of the total number of authorized directors
(whether or not there exist any vacancies in previously
authorized directorships at the time any such resolution is
presented to the Board for adoption) or (2) by the holders of not
less than ten percent (10%) of all of the shares entitled to cast
votes at the meeting.
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SIXTH:
A. The number of directors shall initially be set at four (4) and,
thereafter, shall be fixed from time to time exclusively by the
Board of Directors pursuant to a resolution adopted by a majority
of the total number of authorized directors (whether or not there
exist any vacancies in previously authorized directorships at the
time any such resolution is presented to the Board for adoption).
Subject to the rights of the holders of any series of Preferred
Stock then outstanding, a vacancy resulting from the removal of a
director by the stockholders as provided in Article SIXTH,
Section C below may be filled at a special meeting of the
stockholders held for that purpose.
B. Subject to the rights of the holders of any series of Preferred
Stock then outstanding, newly created directorships resulting
from any increase in the authorized number of directors or any
vacancies in the Board of Directors resulting from death,
resignation or other cause (other than removal from office by a
vote of the stockholders) may be filled only by a majority vote
of the directors then in office, though less than a quorum, and
directors so chosen shall hold office for a term expiring at the
next annual meeting of stockholders at which the term of office
of the class to which they have been elected expires, and until
their respective successors are elected, except in the case of
the death, resignation, or removal of any director. No decrease
in the number of directors constituting the Board of Directors
shall shorten the term of any incumbent director.
C. Subject to the rights of the holders of any series of Preferred
Stock then outstanding, any directors, or the entire Board of
Directors, may be removed from office at any time, with or
without cause, but only by the affirmative vote of the holders of
at least a majority 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, voting together
as a single class. Vacancies in the Board of Directors resulting
from such removal may be filled by a majority of the directors
then in office, though less than a quorum, or by the stockholders
as provided in Article SIXTH, Section A above. Directors so
chosen shall hold office for a term expiring at the next annual
meeting of stockholders at which the term of office of the class
to which they have been elected expires, and until their
respective successors are elected, except in the case of the
death, resignation, or removal of any director.
SEVENTH: The Board of Directors is expressly empowered to adopt, amend or
repeal Bylaws of the Corporation. Any adoption, amendment or
repeal of Bylaws of the Corporation by the Board of Directors
shall
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require the approval of a majority of the total number of
authorized directors (whether or not there exist any vacancies in
previously authorized directorships at the time any resolution
providing for adoption, amendment or repeal is presented to the
Board). The stockholders shall also have power to adopt, amend
or repeal the Bylaws of the Corporation. Any adoption, amendment
or repeal of Bylaws of the Corporation by the stockholders shall
require, in addition to any vote of the holders of any class or
series of stock of the Corporation required by law or by this
Certificate of Incorporation, the affirmative vote of the holders
of at least sixty-six and two-thirds percent (66-2/3%) of the
voting power of all of the then outstanding shares of the capital
stock of the Corporation entitled to vote generally in the
election of directors, voting together as a single class.
EIGHTH: A director of the Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability (i)
for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involved intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware
General Corporation Law, or (iv) for any transaction from which
the director derived an improper personal benefit.
If the Delaware General Corporation Law is hereafter amended to
authorize the further elimination or limitation of the liability
of a director, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent
permitted by the Delaware General Corporation Law, as so amended.
Any repeal or modification of the foregoing provisions of this
Article EIGHTH by the stockholders of the Corporation shall not
adversely affect any right or protection of a director of the
Corporation existing at the time of such repeal or modification.
NINTH: The Corporation reserves the right to amend or repeal any
provision contained in this Certificate of Incorporation in the
manner prescribed by the laws of the State of Delaware and all
rights conferred upon stockholders are granted subject to this
reservation; PROVIDED, HOWEVER, that, notwithstanding any other
provision of this Certificate of Incorporation or any provision
of law which might otherwise permit a lesser vote or no vote, but
in addition to any vote of the holders of any class or series of
the stock of this Corporation required by law or by this
Certificate of Incorporation, the affirmative vote of the holders
of at least 66-2/3% of the voting power of all of the then
outstanding shares of the capital stock of the
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Corporation entitled to vote generally in the election of
directors, voting together as a single class, shall be required
to amend or repeal this Article NINTH, Article FIFTH, Article
SIXTH, Article SEVENTH or Article EIGHTH.
IN WITNESS WHEREOF, the Corporation has caused this Restated Certificate to
be signed by a duly authorized officer on this ___ day of October, 1996.
PUMA TECHNOLOGY, INC.
By:
-----------------------------------
Bradley A. Rowe, President
By:
-----------------------------------
Steven Nichol, Secretary
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BY-LAWS
OF
PUMA TECHNOLOGY DELAWARE CORPORATION
<PAGE>
I N D E X
Section Page
ARTICLE I
STOCKHOLDERS
Section 1.1 Annual Meeting........................................... 1
Section 1.2 Special Meetings......................................... 1
Section 1.3 Notice of Meetings....................................... 1
Section 1.4 Quorum................................................... 2
Section 1.5 Conduct of the Stockholders' Meeting..................... 2
Section 1.6 Conduct of Business...................................... 2
Section 1.7 Notice of Stockholder Business........................... 3
Section 1.8 Proxies and Voting....................................... 3
Section 1.9 Stock List............................................... 4
ARTICLE II
BOARD OF DIRECTORS
Section 2.1 Number and Term of Office................................ 4
Section 2.2 Vacancies and Newly Created Directorships................ 5
Section 2.3 Removal.................................................. 5
Section 2.4 Regular Meetings......................................... 5
Section 2.5 Special Meetings......................................... 5
Section 2.6 Quorum................................................... 5
Section 2.7 Participation in Meetings by Conference Telephone........ 5
Section 2.8 Conduct of Business...................................... 6
Section 2.9 Powers................................................... 6
Section 2.10 Compensation of Directors................................ 6
Section 2.11 Nomination of Director Candidates........................ 6
ARTICLE III
COMMITTEES
Section 3.1 Committees of the Board of Directors..................... 8
Section 3.2 Conduct of Business...................................... 8
ARTICLE IV
OFFICERS
Section 4.1. Generally................................................ 8
Section 4.2 Chairman of the Board.................................... 9
Section 4.3 President................................................ 9
Section 4.4 Vice President........................................... 9
Section 4.5 Treasurer................................................ 9
Section 4.6 Secretary................................................ 9
Section 4.7 Delegation of Authority.................................. 9
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ARTICLE V
STOCK
Section 5.1 Certificates of Stock.................................... 10
Section 5.2 Transfers of Stock....................................... 10
Section 5.3 Record Date.............................................. 10
Section 5.4 Lost, Stolen or Destroyed Certificates................... 10
Section 5.5 Regulations.............................................. 10
ARTICLE VI
NOTICES
Section 6.1 Notices.................................................. 10
Section 6.2 Waivers.................................................. 11
ARTICLE VII
MISCELLANEOUS
Section 7.1 Facsimile Signatures..................................... 11
Section 7.2 Corporate Seal........................................... 11
Section 7.3 Reliance Upon Books, Reports and Records................. 11
Section 7.4 Fiscal Year.............................................. 11
Section 7.5 Time Periods............................................. 11
ARTICLE VIII
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 8.1 Right to Indemnification................................. 12
Section 8.2 Right of Claimant to Bring Suit.......................... 13
Section 8.3 Non-Exclusivity of Rights................................ 13
Section 8.4 Indemnification Contracts................................ 13
Section 8.5 Insurance................................................ 13
Section 8.6 Effect of Amendment...................................... 13
ARTICLE IX
AMENDMENTS
Section 9.1 Amendment of Bylaws...................................... 14
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PUMA TECHNOLOGY DELAWARE CORPORATION
A DELAWARE CORPORATION
BY-LAWS
ARTICLE I
STOCKHOLDERS
SECTION 1.1 ANNUAL MEETING. An annual meeting of the stockholders, for
the election of directors to succeed those whose terms expire and for the
transaction of such other business as may properly come before the meeting,
shall be held at such place, on such date, and at such time as the Board of
Directors shall each year fix, which date shall be within thirteen months
subsequent to the later of the date of incorporation or the last annual meeting
of stockholders.
SECTION 1.2 SPECIAL MEETINGS. Special meetings of the stockholders, for
any purpose or purposes prescribed in the notice of the meeting, may be called
only (i) by the Board of Directors pursuant to a resolution adopted by a
majority of the total number of authorized directors (whether or not there
exists any vacancies in previously authorized directorships at the time any such
resolution is presented to the Board of Directors for adoption) or (ii) by the
holders of not less than 10% of all shares entitled to cast votes at the
meeting, voting together as a single class and shall be held at such place, on
such date, and at such time as they shall fix. Business transacted at special
meetings shall be confined to the purpose or purposes stated in the notice.
SECTION 1.3 NOTICE OF MEETINGS. Written notice of the place, date, and
time of all meetings of the stockholders shall be given, not less than ten (10)
nor more than sixty (60) days before the date on which the meeting is to be
held, to each stockholder entitled to vote at such meeting, except as otherwise
provided herein or required by law (meaning, here and hereinafter, as required
from time to time by the Delaware General Corporation Law or the Certificate of
Incorporation of the Corporation).
When a meeting is adjourned to another place, date or time, written notice
need not be given of the adjourned meeting if the place, date and time thereof
are announced at the meeting at which the adjournment is taken; provided,
however, that if the date of any adjourned meeting is more than thirty (30) days
after the date for which the meeting was originally noticed, or if a new record
date is fixed for the adjourned meeting, written notice of the place, date, and
time of the adjourned meeting shall be given in conformity herewith. At any
adjourned meeting, any business may be transacted which might have been
transacted at the original meeting.
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SECTION 1.4 QUORUM. At any meeting of the stockholders, the holders of
a majority of all of the shares of the stock entitled to vote at the meeting,
present in person or by proxy, shall constitute a quorum for all purposes,
unless or except to the extent that the presence of a larger number may be
required by law.
If a quorum shall fail to attend any meeting, the chairman of the meeting
or the holders of a majority of the shares of stock entitled to vote who are
present, in person or by proxy, may adjourn the meeting to another place, date,
or time.
If a notice of any adjourned special meeting of stockholders is sent to all
stockholders entitled to vote thereat, stating that it will be held with those
present constituting a quorum, then except as otherwise required by law, those
present at such adjourned meeting shall constitute a quorum, and all matters
shall be determined by a majority of the votes cast at such meeting.
SECTION 1.5 CONDUCT OF THE STOCKHOLDERS' MEETING. At every meeting of
the stockholders, the Chairman, if there is such an officer, or if not, the
President of the Corporation, or in his absence the Vice President designated by
the President, or in the absence of such designation any Vice President, or in
the absence of the President or any Vice President, a chairman chosen by the
majority of the voting shares represented in person or by proxy, shall act as
Chairman. The Secretary of the Corporation or a person designated by the
Chairman shall act as Secretary of the meeting. Unless otherwise approved by
the Chairman, attendance at the stockholders' meeting is restricted to
stockholders of record, persons authorized in accordance with Section 8 of these
Bylaws to act by proxy, and officers of the Corporation.
SECTION 1.6 CONDUCT OF BUSINESS. The Chairman shall call the meeting to
order, establish the agenda, and conduct the business of the meeting in
accordance therewith or, at the Chairman's discretion, it may be conducted
otherwise in accordance with the wishes of the stockholders in attendance. The
date and time of the opening and closing of the polls for each matter upon which
the stockholders will vote at the meeting shall be announced at the meeting.
The Chairman shall also conduct the meeting in an orderly manner, rule on
the precedence of and procedure on, motions and other procedural matters, and
exercise discretion with respect to such procedural matters with fairness and
good faith toward all those entitled to take part. The Chairman may impose
reasonable limits on the amount of time taken up at the meeting on discussion in
general or on remarks by any one stockholder. Should any person in attendance
become unruly or obstruct the meeting proceedings, the Chairman shall have the
power to have such person removed from participation. Notwithstanding anything
in the Bylaws to the contrary, no business shall be conducted at a meeting
except in accordance with the procedures set forth in this Section 1.6 and
Section 1.7, below. The Chairman of a meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting and in accordance with the provisions of this Section 1.6 and
Section 1.7, and if he should so determine, he shall so declare
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to the meeting and any such business not properly brought before the meeting
shall not be transacted.
SECTION 1.7 NOTICE OF STOCKHOLDER BUSINESS. At an annual or special
meeting of the stockholders, only such business shall be conducted as shall have
been properly brought before the meeting. To be properly brought before a
meeting, business must be (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors, (b)
properly brought before the meeting by or at the direction of the Board of
Directors, (c) properly brought before an annual meeting by a stockholder, or
(d) properly brought before a special meeting by a stockholder, but if, and only
if, the notice of a special meeting provides for business to be brought before
the meeting by stockholders. For business to be properly brought before a
meeting by a stockholder, the stockholder must have given timely notice thereof
in writing to the Secretary of the Corporation. To be timely, a stockholder
proposal to be presented at an annual meeting shall be received at the
Corporation's principal executive offices not less than 120 calendar days in
advance of the date that the Corporation's (or the Corporation's predecessor's)
proxy statement was released to stockholders in connection with the previous
year's annual meeting of stockholders, except that if no annual meeting was held
in the previous year or the date of the annual meeting has been changed by more
than 30 calendar days from the date contemplated at the time of the previous
year's proxy statement, or in the event of a special meeting, notice by the
stockholder to be timely must be received not later than the close of business
on the tenth day following the day on which such notice of the date of the
meeting was mailed or such public disclosure was made. A stockholder's notice
to the Secretary shall set forth as to each matter the stockholder proposes to
bring before the annual or special meeting (a) a brief description of the
business desired to be brought before the annual or special meeting and the
reasons for conducting such business at the special meeting, (b) the name and
address, as they appear on the Corporation's books, of the stockholder proposing
such business, (c) the class and number of shares of the Corporation which are
beneficially owned by the stockholder, and (d) any material interest of the
stockholder in such business.
SECTION 1.8 PROXIES AND VOTING. At any meeting of the stockholders,
every stockholder entitled to vote may vote in person or by proxy authorized by
an instrument in writing or by a transmission permitted by law filed in
accordance with the procedure established for the meeting. No stockholder may
authorize more than one proxy for his shares.
Each stockholder shall have one vote for every share of stock entitled to
vote which is registered in his or her name on the record date for the meeting,
except as otherwise provided herein or required by law.
All voting, including on the election of directors but excepting where
otherwise required by law, may be by a voice vote; provided, however, that upon
demand therefor by a stockholder entitled to vote or his or her proxy, a stock
vote shall be taken. Every stock vote shall be taken by ballots, each of which
shall state
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the name of the stockholder or proxy voting and such other information as may be
required under the procedure established for the meeting. Every vote taken by
ballots shall be counted by an inspector or inspectors appointed by the chairman
of the meeting.
All elections shall be determined by a plurality of the votes cast, and
except as otherwise required by law, all other matters shall be determined by a
majority of the votes cast.
SECTION 1.9 STOCK LIST. A complete list of stockholders entitled to
vote at any meeting of stockholders, arranged in alphabetical order for each
class of stock and showing the address of each such stockholder and the number
of shares registered in his or her name, shall be open to the examination of any
such stockholder, for any purpose germane to the meeting, during ordinary
business hours for a period of at least ten (10) days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or if not so specified, at the
place where the meeting is to be held.
The stock list shall also be kept at the place of the meeting during the
whole time thereof and shall be open to the examination of any such stockholder
who is present. This list shall presumptively determine the identity of the
stockholders entitled to vote at the meeting and the number of shares held by
each of them.
ARTICLE II
BOARD OF DIRECTORS
SECTION 2.1 NUMBER AND TERM OF OFFICE. The number of directors shall
initially be four (4) and, thereafter, shall be fixed from time to time
exclusively by the Board of Directors pursuant to a resolution adopted by a
majority of the total number of authorized directors (whether or not there exist
any vacancies in previously authorized directorships at the time any such
resolution is presented to the Board for adoption). A vacancy resulting from
the removal of a director by the stockholders as provided in Article II,
Section 2.3 below may be filled at special meeting of the stockholders held
for that purpose. All directors shall hold office until the expiration of
the term for which elected and until their respective successors are elected,
except in the case of the death, resignation or removal of any director.
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SECTION 2.2 VACANCIES AND NEWLY CREATED DIRECTORSHIPS. Subject to the
rights of the holders of any series of Preferred Stock then outstanding, newly
created directorships resulting from any increase in the authorized number of
directors or any vacancies in the Board of Directors resulting from death,
resignation, retirement, disqualification or other cause (other than removal
from office by a vote of the stockholders) may be filled only by a majority vote
of the directors then in office, though less than a quorum, and directors so
chosen shall hold office for a term expiring at the next annual meeting of
stockholders at which the term of office of the class to which they have been
elected expires. No decrease in the number of directors constituting the Board
of Directors shall shorten the term of any incumbent director.
SECTION 2.3 REMOVAL. Subject to the rights of holders of any series of
Preferred Stock then outstanding, any directors, or the entire Board of
Directors, may be removed from office at any time, with or without cause, but
only by the affirmative vote of the holders of at least a majority 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, voting together as a
single class. Vacancies in the Board of Directors resulting from such removal
may be filled by a majority of the directors then in office, though less than a
quorum, or by the stockholders as provided in Article II, Section 2.1 above.
Directors so chosen shall hold office until the new annual meeting of
stockholders.
SECTION 2.4 REGULAR MEETINGS. Regular meetings of the Board of
Directors shall be held at such place or places, on such date or dates, and at
such time or times as shall have been established by the Board of Directors and
publicized among all directors. A notice of each regular meeting shall not be
required.
SECTION 2.5 SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by one-third of the directors then in office (rounded up
to the nearest whole number) or by the chief executive officer and shall be held
at such place, on such date, and at such time as they or he or she shall fix.
Notice of the place, date, and time of each such special meeting shall be given
each director by whom it is not waived by mailing written notice not fewer than
five (5) days before the meeting or by telegraphing or personally delivering the
same not fewer than twenty-four (24) hours before the meeting. Unless otherwise
indicated in the notice thereof, any and all business may be transacted at a
special meeting.
SECTION 2.6 QUORUM. At any meeting of the Board of Directors, a
majority of the total number of authorized directors shall constitute a quorum
for all purposes. If a quorum shall fail to attend any meeting, a majority of
those present may adjourn the meeting to another place, date, or time, without
further notice or waiver thereof.
SECTION 2.7 PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE. Members
of the Board of Directors, or of any committee thereof, may participate in a
meeting of such Board or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
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meeting can hear each other and such participation shall constitute presence in
person at such meeting.
SECTION 2.8 CONDUCT OF BUSINESS. At any meeting of the Board of
Directors, business shall be transacted in such order and manner as the Board
may from time to time determine, and all matters shall be determined by the vote
of a majority of the directors present, except as otherwise provided herein or
requited by law. Action may be taken by the Board of Directors without a
meeting if all members thereof consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board of Directors.
SECTION 2.9 POWERS. The Board of Directors may, except as otherwise
required by law, exercise all such powers and do all such acts and things as may
be exercised or done by the Corporation, including, without limiting the
generality of the foregoing, the unqualified power:
(1) To declare dividends from time to time in accordance with law;
(2) To purchase or otherwise acquire any property, rights or
privileges on such terms as it shall determine;
(3) To authorize the creation, making and issuance, in such form as
it may determine, of written obligations of every kind, negotiable or non-
negotiable, secured or unsecured, and to do all things necessary in connection
therewith;
(4) To remove any officer of the Corporation with or without cause,
and from time to time to devolve the powers and duties of any officer upon any
other person for the time being;
(5) To confer upon any officer of the Corporation the power to
appoint, remove and suspend subordinate officers, employees and agents;
(6) To adopt from time to time such stock, option, stock purchase,
bonus or other compensation plans for directors, officers, employees and agents
of the Corporation and its subsidiaries as it may determine;
(7) To adopt from time to time such insurance, retirement, and other
benefit plans for directors, officers, employees and agents of the Corporation
and its subsidiaries as it may determine; and
(8) To adopt from time to time regulations, not inconsistent with
these bylaws, for the management of the Corporation's business and affairs.
SECTION 2.10 COMPENSATION OF DIRECTORS. Directors, as such, may receive,
pursuant to resolution of the Board of Directors, fixed fees and other
compensation for their services as directors, including, without limitation,
their services as members of committees of the Board of Directors.
SECTION 2.11 NOMINATION OF DIRECTOR CANDIDATES. Subject to the rights of
holders of any class or series of Preferred Stock then outstanding, nominations
for the election of Directors may be made by the Board of Directors or a proxy
committee appointed by the Board of Directors or by any stockholder entitled to
vote in the election of Directors generally. However, any stockholder entitled
to vote in the election of Directors generally may nominate one or more persons
for election as
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Directors at a meeting only if timely notice of such stockholder's intent to
make such nomination or nominations has been given in writing to the Secretary
of the Corporation. To be timely, a stockholder nomination for a director to
be elected at an annual meeting shall be received at the Corporation's principal
executive offices not less than 120 calendar days in advance of the date that
the Corporation's (or the Corporation's Predecessor's) Proxy statement was
released to stockholders in connection with the previous year's annual meeting
of stockholders, except that if no annual meeting was held in the previous year
or the date of the annual meeting has been changed by more than 30 calendar days
from the date contemplated at the time of the previous year's proxy statement,
or in the event of a nomination for director to be elected at a special
meeting, notice by the stockholders to be timely must be received not later than
the close of business on the tenth day following the day on which such notice of
the date of the special meeting was mailed or such public disclosure was made.
Each such notice shall set forth: (a) the name and address of the stockholder
who intends to make the nomination and of the person or persons to be nominated;
(b) a representation that the stockholder is a holder of record of stock of the
Corporation entitled to vote for the election of Directors on the date of such
notice and intends to appear in person or by proxy at the meeting to nominate
the person or persons specified in the notice; (c) a description of all
arrangements or understandings between the stockholder and each nominee and any
other person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the stockholder; (d) such other
information regarding each nominee proposed by such stockholder as would be
required to be included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission, had the nominee been nominated, or
intended to be nominated, by the Board of Directors; and (e) the consent of each
nominee to serve as a director of the Corporation if so elected.
In the event that a person is validly designated as a nominee in accordance
with this Section 2.11 and shall thereafter become unable or unwilling to stand
for election to the Board of Directors, the Board of Directors or the
stockholder who proposed such nominee, as the case may be, may designate a
substitute nominee upon delivery, not fewer than five days prior to the date of
the meeting for the election of such nominee, of a written notice to the
Secretary setting forth such information regarding such substitute nominee as
would have been required to be delivered to the Secretary pursuant to this
Section 2.11 had such substitute nominee been initially proposed as a nominee.
Such notice shall include a signed consent to serve as a director of the
Corporation, if elected, of each such substitute nominee.
If the chairman of the meeting for the election of Directors determines
that a nomination of any candidate for election as a Director at such meeting
was not made in accordance with the applicable provisions of this Section 2.11,
such nomination shall be void; provided, however, that nothing in this
Section 2.11 shall be deemed to limit any voting rights upon the occurrence of
dividend arrearages provided to holders of Preferred Stock pursuant to the
Preferred Stock designation for any series of Preferred Stock.
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ARTICLE III
COMMITTEES
SECTION 3.1 COMMITTEES OF THE BOARD OF DIRECTORS. The Board of
Directors, by a vote of a majority of the whole Board, may from time to time
designate committees of the Board, with such lawfully delegable powers and
duties as it thereby confers, to serve at the pleasure of the Board and shall,
for those committees and any others provided for herein, elect a director or
directors to serve as the member or members, designating, if it desires, other
directors as alternate members who may replace any absent or disqualified member
at any meeting of the committee. Any committee so designated may exercise the
power and authority of the Board of Directors to declare a dividend, to
authorize the issuance of stock or to adopt a certificate of ownership and
merger pursuant to Section 253 of the Delaware General Corporation Law if the
resolution which designates the committee or a supplemental resolution of the
Board of Directors shall so provide. In the absence or disqualification of any
member of any committee and any alternate member in his place, the member or
members of the committee present at the meeting and not disqualified from
voting, whether or not he or she or they constitute a quorum, may by unanimous
vote appoint another member of the Board of Directors to act at the meeting in
the place of the absent or disqualified member.
SECTION 3.2 CONDUCT OF BUSINESS. Each committee may determine the
procedural rules for meeting and conducting its business and shall act in
accordance therewith, except as otherwise provided herein or required by law.
Adequate provision shall be made for notice to members of all meetings; one-
third of the authorized members shall constitute a quorum unless the committee
shall consist of one or two members, in which event one member shall constitute
a quorum; and all matters shall be determined by a majority vote of the members
present. Action may be taken by any committee without a meeting if all members
thereof consent thereto in writing, and the writing or writings are filed with
the minutes of the proceedings of such committee.
ARTICLE IV
OFFICERS
SECTION 4.1. GENERALLY. The officers of the Corporation shall consist of
a President, one or more Vice Presidents, a Secretary and a Treasurer. The
Corporation may also have, at the discretion of the Board of Directors, a
Chairman of the Board and such other officers as may from time to time be
appointed by the Board of Directors. Officers shall be elected by the Board of
Directors, which shall consider that subject at its first meeting after every
annual meeting of stockholders. Each officer shall hold office until his or her
successor is elected and qualified or until his or her earlier resignation or
removal. Any number of offices may he held by the same person.
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SECTION 4.2 CHAIRMAN OF THE BOARD. The Chairman of the Board, if there
shall be such an officer, shall, if present, preside at all 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
these bylaws.
SECTION 4.3 PRESIDENT. The President shall be the chief executive
officer of the Corporation. Subject to the provisions of these bylaws and to
the direction of the Board of Directors, he or she shall have the responsibility
for the general management and control of the business and affairs of the
Corporation and shall perform all duties and have all powers which are commonly
incident to the office of chief executive or which are delegated to him or her
by the Board of Directors. He or she shall have power to sign all stock
certificates, contracts and other instruments of the Corporation which are
authorized and shall have general supervision and direction of all of the other
officers, employees and agents of the Corporation.
SECTION 4.4 VICE PRESIDENT. Each Vice President shall have such powers
and duties as may be delegated to him or her by the Board of Directors. One
Vice President shall be designated by the Board to perform the duties and
exercise the powers of the President in the event of the President's absence or
disability.
SECTION 4.5 TREASURER. Unless otherwise designated by the Board of
Directors, the Chief Financial Officer of the Corporation shall be the
Treasurer. The Treasurer shall have the responsibility for maintaining the
financial records of the Corporation and shall have custody of all monies and
securities of the Corporation. He or she shall make such disbursements of the
funds of the Corporation as are authorized and shall render from time to time an
account of all such transactions and of the financial condition of the
Corporation. The Treasurer shall also perform such other duties as the Board of
Directors may from time to time prescribe.
SECTION 4.6 SECRETARY. The Secretary shall issue all authorized notices
for, and shall keep, or cause to be kept, minutes of all meetings of the
stockholders, the Board of Directors, and all committees of the Board of
Directors. He or she shall have charge of the corporate books and shall perform
such other duties as the Board of Directors may from time to time prescribe.
SECTION 4.7 DELEGATION OF AUTHORITY. The Board of Directors may from
time to time delegate the powers or duties of any officer to any other officers
or agents, notwithstanding any provision hereof.
SECTION 4.8 REMOVAL. Any officer of the Corporation may be removed at
any time, with or without cause, by the Board of Directors.
SECTION 4.9 ACTION WITH RESPECT TO SECURITIES OF OTHER CORPORATIONS.
Unless otherwise directed by the Board of Directors, the President or any
officer of the Corporation authorized by the President shall have power to vote
and otherwise act on behalf of the Corporation, in person or by proxy, at any
meeting of stockholders of or with respect to any action of stockholders of any
other corporation in which this
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<PAGE>
Corporation may hold securities and otherwise to exercise any and all rights and
powers which this Corporation may possess by reason of its ownership of
securities in such other corporation.
ARTICLE V
STOCK
SECTION 5.1 CERTIFICATES OF STOCK. Each stockholder shall be entitled
to a certificate signed by, or in the name of the Corporation by, the President
or a Vice President, and by the Secretary or an Assistant Secretary, or the
Treasurer or an Assistant Treasurer, certifying the number of shares owned by
him or her. Any of or all the signatures on the certificate may be facsimile.
SECTION 5.2 TRANSFERS OF STOCK. Transfers of stock shall be made only
upon the transfer books of the Corporation kept at an office of the Corporation
or by transfer agents designated to transfer shares of the stock of the
Corporation. Except where a certificate is issued in accordance with Section 4
of Article V of these bylaws, an outstanding certificate for the number of
shares involved shall be surrendered for cancellation before a new certificate
is issued therefor.
SECTION 5.3 RECORD DATE. The Board of Directors may fix a record date,
which shall not be more than sixty (60) nor fewer than ten (10) days before the
date of any meeting of stockholders, nor more than sixty (60) days prior to the
time for the other action hereinafter described, as of which there shall be
determined the stockholders who are entitled: to notice of or to vote at any
meeting of stockholders or any adjournment thereof; to receive payment of any
dividend or other distribution or allotment of any rights; or to exercise any
rights with respect to any change, conversion or exchange of stock or with
respect to any other lawful action.
SECTION 5.4 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event of the
loss, theft or destruction of any certificate of stock, another may be issued in
its place pursuant to such regulations as the Board of Directors may establish
concerning proof of such loss, theft or destruction and concerning the giving of
a satisfactory bond or bonds of indemnity.
SECTION 5.5 REGULATIONS. The issue, transfer, conversion and
registration of certificates of stock shall be governed by such other
regulations as the Board of Directors may establish.
ARTICLE VI
NOTICES
SECTION 6.1 NOTICES. Except as otherwise specifically provided herein
or required by law, all notices required to be given to any stockholder,
director, officer, employee or agent shall be in writing and may in every
instance be effectively given
10
<PAGE>
by hand delivery to the recipient thereof, by depositing such notice in the
mails, postage paid, or by sending such notice by prepaid telegram, mailgram,
telecopy or commercial courier service. Any such notice shall be addressed to
such stockholder, director, officer, employee or agent at his or her last known
address as the same appears on the books of the Corporation. The time when such
notice shall be deemed to be given shall be the time such notice is received by
such stockholder, director, officer, employee or agent, or by any person
accepting such notice on behalf of such person, if hand delivered, or the time
such notice is dispatched, if delivered through the mails or be telegram or
mailgram.
SECTION 6.2 WAIVERS. A written waiver of any notice, signed by a
stockholder, director, officer, employee or agent, whether before or after the
time of the event for which notice is to be given, shall be deemed equivalent to
the notice required to be given to such stockholder, director, officer, employee
or agent. Neither the business nor the purpose of any meeting need be specified
in such a waiver.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 FACSIMILE SIGNATURES. In addition to the provisions for use
of facsimile signatures elsewhere specifically authorized in these bylaws,
facsimile signatures of any officer or officers of the Corporation may be used
whenever and as authorized by the Board of Directors or a committee thereof.
SECTION 7.2 CORPORATE SEAL. The Board of Directors may provide a
suitable seal, containing the name of the Corporation, which seal shall be in
the charge of the Secretary. If and when so directed by the Board of Directors
or a committee thereof, duplicates of the seal may be kept and used by the
Treasurer or by an Assistant Secretary or Assistant Treasurer.
SECTION 7.3 RELIANCE UPON BOOKS, REPORTS AND RECORDS. Each director,
each member of any committee designated by the Board of Directors, and each
officer of the Corporation shall, in the performance of his duties, be fully
protected in relying in good faith upon the books of account or other records of
the Corporation, including reports made to the Corporation by any of its
officers, by an independent certified public accountant, or by an appraiser
selected with reasonable care.
SECTION 7.4 FISCAL YEAR. The fiscal year of the Corporation shall be as
fixed by the Board of Directors.
SECTION 7.5 TIME PERIODS. In applying any provision of these bylaws
which require that an act be done or not done a specified number of days prior
to an event or that an act be done during a period of a specified number of days
prior to an event, calendar days shall be used, the day of the doing of the act
shall be excluded, and the day of the event shall be included.
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<PAGE>
ARTICLE VIII
INDEMNIFICATION OF DIRECTORS AND OFFICERS
SECTION 8.1 RIGHT TO INDEMNIFICATION. Each person who was or is made a
party or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
("proceeding"), by reason of the fact that he or she or a person of whom he or
she is the legal representative, is or was a director, officer or employee of
the Corporation or is or was serving at the request of the Corporation as a
director, officer or employee of another corporation, or of a Partnership, joint
venture, trust or other enterprise, including service with respect to employee
benefit plans, whether the basis of such proceeding is alleged action in an
official capacity as a director, officer or employee or in any other capacity
while serving as a director, officer or employee, shall be indemnified and held
harmless by the Corporation to the fullest extent authorized by Delaware Law, as
the same exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than said Law permitted the Corporation
to provide prior to such amendment) against all expenses, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties,
amounts paid or to be paid in settlement and amounts expended in seeking
indemnification granted to such person under applicable law, this bylaw or any
agreement with the Corporation) reasonably incurred or suffered by such person
in connection therewith and such indemnification shall continue as to a person
who has ceased to be a director, officer or employee and shall inure to the
benefit of his or her heirs, executors and administrators; PROVIDED, HOWEVER,
that, except as provided in Section 8.2 of this Article VIII, the Corporation
shall indemnify any such person seeking indemnity in connection with an action,
suit or proceeding (or part thereof) initiated by such person only if (a) such
indemnification is expressly required to be made by law, (b) the action, suit or
proceeding (or part thereof) was authorized by the Board of Directors of the
Corporation, (c) such indemnification is provided by the Corporation, in its
sole discretion, pursuant to the powers vested in the Corporation under the
Delaware General Corporation Law, or (d) the action, suit or proceeding (or part
thereof) is brought to establish or enforce a right to indemnification under an
indemnity agreement or any other statute or law or otherwise as required under
Section 145 of the Delaware General Corporation Law. Such right shall be a
contract right and shall include the right to be paid by the Corporation
expenses incurred in defending any such proceeding in advance of its final
disposition; PROVIDED, HOWEVER, that, unless the Delaware General Corporation
Law then so prohibits, the payment of such expenses incurred by a director or
officer of the Corporation in his or her capacity as a director or officer (and
not in any other capacity in which service was or is tendered by such person
while a director or officer, including, without limitation. service to an
employee benefit plan) in advance of the final disposition of such proceeding,
shall be made only upon delivery to the Corporation of an undertaking, by or on
behalf of such director or officer, to repay all amounts so advanced if it
should be determined ultimately that such director or officer is not entitled to
be indemnified under this Section or otherwise.
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<PAGE>
SECTION 8.2 RIGHT OF CLAIMANT TO BRING SUIT. If a claim under Section 1
of this Article VIII is not paid in full by the Corporation within ninety (90)
days after a written claim has been received by the Corporation, the claimant
may at any time thereafter bring suit against the Corporation to recover the
unpaid amount of the claim and, if such suit is not frivolous or brought in bad
faith, the claimant shall be entitled to be paid also the expense of prosecuting
such claim. The burden of proving such claim shall be on the claimant. It
shall be a defense to any such action (other then an action brought to enforce a
claim for expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any, has been tendered to this
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the Delaware General Corporation Law 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
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
Delaware General Corporation Law, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) 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 8.3 NON-EXCLUSIVITY OF RIGHTS. The rights conferred on any
person in Sections 1 and 2 shall not be exclusive of any other right which such
persons may have or hereafter acquire under any statute, provision of the
Certificate of Incorporation, bylaw, agreement, vote of stockholders or
disinterested directors or otherwise.
SECTION 8.4 INDEMNIFICATION CONTRACTS. The Board of Directors is
authorized to enter into a contract with any director, officer, employee or
agent of the Corporation, or any person serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, including employee
benefit plans, providing for indemnification rights equivalent to or, if the
Board of Directors so determinates, greater than, those provided for in this
Article VIII.
SECTION 8.5 INSURANCE. The Corporation shall maintain insurance to the
extent reasonably available, at its expense, to protect itself and any such
director, officer, employee or agent of the Corporation or another corporation,
partnership, joint venture, trust or other enterprise against any such expense,
liability or loss, whether or not the Corporation would have the power to
indemnify such person against such expense, liability or loss under the Delaware
General Corporation Law.
SECTION 8.6 EFFECT OF AMENDMENT. Any amendment, repeal or modification
of any provision of this Article VIII by the stockholders and the directors of
the Corporation shall not adversely affect any right or protection of a director
or officer of the Corporation existing at the time of such amendment, repeal or
modification.
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ARTICLE IX
AMENDMENTS
SECTION 9.1 AMENDMENT OF BYLAWS. The Board of Directors is expressly
empowered to adopt, amend or repeal Bylaws of the Corporation. Any adoption,
amendment or repeal of Bylaws of the Corporation by the Board of Directors shall
require the approval of a majority of the total number of authorized directors
(whether or not there exist any vacancies in previously authorized directorships
at the time any resolution providing for adoption, amendment or repeal is
presented to the Board). The stockholders shall also have power to adopt, amend
or repeal the Bylaws of the Corporation. Any adoption, amendment or repeal of
By-Laws of the Corporation by the stockholders shall require, in addition to any
vote of the holders of any class or series of stock of the Corporation required
by law or by this Certificate of Incorporation, the affirmative vote of the
holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting
power of all of the then outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors, voting
together as a single class.
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<PAGE>
EXHIBIT 4.1
COMMON STOCK COMMON STOCK
NUMBER SHARES
PUMA
TECHNOLOGY
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
SEE REVERSE SIDE FOR
CERTAIN DEFINITIONS
AND A STATEMENT OF
RIGHTS, PREFERENCES,
PRIVILEGES AND
RESTRICTIONS ON SHARES
CUSIP 745887 10 9
THIS CERTIFIES THAT
IS THE RECORD HOLDER OF
FULLY PAID AND NONASSESSABLE SHARES OF THE COMMON STOCK, $.001 PAR VALUE
PER SHARE, OF
PUMA TECHNOLOGY, INC.
transferable on the books of the Corporation by the record holder hereof, in
person or by duly authorized attorney upon surrender of this Certificate
properly endorsed. This Certificate is not valid until countersigned by the
Transfer Agent and registered by the Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
DATED:
/s/ M. Bruce Nakao [SEAL] /s/ Bradley A. Rowe
SENIOR VICE PRESIDENT, PRESIDENT AND CHIEF
CHIEF FINANCIAL OFFICER EXECUTIVE OFFICER
COUNTERSIGNED AND REGISTERED:
HARRIS TRUST COMPANY OF CALIFORNIA
TRANSFER AGENT
AND REGISTRAR
BY
AUTHORIZED SIGNATURE
<PAGE>
A statement of the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or
series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights as established, from time to time, by the
Certificate of Incorporation of the Corporation and by any certificate of
determination, the number of shares constituting each class and series, and
the designations thereof, may be obtained by the holder hereof upon request
and without charge at the principal office of the Corporation.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM -- as tenants in common UNIF GIFT MIN ACT -- ............Custodian............
TEN ENT -- as tenants by the entireties (Cust) (Minor)
JT TEN -- as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act..............................
in common (State)
UNIF TRF MIN ACT -- ..........Custodian (until age.....)
(Cust)
........... under Uniform Transfers
(Minor)
to Minors Act......................
(State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, ________________________________________hereby
sell(s), assign(s) and transfers(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
/ /
_______________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
_______________________________________________________________________________
_______________________________________________________________________________
________________________________________________________________________ Shares
of the common stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
_______________________________________________________________________Attorney
to transfer the said stock on the books of the within named Corporation
with full power of substitution in the premises.
Dated_________________________________
X
_____________________________________________
X
_____________________________________________
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME(S) AS WRITTEN
UPON THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.
Signature(s) Guaranteed:
________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY
AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS
AND CREDIT UNIONS WITH MEMBERSHIP IN AN
APPROVED MEDALLION SIGNATURE GUARANTEE
PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.
<PAGE>
Securities and Exchange Commission
Fiduciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Puma Technology, Inc.
Ladies and Gentlemen:
As counsel to Puma Technology, Inc. (the "Company"), we are rendering this
opinion in connection with a proposed sale of those certain shares of the
Company's newly-issued Common Stock and those certain additional shares of the
Company's Common Stock held by certain stockholders as set forth in the
Registration Statement on Form S-1 to which this opinion is being filed as
Exhibit 5.1 (the "Shares"). We have examined all instruments, documents and
records which we deemed relevant and necessary for the basis of our opinion
hereinafter expressed. In such examination, we have assumed the genuineness of
all signatures and authenticity of all documents submitted to us as originals
and the conformity to the originals of all documents submitted to us as copies.
We express no opinion with respect to (i) the availability of equitable
remedies, including specific performance, or (ii) the effect of bankruptcy,
insolvency, reorganization, moratorium or equitable principles relating to or
limiting creditors' rights generally.
Based on such examination, we are of the opinion that the Shares identified
in the above-referenced Registration Statement will be, upon effectiveness of
the Registration Statement and receipt by the Company of payment thereof,
validly authorized, legally issued, fully paid, and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the above-
referenced Registration Statement and to the use of our name wherever it appears
in said Registration Statement, including the Prospectus constituting a part
thereof, as originally filed or as subsequently amended.
Respectfully submitted,
/s/ Gray Cary Ware & Freidenrich
GRAY CARY WARE & FREIDENRICH
A Professional Corporation
<PAGE>
PUMA TECHNOLOGY, INC.
1993 STOCK OPTION PLAN
1. PURPOSE. Puma Technology, Inc. 1993 Stock Option Plan (the "Plan") is
established to attract, retain and reward persons providing services to Puma
Technology, Inc. and any successor corporation thereto (collectively referred to
as the "Company"), and any future parent and/or subsidiary corporations of such
corporation (all of whom along with the Company being individually referred to
as a "Participating Company" and collectively referred to as the "Participating
Company Group"), and to motivate such persons to contribute to the growth and
profits of the Participating Company Group in the future. For purposes of the
Plan, a parent corporation and a subsidiary corporation shall be as defined in
sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as amended (the
"Code").
2. ADMINISTRATION. The Plan shall be administered by the Board of
Directors of the Company (the "Board") and/or by a duly appointed committee of
the Board having such powers as shall be specified by the Board. Any subsequent
references herein to the Board shall also mean the committee if such committee
has been appointed and, unless the powers of the committee have been
specifically limited, the committee shall have all of the powers of the Board
granted herein, including, without limitation, the power to terminate or amend
the Plan at any time, subject to the terms of the Plan and any applicable
limitations imposed by law. All questions of interpretation of the Plan or of
any options granted under the Plan (an "Option") shall be determined by the
Board, and such determinations shall be final and binding upon all persons
having an interest in the Plan and/or any Option. Options may be either
incentive stock options as defined in section 422 of the Code ("Incentive Stock
Options") or nonqualified stock options. Any officer of a Participating Company
shall have the authority to act on behalf of the Company with respect to any
matter, right, obligation, or election which is the responsibility of or which
is allocated to the Company herein, provided the officer has apparent authority
with respect to such matter, right, obligation, or election.
3. ELIGIBILITY. Options may be granted only to employees (including
officers and directors who are also employees) and directors of the
Participating Company Group or to individuals who are rendering services as
consultants, or advisors to the Participating Company Group. For purposes of
the foregoing sentence, "employees" shall include prospective employees to whom
Options are granted in connection with written offers of employment with the
Participating Company Group and "consultants" or "advisors" shall include
prospective consultants or advisors to whom Options are granted in connection
with written consulting or advising offers with the Participating Company Group.
The Board shall, in its sole discretion, determine which persons shall be
granted Options (an "Optionee"). A director of the Company may only be granted
a nonqualified stock option unless the director is also an employee of the
Company. An individual who is rendering services as a consultant, advisor, or
other independent contractor may only be
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<PAGE>
granted a nonqualified stock option. Eligible persons may be granted more than
one (1) Option.
4. SHARES SUBJECT TO OPTION. Options shall be for the purchase of shares
of the authorized but unissued common stock of the Company (the "Stock"),
subject to adjustment as provided in paragraph 9 below. The maximum number of
shares of Stock which may be issued under the Plan shall be two million five
hundred thousand (2,500,000) shares. In the event that any outstanding Option
for any reason expires or is terminated or canceled, the shares allocable to the
unexercised portion of such Option may again be subject to an Option grant.
5. TIME FOR GRANTING OPTIONS. All Options shall be granted, if at all,
within ten (10) years from the earlier of the date the Plan is adopted by the
Board or the date the Plan is duly approved by the shareholders of the Company.
6. TERMS, CONDITIONS AND FORM OF OPTIONS. Subject to the provisions of
the Plan, the Board shall determine for each Option (which need not be
identical) the number of shares of Stock for which the Option shall be granted,
the option exercise price of the Option, the timing and terms of exercisability
and vesting of the Option, whether the Option is to be treated as an Incentive
Stock Option or as a nonqualified stock option and all other terms and
conditions of the Option not inconsistent with the Plan. Options granted
pursuant to the Plan shall be evidenced by written agreements specifying the
number of shares of Stock covered thereby, in such form as the Board shall from
time to time establish, which agreements may incorporate all or any of the terms
of the Plan by reference and shall comply with and be subject to the following
terms and conditions:
(a) OPTION EXERCISE PRICE. The option exercise price for each Option
shall be established in the sole discretion of the Board; provided, however,
that (i) the option exercise price per share for an Incentive Stock Option shall
be not less than the fair market value, as determined by the Board, of a share
of Stock on the date of the granting of the Option, (ii) the option exercise
price per share for a nonqualified stock option shall not be less than
eighty-five percent (85%) of the fair market value, as determined by the Board,
of a share of Stock on the date of the granting of the Option and (iii) no
Option granted to an Optionee who at the time the Option is granted owns stock
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of a Participating Company within the meaning of section
422(b)(6) of the Code (a "Ten Percent Owner Optionee") shall have an option
exercise price per share less than one hundred ten percent (110%) of the fair
market value, as determined by the Board, of a share of Stock on the date of the
granting of the Option. Notwithstanding the foregoing, an Option (whether an
Incentive Stock Option or a nonqualified stock option) may be granted with an
option exercise price lower than the minimum exercise price set forth above if
such Option is granted pursuant to an assumption or substitution for another
option in a manner qualifying with the provisions of section 424(a) of the Code.
2
<PAGE>
(b) EXERCISE PERIOD OF OPTIONS. The Board shall have the power to
set the time or times within which each Option shall be exercisable or the event
or events upon the occurrence of which all or a portion of each Option shall be
exercisable and the term of each Option; provided, however, that (i) no Option
shall be exercisable after the expiration of ten (10) years after the date such
Option is granted, and (ii) no Incentive Stock Option granted to a Ten Percent
Owner Optionee shall be exercisable after the expiration of five (5) years after
the date such Option is granted.
(c) PAYMENT OF OPTION EXERCISE PRICE. Payment of the option exercise
price for the number of shares of Stock being purchased pursuant to any Option
shall be made (i) in cash, by check, or cash equivalent, (ii) by tender to the
Company of shares of the Company's stock owned by the Optionee having a value,
as determined by the Board (but without regard to any restrictions on
transferability applicable to such stock by reason of federal or state
securities laws or agreements with an underwriter for the Company) not less than
the option exercise price, (iii) by the Optionee's recourse promissory note in a
form approved by the Company, (iv) by the assignment of the proceeds of a sale
of some or all of the shares being acquired upon the exercise of the Option
(including, without limitation, through an exercise complying with the
provisions of Regulation T as promulgated from time to time by the Board of
Governors of the Federal Reserve System), or (v) by any combination thereof.
The Board may at any time or from time to time, by adoption of or by amendment
to either of the standard forms of stock option agreement described in
paragraph 7 below, or by other means, grant Options which do not permit all of
the foregoing forms of consideration to be used in payment of the option
exercise price and/or which otherwise restrict one (1) or more forms of
consideration. Notwithstanding the foregoing, an Option may not be exercised by
tender to the Company of shares of the Company's stock to the extent such tender
of stock would constitute a violation of the provisions of any law, regulation
and/or agreement restricting the redemption of the Company's stock.
Furthermore, no promissory note shall be permitted if an exercise using a
promissory note would be a violation of any law. Any permitted promissory note
shall be due and payable not more than four (4) years after the Option is
exercised, and interest shall be payable at least annually and be at least equal
to the minimum interest rate necessary to avoid imputed interest pursuant to all
applicable sections of the Code. The Board shall have the authority to permit
or require the Optionee to secure any promissory note used to exercise an Option
with the shares of Stock acquired on exercise of the Option and/or with other
collateral acceptable to the Company.
(i) Unless otherwise provided by the Board, in the event the
Company at any time is subject to the regulations promulgated by the Board of
Governors of the Federal Reserve System or any other governmental entity
affecting the extension of credit in connection with the Company's securities,
any promissory note shall comply with such applicable regulations, and the
Optionee shall pay the unpaid principal and accrued interest, if any, to the
extent necessary to comply with such applicable regulations.
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(ii) The Company reserves, at any and all times, the right, in
the Company's sole and absolute discretion, to establish, decline to approve
and/or terminate any program and/or procedures for the exercise of Options by
means of an assignment of the proceeds of a sale of some or all of the shares of
Stock to be acquired upon such exercise.
7. STANDARD FORMS OF STOCK OPTION AGREEMENT. Unless otherwise provided
for by the Board at the time an Option is granted or as otherwise provided for
by this paragraph 7, all Options shall comply with and be subject to the terms
and conditions set forth in the standard forms of stock option agreement
attached hereto as EXHIBIT A and EXHIBIT B and incorporated herein by reference.
(a) INCENTIVE STOCK OPTIONS. Unless otherwise provided for by the
Board at the time an Option is granted, an Option designated as an "Incentive
Stock Option" shall comply with and be subject to the terms and conditions set
forth in the form of incentive stock option agreement attached hereto as
EXHIBIT A and incorporated herein by reference.
(b) NONQUALIFIED STOCK OPTIONS. Unless otherwise provided for by the
Board at the time an Option is granted, an Option designated as a "Nonqualified
Stock Option" shall comply with and be subject to the terms and conditions set
forth in the form of nonqualified stock option agreement attached hereto as
EXHIBIT B and incorporated herein by reference.
(c) STANDARD TERM FOR OPTIONS. Unless otherwise provided for by the
Board in the grant of an Option, any Stock Option granted hereunder shall be
exercisable for a term of ten (10) years.
8. AUTHORITY TO VARY TERMS. The Board shall have the authority from time
to time to vary the terms of either of the standard forms of Stock Option
Agreement described in paragraph 7 above either in connection with the grant of
an individual Option or in connection with the authorization of a new standard
form or forms; provided, however, that the terms and conditions of such revised
or amended standard form or forms of stock option agreement shall be in
accordance with the terms of the Plan. Such authority shall include, but not by
way of limitation, the authority to grant Options which are immediately
exercisable subject to the Company's right to repurchase any unvested shares of
Stock acquired by an Optionee on exercise of an Option in the event such
Optionee's employment with the Participating Company Group is terminated for any
reason, with or without cause.
9. EFFECT OF CHANGE IN STOCK SUBJECT TO PLAN. Appropriate adjustments
shall be made in the number and class of shares of Stock subject to the Plan and
to any outstanding Options and in the option exercise price of any outstanding
Options in the event of a stock dividend, stock split, reverse stock split,
recapitalization, combination, reclassification, or like change in the capital
structure of the Company.
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10. TRANSFER OF CONTROL. A "Transfer of Control" shall be deemed to have
occurred in the event any of the following occurs with respect to the Company:
(a) a merger or consolidation in which the Company is not the
surviving corporation;
(b) the sale, exchange, or transfer of all or substantially all of
the assets of the Company (other than a sale, exchange, or transfer to one (1)
or more subsidiary corporations (as defined in paragraph 1 above) of the
Company); or
(c) A liquidation or dissolution of the Company.
In the event of a Transfer of Control, the Board, in its sole discretion,
may arrange with the surviving, continuing, successor, or purchasing corporation
or parent corporation thereof, as the case may be (the "Acquiring Corporation"),
for the Acquiring Corporation to either assume the Company's rights and
obligations under outstanding Options or substitute options for the Acquiring
Corporation's stock for such outstanding Options. Any Options which are neither
assumed or substituted for by the Acquiring Corporation in connection with the
Transfer of Control nor exercised as of the date of the Transfer of Control
shall terminate and cease to be outstanding effective as of the date of the
Transfer of Control.
11. PROVISION OF INFORMATION. At least annually, copies of the Company's
balance sheet and income statement for the just completed fiscal year shall be
made available to each Optionee and purchasers of shares of Stock upon the
exercise of an Option. The Company shall not be required to provide such
information to persons whose duties in connection with the Company assure them
access to equivalent information.
12. OPTIONS NON-TRANSFERABLE. During the lifetime of the Optionee, the
Option shall be exercisable only by the Optionee. No Option shall be assignable
or transferable by the Optionee, except by will or by the laws of descent and
distribution.
13. TRANSFER OF COMPANY'S RIGHTS. In the event any Participating Company
assigns, other than by operation of law, to a third person, other than another
Participating Company, any of the Participating Company's rights to repurchase
any shares of Stock acquired on the exercise of an Option, the assignee shall
pay to the assigning Participating Company the value of such right as determined
by the Company in the Company's sole discretion. Such consideration shall be in
such form, including, without limitation, the performance of future services, as
the Company shall determine in the Company's sole discretion. In the event such
repurchase right is exercisable at the time of such assignment, the value of
such right shall be not less than the fair market value of the shares of Stock
which may be repurchased under such right (as determined by the Company) minus
the repurchase price of such shares. The requirements of this paragraph 13
regarding the minimum consideration to be received by the assigning
Participating Company shall not inure to the benefit of the Optionee whose
shares of Stock are being repurchased. Failure
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of a Participating Company to comply with the provisions of this paragraph 13
shall not constitute a defense or otherwise prevent the exercise of the
repurchase right by the assignee of such right.
14. TERMINATION OR AMENDMENT OF PLAN. The Board, including any duly
appointed committee of the Board, may terminate or amend the Plan or one or more
outstanding options at any time; provided, however, that without the approval of
the Company's shareholders, there shall be (a) no increase in the total number
of shares of Stock covered by the Plan (except by operation of the provisions of
paragraph 9 above), (b) no change in the class of persons eligible to receive
Incentive Stock Options and (c) no expansion in the class of persons eligible to
receive nonqualified stock options. In any event, no amendment may adversely
affect any then outstanding Option or any unexercised portion thereof, without
the consent of the Optionee, unless such amendment is required to enable an
Option designated as an Incentive Stock Option to qualify as an Incentive Stock
Option.
IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies that
the foregoing Puma Technology, Inc. 1993 Stock Option Plan was duly adopted by
the Board of Directors of the Company on the 30th day of October 1993, and as
amended on May 24, 1994, and March 8, 1996.
-----------------------------------
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October 30, 1993 Date 1993 Stock Option Plan adopted by Unanimous
Written Consent of the Board of Directors with a
share reserve of 685,500 (pre 2 for 1 split)
shares.
October 30, 1993 Date Shareholders approved adoption of the 1993
Stock Option Plan with a share reserve of 685,500
(pre 2 for 1 split) shares by Written Consent of
Shareholders.
May 24, 1994 Date Board of Directors approved share reserve
decrease to 1,356,300 (post 2 for 1 split) shares
by Unanimous Written Consent.
March 8, 1996 Date of Board of Directors approval of a share
reserve increase of 1,143,700 to 2,500,000.
April , 1996 Date Shareholder approved share reserve increase
by 1,143,700 to 2,500,000.
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IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY OR ANY INTEREST
THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN
CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT
AS PERMITTED IN THE COMMISSIONER'S RULES.
THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS BEEN ACQUIRED FOR INVESTMENT
AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF.
NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
PUMA TECHNOLOGY, INC.
IMMEDIATELY EXERCISABLE
NONQUALIFIED STOCK OPTION AGREEMENT
Puma Technology, Inc. (the "Company"), granted to the individual named
below an option to purchase certain shares of common stock of the Company, in
the manner and subject to the provisions of this Option Agreement.
1. DEFINITIONS:
(a) "Optionee" shall mean .
(b) "Date of Option Grant" shall mean .
(c) "Number of Option Shares" shall mean shares
of common stock of the Company as adjusted from time to time pursuant to
paragraph 9 below.
(d) "Exercise Price" shall mean $ per share as adjusted
from time to time pursuant to paragraph 9 below.
(e) "Initial Exercise Date" shall be the Date of Option Grant.
(f) "Initial Vesting Date" shall be the date occurring one (1) year
after the Date of Option Grant.
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(g) Determination of "Vested Ratio":
Vested Ratio
------------
Prior to Initial Vesting Date 0
On Initial Vesting Date, provided 1/4
the Optionee is continuously employed
by a Participating Company from the
Date of Option Grant until the
Initial Vesting Date
PLUS
For each full month of the Optionee's 1/48
continuous employment by a Participating
Company from the Initial Vesting Date
In no event shall the Vested Ratio exceed 1/1.
(h) "Option Term Date" shall mean the date ten (10) years after the
Date of Option Grant.
(i) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(j) "Company" shall mean Puma Technology, Inc., a California
corporation, and any successor corporation thereto.
(k) "Participating Company" shall mean (i) the Company and (ii) any
future parent and/or subsidiary corporation of the Company while such
corporation is a parent or subsidiary of the Company. For purposes of this
Option Agreement, a parent corporation and a subsidiary corporation shall be as
defined in sections 424(e) and 424(f) of the Code.
(l) "Participating Company Group" shall mean at any point in time all
corporations collectively which are then a Participating Company.
(m) "Plan" shall mean the Puma Technology, Inc. 1993 Stock Option
Plan.
2. STATUS OF THE OPTION. This Option is intended to be a nonqualified
stock option and shall not be treated as an incentive stock option as described
in section 422(b) of the Code.
3. ADMINISTRATION. All questions of interpretation concerning this
Option Agreement shall be determined by the Board of Directors of the Company
(the "Board") and/or by a duly appointed committee of the Board having such
powers as
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<PAGE>
shall be specified by the Board. Any subsequent references herein to the Board
shall also mean the committee if such committee has been appointed and, unless
the powers of the committee have been specifically limited, the committee shall
have all of the powers of the Board granted in the Plan, including, without
limitation, the power to terminate or amend the Plan at any time, subject to the
terms of the Plan and any applicable limitations imposed by law. All
determinations by the Board shall be final and binding upon all persons having
an interest in the Option. Any officer of a Participating Company shall have
the authority to act on behalf of the Company with respect to any matter, right,
obligation, or election which is the responsibility of or which is allocated to
the Company herein, provided the officer has apparent authority with respect to
such matter, right, obligation, or election.
4. EXERCISE OF THE OPTION.
(a) RIGHT TO EXERCISE. The Option shall be immediately exercisable
in its entirety on and after the Initial Exercise Date subject to the Optionee's
agreement that any shares purchased upon exercise are subject to the Company's
repurchase rights set forth in paragraph 11 and paragraph 12 below.
(b) METHOD OF EXERCISE. The Option may be exercised by written
notice to the Company which must state the election to exercise the Option, the
number of shares for which the Option is being exercised and such other
representations and agreements as to the Optionee's investment intent with
respect to such shares as may be required pursuant to the provisions of this
Option Agreement. The written notice must be signed by the Optionee and must be
delivered in person or by certified or registered mail, return receipt
requested, to the Chief Financial Officer of the Company, or other authorized
representative of the Participating Company Group, prior to the termination of
the Option as set forth in paragraph 6 below, accompanied by (i) full payment of
the exercise price for the number of shares being purchased and (ii) an executed
copy, if required herein, of the then current forms of escrow and security
agreements referenced below.
(c) FORM OF PAYMENT OF OPTION EXERCISE PRICE. Such payment shall be
made (i) in cash, by check, or cash equivalent, (ii) by tender to the Company of
shares of the Company's common stock owned by the Optionee having a value not
less than the option price, which either have been owned by the Optionee for
more than six (6) months or were not acquired, directly or indirectly, from the
Company, (iii) by Immediate Sales Proceeds, as defined below, or (iv) by any
combination of the foregoing. Notwithstanding the foregoing, the Option may not
be exercised by tender to the Company of shares of the Company's common stock to
the extent such tender of stock would constitute a violation of the provisions
of any law, regulation and/or agreement restricting the redemption of the
Company's common stock.
(d) WITHHOLDING. At the time the Option is exercised, in whole or in
part, or at any time thereafter as requested by the Company, the Optionee hereby
authorizes payroll withholding and otherwise agrees to make adequate provision
for foreign, federal and state tax withholding obligations of the Company, if
any, which arise in connection with the Option, including, without limitation,
obligations arising
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<PAGE>
upon (i) the exercise, in whole or in part, of the Option, (ii) the transfer, in
whole or in part, of any shares acquired on exercise of the Option, (iii) the
operation of any law or regulation providing for the imputation of interest, or
(iv) the lapsing of any restriction with respect to any shares acquired on
exercise of the Option. The Optionee is cautioned that the Option is not
exercisable unless the Company's withholding obligations are satisfied.
Accordingly, the Optionee may not be able to exercise the Option when desired
even though the Option is vested and the Company shall have no obligation to
issue a certificate for such shares.
(e) CERTIFICATE REGISTRATION. The certificate or certificates for
the shares as to which the Option shall be exercised shall be registered in the
name of the Optionee, or, if applicable, the heirs of the Optionee.
(f) RESTRICTIONS ON GRANT OF THE OPTION AND ISSUANCE OF SHARES. The
grant of the Option and the issuance of the shares upon exercise of the Option
shall be subject to compliance with all applicable requirements of federal or
state law with respect to such securities. The Option may not be exercised if
the issuance of shares upon such exercise would constitute a violation of any
applicable federal or state securities laws or other law or regulations. IT IS
UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY OR ANY INTEREST
THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN
CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT
AS PERMITTED IN THE COMMISSIONER'S RULES. Section 260.141.11 of the Rules of
the Commissioner of Corporations of the State of California is set forth in
paragraph 17 herein. In addition, no Option may be exercised unless (i) a
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), shall at the time of exercise of the Option be in effect with
respect to the shares issuable upon exercise of the Option or (ii) in the
opinion of legal counsel to the Company, the shares issuable upon exercise of
the Option may be issued in accordance with the terms of an applicable exemption
from the registration requirements of the Securities Act. THE OPTIONEE IS
CAUTIONED THAT THE OPTION MAY NOT BE EXERCISABLE UNLESS THE FOREGOING CONDITIONS
ARE SATISFIED. ACCORDINGLY, THE OPTIONEE MAY NOT BE ABLE TO EXERCISE THE OPTION
WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED. Questions concerning this
restriction should be directed to the Chief Financial Officer of the Company.
As a condition to the exercise of the Option, the Company may require the
Optionee to satisfy any qualifications that may be necessary or appropriate, to
evidence compliance with any applicable law or regulation and to make any
representation or warranty with respect thereto as may be requested by the
Company.
(g) FRACTIONAL SHARES. The Company shall not be required to issue
fractional shares upon the exercise of the Option.
5. NON-TRANSFERABILITY OF THE OPTION. The Option may be exercised during
the lifetime of the Optionee only by the Optionee and may not be assigned or
transferred in any manner except by will or by the laws of descent and
distribution. Following the death of the Optionee, the Option, to the extent
unexercised and
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<PAGE>
exercisable by the Optionee on the date of death, may be exercised by the
Optionee's legal representative or by any person empowered to do so under the
deceased Optionee's will or under the then applicable laws of descent and
distribution.
6. TERMINATION OF THE OPTION. The Option shall terminate and may no
longer be exercised on the first to occur of (a) the Option Term Date as defined
above, (b) the last date for exercising the Option following termination of
employment as described in paragraph 7 below, or (c) upon a Transfer of Control
as described in paragraph 8 below.
7. TERMINATION OF EMPLOYMENT.
(a) TERMINATION OF THE OPTION. If the Optionee ceases to be an
employee of the Participating Company Group for any reason, except death or
disability, the Option, to the extent unexercised and exercisable by the
Optionee on the date on which the Optionee ceased to be an employee, may be
exercised by the Optionee within three (3) months after the date on which the
Optionee's employment terminated, but in any event no later than the Option Term
Date. If the Optionee's employment with the Company is terminated because of
the death or disability of the Optionee, the Option, to the extent unexercised
and exercisable by the Optionee on the date on which the Optionee ceased to be
an employee, may be exercised by the Optionee (or the Optionee's legal
representative) at any time prior to the expiration of twelve (12) months from
the date on which the Optionee's employment terminated, but in any event no
later than the Option Term Date. The Optionee's employment shall be deemed to
have terminated on account of death if the Optionee dies within three (3) months
after the Optionee's termination of employment. Notwithstanding the provisions
of this paragraph 7(a), the Option may not be exercised after the Optionee's
termination of employment if the shares to be acquired on exercise of the Option
would be Unvested Shares as that term is defined in paragraph 11 below. Except
as provided in this paragraph 7(a), the Option shall terminate and may not be
exercised after the Optionee ceases to be an employee of the Participating
Company Group.
(b) EMPLOYEE AND TERMINATION OF EMPLOYMENT DEFINED. For purposes of
this paragraph 7, the term "employee" shall mean any person, including officers
and directors, employed by a Participating Company or performing services for a
Participating Company as a director, consultant, advisor or other independent
contractor. For purposes of this paragraph 7, the Optionee's employment shall
be deemed to have terminated either upon an actual termination of employment or
upon the Optionee's employer ceasing to be a Participating Company. The
Optionee's employment shall not be deemed to have terminated merely because of a
change in the capacity in which the Optionee serves as an employee, provided
that there is no interruption or termination of the Optionee's service as an
employee.
(c) EXTENSION IF EXERCISE PREVENTED BY LAW. Notwithstanding the
foregoing, if the exercise of the Option within the applicable time periods set
forth above is prevented by the provisions of paragraph 4(f) above, the Option
shall remain exercisable until three (3) months after the date the Optionee is
notified by
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<PAGE>
the Company that the Option is exercisable, but in any event no later than the
Option Term Date.
(d) EXTENSION IF OPTIONEE SUBJECT TO SECTION 16(b). Notwithstanding
the foregoing, if the exercise of the Option within the applicable time periods
set forth above would subject the Optionee to suit under Section 16(b) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Option
shall remain exercisable until the earliest to occur of (i) the tenth (10th) day
following the date on which the Optionee would no longer be subject to such
suit, (ii) the one hundred and ninetieth (190th) day after the Optionee's
termination of employment, or (iii) the Option Term Date.
(e) LEAVE OF ABSENCE. For purposes hereof, the Optionee's employment
with the Participating Company Group shall not be deemed to terminate if the
Optionee takes any military leave, sick leave, or other bona fide leave of
absence approved by the Company of ninety (90) days or less. In the event of a
leave in excess of ninety (90) days, the Optionee's employment shall be deemed
to terminate on the ninety-first (91st) day of the leave unless the Optionee's
right to reemployment with the Participating Company Group remains guaranteed by
statute or contract. Notwithstanding the foregoing, however, a leave of absence
shall be treated as employment for purposes of determining the Optionee's Vested
Ratio if and only if the leave of absence is designated by the Company as (or
required by law to be) a leave for which vesting credit is given.
8. OWNERSHIP CHANGE AND TRANSFER OF CONTROL. An "Ownership Change" shall
be deemed to have occurred in the event any of the following occurs with respect
to the Company:
(a) a merger or consolidation in which the Company is a party;
(b) a liquidation or dissolution of the Company.
A "Transfer of Control" shall mean an Ownership Change in which the
shareholders of the Company before such Ownership Change do not retain,
directly or indirectly, at least a majority of the beneficial interest in the
voting stock of the Company after such transaction or in which the Company is
not the surviving corporation.
In the event of a Transfer of Control, the Board, in its sole discretion,
may arrange with the surviving, continuing, successor, or purchasing corporation
or parent corporation thereof, as the case may be (the "Acquiring Corporation"),
for the Acquiring Corporation to assume the Company's rights and obligations
under this Option Agreement or substitute an option for the Acquiring
Corporation's stock in exchange for the Option. The Option shall terminate and
cease to be outstanding effective as of the date of the Transfer of Control to
the extent that the Option is neither assumed or substituted for by the
Acquiring Corporation in connection with the Transfer of Control nor exercised
as of the date of the Transfer of Control.
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<PAGE>
9. EFFECT OF CHANGE IN STOCK SUBJECT TO THE OPTION. Appropriate
adjustments shall be made in the number, exercise price and class of shares of
stock subject to the Option in the event of a stock dividend, stock split,
reverse stock split, recapitalization, combination, reclassification, or like
change in the capital structure of the Company. In the event a majority of the
shares which are of the same class as the shares that are subject to the Option
are exchanged for, converted into, or otherwise become (whether or not pursuant
to an Ownership Change) shares of another corporation (the "New Shares"), the
Company may unilaterally amend the Option to provide that the Option is
exercisable for New Shares. In the event of any such amendment, the number of
shares and the exercise price shall be adjusted in a fair and equitable manner.
10. RIGHTS AS A SHAREHOLDER OR EMPLOYEE. The Optionee shall have no
rights as a shareholder with respect to any shares covered by the Option until
the date of the issuance of a certificate or certificates for the shares for
which the Option has been exercised. No adjustment shall be made for dividends
or distributions or other rights for which the record date is prior to the date
such certificate or certificates are issued, except as provided in paragraph 9
above. Nothing in the Option shall confer upon the Optionee any right to
continue in the employ of a Participating Company or interfere in any way with
any right of the Participating Company Group to terminate the Optionee's
employment at any time.
11. UNVESTED SHARE REPURCHASE OPTION.
(a) UNVESTED SHARE REPURCHASE OPTION. In the event the Optionee's
employment with the Participating Company Group is terminated for any reason,
with or without cause, or if the Optionee or the Optionee's legal representative
attempts to sell, exchange, transfer, pledge, or otherwise dispose of (other
than pursuant to an Ownership Change not resulting in a Transfer of Control as
defined in paragraph 8 above) any shares acquired upon exercise of the Option
which exceed the Optionee's Vested Shares as defined in paragraph 11(b) below
(the "Unvested Shares"), the Company shall have the right to repurchase the
Unvested Shares under the terms and subject to the conditions set forth in this
paragraph 11 (the "Unvested Share Repurchase Option").
(b) VESTED SHARES AND UNVESTED SHARES DEFINED. The total Number of
Option Shares multiplied by the Vested Ratio as set forth in paragraph 1 above
are Vested Shares. For purposes of this paragraph 11, the Unvested Shares are
the number of shares acquired upon exercise of the Option in excess of the
Vested Shares.
(c) EXERCISE OF UNVESTED SHARE REPURCHASE OPTION. The Company may
exercise the Unvested Share Repurchase Option by written notice to the Optionee
within sixty (60) days after (i) such termination of employment (or exercise of
the Option, if later) or (ii) the Company has received notice of the attempted
disposition. If the Company fails to give notice within such sixty (60) day
period, the Unvested Share Repurchase Option shall terminate unless the Company
and the Optionee have extended the time for the exercise of the Unvested Share
Repurchase
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Option. The Unvested Share Repurchase Option must be exercised, if at all, for
all of the Unvested Shares, except as the Company and the Optionee otherwise
agree.
(d) PAYMENT FOR SHARES AND RETURN OF SHARES. Payment by the Company
to the Optionee shall be made in cash within thirty (30) days after the date of
the mailing of the written notice of exercise of the Unvested Share Repurchase
Option. For purposes of the foregoing, cancellation of any indebtedness of the
Optionee to any Participating Company shall be treated as payment to the
Optionee in cash to the extent of the unpaid principal and any accrued interest
canceled. The purchase price per share being repurchased by the Company shall
be an amount equal to the Optionee's original cost per share, as adjusted
pursuant to paragraph 9 above. The shares being repurchased shall be delivered
to the Company by the Optionee at the same time as the delivery of the purchase
price to the Optionee.
(e) ASSIGNMENT OF UNVESTED SHARE REPURCHASE OPTION. The Company
shall have the right to assign the Unvested Share Repurchase Option at any time,
whether or not such option is then exercisable, to one (1) or more persons as
may be selected by the Company.
(f) OWNERSHIP CHANGE. In the event of an Ownership Change, the
Unvested Share Repurchase Option shall continue in full force and effect;
provided, however, that "employment with the Participating Company Group" for
purposes of this paragraph 11 shall include all service with any corporation
which was a Participating Company at the time the services were rendered,
whether or not the corporation was included within such term both before and
after the event constituting the Ownership Change.
12. RIGHT OF FIRST REFUSAL.
(a) RIGHT OF FIRST REFUSAL. In the event the Optionee proposes to
sell, pledge, or otherwise transfer any shares acquired upon the exercise of the
Option (the "Transfer Shares") to any person or entity, including, without
limitation, any shareholder of the Participating Company Group, the Company
shall have the right to repurchase the Transfer Shares under the terms and
subject to the conditions set forth in this paragraph 12 (the "Right of First
Refusal"). For purposes of this paragraph 12, a change in record ownership of
shares, including, without limitation, any such change pursuant to a decree of
divorce or marital separation, shall be deemed a transfer subject to the Right
of First Refusal whether or not such change in record ownership results in a
change in the beneficial ownership of such shares.
(b) NOTICE OF PROPOSED TRANSFER. Prior to any proposed transfer of
the Transfer Shares, the Optionee shall give a written notice (the "Transfer
Notice") to the Company describing fully the proposed transfer, including the
number of Transfer Shares, the name and address of the proposed transferee (the
"Proposed Transferee") and, if the transfer is voluntary, the proposed transfer
price and containing such information necessary to show the bona fide nature of
the proposed transfer. In the event of a bona fide gift or involuntary
transfer, the proposed transfer price shall be deemed to be the fair market
value of the Transfer Shares as
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determined by the Company in good faith. In the event the Optionee proposes to
transfer any shares acquired upon the exercise of the Option to more than one
(1) Proposed Transferee, the Optionee shall provide a separate Transfer Notice
for the proposed transfer to each Proposed Transferee. The Transfer Notice
shall be signed by both the Optionee and the Proposed Transferee and must
constitute a binding commitment of the Optionee and the Proposed Transferee for
the transfer of the Transfer Shares to the Proposed Transferee subject only to
the Right of First Refusal.
(c) BONA FIDE TRANSFER. In the event that the Company shall
determine that the information provided by the Optionee in the Transfer Notice
is insufficient to establish the bona fide nature of a proposed voluntary
transfer, the Company shall give the Optionee written notice of the Optionee's
failure to comply with the procedure described in this paragraph 12 and the
Optionee shall have no right to transfer the Transfer Shares without first
complying with the procedure described in this paragraph 12. The Optionee shall
not be permitted to transfer the Transfer Shares if the proposed transfer is not
bona fide.
(d) EXERCISE OF THE RIGHT OF FIRST REFUSAL. In the event the
proposed transfer is deemed to be bona fide, the Company shall have the right to
purchase all, but not less than all, of the Transfer Shares (except as the
Company and Optionee otherwise agree) at the purchase price and on the terms set
forth in the Transfer Notice by delivery to the Optionee of a notice of exercise
of the Right of First Refusal within thirty (30) days after the date the
Transfer Notice is delivered to the Company. The Company's exercise or failure
to exercise the Right of First Refusal with respect to any proposed transfer
described in a Transfer Notice shall not affect the Company's ability to
exercise the Right of First Refusal with respect to any proposed transfer
described in any other Transfer Notice, whether or not such other Transfer
Notice is issued by the Optionee or issued by a person other than the Optionee
with respect to a proposed transfer to the same Proposed Transferee. If the
Company exercises the Right of First Refusal, the Company and the Optionee shall
thereupon consummate the sale of the Transfer Shares to the Company on the terms
set forth in the Transfer Notice within sixty (60) days after the date the
Transfer Notice is delivered to the Company (unless a longer period is offered
by the Proposed Transferee); provided, however, that in the event the Transfer
Notice provides for the payment for the Transfer Shares other than in cash, the
Company shall have the option of paying for the Transfer Shares by the
discounted cash equivalent of the consideration described in the Transfer Notice
as reasonably determined by the Company. For purposes of the foregoing,
cancellation of any indebtedness of the Optionee to any Participating Company
shall be treated as payment to the Optionee in cash to the extent of the unpaid
principal and any accrued interest canceled.
(e) FAILURE TO EXERCISE THE RIGHT OF FIRST REFUSAL. If the Company
fails to exercise the Right of First Refusal in full within the period specified
in paragraph 12(d) above, the Optionee may conclude a transfer to the Proposed
Transferee of the Transfer Shares on the terms and conditions described in the
Transfer Notice, provided such transfer occurs not later than ninety (90) days
following delivery to the Company of the Transfer Notice. The Company shall
have
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the right to demand further assurances from the Optionee and the Proposed
Transferee (in a form satisfactory to the Company) that the transfer of the
Transfer Shares was actually carried out on the terms and conditions described
in the Transfer Notice. No Transfer Shares shall be transferred on the books of
the Company until the Company has received such assurances, if so demanded, and
has approved the proposed transfer as bona fide. Any proposed transfer on terms
and conditions different from those described in the Transfer Notice, as well as
any subsequent proposed transfer by the Optionee, shall again be subject to the
Right of First Refusal and shall require compliance by the Optionee with the
procedure described in this paragraph 12.
(f) TRANSFEREES OF THE TRANSFER SHARES. All transferees of the
Transfer Shares or any interest therein, other than the Company, shall be
required as a condition of such transfer to agree in writing (in a form
satisfactory to the Company) that such transferee shall receive and hold such
Transfer Shares or interests subject to the provisions of this paragraph 12
providing for the Right of First Refusal with respect to any subsequent
transfer. Any sale or transfer of any shares acquired upon exercise of the
Option shall be void unless the provisions of this paragraph 12 are met.
(g) TRANSFERS NOT SUBJECT TO THE RIGHT OF FIRST REFUSAL. The Right
of First Refusal shall not apply to any transfer or exchange of the shares
acquired pursuant to the exercise of the Option if such transfer is in
connection with an Ownership Change. If the consideration received pursuant to
such transfer or exchange consists of stock of a Participating Company, such
consideration shall remain subject to the Right of First Refusal unless the
provisions of paragraph 12(i) below result in a termination of the Right of
First Refusal.
(h) ASSIGNMENT OF THE RIGHT OF FIRST REFUSAL. The Company shall have
the right to assign the Right of First Refusal at any time, whether or not the
Optionee has attempted a transfer, to one (1) or more persons as may be selected
by the Company.
(i) EARLY TERMINATION OF THE RIGHT OF FIRST REFUSAL. The other
provisions of this paragraph 12 notwithstanding, the Right of First Refusal
shall terminate, and be of no further force and effect upon (i) the occurrence
of a Transfer of Control, unless the surviving, continuing, successor, or
purchasing corporation, as the case may be, assumes the Company's rights and
obligations under the Plan, or (ii) the existence of a public market for the
class of shares subject to the Right of First Refusal. A "public market" shall
be deemed to exist if (x) such stock is listed on a national securities exchange
(as that term is used in the Exchange Act) or (y) such stock is traded on the
over-the-counter market and prices therefor are published daily on business days
in a recognized financial journal.
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13. ESCROW.
(a) ESTABLISHMENT OF ESCROW. To insure shares subject to the
Unvested Share Repurchase Option and the Right of First Refusal will be
available for repurchase, the Company may require the Optionee to deposit the
certificate or certificates evidencing the shares which the Optionee purchases
upon exercise of the Option with an escrow agent designated by the Company under
the terms and conditions of an escrow agreement approved by the Company. If the
Company does not require such deposit as a condition of exercise of the Option,
the Company reserves the right at any time to require the Optionee to so deposit
the certificate or certificates in escrow. The Company shall bear the expenses
of the escrow.
(b) DELIVERY OF SHARES TO OPTIONEE. As soon as practicable after the
expiration of the Unvested Share Repurchase Option and the Right of First
Refusal but not more frequently than once each year, the escrow agent shall
deliver to the Optionee the shares no longer subject to such restriction.
(c) NOTICES AND PAYMENTS. In the event the shares held in escrow are
subject to the Company's exercise of the Right of First Refusal, the notices
required to be given to the Optionee shall be given to the escrow agent and any
payment required to be given to the Optionee shall be given to the escrow agent.
Within thirty (30) days after payment by the Company, the escrow agent shall
deliver the shares which the Company has purchased to the Company and shall
deliver the payment received from the Company to the Optionee.
14. STOCK DIVIDENDS SUBJECT TO OPTION AGREEMENT. If, from time to time,
there is any stock dividend, stock split, or other change in the character or
amount of any of the outstanding stock of the corporation the stock of which is
subject to the provisions of this Option Agreement, then in such event any and
all new substituted or additional securities to which the Optionee is entitled
by reason of the Optionee's ownership of the shares acquired upon exercise of
the Option shall be immediately subject to the Right of First Refusal with the
same force and effect as the shares subject to the Right of First Refusal
immediately before such event.
15. RULES OF THE COMMISSIONER OF CORPORATIONS. The Optionee is hereby
delivered a copy of Section 260.141.11 of the Rules of the Commissioner of
Corporations of the State of California, adopted pursuant to the California
Corporate Securities Act of 1968. References to the "Code" in the following
text are references to the California Corporations Code.
260.141.11. Restriction on Transfer.
(a) The issuer of any security upon which a restriction on transfer
has been imposed pursuant to Sections 260.102.6, 260.141.10 or 260.534 shall
cause a copy of this section to be delivered to each issuee or transferee of
such security at the time the certificate evidencing the security is delivered
to the issuee or transferee.
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(b) It is unlawful for the holder of any such security to consummate
a sale or transfer of such security, or any interest therein, without the prior
written consent of the Commissioner (until this condition is removed pursuant to
Section 260.141.12 of these rules), except:
(1) to the issuer;
(2) pursuant to the order or process of any court;
(3) to any person described in subdivision (i) of Section 25102
of the Code or Section 260.105.14 of these rules;
(4) to the transferor's ancestors, descendants, or spouse, or
any custodian or trustee for the account of the transferor or the transferor's
ancestors, descendants, or spouse; or to a transferee by a trustee or custodian
for the account of the transferee or the transferee's ancestors, descendants, or
spouse;
(5) to holders of securities of the same class of the same
issuer;
(6) by way of gift or donation inter vivos or on death;
(7) by or through a broker-dealer licensed under the Code
(either acting as such or as a finder) to a resident of a foreign state,
territory or country who is neither domiciled in this state to the knowledge of
the broker-dealer, nor actually present in this state if the sale of such
securities is not in violation of any securities law of the foreign state,
territory or country concerned;
(8) to a broker-dealer licensed under the Code in a principal
transaction, or as an underwriter or member of an underwriting syndicate or
selling group;
(9) if the interest sold or transferred is a pledge or other
lien given by the purchaser to the seller upon a sale of the security for which
the Commissioner's written consent is obtained or under this rule not required;
(10) by way of a sale qualified under Sections 25111, 25112,
25113, or 25121 of the Code, of the securities to be transferred, provided that
no order under Section 25140 or subdivision (a) of Section 25143 is in effect
with respect to such qualification;
(11) by a corporation to a wholly owned subsidiary of such
corporation, or by a wholly owned subsidiary of a corporation to such
corporation;
(12) by way of an exchange qualified under Section 25111, 25112
or 25113 of the Code, provided that no order under Section 25140 or
subdivision (a) of Section 25143 is in effect with respect to such
qualification;
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(13) between residents of foreign states, territories or
countries who are neither domiciled nor actually present in this state;
(14) to the State Controller pursuant to the Unclaimed Property
Law or to the administrator of the unclaimed property law of another state; or
(15) by the State Controller pursuant to the Unclaimed Property
Law or by the administrator of the unclaimed property law of another state if,
in either such case, such person (i) discloses to potential purchasers at the
sale that transfer of the securities is restricted under this rule,
(ii) delivers to each purchaser a copy of this rule, and (iii) advises the
Commissioner of the name of each purchaser;
(16) by a trustee to a successor trustee when such transfer does
not involve a change in the beneficial ownership of the securities;
(17) by way of an offer and sale of outstanding securities in an
issuer transaction that is subject to the qualification requirement of
Section 25110 of the Code but exempt from that qualification requirement by
subdivision (f) of Section 25102;
provided that any such transfer is on the condition that any certificate
evidencing the security issued to such transferee shall contain the legend
required by this section.
(c) The certificates representing all such securities subject to such
a restriction on transfer, whether upon initial issuance or upon any transfer
thereof, shall bear on their face a legend prominently stamped or printed
thereon in capital letters of not less than 10-point size reading as follows:
"IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES."
16. LEGENDS. The Company may at any time place legends referencing the
Unvested Share Repurchase Option and the Right of First Refusal set forth in
paragraph 11 and paragraph 12 above and any applicable federal or state
securities law restrictions on all certificates representing shares of stock
subject to the provisions of this Option Agreement. The Optionee shall, at the
request of the Company, promptly present to the Company any and all certificates
representing shares acquired pursuant to the Option in the possession of the
Optionee in order to carry out the provisions of this paragraph. Unless
otherwise specified by the Company, legends placed on such certificates may
include, but shall not be limited to, the following:
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(a) "THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN
ACCORDANCE WITH RULE 144 OR RULE 701 UNDER THE ACT, OR THE COMPANY RECEIVES AN
OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO
THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT."
(b) Any legend required to be placed thereon by the Commissioner of
Corporations of the State of California.
(c) "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN
UNVESTED SHARE REPURCHASE OPTION IN FAVOR OF THE CORPORATION OR ITS ASSIGNEE SET
FORTH IN AN AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED HOLDER, OR SUCH
HOLDER'S PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL
OFFICE OF THIS CORPORATION."
(d) "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF THE CORPORATION OR ITS ASSIGNEE SET
FORTH IN AN AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED HOLDER, OR SUCH
HOLDER'S PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL
OFFICE OF THIS CORPORATION."
17. INITIAL PUBLIC OFFERING. The Optionee hereby agrees that in the event
of any underwritten public offering of stock, including an initial public
offering of stock, made by the Company pursuant to an effective registration
statement filed under the Securities Act, the Optionee shall not offer, sell,
contract to sell, pledge, hypothecate, grant any option to purchase or make any
short sale of, or otherwise dispose of any shares of stock of the Company or any
rights to acquire stock of the Company for such period of time from and after
the effective date of such registration statement as may be established by the
underwriter for such public offering; provided, however, that such period of
time shall not exceed one hundred eighty (180) days from the effective date of
the registration statement to be filed in connection with such public offering.
The foregoing limitation shall not apply to shares registered in the initial
public offering under the Securities Act and shall cease to apply once a
registration statement is effective covering shares issuable pursuant to options
granted pursuant to the Plan, whether or not such registration statement applies
to any of the shares issued or issuable pursuant to the Option.
18. BINDING EFFECT. This Option Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
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19. TERMINATION OR AMENDMENT. The Board, including any duly appointed
committee of the Board, may terminate or amend the Plan and/or the Option at any
time; provided, however, that no such termination or amendment may adversely
affect the Option or any unexercised portion hereof without the consent of the
Optionee unless such amendment is required to enable the Option to qualify as
an Incentive Stock Option.
20. INTEGRATED AGREEMENT. This Option Agreement constitutes the entire
understanding and agreement of the Optionee and the Participating Company Group
with respect to the subject matter contained herein, and there are no
agreements, understandings, restrictions, representations, or warranties among
the Optionee and the Company other than those as set forth or provided for
herein. To the extent contemplated herein, the provisions of this Option
Agreement shall survive any exercise of the Option and shall remain in full
force and effect.
21. APPLICABLE LAW. This Option Agreement shall be governed by the laws
of the State of California as such laws are applied to agreements between
California residents entered into and to be performed entirely within the State
of California.
Puma Technology, Inc.
By:
------------------------------------
Title:
---------------------------------
The Optionee represents that the Optionee is familiar with the terms and
provisions of this Option Agreement, including the Unvested Share Repurchase
Option and the Right of First Refusal set forth in paragraph 11 and 12, and
hereby accepts the Option subject to all of the terms and provisions thereof.
The Optionee hereby agrees to accept as binding, conclusive and final all
decisions or interpretations of the Board upon any questions arising under this
Option Agreement.
The undersigned acknowledges receipt of a copy of Section 260.141.11 of the
Rules of the Commissioner of Corporations of the State of California regarding
restriction on transfer.
Date:
----------------------------- ----------------------------------------
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The undersigned, being the spouse of the above-named Optionee, does hereby
acknowledge that the undersigned has read and is familiar with the provisions of
the above Option Agreement, including, without limitation, the provisions of
paragraph 12 providing a right of first refusal in favor of the Company upon
certain changes in record ownership, and the undersigned hereby agrees thereto
and joins therein to the extent, if any, that the agreement and joinder of the
undersigned may be necessary.
----------------------------------------
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IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY OR ANY INTEREST
THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN
CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT
AS PERMITTED IN THE COMMISSIONER'S RULES.
THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS BEEN ACQUIRED FOR INVESTMENT
AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF.
NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
PUMA TECHNOLOGY, INC.
IMMEDIATELY EXERCISABLE
INCENTIVE STOCK OPTION AGREEMENT
Puma Technology, Inc. (the "Company"), granted to the individual named
below an option to purchase certain shares of common stock of the Company, in
the manner and subject to the provisions of this Option Agreement.
1. DEFINITIONS:
(a) "Optionee" shall mean .
(b) "Date of Option Grant" shall mean .
(c) "Number of Option Shares" shall mean shares
of common stock of the Company as adjusted from time to time pursuant to
paragraph 9 below.
(d) "Exercise Price" shall mean $ per share as adjusted
from time to time pursuant to paragraph 9 below.
(e) "Initial Exercise Date" shall be the Date of Option Grant.
(f) "Initial Vesting Date" shall be the date occurring one (1) year
after the Date of Option Grant.
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(g) Determination of "Vested Ratio":
Vested Ratio
------------
Prior to Initial Vesting Date 0
On Initial Vesting Date, provided 1/4
the Optionee is continuously employed
by a Participating Company from the
Date of Option Grant until the
Initial Vesting Date
PLUS
For each full month of the Optionee's 1/48
continuous employment by a Participating
Company from the Initial Vesting Date
In no event shall the Vested Ratio exceed 1/1.
(h) "Option Term Date" shall mean the date ten (10) years after the
Date of Option Grant.
(i) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(j) "Company" shall mean Puma Technology, Inc., a California
corporation, and any successor corporation thereto.
(k) "Participating Company" shall mean (i) the Company and (ii) any
future parent and/or subsidiary corporation of the Company while such
corporation is a parent or subsidiary of the Company. For purposes of this
Option Agreement, a parent corporation and a subsidiary corporation shall be as
defined in sections 424(e) and 424(f) of the Code.
(l) "Participating Company Group" shall mean at any point in time all
corporations collectively which are then a Participating Company.
(m) "Plan" shall mean the Puma Technology, Inc. 1993 Stock Option
Plan.
2. STATUS OF THE OPTION. This Option is intended to be an incentive
stock option as described in section 422 of the Code, but the Company does not
represent or warrant that this Option qualifies as such. The Optionee should
consult with the Optionee's own tax advisors regarding the tax effects of this
Option and the requirements necessary to obtain favorable income tax treatment
under section 422 of the Code, including, but not limited to, holding period
requirements. (NOTE: If the aggregate Exercise Price of the Option (that is,
the Exercise Price multiplied by the
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Number of Option Shares) plus the aggregate exercise price of any other
incentive stock options held by the Optionee (whether granted pursuant to the
Plan or any other stock option plan of the Participating Company Group) is
greater than One Hundred Thousand Dollars ($100,000), the Optionee should
contact the Chief Financial Officer of the Company to ascertain whether the
entire Option qualifies as an incentive stock option.)
3. ADMINISTRATION. All questions of interpretation concerning this
Option Agreement shall be determined by the Board of Directors of the Company
(the "Board") and/or by a duly appointed committee of the Board having such
powers as shall be specified by the Board. Any subsequent references herein to
the Board shall also mean the committee if such committee has been appointed
and, unless the powers of the committee have been specifically limited, the
committee shall have all of the powers of the Board granted in the Plan,
including, without limitation, the power to terminate or amend the Plan at any
time, subject to the terms of the Plan and any applicable limitations imposed by
law. All determinations by the Board shall be final and binding upon all
persons having an interest in the Option. Any officer of a Participating
Company shall have the authority to act on behalf of the Company with respect to
any matter, right, obligation, or election which is the responsibility of or
which is allocated to the Company herein, provided the officer has apparent
authority with respect to such matter, right, obligation, or election.
4. EXERCISE OF THE OPTION.
(a) RIGHT TO EXERCISE. The Option shall be immediately exercisable
in its entirety on and after the Initial Exercise Date subject to the Optionee's
agreement that any shares purchased upon exercise are subject to the Company's
repurchase rights set forth in paragraph 11 and paragraph 12 below.
Notwithstanding the foregoing, except as provided in paragraph 16 below, the
aggregate fair market value of the stock with respect to which the Optionee may
exercise the Option for the first time during any calendar year, together with
any other incentive stock options which are exercisable for the first time
during any such year, as determined in accordance with section 422(d) of the
Code, shall not exceed One Hundred Thousand Dollars ($100,000). Such limitation
on exercise described in section 422(d) of the Code shall be referred to in this
Option Agreement as the "$100,000 Exercise Limitation."
(b) METHOD OF EXERCISE. The Option may be exercised by written
notice to the Company which must state the election to exercise the Option, the
number of shares for which the Option is being exercised and such other
representations and agreements as to the Optionee's investment intent with
respect to such shares as may be required pursuant to the provisions of this
Option Agreement. The written notice must be signed by the Optionee and must be
delivered in person or by certified or registered mail, return receipt
requested, to the Chief Financial Officer of the Company, or other authorized
representative of the Participating Company Group, prior to the termination of
the Option as set forth in paragraph 6 below, accompanied by (i) full payment of
the exercise price for the number of shares being purchased and (ii) an executed
copy, if required herein, of the then current forms of escrow and security
agreements referenced below.
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(c) FORM OF PAYMENT OF OPTION EXERCISE PRICE. Such payment shall be
made (i) in cash, by check, or cash equivalent, (ii) by tender to the Company of
shares of the Company's common stock owned by the Optionee having a value not
less than the option price, which either have been owned by the Optionee for
more than six (6) months or were not acquired, directly or indirectly, from the
Company, (iii) by Immediate Sales Proceeds, as defined below, or (iv) by any
combination of the foregoing. Notwithstanding the foregoing, the Option may not
be exercised by tender to the Company of shares of the Company's common stock to
the extent such tender of stock would constitute a violation of the provisions
of any law, regulation and/or agreement restricting the redemption of the
Company's common stock.
(d) WITHHOLDING. At the time the Option is exercised, in whole or in
part, or at any time thereafter as requested by the Company, the Optionee hereby
authorizes payroll withholding and otherwise agrees to make adequate provision
for foreign, federal and state tax withholding obligations of the Company, if
any, which arise in connection with the Option, including, without limitation,
obligations arising upon (i) the exercise, in whole or in part, of the Option,
(ii) the transfer, in whole or in part, of any shares acquired on exercise of
the Option, (iii) the operation of any law or regulation providing for the
imputation of interest, or (iv) the lapsing of any restriction with respect to
any shares acquired on exercise of the Option. The Optionee is cautioned that
the Option is not exercisable unless the Company's withholding obligations are
satisfied. Accordingly, the Optionee may not be able to exercise the Option when
desired even though the Option is vested and the Company shall have no
obligation to issue a certificate for such shares.
(e) CERTIFICATE REGISTRATION. The certificate or certificates for
the shares as to which the Option shall be exercised shall be registered in the
name of the Optionee, or, if applicable, the heirs of the Optionee.
(f) RESTRICTIONS ON GRANT OF THE OPTION AND ISSUANCE OF SHARES. The
grant of the Option and the issuance of the shares upon exercise of the Option
shall be subject to compliance with all applicable requirements of federal or
state law with respect to such securities. The Option may not be exercised if
the issuance of shares upon such exercise would constitute a violation of any
applicable federal or state securities laws or other law or regulations. IT IS
UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY OR ANY INTEREST
THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN
CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT
AS PERMITTED IN THE COMMISSIONER'S RULES. Section 260.141.11 of the Rules of
the Commissioner of Corporations of the State of California is set forth in
paragraph 17 herein. In addition, no Option may be exercised unless (i) a
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), shall at the time of exercise of the Option be in effect with
respect to the shares issuable upon exercise of the Option or (ii) in the
opinion of legal counsel to the Company, the shares issuable upon exercise of
the Option may be issued in accordance with the terms of an applicable exemption
from the registration requirements of the Securities Act. THE OPTIONEE IS
CAUTIONED THAT THE OPTION MAY NOT BE EXERCISABLE UNLESS THE FOREGOING
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CONDITIONS ARE SATISFIED. ACCORDINGLY, THE OPTIONEE MAY NOT BE ABLE TO EXERCISE
THE OPTION WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED. Questions
concerning this restriction should be directed to the Chief Financial Officer of
the Company. As a condition to the exercise of the Option, the Company may
require the Optionee to satisfy any qualifications that may be necessary or
appropriate, to evidence compliance with any applicable law or regulation and to
make any representation or warranty with respect thereto as may be requested by
the Company.
(g) FRACTIONAL SHARES. The Company shall not be required to issue
fractional shares upon the exercise of the Option.
5. NON-TRANSFERABILITY OF THE OPTION. The Option may be exercised during
the lifetime of the Optionee only by the Optionee and may not be assigned or
transferred in any manner except by will or by the laws of descent and
distribution. Following the death of the Optionee, the Option, to the extent
unexercised and exercisable by the Optionee on the date of death, may be
exercised by the Optionee's legal representative or by any person empowered to
do so under the deceased Optionee's will or under the then applicable laws of
descent and distribution.
6. TERMINATION OF THE OPTION. The Option shall terminate and may no
longer be exercised on the first to occur of (a) the Option Term Date as defined
above, (b) the last date for exercising the Option following termination of
employment as described in paragraph 7 below, or (c) upon a Transfer of Control
as described in paragraph 8 below.
7. TERMINATION OF EMPLOYMENT.
(a) TERMINATION OF THE OPTION. If the Optionee ceases to be an
employee of the Participating Company Group for any reason, except death or
disability, the Option, to the extent unexercised and exercisable by the
Optionee on the date on which the Optionee ceased to be an employee, may be
exercised by the Optionee within three (3) months after the date on which the
Optionee's employment terminated, but in any event no later than the Option Term
Date. If the Optionee's employment with the Company is terminated because of
the death or disability of the Optionee, the Option, to the extent unexercised
and exercisable by the Optionee on the date on which the Optionee ceased to be
an employee, may be exercised by the Optionee (or the Optionee's legal
representative) at any time prior to the expiration of twelve (12) months from
the date on which the Optionee's employment terminated, but in any event no
later than the Option Term Date. (NOTE: If the Option is exercised more than
three (3) months after the date on which the Optionee's employment terminated as
a result of a disability other than a permanent and total disability as defined
in Section 22(e)(3) of the Code, the exercise of the Option will be treated as
an exercise of a nonqualified stock option rather than of an incentive stock
option to the extent required by Section 422 of the Code.) The Optionee's
employment shall be deemed to have terminated on account of death if the
Optionee dies within three (3) months after the Optionee's termination of
employment. Notwithstanding the provisions of this paragraph 7(a), the Option
may
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not be exercised after the Optionee's termination of employment if the shares to
be acquired on exercise of the Option would be Unvested Shares as that term is
defined in paragraph 11 below. Except as provided in this paragraph 7(a), the
Option shall terminate and may not be exercised after the Optionee ceases to be
an employee of the Participating Company Group.
(b) TERMINATION OF EMPLOYMENT DEFINED. For purposes of this
paragraph 7, the Optionee's employment shall be deemed to have terminated either
upon an actual termination of employment or upon the Optionee's employer ceasing
to be a Participating Company.
(c) EXTENSION IF EXERCISE PREVENTED BY LAW. Notwithstanding the
foregoing, if the exercise of the Option within the applicable time periods set
forth above is prevented by the provisions of paragraph 4(f) above, the Option
shall remain exercisable until three (3) months after the date the Optionee is
notified by the Company that the Option is exercisable, but in any event no
later than the Option Term Date.
(d) EXTENSION IF OPTIONEE SUBJECT TO SECTION 16(b). Notwithstanding
the foregoing, if the exercise of the Option within the applicable time periods
set forth above would subject the Optionee to suit under Section 16(b) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Option
shall remain exercisable until the earliest to occur of (i) the tenth (10th) day
following the date on which the Optionee would no longer be subject to such
suit, (ii) the one hundred and ninetieth (190th) day after the Optionee's
termination of employment, or (iii) the Option Term Date.
(e) LEAVE OF ABSENCE. For purposes hereof, the Optionee's employment
with the Participating Company Group shall not be deemed to terminate if the
Optionee takes any military leave, sick leave, or other bona fide leave of
absence approved by the Company of ninety (90) days or less. In the event of a
leave in excess of ninety (90) days, the Optionee's employment shall be deemed
to terminate on the ninety-first (91st) day of the leave unless the Optionee's
right to reemployment with the Participating Company Group remains guaranteed by
statute or contract. Notwithstanding the foregoing, however, a leave of absence
shall be treated as employment for purposes of determining the Optionee's Vested
Ratio if and only if the leave of absence is designated by the Company as (or
required by law to be) a leave for which vesting credit is given.
8. OWNERSHIP CHANGE AND TRANSFER OF CONTROL. An "Ownership Change" shall
be deemed to have occurred in the event any of the following occurs with respect
to the Company:
(a) a merger or consolidation in which the Company is a party;
(b) a liquidation or dissolution of the Company.
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A "Transfer of Control" shall mean an Ownership Change in which the
shareholders of the Company before such Ownership Change do not retain,
directly or indirectly, at least a majority of the beneficial interest in the
voting stock of the Company after such transaction or in which the Company is
not the surviving corporation.
In the event of a Transfer of Control, the Board, in its sole discretion,
may arrange with the surviving, continuing, successor, or purchasing corporation
or parent corporation thereof, as the case may be (the "Acquiring Corporation"),
for the Acquiring Corporation to assume the Company's rights and obligations
under this Option Agreement or substitute an option for the Acquiring
Corporation's stock in exchange for the Option. The Option shall terminate and
cease to be outstanding effective as of the date of the Transfer of Control to
the extent that the Option is neither assumed or substituted for by the
Acquiring Corporation in connection with the Transfer of Control nor exercised
as of the date of the Transfer of Control.
9. EFFECT OF CHANGE IN STOCK SUBJECT TO THE OPTION. Appropriate
adjustments shall be made in the number, exercise price and class of shares of
stock subject to the Option in the event of a stock dividend, stock split,
reverse stock split, recapitalization, combination, reclassification, or like
change in the capital structure of the Company. In the event a majority of the
shares which are of the same class as the shares that are subject to the Option
are exchanged for, converted into, or otherwise become (whether or not pursuant
to an Ownership Change) shares of another corporation (the "New Shares"), the
Company may unilaterally amend the Option to provide that the Option is
exercisable for New Shares. In the event of any such amendment, the number of
shares and the exercise price shall be adjusted in a fair and equitable manner.
10. RIGHTS AS A SHAREHOLDER OR EMPLOYEE. The Optionee shall have no
rights as a shareholder with respect to any shares covered by the Option until
the date of the issuance of a certificate or certificates for the shares for
which the Option has been exercised. No adjustment shall be made for dividends
or distributions or other rights for which the record date is prior to the date
such certificate or certificates are issued, except as provided in paragraph 9
above. Nothing in the Option shall confer upon the Optionee any right to
continue in the employ of a Participating Company or interfere in any way with
any right of the Participating Company Group to terminate the Optionee's
employment at any time.
11. UNVESTED SHARE REPURCHASE OPTION.
(a) UNVESTED SHARE REPURCHASE OPTION. In the event the Optionee's
employment with the Participating Company Group is terminated for any reason,
with or without cause, or if the Optionee or the Optionee's legal representative
attempts to sell, exchange, transfer, pledge, or otherwise dispose of (other
than pursuant to an Ownership Change) any shares acquired upon exercise of the
Option which exceed the Optionee's Vested Shares as defined in paragraph 11(b)
below (the "Unvested Shares"), the Company shall have the right to repurchase
the Unvested
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Shares under the terms and subject to the conditions set forth in this
paragraph 11 (the "Unvested Share Repurchase Option").
(b) VESTED SHARES AND UNVESTED SHARES DEFINED. The total Number of
Option Shares multiplied by the Vested Ratio as set forth in paragraph 1 above
are Vested Shares. For purposes of this paragraph 11, the Unvested Shares are
the number of shares acquired upon exercise of the Option in excess of the
Vested Shares.
(c) EXERCISE OF UNVESTED SHARE REPURCHASE OPTION. The Company may
exercise the Unvested Share Repurchase Option by written notice to the Optionee
within sixty (60) days after (i) such termination of employment (or exercise of
the Option, if later) or (ii) the Company has received notice of the attempted
disposition. If the Company fails to give notice within such sixty (60) day
period, the Unvested Share Repurchase Option shall terminate unless the Company
and the Optionee have extended the time for the exercise of the Unvested Share
Repurchase Option. The Unvested Share Repurchase Option must be exercised, if
at all, for all of the Unvested Shares, except as the Company and the Optionee
otherwise agree.
(d) PAYMENT FOR SHARES AND RETURN OF SHARES. Payment by the Company
to the Optionee shall be made in cash within thirty (30) days after the date of
the mailing of the written notice of exercise of the Unvested Share Repurchase
Option. For purposes of the foregoing, cancellation of any indebtedness of the
Optionee to any Participating Company shall be treated as payment to the
Optionee in cash to the extent of the unpaid principal and any accrued interest
canceled. The purchase price per share being repurchased by the Company shall
be an amount equal to the Optionee's original cost per share, as adjusted
pursuant to paragraph 9 above. The shares being repurchased shall be delivered
to the Company by the Optionee at the same time as the delivery of the purchase
price to the Optionee.
(e) ASSIGNMENT OF UNVESTED SHARE REPURCHASE OPTION. The Company
shall have the right to assign the Unvested Share Repurchase Option at any time,
whether or not such option is then exercisable, to one (1) or more persons as
may be selected by the Company.
(f) OWNERSHIP CHANGE. In the event of an Ownership Change, the
Unvested Share Repurchase Option shall continue in full force and effect;
provided, however, that "employment with the Participating Company Group" for
purposes of this paragraph 11 shall include all service with any corporation
which was a Participating Company at the time the services were rendered,
whether or not the corporation was included within such term both before and
after the event constituting the Ownership Change.
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12. RIGHT OF FIRST REFUSAL.
(a) RIGHT OF FIRST REFUSAL. In the event the Optionee proposes to
sell, pledge, or otherwise transfer any shares acquired upon the exercise of the
Option (the "Transfer Shares") to any person or entity, including, without
limitation, any shareholder of the Participating Company Group, the Company
shall have the right to repurchase the Transfer Shares under the terms and
subject to the conditions set forth in this paragraph 12 (the "Right of First
Refusal"). For purposes of this paragraph 12, a change in record ownership of
shares, including, without limitation, any such change pursuant to a decree of
divorce or marital separation, shall be deemed a transfer subject to the Right
of First Refusal whether or not such change in record ownership results in a
change in the beneficial ownership of such shares.
(b) NOTICE OF PROPOSED TRANSFER. Prior to any proposed transfer of
the Transfer Shares, the Optionee shall give a written notice (the "Transfer
Notice") to the Company describing fully the proposed transfer, including the
number of Transfer Shares, the name and address of the proposed transferee (the
"Proposed Transferee") and, if the transfer is voluntary, the proposed transfer
price and containing such information necessary to show the bona fide nature of
the proposed transfer. In the event of a bona fide gift or involuntary
transfer, the proposed transfer price shall be deemed to be the fair market
value of the Transfer Shares as determined by the Company in good faith. In the
event the Optionee proposes to transfer any shares acquired upon the exercise of
the Option to more than one (1) Proposed Transferee, the Optionee shall provide
a separate Transfer Notice for the proposed transfer to each Proposed
Transferee. The Transfer Notice shall be signed by both the Optionee and the
Proposed Transferee and must constitute a binding commitment of the Optionee and
the Proposed Transferee for the transfer of the Transfer Shares to the Proposed
Transferee subject only to the Right of First Refusal.
(c) BONA FIDE TRANSFER. In the event that the Company shall
determine that the information provided by the Optionee in the Transfer Notice
is insufficient to establish the bona fide nature of a proposed voluntary
transfer, the Company shall give the Optionee written notice of the Optionee's
failure to comply with the procedure described in this paragraph 12 and the
Optionee shall have no right to transfer the Transfer Shares without first
complying with the procedure described in this paragraph 12. The Optionee shall
not be permitted to transfer the Transfer Shares if the proposed transfer is not
bona fide.
(d) EXERCISE OF THE RIGHT OF FIRST REFUSAL. In the event the
proposed transfer is deemed to be bona fide, the Company shall have the right to
purchase all, but not less than all, of the Transfer Shares (except as the
Company and Optionee otherwise agree) at the purchase price and on the terms set
forth in the Transfer Notice by delivery to the Optionee of a notice of exercise
of the Right of First Refusal within thirty (30) days after the date the
Transfer Notice is delivered to the Company. The Company's exercise or failure
to exercise the Right of First Refusal with respect to any proposed transfer
described in a Transfer Notice shall not affect the Company's ability to
exercise the Right of First Refusal with respect to any proposed transfer
described in any other Transfer Notice, whether or not such other
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<PAGE>
Transfer Notice is issued by the Optionee or issued by a person other than the
Optionee with respect to a proposed transfer to the same Proposed Transferee.
If the Company exercises the Right of First Refusal, the Company and the
Optionee shall thereupon consummate the sale of the Transfer Shares to the
Company on the terms set forth in the Transfer Notice within sixty (60) days
after the date the Transfer Notice is delivered to the Company (unless a longer
period is offered by the Proposed Transferee); provided, however, that in the
event the Transfer Notice provides for the payment for the Transfer Shares other
than in cash, the Company shall have the option of paying for the Transfer
Shares by the discounted cash equivalent of the consideration described in the
Transfer Notice as reasonably determined by the Company. For purposes of the
foregoing, cancellation of any indebtedness of the Optionee to any Participating
Company shall be treated as payment to the Optionee in cash to the extent of the
unpaid principal and any accrued interest canceled.
(e) FAILURE TO EXERCISE THE RIGHT OF FIRST REFUSAL. If the Company
fails to exercise the Right of First Refusal in full within the period specified
in paragraph 12(d) above, the Optionee may conclude a transfer to the Proposed
Transferee of the Transfer Shares on the terms and conditions described in the
Transfer Notice, provided such transfer occurs not later than ninety (90) days
following delivery to the Company of the Transfer Notice. The Company shall
have the right to demand further assurances from the Optionee and the Proposed
Transferee (in a form satisfactory to the Company) that the transfer of the
Transfer Shares was actually carried out on the terms and conditions described
in the Transfer Notice. No Transfer Shares shall be transferred on the books of
the Company until the Company has received such assurances, if so demanded, and
has approved the proposed transfer as bona fide. Any proposed transfer on terms
and conditions different from those described in the Transfer Notice, as well as
any subsequent proposed transfer by the Optionee, shall again be subject to the
Right of First Refusal and shall require compliance by the Optionee with the
procedure described in this paragraph 12.
(f) TRANSFEREES OF THE TRANSFER SHARES. All transferees of the
Transfer Shares or any interest therein, other than the Company, shall be
required as a condition of such transfer to agree in writing (in a form
satisfactory to the Company) that such transferee shall receive and hold such
Transfer Shares or interests subject to the provisions of this paragraph 12
providing for the Right of First Refusal with respect to any subsequent
transfer. Any sale or transfer of any shares acquired upon exercise of the
Option shall be void unless the provisions of this paragraph 12 are met.
(g) TRANSFERS NOT SUBJECT TO THE RIGHT OF FIRST REFUSAL. The Right
of First Refusal shall not apply to any transfer or exchange of the shares
acquired pursuant to the exercise of the Option if such transfer is in
connection with an Ownership Change. If the consideration received pursuant to
such transfer or exchange consists of stock of a Participating Company, such
consideration shall remain subject to the Right of First Refusal unless the
provisions of paragraph 12(i) below result in a termination of the Right of
First Refusal.
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(h) ASSIGNMENT OF THE RIGHT OF FIRST REFUSAL. The Company shall have
the right to assign the Right of First Refusal at any time, whether or not the
Optionee has attempted a transfer, to one (1) or more persons as may be selected
by the Company.
(i) EARLY TERMINATION OF THE RIGHT OF FIRST REFUSAL. The other
provisions of this paragraph 12 notwithstanding, the Right of First Refusal
shall terminate, and be of no further force and effect upon (i) the occurrence
of a Transfer of Control, unless the surviving, continuing, successor, or
purchasing corporation, as the case may be, assumes the Company's rights and
obligations under the Plan, or (ii) the existence of a public market for the
class of shares subject to the Right of First Refusal. A "public market" shall
be deemed to exist if (x) such stock is listed on a national securities exchange
(as that term is used in the Exchange Act) or (y) such stock is traded on the
over-the-counter market and prices therefor are published daily on business days
in a recognized financial journal.
13. ESCROW.
(a) ESTABLISHMENT OF ESCROW. To insure shares subject to the
Unvested Share Repurchase Option and the Right of First Refusal will be
available for repurchase, the Company may require the Optionee to deposit the
certificate or certificates evidencing the shares which the Optionee purchases
upon exercise of the Option with an escrow agent designated by the Company under
the terms and conditions of an escrow agreement approved by the Company. If the
Company does not require such deposit as a condition of exercise of the Option,
the Company reserves the right at any time to require the Optionee to so deposit
the certificate or certificates in escrow. The Company shall bear the expenses
of the escrow.
(b) DELIVERY OF SHARES TO OPTIONEE. As soon as practicable after the
expiration of the Unvested Share Repurchase Option and the Right of First
Refusal but not more frequently than once each year, the escrow agent shall
deliver to the Optionee the shares no longer subject to such restriction.
(c) NOTICES AND PAYMENTS. In the event the shares held in escrow are
subject to the Company's exercise of the Right of First Refusal, the notices
required to be given to the Optionee shall be given to the escrow agent and any
payment required to be given to the Optionee shall be given to the escrow agent.
Within thirty (30) days after payment by the Company, the escrow agent shall
deliver the shares which the Company has purchased to the Company and shall
deliver the payment received from the Company to the Optionee.
14. STOCK DIVIDENDS SUBJECT TO OPTION AGREEMENT. If, from time to time,
there is any stock dividend, stock split, or other change in the character or
amount of any of the outstanding stock of the corporation the stock of which is
subject to the provisions of this Option Agreement, then in such event any and
all new substituted or additional securities to which the Optionee is entitled
by reason of the Optionee's ownership of the shares acquired upon exercise of
the Option shall be immediately
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subject to the Right of First Refusal with the same force and effect as the
shares subject to the Right of First Refusal immediately before such event.
15. NOTICE OF SALES UPON DISQUALIFYING DISPOSITION. The Optionee shall
dispose of the shares acquired pursuant to the Option only in accordance with
the provisions of this Option Agreement. In addition, the Optionee shall
promptly notify the Chief Financial Officer of the Company if the Optionee
disposes of any of the shares acquired pursuant to the Option within one (1)
year from the date the Optionee exercises all or part of the Option or within
two (2) years of the date of grant of the Option. Until such time as the
Optionee disposes of such shares in a manner consistent with the provisions of
this Option Agreement, the Optionee shall hold all shares acquired pursuant to
the Option in the Optionee's name (and not in the name of any nominee) for the
one-year period immediately after exercise of the Option and the two-year period
immediately after grant of the Option. At any time during the one-year or
two-year periods set forth above, the Company may place a legend or legends on
any certificate or certificates representing shares acquired pursuant to the
Option requesting the transfer agent for the Company's stock to notify the
Company of any such transfers. The obligation of the Optionee to notify the
Company of any such transfer shall continue notwithstanding that a legend has
been placed on the certificate or certificates pursuant to the preceding
sentence.
16. EXCEPTION TO $100,000 EXERCISE LIMITATION. Notwithstanding any other
provision of this Option Agreement, if compliance with the $100,000 Exercise
Limitation as set forth in paragraph 4(a) above will result in the
exercisability of any Vested Shares (as defined in paragraph 11(b) above) being
delayed more than thirty (30) days beyond the vesting date for such shares, the
Option shall be deemed to be (2) options. The first option shall be for the
maximum number of shares subject to the Option that can comply with the $100,000
Exercise Limitation without causing the Option to be unexercisable as to Vested
Shares. The second option, which shall not be treated as an incentive stock
option as described in section 422(b) of the Code, shall be for the balance of
the shares subject to the Option and shall be exercisable on the same terms and
at the same time as set forth in this Option Agreement; provided, however, that
(a) the second sentence of paragraph 4(a) above shall not apply to the second
option and (b) such shares shall become Vested Shares on the same date or dates
as set forth in this Option Agreement without regard to this paragraph. Unless
the Optionee specifically elects to the contrary in the Optionee's written
notice of exercise, the first option shall be deemed to be exercised first to
the maximum possible extent and then the second option shall be deemed to be
exercised.
17. RULES OF THE COMMISSIONER OF CORPORATIONS. The Optionee is hereby
delivered a copy of Section 260.141.11 of the Rules of the Commissioner of
Corporations of the State of California, adopted pursuant to the California
Corporate Securities Act of 1968. References to the "Code" in the following
text are references to the California Corporations Code.
260.141.11. Restriction on Transfer.
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(a) The issuer of any security upon which a restriction on transfer
has been imposed pursuant to Sections 260.102.6, 260.141.10 or 260.534 shall
cause a copy of this section to be delivered to each issuee or transferee of
such security at the time the certificate evidencing the security is delivered
to the issuee or transferee.
(b) It is unlawful for the holder of any such security to consummate
a sale or transfer of such security, or any interest therein, without the prior
written consent of the Commissioner (until this condition is removed pursuant to
Section 260.141.12 of these rules), except:
(1) to the issuer;
(2) pursuant to the order or process of any court;
(3) to any person described in subdivision (i) of Section 25102
of the Code or Section 260.105.14 of these rules;
(4) to the transferor's ancestors, descendants, or spouse, or
any custodian or trustee for the account of the transferor or the transferor's
ancestors, descendants, or spouse; or to a transferee by a trustee or custodian
for the account of the transferee or the transferee's ancestors, descendants, or
spouse;
(5) to holders of securities of the same class of the same
issuer;
(6) by way of gift or donation inter vivos or on death;
(7) by or through a broker-dealer licensed under the Code
(either acting as such or as a finder) to a resident of a foreign state,
territory or country who is neither domiciled in this state to the knowledge of
the broker-dealer, nor actually present in this state if the sale of such
securities is not in violation of any securities law of the foreign state,
territory or country concerned;
(8) to a broker-dealer licensed under the Code in a principal
transaction, or as an underwriter or member of an underwriting syndicate or
selling group;
(9) if the interest sold or transferred is a pledge or other
lien given by the purchaser to the seller upon a sale of the security for which
the Commissioner's written consent is obtained or under this rule not required;
(10) by way of a sale qualified under Sections 25111, 25112,
25113, or 25121 of the Code, of the securities to be transferred, provided that
no order under Section 25140 or subdivision (a) of Section 25143 is in effect
with respect to such qualification;
(11) by a corporation to a wholly owned subsidiary of such
corporation, or by a wholly owned subsidiary of a corporation to such
corporation;
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(12) by way of an exchange qualified under Section 25111, 25112
or 25113 of the Code, provided that no order under Section 25140 or
subdivision (a) of Section 25143 is in effect with respect to such
qualification;
(13) between residents of foreign states, territories or
countries who are neither domiciled nor actually present in this state;
(14) to the State Controller pursuant to the Unclaimed Property
Law or to the administrator of the unclaimed property law of another state; or
(15) by the State Controller pursuant to the Unclaimed Property
Law or by the administrator of the unclaimed property law of another state if,
in either such case, such person (i) discloses to potential purchasers at the
sale that transfer of the securities is restricted under this rule,
(ii) delivers to each purchaser a copy of this rule, and (iii) advises the
Commissioner of the name of each purchaser;
(16) by a trustee to a successor trustee when such transfer does
not involve a change in the beneficial ownership of the securities;
(17) by way of an offer and sale of outstanding securities in an
issuer transaction that is subject to the qualification requirement of
Section 25110 of the Code but exempt from that qualification requirement by
subdivision (f) of Section 25102; provided that any such transfer is on the
condition that any certificate evidencing the security issued to such transferee
shall contain the legend required by this section.
(c) The certificates representing all such securities subject to such
a restriction on transfer, whether upon initial issuance or upon any transfer
thereof, shall bear on their face a legend prominently stamped or printed
thereon in capital letters of not less than 10-point size reading as follows:
"IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES."
18. LEGENDS. The Company may at any time place legends referencing the
Unvested Share Repurchase Option and the Right of First Refusal set forth in
paragraph 11 and paragraph 12 above and any applicable federal or state
securities law restrictions on all certificates representing shares of stock
subject to the provisions of this Option Agreement. The Optionee shall, at the
request of the Company, promptly present to the Company any and all certificates
representing shares acquired pursuant to the Option in the possession of the
Optionee in order to carry out the provisions of this paragraph. Unless
otherwise specified by the Company, legends placed on such certificates may
include, but shall not be limited to, the following:
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(a) "THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN
ACCORDANCE WITH RULE 144 OR RULE 701 UNDER THE ACT, OR THE COMPANY RECEIVES AN
OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO
THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT."
(b) Any legend required to be placed thereon by the Commissioner of
Corporations of the State of California.
(c) "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN
UNVESTED SHARE REPURCHASE OPTION IN FAVOR OF THE CORPORATION OR ITS ASSIGNEE SET
FORTH IN AN AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED HOLDER, OR SUCH
HOLDER'S PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL
OFFICE OF THIS CORPORATION."
(d) "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF THE CORPORATION OR ITS ASSIGNEE SET
FORTH IN AN AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED HOLDER, OR SUCH
HOLDER'S PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL
OFFICE OF THIS CORPORATION."
(e) "THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY THE
CORPORATION TO THE REGISTERED HOLDER UPON EXERCISE OF AN INCENTIVE STOCK OPTION
AS DEFINED IN SECTION 422 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
("ISO"). IN ORDER TO OBTAIN THE PREFERENTIAL TAX TREATMENT AFFORDED TO ISOs,
THE SHARES SHOULD NOT BE TRANSFERRED PRIOR TO . SHOULD THE
REGISTERED HOLDER ELECT TO TRANSFER ANY OF THE SHARES PRIOR TO THIS DATE AND
FOREGO ISO TAX TREATMENT, THE TRANSFER AGENT FOR THE SHARES SHALL NOTIFY THE
CORPORATION IMMEDIATELY. THE REGISTERED HOLDER SHALL HOLD ALL SHARES PURCHASED
UNDER THE INCENTIVE STOCK OPTION IN THE REGISTERED HOLDER'S NAME (AND NOT IN THE
NAME OF ANY NOMINEE) PRIOR TO THIS DATE OR UNTIL TRANSFERRED AS DESCRIBED
ABOVE."
19. INITIAL PUBLIC OFFERING. The Optionee hereby agrees that in the event
of any underwritten public offering of stock, including an initial public
offering of stock, made by the Company pursuant to an effective registration
statement filed under the Securities Act, the Optionee shall not offer, sell,
contract to sell, pledge, hypothecate, grant any option to purchase or make any
short sale of, or otherwise dispose of any shares of stock of the Company or any
rights to acquire stock of the
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Company for such period of time from and after the effective date of such
registration statement as may be established by the underwriter for such public
offering; provided, however, that such period of time shall not exceed one
hundred eighty (180) days from the effective date of the registration statement
to be filed in connection with such public offering. The foregoing limitation
shall not apply to shares registered in the initial public offering under the
Securities Act and shall cease to apply once a registration statement is
effective covering shares issuable pursuant to options granted pursuant to the
Plan, whether or not such registration statement applies to any of the shares
issued or issuable pursuant to the Option.
20. BINDING EFFECT. This Option Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
21. TERMINATION OR AMENDMENT. The Board, including any duly appointed
committee of the Board, may terminate or amend the Plan and/or the Option at any
time; provided, however, that no such termination or amendment may adversely
affect the Option or any unexercised portion hereof without the consent of the
Optionee unless such amendment is required to enable the Option to qualify as
an Incentive Stock Option.
22. INTEGRATED AGREEMENT. This Option Agreement constitutes the entire
understanding and agreement of the Optionee and the Participating Company Group
with respect to the subject matter contained herein, and there are no
agreements, understandings, restrictions, representations, or warranties among
the Optionee and the Company other than those as set forth or provided for
herein. To the extent contemplated herein, the provisions of this Option
Agreement shall survive any exercise of the Option and shall remain in full
force and effect.
23. APPLICABLE LAW. This Option Agreement shall be governed by the laws
of the State of California as such laws are applied to agreements between
California residents entered into and to be performed entirely within the State
of California.
Puma Technology, Inc.
By:
------------------------------------
Title:
---------------------------------
The Optionee represents that the Optionee is familiar with the terms and
provisions of this Option Agreement, including the Unvested Share Repurchase
Option and the Right of First Refusal set forth in paragraph 11 and 12, and
hereby accepts the Option subject to all of the terms and provisions thereof.
The Optionee hereby agrees to accept as binding, conclusive and final all
decisions or
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interpretations of the Board upon any questions arising under this Option
Agreement.
The undersigned acknowledges receipt of a copy of Section 260.141.11 of the
Rules of the Commissioner of Corporations of the State of California regarding
restriction on transfer.
Date:
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The undersigned, being the spouse of the above-named Optionee, does hereby
acknowledge that the undersigned has read and is familiar with the provisions of
the above Option Agreement, including, without limitation, the provisions of
paragraph 12 providing a right of first refusal in favor of the Company upon
certain changes in record ownership, and the undersigned hereby agrees thereto
and joins therein to the extent, if any, that the agreement and joinder of the
undersigned may be necessary.
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EXHIBIT 10.2
PUMA TECHNOLOGY, INC.
1996 EMPLOYEE STOCK PURCHASE PLAN
1. ESTABLISHMENT, PURPOSE AND TERM OF PLAN.
1.1 ESTABLISHMENT. The Puma Technology, Inc. 1996 Employee Stock
Purchase Plan (the "PLAN") is hereby established effective as of the effective
date of the initial registration by the Company of its Stock under Section 12 of
the Exchange Act (the "EFFECTIVE DATE").
1.2 PURPOSE. The purpose of the Plan is to provide Eligible
Employees of the Participating Company Group with an opportunity to acquire a
proprietary interest in the Company through the purchase of Stock. The Company
intends that the Plan shall qualify as an "employee stock purchase plan" under
Section 423 of the Code (including any amendments or replacements of such
section), and the Plan shall be so construed.
1.3 TERM OF PLAN. The Plan shall continue in effect until the
earlier of its termination by the Board or the date on which all of the shares
of Stock available for issuance under the Plan have been issued.
2. DEFINITIONS AND CONSTRUCTION.
2.1 DEFINITIONS. Any term not expressly defined in the Plan but
defined for purposes of Section 423 of the Code shall have the same definition
herein. Whenever used herein, the following terms shall have their respective
meanings set forth below:
(a) "BOARD" means the Board of Directors of the Company. If
one or more Committees have been appointed by the Board to administer the Plan,
"Board" also means such Committee(s).
(b) "CODE" means the Internal Revenue Code of 1986, as
amended, and any applicable regulations promulgated thereunder.
(c) "COMMITTEE" means a committee of the Board duly
appointed to administer the Plan and having such powers as shall be specified by
the Board. Unless the powers of the Committee have been specifically limited,
the Committee shall have all of the powers of the Board granted herein,
including, without limitation, the power to amend or terminate the Plan at any
time, subject to the terms of the Plan and any applicable limitations imposed by
law.
(d) "COMPANY" means Puma Technology, Inc., a Delaware
corporation, or any successor corporation thereto.
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(e) "COMPENSATION" means, with respect to an Offering Period
under the Plan, all amounts paid in cash in the forms of base salary,
commissions, overtime, bonuses, annual awards, other incentive payments, shift
premiums, and all other compensation paid in cash during such Offering Period
before deduction for any contributions to any plan maintained by a Participating
Company and described in Section 401(k) or Section 125 of the Code.
Compensation shall not include reimbursements of expenses, allowances, long-term
disability, workers' compensation or any amount deemed received without the
actual transfer of cash or any amounts directly or indirectly paid pursuant to
the Plan or any other stock purchase or stock option plan.
(f) "ELIGIBLE EMPLOYEE" means an Employee who meets the
requirements set forth in Section 5 for eligibility to participate in the Plan.
(g) "EMPLOYEE" means any person treated as an employee
(including an officer or a director who is also treated as an employee) in the
records of a Participating Company and for purposes of Section 423 of the Code;
provided, however, that neither service as a director nor payment of a
director's fee shall be sufficient to constitute employment for purposes of the
Plan.
(h) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
(i) "FAIR MARKET VALUE" means, as of any date, if there is
then a public market for the Stock, the closing price of a share of Stock (or
the mean of the closing bid and asked prices of a share of Stock if the Stock is
so reported instead) as reported on the National Association of Securities
Dealers Automated Quotation ("NASDAQ") System, the NASDAQ National Market System
or such other national or regional securities exchange or market system
constituting the primary market for the Stock. If the relevant date does not
fall on a day on which the Stock is trading on NASDAQ, the NASDAQ National
Market System or other national or regional securities exchange or market
system, the date on which the Fair Market Value shall be established shall be
the last day on which the Stock was so traded prior to the relevant date, or
such other appropriate day as shall be determined by the Board, in its sole
discretion. If there is then no public market for the Stock, the Fair Market
Value on any relevant date shall be as determined by the Board without regard to
any restriction other than a restriction which, by its terms, will never lapse.
Notwithstanding the foregoing, the Fair Market Value per share of Stock on the
Effective Date shall be deemed to be the public offering price set forth in the
final prospectus filed with the Securities and Exchange Commission in connection
with the initial public offering of the Stock.
(j) "OFFERING" means an offering of Stock as provided in
Section 6.
(k) "OFFERING DATE" means, for any Offering Period, the
first day of such Offering Period.
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(l) "OFFERING PERIOD" means a period determined in
accordance with Section 6.1.
(m) "PARENT CORPORATION" means any present or future "parent
corporation" of the Company, as defined in Section 424(e) of the Code.
(n) "PARTICIPANT" means an Eligible Employee participating
in the Plan.
(o) "PARTICIPATING COMPANY" means the Company or any Parent
Corporation or Subsidiary Corporation which the Board determines should be
included in the Plan. The Board shall have the sole and absolute discretion to
determine from time to time what Parent Corporations or Subsidiary Corporations
shall be Participating Companies.
(p) "PARTICIPATING COMPANY GROUP" means, at any point in
time, the Company and all other corporations collectively which are then
Participating Companies.
(q) "PURCHASE DATE" means, for any Purchase Period, the last
day of such Purchase Period.
(r) "PURCHASE PERIOD" means a period determined in
accordance with Section 6.2.
(s) "PURCHASE PRICE" means the price at which a share of
Stock may be purchased pursuant to the Plan, as determined in accordance with
Section 9.
(t) "PURCHASE RIGHT" means an option pursuant to the Plan
to purchase such shares of Stock as provided in Section 8 which may or may not
be exercised at the end of an Offering Period. Such option arises from the
right of a Participant to withdraw such Participant's accumulated payroll
deductions (if any) and terminate participation in the Plan or any Offering
therein at any time during a Purchase Period.
(u) "STOCK" means the common stock of the Company, as
adjusted from time to time in accordance with Section 4.2.
(v) "SUBSIDIARY CORPORATION" means any present or future
"subsidiary corporation" of the Company, as defined in Section 424(f) of the
Code.
2.2 CONSTRUCTION. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan. Except when otherwise indicated by the context, the
singular shall include the plural, the plural shall include the singular, and
use of the term "or" shall include the conjunctive as well as the disjunctive.
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3. ADMINISTRATION. The Plan shall be administered by the Board,
including any duly appointed Committee of the Board. All questions of
interpretation of the Plan or of any Purchase Right shall be determined by the
Board and shall be final and binding upon all persons having an interest in the
Plan or such Purchase Right. Subject to the provisions of the Plan, the Board
shall determine all of the relevant terms and conditions of Purchase Rights
granted pursuant to the Plan; provided, however, that all Participants granted
Purchase Rights pursuant to the Plan shall have the same rights and privileges
within the meaning of Section 423(b)(5) of the Code. All expenses incurred in
connection with the administration of the Plan shall be paid by the Company.
4. SHARES SUBJECT TO PLAN.
4.1 MAXIMUM NUMBER OF SHARES ISSUABLE. Subject to adjustment as
provided in Section 4.2, the maximum aggregate number of shares of Stock that
may be issued under the Plan shall be ( ) and shall
consist of authorized but unissued or reacquired shares of the Stock, or any
combination thereof. If an outstanding Purchase Right for any reason expires or
is terminated or canceled, the shares of Stock allocable to the unexercised
portion of such Purchase Right shall again be available for issuance under the
Plan.
4.2 ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the event of
any stock dividend, stock split, reverse stock split, recapitalization,
combination, reclassification or similar change in the capital structure of the
Company, or in the event of any merger (including a merger effected for the
purpose of changing the Company's domicile), sale of assets or other
reorganization in which the Company is a party, appropriate adjustments shall be
made in the number and class of shares subject to the Plan, to the Per Offering
Share Limit set forth in Section 8.1 and to each Purchase Right and in the
Purchase Price.
5. ELIGIBILITY.
5.1 EMPLOYEES ELIGIBLE TO PARTICIPATE. Any Employee of a
Participating Company is eligible to participate in the Plan except the
following:
(a) Employees who have not been employed by the
Participating Company Group for one year as of the commencement of an Offering
Period (the "ELIGIBILITY SERVICE REQUIREMENT"), provided, however, that the
Eligibility Service Requirement shall be six (6) months with respect to
participation in the Initial Offering Period (as defined in Section 6.1);
(b) Employees who are customarily employed by the
Participating Company Group for twenty (20) hours or less per week;
(c) Employees who are customarily employed by the
Participating Company Group for not more than five (5) months in any calendar
year; and
(d) Employees who own or hold options to purchase or who, as
a result of participation in the Plan, would own or hold options to purchase,
stock of the Company or of any Parent Corporation or Subsidiary Corporation
possessing five percent (5%) or more of the total combined voting power or value
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of all classes of stock of such corporation within the meaning of Section
423(b)(3) of the Code.
5.2 LEASED EMPLOYEES EXCLUDED. Notwithstanding anything herein to
the contrary, any individual performing services for a Participating Company
solely through a leasing agency or employment agency shall not be deemed an
"Employee" of such Participating Company.
6. OFFERINGS.
6.1 OFFERING PERIODS. Except as otherwise set forth below, the
Plan shall be implemented by sequential Offerings of approximately twenty-four
(24) months duration (an "OFFERING PERIOD"); provided, however that the first
Offering Period shall commence on the Effective Date and end on February 28,
1999 (the "INITIAL OFFERING PERIOD"). Subsequent Offerings shall commence on
the first day of March and September of each year and end on the last day of
the second February and August, respectively, occurring thereafter.
Notwithstanding the foregoing, the Board may establish a different term for one
or more Offerings or different commencing or ending dates for such Offerings;
provided, however, that no Offering may exceed a term of twenty-seven (27)
months. An Employee who becomes an Eligible Employee after an Offering Period
has commenced shall not be eligible to participate in such Offering but may
participate in any subsequent Offering provided such Employee is still an
Eligible Employee as of the commencement of any such subsequent Offering.
Eligible Employees may not participate in more than one Offering at a time.
In the event the first or last day of an Offering Period is not a business day,
the Company shall specify the business day that will be deemed the first or
last day, as the case may be, of the Offering Period.
6.2 PURCHASE PERIODS. Each Offering Period shall consist of four
(4) consecutive purchase periods of approximately six (6) months duration
(individually, a "PURCHASE PERIOD"). The Purchase Period commencing on the
Offering Date of the Initial Offering Period shall end on August 31, 1997. A
Purchase Period commencing on March 1 shall end on the last day of the next
following August. A Purchase Period commencing on September 1 shall end on
the last day of the next following February. Notwithstanding the foregoing,
the Board may establish a different term for one or more Purchase Periods or
different commencing or ending dates for such Purchase Periods. In the event
the first or last day of a Purchase Period is not a business day, the Company
shall specify the business day that will be deemed the first or last day, as the
case may be, of the Purchase Period.
6.3 GOVERNMENTAL APPROVAL; STOCKHOLDER APPROVAL. Notwithstanding
any other provision of the Plan to the contrary, any Purchase Right granted
pursuant to the Plan shall be subject to (a) obtaining all necessary
governmental approvals or qualifications of the sale or issuance of the Purchase
Rights or the shares of Stock and (b) obtaining stockholder approval of the
Plan.
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Notwithstanding the foregoing, stockholder approval shall not be necessary in
order to grant any Purchase Right granted in the Plan's Initial Offering Period;
provided, however, that the exercise of any such Purchase Right shall be subject
to obtaining stockholder approval of the Plan.
7. PARTICIPATION IN THE PLAN.
7.1 INITIAL PARTICIPATION. An Eligible Employee shall become a
Participant on the first Offering Date after satisfying the eligibility
requirements of Section 5 and delivering to the Company's payroll office or
other office designated by the Company not later than the close of business for
such office on the last business day before such Offering Date (the
"SUBSCRIPTION DATE") a subscription agreement indicating the Employee's election
to participate in the Plan and authorizing payroll deductions. An Eligible
Employee who does not deliver a subscription agreement to the Company's payroll
or other designated office on or before the Subscription Date shall not
participate in the Plan for that Offering Period or for any subsequent Offering
Period unless such Employee subsequently enrolls in the Plan by filing a
subscription agreement with the Company by the Subscription Date for such
subsequent Offering Period. The Company may, from time to time, change the
Subscription Date as deemed advisable by the Company in its sole discretion for
proper administration of the Plan.
7.2 CONTINUED PARTICIPATION. A Participant shall automatically
participate in the Offering Period commencing immediately after the final
Purchase Date of each Offering Period in which the Participant participates
until such time as such Participant (a) ceases to be an Eligible Employee,
(b) withdraws from the Plan pursuant to Section 13.2 or (c) terminates
employment as provided in Section 14. If a Participant automatically may
participate in a subsequent Offering Period pursuant to this Section 7.2, then
the Participant is not required to file any additional subscription agreement
for such subsequent Offering Period in order to continue participation in the
Plan. However, a Participant may file a subscription agreement with respect to
a subsequent Offering Period if the Participant desires to change any of the
Participant's elections contained in the Participant's then effective
subscription agreement.
8. RIGHT TO PURCHASE SHARES.
8.1 PURCHASE RIGHT. Except as set forth below, during an Offering
Period each Participant in such Offering Period shall have a Purchase Right
consisting of the right to purchase that number of whole shares of Stock arrived
at by dividing Fifty Thousand Dollars ($50,000) by the Fair Market Value of a
share of Stock on the Offering Date of such Offering Period; provided, however,
that such number shall not exceed five thousand (5,000) shares (the "PER
OFFERING SHARE LIMIT"). Shares of Stock may only be purchased through a
Participant's payroll deductions pursuant to Section 10.
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8.2 PRO RATA ADJUSTMENT OF PURCHASE RIGHT. Notwithstanding the
foregoing, if the Board shall establish an Offering Period of less than twenty-
three and one-half (231/2) months or more than twenty-four and one-half (241/2)
months in duration, (a) the dollar amount in Section 8.1 shall be determined by
multiplying $2,083.33 by the number of months in the Offering Period and
rounding to the nearest whole dollar, and (b) the Per Offering Share Limit shall
be determined by multiplying 208.33 shares by the number of months in the
Offering Period and rounding to the nearest whole share. For purposes of the
preceding sentence, fractional months shall be rounded to the nearest whole
month.
9. PURCHASE PRICE. The Purchase Price at which each share of Stock may
be acquired in a given Offering Period pursuant to the exercise of all or any
portion of a Purchase Right granted under the Plan shall be set by the Board;
provided, however, that the Purchase Price shall not be less than eighty-five
percent (85%) of the lesser of (a) the Fair Market Value of a share of Stock on
the Offering Date of the Offering Period, or (b) the Fair Market Value of a
share of Stock on the Purchase Date of the Offering Period. Unless otherwise
provided by the Board prior to the commencement of an Offering Period, the
Purchase Price for that Offering Period shall be eighty-five percent (85%) of
the lesser of (a) the Fair Market Value of a share of Stock on the Offering Date
of the Offering Period, or (b) the Fair Market Value of a share of Stock on the
Purchase Date of the Offering Period.
10. ACCUMULATION OF PURCHASE PRICE THROUGH PAYROLL DEDUCTION. Shares of
Stock which are acquired pursuant to the exercise of all or any portion of a
Purchase Right for an Offering Period may be paid for only by means of payroll
deductions from the Participant's Compensation accumulated during the Offering
Period. Except as set forth below, the amount of Compensation to be deducted
from a Participant's Compensation during each pay period shall be determined by
the Participant's subscription agreement.
10.1 COMMENCEMENT OF PAYROLL DEDUCTIONS. Payroll deductions shall
commence on the first payday following the Offering Date and shall continue to
the end of the Offering Period unless sooner altered or terminated as provided
in the Plan.
10.2 LIMITATIONS ON PAYROLL DEDUCTIONS. The amount of payroll
deductions with respect to the Plan for any Participant during any pay period
shall be in one percent (1%) increments not to exceed ten percent (10%) of the
Participant's Compensation for such pay period. Notwithstanding the foregoing,
the Board may change the limits on payroll deductions effective as of a future
Offering Date, as determined by the Board. Amounts deducted from Compensation
shall be reduced by any amounts contributed by the Participant and applied to
the purchase of Company stock pursuant to any other employee stock purchase plan
qualifying under Section 423 of the Code.
10.3 ELECTION TO INCREASE, DECREASE OR STOP PAYROLL DEDUCTIONS.
During an Offering Period, a Participant may elect to increase or decrease the
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amount deducted or stop deductions from his or her Compensation by filing an
amended subscription agreement with the Company on or before the "Change Notice
Date." The "CHANGE NOTICE DATE" shall initially be the seventh (7th) day prior
to the end of the first pay period for which such election is to be effective;
however, the Company may change such Change Notice Date from time to time.
10.4 PARTICIPANT ACCOUNTS. Individual Plan accounts shall be
maintained for each Participant. All payroll deductions from a Participant's
Compensation shall be credited to such account and shall be deposited with the
general funds of the Company. All payroll deductions received or held by the
Company may be used by the Company for any corporate purpose.
10.5 NO INTEREST PAID. Interest shall not be paid on sums deducted
from a Participant's Compensation pursuant to the Plan.
10.6 COMPANY ESTABLISHED PROCEDURES. The Company may, from time to
time, establish or change (a) a minimum required payroll deduction amount for
participation in an Offering, (b) limitations on the frequency or number of
changes in the rate of payroll deduction during an Offering, (c) an exchange
ratio applicable to amounts withheld in a currency other than U.S. dollars,
(d) payroll deduction in excess of or less than the amount designated by a
Participant in order to adjust for delays or mistakes in the Company's
processing of subscription agreements, (e) the date(s) and manner by which the
Fair Market Value of a share of Stock is determined for purposes of
administration of the Plan, or (f) such other limitations or procedures as
deemed advisable by the Company in the Company's sole discretion which are
consistent with the Plan and in accordance with the requirements of Section 423
of the Code.
11. PURCHASE OF SHARES.
11.1 EXERCISE OF PURCHASE RIGHT. On each Purchase Date of an
Offering Period, each Participant who has not withdrawn from the Offering or
whose participation in the Offering has not terminated on or before such
Purchase Date shall automatically acquire pursuant to the exercise of the
Participant's Purchase Right the number of whole shares of Stock arrived at by
dividing the total amount of the Participant's accumulated payroll deductions
for the Purchase Period by the Purchase Price; provided, however, in no event
shall the number of shares purchased by the Participant during an Offering
Period exceed the number of shares subject to the Participant's Purchase Right.
No shares of Stock shall be purchased on a Purchase Date on behalf of a
Participant whose participation in the Offering or the Plan has terminated on or
before such Purchase Date.
11.2 RETURN OF CASH BALANCE. Any cash balance remaining in the
Participant's Plan account shall be refunded to the Participant as soon as
practicable after the Purchase Date. In the event the cash to be returned to a
Participant pursuant to the preceding sentence is an amount less than the amount
necessary to purchase a whole share of Stock, the Company may establish
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procedures whereby such cash is maintained in the Participant's Plan account and
applied toward the purchase of shares of Stock in the subsequent Purchase Period
or Offering Period.
11.3 TAX WITHHOLDING. At the time a Participant's Purchase Right
is exercised, in whole or in part, or at the time a Participant disposes of some
or all of the shares of Stock he or she acquires under the Plan, the Participant
shall make adequate provision for the foreign, federal, state and local tax
withholding obligations of the Participating Company Group, if any, which arise
upon exercise of the Purchase Right or upon such disposition of shares,
respectively. The Participating Company Group may, but shall not be obligated
to, withhold from the Participant's compensation the amount necessary to meet
such withholding obligations.
11.4 EXPIRATION OF PURCHASE RIGHT. Any portion of a Participant's
Purchase Right remaining unexercised after the end of the Offering Period to
which such Purchase Right relates shall expire immediately upon the end of such
Offering Period.
12. LIMITATIONS ON PURCHASE OF SHARES; RIGHTS AS A STOCKHOLDER.
12.1 FAIR MARKET VALUE LIMITATION. Notwithstanding any other
provision of the Plan, no Participant shall be entitled to purchase shares of
Stock under the Plan (or any other employee stock purchase plan which is
intended to meet the requirements of Section 423 of the Code sponsored by the
Company or a Parent Corporation or Subsidiary Corporation at a rate which
exceeds $25,000 in Fair Market Value, which Fair Market Value is determined for
shares purchased during a given Offering Period as of the Offering Date for such
Offering Period (or such other limit as may be imposed by the Code), for each
calendar year in which the Participant participates in the Plan (or any other
employee stock purchase plan described in this sentence).
12.2 PRO RATA ALLOCATION. In the event the number of shares of
Stock which might be purchased by all Participants in the Plan exceeds the
number of shares of Stock available in the Plan, the Company shall make a pro
rata allocation of the remaining shares in as uniform a manner as shall be
practicable and as the Company shall determine to be equitable.
12.3 RIGHTS AS A STOCKHOLDER AND EMPLOYEE. A Participant shall
have no rights as a stockholder by virtue of the Participant's participation in
the Plan until the date of the issuance of a stock certificate for the shares of
Stock being purchased pursuant to the exercise of the Participant's Purchase
Right. No adjustment shall be made for cash dividends or distributions or other
rights for which the record date is prior to the date such stock certificate is
issued. Nothing herein shall confer upon a Participant any right to continue in
the employ of the Participating Company Group or interfere in any way with any
right of the
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Participating Company Group to terminate the Participant's employment at any
time.
13. WITHDRAWAL.
13.1 WITHDRAWAL FROM AN OFFERING. A Participant may withdraw from
an Offering by signing and delivering to the Company's payroll or other
designated office a written notice of withdrawal on a form provided by the
Company for such purpose. Such withdrawal may be elected at any time prior to
the end of an Offering Period; provided, however, if a Participant withdraws
after the Purchase Date for a Purchase Period of an Offering, the withdrawal
shall not affect shares of Stock acquired by the Participant in such Purchase
Period. Unless otherwise indicated, withdrawal from an Offering shall not
result in a withdrawal from the Plan or any succeeding Offering therein. By
withdrawing from an Offering effective as of the close of a given Purchase Date,
a Participant may have shares of Stock purchased on such Purchase Date and
immediately commence participation in the new Offering commencing immediately
after such Purchase Date. A Participant is prohibited from again participating
in an Offering at any time following withdrawal from such Offering. The Company
may impose, from time to time, a requirement that the notice of withdrawal be on
file with the Company's payroll office or other designated office for a
reasonable period prior to the effectiveness of the Participant's withdrawal
from an Offering.
13.2 WITHDRAWAL FROM THE PLAN. A Participant may withdraw from the
Plan by signing and delivering to the Company's payroll office or other
designated office a written notice of withdrawal on a form provided by the
Company for such purpose. Withdrawals made after a Purchase Date shall not
affect shares of Stock acquired by the Participant on such Purchase Date. In
the event a Participant voluntarily elects to withdraw from the Plan, the
Participant may not resume participation in the Plan during the same Offering
Period, but may participate in any subsequent Offering under the Plan by again
satisfying the requirements of Sections 5 and 7.1. The Company may impose, from
time to time, a requirement that the notice of withdrawal be on file with the
Company's payroll office or other designated office for a reasonable period
prior to the effectiveness of the Participant's withdrawal from the Plan.
13.3 RETURN OF PAYROLL DEDUCTIONS. Upon a Participant's withdrawal
from an Offering or the Plan pursuant to Sections 13.1 or 13.2, respectively,
the Participant's accumulated payroll deductions which have not been applied
toward the purchase of shares of Stock shall be returned as soon as practicable
after the withdrawal, without the payment of any interest, to the Participant,
and the Participant's interest in the Offering or the Plan, as applicable, shall
terminate. Such accumulated payroll deductions may not be applied to any other
Offering under the Plan.
13.4 AUTOMATIC WITHDRAWAL FROM AN OFFERING. If the Fair Market
Value of a share of Stock on a Purchase Date of an Offering (other than the
final
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Purchase Date of such Offering) is less than the Fair Market Value of a share of
Stock on the Offering Date for such Offering, then every Participant shall
automatically (a) be withdrawn from such Offering at the close of such Purchase
Date and after the acquisition of shares of Stock for such Purchase Period and
(b) be enrolled in the Offering commencing on the first business day subsequent
to such Purchase Period. A Participant may elect not to be automatically
withdrawn from an Offering Period pursuant to this Section 13.4 by delivering to
the Company not later than the close of business on the last day before the
Purchase Date a written notice indicating such election.
14. TERMINATION OF EMPLOYMENT OR ELIGIBILITY. Termination of a
Participant's employment with a Participating Company for any reason, including
retirement, disability or death or the failure of a Participant to remain an
Eligible Employee, shall terminate the Participant's participation in the Plan
immediately. In such event, the payroll deductions credited to the
Participant's Plan account since the last Purchase Date shall, as soon as
practicable, be returned to the Participant or, in the case of the Participant's
death, to the Participant's legal representative, and all of the Participant's
rights under the Plan shall terminate. Interest shall not be paid on sums
returned to a Participant pursuant to this Section 14. A Participant whose
participation has been so terminated may again become eligible to participate in
the Plan by again satisfying the requirements of Sections 5 and 7.1.
15. TRANSFER OF CONTROL.
15.1 DEFINITIONS.
(a) An "OWNERSHIP CHANGE EVENT" shall be deemed to have
occurred if any of the following occurs with respect to the Company: (i) the
direct or indirect sale or exchange in a single or series of related
transactions by the stockholders of the Company of more than fifty percent (50%)
of the voting stock of the Company; (ii) a merger or consolidation in which the
Company a party; (iii) the sale, exchange, or transfer of all or substantially
all of the assets of the Company; or (iv) a liquidation or dissolution of the
Company.
(b) A "TRANSFER OF CONTROL" shall mean an Ownership Change
Event or a series of related Ownership Change Events (collectively, the
"TRANSACTION") wherein the stockholders of the Company immediately before the
Transaction do not retain immediately after the Transaction, in substantially
the same proportions as their ownership of shares of the Company's voting stock
immediately before the Transaction, direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of the
outstanding voting stock of the Company or the corporation or corporations to
which the assets of the Company were transferred (the "TRANSFEREE
CORPORATION(S)"), as the case may be. For purposes of the preceding sentence,
indirect beneficial ownership shall include, without limitation, an interest
resulting from ownership of the voting stock of one or more corporations which,
as a result of the Transaction, own the
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Company or the Transferee Corporation(s), as the case may be, either directly or
through one or more subsidiary corporations. The Board shall have the right to
determine whether multiple sales or exchanges of the voting stock of the Company
or multiple Ownership Change Events are related, and its determination shall be
final, binding and conclusive.
15.2 EFFECT OF TRANSFER OF CONTROL ON PURCHASE RIGHTS. In the
event of a Transfer of Control, the surviving, continuing, successor, or
purchasing corporation or parent corporation thereof, as the case may be (the
"ACQUIRING CORPORATION"), may assume the Company's rights and obligations under
the Plan or substitute substantially equivalent Purchase Rights for stock of the
Acquiring Corporation. If the Acquiring Corporation elects not to assume or
substitute for the outstanding Purchase Rights, the Board may, in its sole
discretion and notwithstanding any other provision herein to the contrary,
adjust the Purchase Date of the then current Purchase Period to a date on or
before the date of the Transfer of Control, but shall not adjust the number of
shares of Stock subject to any Purchase Right. All Purchase Rights which are
neither assumed or substituted for by the Acquiring Corporation in connection
with the Transfer of Control nor exercised as of the date of the Transfer of
Control shall terminate and cease to be outstanding effective as of the date of
the Transfer of Control. Notwithstanding the foregoing, if the corporation the
stock of which is subject to the outstanding Purchase Rights immediately prior
to an Ownership Change Event described in Section 15.1(a)(i) constituting a
Transfer of Control is the surviving or continuing corporation and immediately
after such Ownership Change Event less than fifty percent (50%) of the total
combined voting power of its voting stock is held by another corporation or by
other corporations that are members of an affiliated group within the meaning of
section 1504(a) of the Code without regard to the provisions of section 1504(b)
of the Code, the outstanding Purchase Rights shall not terminate unless the
Board otherwise provides in its sole discretion.
16. NONTRANSFERABILITY OF PURCHASE RIGHTS. A Purchase Right may not be
transferred in any manner otherwise than by will or the laws of descent and
distribution and shall be exercisable during the lifetime of the Participant
only by the Participant. The Company, in its absolute discretion, may impose
such restrictions on the transferability of the shares purchasable upon the
exercise of a Purchase Right as it deems appropriate and any such restriction
shall be set forth in the respective subscription agreement and may be referred
to on the certificates evidencing such shares.
17. REPORTS. Each Participant who exercised all or part of his or her
Purchase Right for a Purchase Period shall receive, as soon as practicable after
the Purchase Date of such Purchase Period, a report of such Participant's Plan
account setting forth the total payroll deductions accumulated, the number of
shares of Stock purchased, the Purchase Price for such shares, the date of
purchase and the remaining cash balance to be refunded or retained in the
Participant's Plan account pursuant to Section 11.2, if any. Each Participant
shall be provided information
12
<PAGE>
concerning the Company equivalent to that information generally made available
to the Company's common stockholders.
18. RESTRICTION ON ISSUANCE OF SHARES. The issuance of shares under the
Plan shall be subject to compliance with all applicable requirements of foreign,
federal or state law with respect to such securities. A Purchase Right may not
be exercised if the issuance of shares upon such exercise would constitute a
violation of any applicable foreign, federal or state securities laws or other
law or regulations. In addition, no Purchase Right may be exercised unless
(a) a registration statement under the Securities Act of 1933, as amended, shall
at the time of exercise of the Purchase Right be in effect with respect to the
shares issuable upon exercise of the Purchase Right, or (b) in the opinion of
legal counsel to the Company, the shares issuable upon exercise of the Purchase
Right may be issued in accordance with the terms of an applicable exemption from
the registration requirements of said Act. The inability of the Company to
obtain from any regulatory body having jurisdiction the authority, if any,
deemed by the Company's legal counsel to be necessary to the lawful issuance and
sale of any shares under the Plan shall relieve the Company of any liability in
respect of the failure to issue or sell such shares as to which such requisite
authority shall not have been obtained. As a condition to the exercise of a
Purchase Right, the Company may require the Participant to satisfy any
qualifications that may be necessary or appropriate, to evidence compliance with
any applicable law or regulation, and to make any representation or warranty
with respect thereto as may be requested by the Company.
19. LEGENDS. The Company may at any time place legends or other
identifying symbols referencing any applicable foreign, federal or state
securities law restrictions or any provision convenient in the administration of
the Plan on some or all of the certificates representing shares of Stock issued
under the Plan. The Participant shall, at the request of the Company, promptly
present to the Company any and all certificates representing shares acquired
pursuant to a Purchase Right in the possession of the Participant in order to
carry out the provisions of this Section. Unless otherwise specified by the
Company, legends placed on such certificates may include but shall not be
limited to the following:
"THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY THE
CORPORATION TO THE REGISTERED HOLDER UPON THE PURCHASE OF SHARES UNDER AN
EMPLOYEE STOCK PURCHASE PLAN AS DEFINED IN SECTION 423 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED. THE TRANSFER AGENT FOR THE SHARES EVIDENCED HEREBY
SHALL NOTIFY THE CORPORATION IMMEDIATELY OF ANY TRANSFER OF THE SHARES BY THE
REGISTERED HOLDER HEREOF MADE ON OR BEFORE , 19 THE REGISTERED
HOLDER SHALL HOLD ALL SHARES PURCHASED UNDER THE PLAN IN THE REGISTERED HOLDER'S
NAME (AND NOT IN THE NAME OF ANY NOMINEE) PRIOR TO THIS DATE."
13
<PAGE>
20. NOTIFICATION OF SALE OF SHARES. The Company may require the
Participant to give the Company prompt notice of any disposition of shares
acquired by exercise of a Purchase Right within two years from the date of
granting such Purchase Right or one year from the date of exercise of such
Purchase Right. The Company may require that until such time as a Participant
disposes of shares acquired upon exercise of a Purchase Right, the Participant
shall hold all such shares in the Participant's name (and not in the name of any
nominee) until the lapse of the time periods with respect to such Purchase Right
referred to in the preceding sentence. The Company may direct that the
certificates evidencing shares acquired by exercise of a Purchase Right refer to
such requirement to give prompt notice of disposition.
21. AMENDMENT OR TERMINATION OF THE PLAN. The Board may at any time
amend or terminate the Plan, except that (a) such termination shall not affect
Purchase Rights previously granted under the Plan, except as permitted under the
Plan, and (b) no amendment may adversely affect a Purchase Right previously
granted under the Plan (except to the extent permitted by the Plan or as may be
necessary to qualify the Plan as an employee stock purchase plan pursuant to
Section 423 of the Code or to obtain qualification or registration of the shares
of Stock under applicable foreign, federal or state securities laws). In
addition, an amendment to the Plan must be approved by the stockholders of the
Company within twelve (12) months of the adoption of such amendment if such
amendment would authorize the sale of more shares than are authorized for
issuance under the Plan or would change the definition of the corporations that
may be designated by the Board as Participating Companies.
IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies
that the foregoing Puma Technology, Inc. 1996 Employee Stock Purchase Plan was
duly adopted by the Board of Directors of the Company on August , 1996.
--------------------------------------
Secretary
14
<PAGE>
PLAN HISTORY
August , 1996 Board adopts Plan, with an initial reserve of
shares.
, 1996 Stockholders approve Plan, with an initial reserve of
shares.
15
<PAGE>
PUMA TECHNOLOGY, INC.
1996 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
/ / Original Application
/ / Change in Percentage of Payroll Deductions
I hereby elect to participate in the 1996 Employee Stock Purchase Plan
(the "PLAN") of Puma Technology, Inc. (the "COMPANY") and subscribe to purchase
shares of the Company's common stock as determined in accordance with the terms
of the Plan.
I hereby authorize payroll deductions in the amount of
percent (in 1% increments not to exceed 10%) of my "COMPENSATION" (as defined in
the Plan) from each paycheck throughout the "OFFERING PERIOD" (as defined in the
Plan) in accordance with the terms of the Plan. I understand that these payroll
deductions will be accumulated for the purchase of shares of common stock of the
Company at the applicable purchase price determined in accordance with the Plan.
I further understand that, except as otherwise set forth in the Plan, shares
will be purchased for me automatically on the last day of each Purchase Period
unless I withdraw from the Plan or from the Offering by giving written notice to
the Company or unless I terminate employment.
I further understand that I will automatically participate in each
subsequent Offering which commences immediately after the last day of an
Offering in which I am participating under the Plan until such time as I file
with the Company a notice of withdrawal from the Plan on such form as may be
established from time to time by the Company or I terminate employment.
Shares purchased for me under the Plan should be issued in the name set
forth below. (I understand that shares may be issued either in my name alone or
together with my spouse as community property or in joint tenancy.)
NAME:
--------------------------------------------------------------
ADDRESS:
-----------------------------------------------------------
-----------------------------------------------------------
MY SOCIAL SECURITY NUMBER:
-----------------------------------------
I hereby authorize withholding from my compensation in order to satisfy
the foreign, federal, state and local tax withholding obligations, if any, which
may arise upon my purchase of shares under the Plan and/or upon my disposition
of shares I acquired under the Plan. I hereby agree that until I dispose of the
shares, unless otherwise permitted by the Company, I will hold all shares I
acquire under the Plan in the name entered above (and not in the name of any
nominee) for at least two (2) years from the first day of the Offering Period in
which, and at least one (1) year from the Purchase Date on which, I acquired
such shares. I further agree that I will promptly notify the Chief Financial
Officer of the Company in writing of any transfer of such shares prior to the
end of the periods referred to in the preceding sentence.
I am familiar with the provisions of the Plan and hereby agree to
participate in the Plan subject to all of the provisions thereof. I understand
that the Board of Directors of the Company reserves the right to amend the Plan
and my right to purchase stock under the Plan as may be necessary to qualify the
Plan as an employee stock purchase plan as defined in section 423 of the
Internal Revenue Code of 1986, as amended, or to obtain qualification or
registration of the Company's common stock to be issued out of the Plan under
applicable foreign, federal and state securities laws. I understand that the
effectiveness of this subscription agreement is dependent upon my eligibility to
participate in the Plan.
Date: Signature:
-------------- -------------------------------------------
Name Printed:
---------------------------------------
<PAGE>
PUMA TECHNOLOGY, INC.
1996 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
I hereby elect to withdraw from the current offering (the "CURRENT
OFFERING") of the common stock of Puma Technology, Inc. (the "COMPANY") under
the Company's 1996 Employee Stock Purchase Plan (the "PLAN").
MAKE ONE ELECTION UNDER SECTION A AND ONE ELECTION UNDER SECTION B:
A. CURRENT OFFERING. As to my participation in the current purchase period
(the "Current Purchase Period") of the Current Offering under the Plan, I
elect as follows (check one):
1. I elect to terminate my participation in the Current Purchase Period
immediately.
I hereby request that all payroll deductions credited to my account
under the Plan (if any) not previously used to purchase shares under
the Plan shall NOT be used to purchase shares on the last day of the
Current Purchase Period. Instead, I request that all such amounts
be paid to me as soon as practicable. I understand that this
election immediately terminates my interest in the Current Offering.
2. I elect to terminate my participation in the Current Offering
following my purchase of shares on the last day of the Current
Purchase Period.
I hereby request that all payroll deductions credited to my account
under the Plan (if any) not previously used to purchase shares under
the Plan shall be used to purchase shares on the last day of the
Current Purchase Period. I understand that this election will
terminate my interest in the Current Offering immediately following
such purchase. I request that any cash balance remaining in my
account under the Plan after my purchase of shares be returned to me
as soon as practicable.
I understand that if no election is made as to participation in the
Current Offering under the Plan, I will be deemed to have elected to participate
in the Current Offering.
B. FUTURE OFFERINGS. As to my participation in future offerings of common
stock under the Plan, I elect as follows (check one):
1. I elect to participate in future offerings under the Plan.
I understand that by making this election I will participate in the
next offering under the Plan commencing subsequent to the Current
Offering, and in each subsequent offering commencing immediately
after the last day of an offering in which I participate, until such
time as I elect to withdraw from the Plan or from any such
subsequent offering.
2. I elect NOT to participate in future offerings under the Plan.
I understand that by making this election I terminate my interest in
the Plan and that no further payroll deductions will be made unless
I elect in accordance with the Plan to become a participant in
another offering under the Plan.
I understand that if no election is made as to participation in future
offerings under the Plan, I will be deemed to have elected to participate in
such future offerings.
Date: Signature:
-------------- -------------------------------------------
Name Printed:
---------------------------------------
<PAGE>
EXHIBIT 11.1
PUMA TECHNOLOGY, INC.
STATEMENT REGARDING COMPUTATION OF PRO FORMA
NET LOSS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
<TABLE>
<CAPTION>
YEAR ENDED
JULY 31, 1996
-------------
<S> <C>
Net loss........................................................................................... $ (2,401)
-------------
-------------
Weighted average of common stock outstanding....................................................... 2,833
Weighted average of preferred stock outstanding, on an as-if converted basis....................... 4,089
Shares, options and warrants included pursuant to Staff Accounting Bulletin No. 83................. 2,552
-------------
Shares used in pro forma per share computation..................................................... 9,474
-------------
-------------
Pro forma net loss per share....................................................................... $ (0.25)
-------------
-------------
</TABLE>
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated August 20, 1996, except
for Note 10 which is as of September 4, 1996, relating to the consolidated
financial statements of Puma Technology, Inc., which appears in such Prospectus.
We also consent to the application of such report to the Financial Statement
Schedule for the period from August 27, 1993 (inception) to July 31, 1994 and
the two years in the period ended July 31, 1996 listed under Item 16(b) of this
Registration Statement when such schedule is read in conjunction with the
financial statements referred to in our report. The audits referred to in such
report also included this schedule. We also consent to the references to us
under the headings "Experts" and "Selected Consolidated and Pro Forma Combined
Financial Information" in such Prospectus. However, it should be noted that
Price Waterhouse LLP has not prepared or certified such "Selected Consolidated
and Pro Forma Combined Financial Information."
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
San Jose, California
November 7, 1996
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated August 7, 1996, relating
to the financial statements of IntelliLink Corp., which appears in such
Prospectus. We also consent to the reference to us under the heading "Experts"
in such Prospectus.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Boston, Massachusetts
November 7, 1996
<PAGE>
CONSENT
The undersigned consents to the reference to our firm under the caption
"Experts" in the Registration Statement on Form S-1 and related prospectus of
Puma Technology, Inc., for the registration of shares of its common stock.
/s/ Columbia Financial Advisors, Inc.
Columbia Financial Advisors, Inc.
Portland, Oregon
November 1, 1996
