As Filed with the Securities and Exchange Commission on August 9, 1999
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
WORKFLOW MANAGEMENT, INC.
(Exact name of registrant as specified in its charter)
Delaware 06-1507104
(State of Incorporation) (IRS Employer Identification Number)
240 Royal Palm Way
Palm Beach, Florida 33480
(Address of Principal Executive Offices)
(561) 659-6551
(Registrant's telephone number including area code)
WORKFLOW MANAGEMENT, INC.
1999 Employee Stock Purchase Plan
(Full title of the Plan)
-----------------------------------
Claudia S. Amlie, Esq.
Executive Vice President and General Counsel
Workflow Management, Inc.
240 Royal Palm Way
Palm Beach, Florida 33480
(561) 659-6551
(Name, address and telephone number of agent for service)
-----------------------------------
Copy to:
T. Richard Litton, Jr., Esq.
Kaufman & Canoles
One Commercial Place
P.O. Box 3037
Norfolk, Virginia 23514
(757) 624-3241
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered(1) Per Share Price Fee(2)
- --------------------------------------------------------------------------------
Common Stock, par
value $.001 per 500,000
share shares $9.88 $4,940,000 $1,373.32
- --------------------------------------------------------------------------------
(1) Also registered hereunder are such additional number of shares of Common
Stock, presently indeterminable, as may be necessary to satisfy the antidilution
provisions of the 1999 Employee Stock Purchase Plan to which this Registration
Statement relates.
(2) The registration fee has been calculated in accordance with Rule 457(c) and
457(h) with respect to the 500,000 shares of Common Stock registered hereby on
the basis of 85% of the price of shares of the Company's Common Stock on the
NASDAQ National Market on August 5, 1999.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Note: The document(s) containing the information required by Item 1 of
Form S-8 and the statement of availability of registrant information and any
other information required by Item 2 of Form S-8 will be sent or given to
participants as specified by Rule 428 under the Securities Act of 1933, as
amended (the "Securities Act"). In accordance with Rule 428 and the requirements
of Part I of Form S-8, such documents are not being filed with the Securities
and Exchange Commission (the "Commission") either as part of this Registration
Statement or as prospectuses or prospectus supplements pursuant to Rule 424
under the Securities Act. Workflow Management, Inc. (the "Registrant"' or the
"Company") shall maintain a file of such documents in accordance with the
provisions of Rule 428. Upon request, the Registrant shall furnish the
Commission or its staff a copy or copies of all of the documents included in
such file.
2
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The Company hereby incorporates by reference the documents listed in (a)
through (d) below. In addition, all documents subsequently filed by the Company
pursuant to Section 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") (prior to filing of a Post-Effective
Amendment which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold) shall be deemed to be
incorporated by reference in this Registration Statement and to be a part hereof
from the date of filing of such documents.
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
April 24, 1999.
(b) All other reports filed by the Company pursuant to Section 13(a) of
the Exchange Act since April 24, 1999, including the Company's current report on
Form 8-K filed May 4, 1999.
(c) The description of the Company's Common Stock which is incorporated by
reference in the Registration Statement on Form 8-A filed by the Company under
the Exchange Act on June 9, 1998, including any amendment or report filed for
the purpose of updating such description.
Item 4. Description of Securities
Inapplicable.
Item 5. Interests of Named Experts and Counsel
Inapplicable
Item 6. Indemnification of Directors and Officers
Article 9 of the Company's Certificate of Incorporation provides that the
Company will indemnify its directors and officers to the fullest extent
permitted by the General Corporation Law of the State of Delaware.
Section 145 of the General Corporation Law of the State of Delaware
permits a corporation, under specified circumstances, to indemnify its
directors, officers, employees or agents against expenses (including attorney's
fees), judgments, fines and amounts paid in settlements actually and reasonably
incurred by them in connection with any action, suit or proceeding brought by
third parties by reason of the fact that they were or are directors, officers,
employees or agents of the corporation if such directors, officers, employees or
agents acted in good faith and in a manner they reasonably believed to be in or
not opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reason to believe their conduct was
unlawful. In a derivative action, i.e., one by or in the right of the
corporation, indemnification may be made only for expenses actually and
reasonably incurred by directors, officers, employees or agents in connection
with the defense or settlement of an action or suit, and only with respect to a
matter as to which they shall have acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification shall be made if such person shall
have been adjudged liable to the corporation, unless and only to the extent that
the court in which the action or suit was brought shall determine upon
application that the defendant directors, officers, employees or agents are
fairly and reasonably entitled to indemnity for such expenses despite such
adjudication of liability.
Article 8 of the Certificate of Incorporation states that directors of the
Company will not be liable to the Company or its stockholders for monetary
damages for any breach of fiduciary duty as a director, except for liability:
(i) for any breach of the director's duty of loyalty to the Company or its
3
<PAGE>
stockholders; (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the General Corporation Law of the State of Delaware, which makes directors
liable for unlawful dividends or unlawful stock repurchases or redemptions; or
(iv) for any transaction from which the director derived an improper personal
benefit.
Article VI of the Company's By-laws provides that the Company will
indemnify its officers and directors (and those serving at the request of the
Company as an officer or director of another corporation, partnership, joint
venture, trust or other enterprise), and may indemnify its employees and agents
(and those serving at the request of the Company as an employee or agent of
another corporation, partnership, joint venture, trust or other enterprise),
against expenses (including attorney's fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred, if such officer, director,
employee or agent acted in good faith and in a manner reasonably believed to be
in or not opposed to the best interests of the Company, and with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. In a derivative action, indemnification shall be limited to
expenses (including attorney's fees) actually and reasonably incurred by such
officer, director, employee or agent in the defense or settlement of such action
or suit, and no indemnification shall be made in respect to any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
Company unless and only to the extent that the Delaware Court of Chancery or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Delaware Court of Chancery or such other court shall deem
proper.
Unless the Board of Directors otherwise determines in a specific case,
expenses incurred by an officer or director in defending a civil or criminal
action, suit or proceeding shall be paid by the Company in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of the officer or director to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
Company.
Item 7. Exemption from Registration Claimed
Not Applicable.
Item 8. Exhibits
Number Description
4.1* Certificate of Incorporation of the Registrant
4.2* Certificate of Amendment of Certificate of Incorporation of
Registrant
4.3** Amended and Restated By-Laws of the Registrant
4.4* Specimen certificate representing the Common Stock of
Registrant
5.1 Opinion of Kaufman & Canoles
23.1 Consent of Kaufman & Canoles (included in Exhibit 5.1)
23.2 Consent of PricewaterhouseCoopers LLP
24.1 Power of Attorney (included as part of the signature page
to this Registration Statement)
99.1 Workflow Management, Inc. 1999 Employee Stock Purchase Plan
- ------------------
*Incorporated herein by reference from the Registrant's Registration
Statement on Form S-1 (File No. 333-46535).
**Incorporated herein by reference from the Registrant's Form 10-Q/A filed
April 9, 1999.
4
<PAGE>
Item 9. Undertakings
The undersigned Registrant hereby undertakes the following:
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement
(or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of any
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(h) The undersigned Registrant hereby undertakes, that, insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
5
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned thereunto
duly authorized, in Palm Beach, Florida, on August 9, 1999.
WORKFLOW MANAGEMENT, INC.
By: /s/ Thomas B. D'Agostino
-------------------------------------------------
Thomas B. D'Agostino, Chief Executive
Officer and President
POWER OF ATTORNEY
In accordance with the requirements of the Securities Act of 1933, the
Registration Statement has been signed by the following persons in the
capacities and on the dates stated. Each person whose signature appears below
constitutes and appoints Thomas B. D'Agostino and Gus J. James, II, and each of
them individually, his true and lawful attorney-in-fact in his place and stead,
to execute and cause to be filed with the Securities and Exchange Commission any
and all amendments to this Registration Statement.
Witness our hands and common seals on the date set forth below.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C>
Director, Chairman of the Board,
/s/ Thomas B. D'Agostino Chief Executive Officer and
- ------------------------------------------ President (Principal Executive
Thomas B. D'Agostino Officer) August 9, 1999
Vice President, Chief Financial
/s/ Steven R. Gibson Officer, Treasurer and Secretary
- ------------------------------------------ (Principal Financial Officer and
Steven R. Gibson Principal Accounting Officer) August 9, 1999
/s/ Thomas A. Brown, Sr.
- ------------------------------------------
Thomas A. Brown, Sr. Director August 9, 1999
/s/ Gus J. James, II
- ------------------------------------------
Gus J. James, II Director August 9, 1999
/s/ Roger J. Pearson
- ------------------------------------------
Roger J. Pearson Director August 9, 1999
/s/ F. Craig Wilson
- ------------------------------------------
F. Craig Wilson Director August 9, 1999
</TABLE>
6
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBITS
to
FORM S-8
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933, AS AMENDED
WORKFLOW MANAGEMENT, INC.
(Exact name of registrant as specified in its charter)
7
<PAGE>
Exhibits
Number Description
4.1* Certificate of Incorporation of the Registrant
4.2* Certificate of Amendment of Certificate of Incorporation of
Registrant
4.3** Amended and Restated By-Laws of the Registrant
4.4* Specimen certificate representing the Common Stock of Registrant
5.1 Opinion of Kaufman & Canoles
23.1 Consent of Kaufman & Canoles (included in Exhibit 5.1)
23.2 Consent of PricewaterhouseCoopers LLP
24.1 Power of Attorney (included as part of the signature page to this
Registration Statement)
99.1 Workflow Management, Inc. 1999 Employee Stock Purchase Plan
- ------------------
*Incorporated herein by reference from the Registrant's Registration Statement
on Form S-1 (File No. 333-46535).
**Incorporated herein by reference from the Registrant's Form 10-Q/A filed April
9, 1999.
8
Exhibit 5.1
August 9, 1999
Workflow Management, Inc.
240 Royal Palm Way
Palm Beach, Florida 33480
Re: 1999 Employee Stock Purchase Plan
Dear Sirs:
In connection with the registration on Form S-8 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Act"), of 500,000
shares of Common Stock, par value $.001 of Workflow Management, Inc. (the
"Company"), which may be issued pursuant to the terms of the Company's 1999
Employee Stock Purchase Plan (the "Plan"), we hereby advise you that it is our
opinion that upon issuance pursuant to the terms of the Plan, the shares of
Common Stock which may be issued pursuant thereto will be validly issued, fully
paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not thereby admit that we
are acting within the category of persons whose consent is required under
Section 7 of the Act and the rules and regulations of the Securities and
Exchange Commission thereunder.
Very truly yours,
/s/ Kaufman & Canoles, P.C.
Kaufman & Canoles, P.C.
9
Exhibit 23.2
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated June 15, 1999 relating to the
consolidated financial statements and financial statement schedule, which
appears in Workflow Management, Inc.'s Annual Report on Form 10-K for the fiscal
year ended April 24, 1999.
/s/ PRICEWATERHOUSECOOPERS LLP
Minneapolis, Minnesota
August 6, 1999
10
Exhibit 99.1
WORKFLOW MANAGEMENT, INC.
1999 EMPLOYEE STOCK PURCHASE PLAN
1. Purpose. The purpose of the Plan is to provide employees of Workflow
Management, Inc. (the "Company") and its Designated Subsidiaries with an
opportunity to purchase Common Stock of the Company through accumulated payroll
deductions. It is the intention of the Company to have the Plan qualify as an
"Employee Stock Purchase Plan" under ss. 423 of the Internal Revenue Code of
1986, as amended. The provisions of the Plan, accordingly, shall be construed so
as to extend and limit participation in a manner consistent with the
requirements of that section of the Code.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Common Stock" shall mean the Common Stock of the Company.
(d) "Company" shall mean Workflow Management, Inc., a Delaware
corporation, and any Designated Subsidiary of the Company.
(e) "Compensation" shall mean all base straight time gross wages or
base salary payments and commissions, overtime and shift premium payments and
sick, vacation and holiday pay, but excluding bonuses and other forms of
supplemental, extraordinary or irregular compensation.
(f) "Designated Subsidiary" shall mean any Subsidiary which has been
designated by the Board from time to time in its sole discretion as eligible to
participate in the Plan.
(g) "Employee" shall mean any individual who is an Employee of the
Company for tax purposes and whose customary employment with the Company is at
least twenty (20) hours per week and more than five (5) months in any calendar
year. For purposes of the Plan, the employment relationship shall be treated as
continuing intact while the individual is on sick leave or other leave of
absence approved by the Company. Where the period of leave exceeds 90 days and
the individual's right to reemployment is not guaranteed either by statute or by
contract, the employment relationship shall be deemed to have terminated on the
91st day of such leave.
(h) "Enrollment Date" shall mean the first day of each Offering
Period.
(i) "Exercise Date" shall mean the last day of each Offering Period.
(j) "Fair Market Value" shall mean, as of any date, the value of
Common Stock determined as follows:
(1) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day on the date of such determination, as reported in
The Wall Street Journal or such other source as the Board (or its committee)
deems reliable; or
(2) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean of the closing bid and asked prices for the Common Stock on
the date of such determination, as reported in The Wall Street Journal or such
other source as the Board (or its committee) deems reliable.
(k) "Offering Period" shall mean a period of approximately three (3)
months during which an option granted pursuant to the Plan may be exercised,
commencing on the first Trading Day on or after October 1, 1999, and terminating
on the last Trading Day in the period ending the following December 31, with
succeeding Offering Periods commencing on the first Trading Day on or after the
first day of each subsequent calendar quarter, and terminating on the last
Trading Day in each such calendar quarter. The duration of Offering Periods may
be changed pursuant to Section 4 of this Plan.
(l) "Plan" shall mean this Employee Stock Purchase Plan.
(m) "Purchase Price" shall mean an amount equal to 85% of the Fair
Market Value of a share of Common Stock on the Enrollment Date or on the
Exercise Date, whichever is lower.
(n) "Reserves" shall mean the number of shares of Common Stock
covered by each option under the Plan which have not yet been exercised and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but not yet placed under option.
(o) "Subsidiary" shall mean a U.S. or Canadian corporation, of which
more than 50% of the voting shares are held by the Company or a Subsidiary,
whether or not such corporation now exists or is hereafter organized or acquired
by the Company or a Subsidiary.
(p) "Trading Day" shall mean a day on which national stock exchanges
and the Nasdaq System are open for trading.
3. Eligibility.
(a) Any Employee who (i) has completed six (6) months of service,
(ii) has attained age 21, and (iii) is employed by the Company on a given
Enrollment Date shall be eligible to participate in the Plan.
(b) Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) to the extent that,
immediately after the grant, such Employee (or any other person whose stock
would be attributed to such Employee pursuant to ss. 424(d) of the Code) would
own capital stock of the Company and/or hold outstanding options to purchase
such stock possessing five percent (5%) or more of the total combined voting
power or value of all classes of the capital stock of the Company or of any
Subsidiary, or (ii) to the extent that his or her rights to purchase stock under
all employee stock purchase plans of the Company and its Subsidiaries accrues at
a rate which exceeds Twenty-Five Thousand Dollars ($25,000) worth of stock
(determined at the fair market value of the shares at the time such option is
granted) for each calendar year in which such option is outstanding at any time.
4. Offering Periods. The Plan shall be implemented by consecutive Offering
Periods with a new Offering Period commencing on the first Trading Day on or
after October 1, and each January 1, April 1, July 1 and October 1 thereafter,
or on such other date(s) as the Board (or its committee) shall determine, and
continuing thereafter until terminated in accordance with Section 20 hereof. The
Board (or its committee) shall have the power to change the duration of Offering
Periods (including the commencement dates thereof) with respect to future
offerings without stockholder approval if such change is announced at least five
(5) days prior to the scheduled beginning of the first Offering Period to be
affected thereafter.
5. Participation.
(a) An eligible Employee may become a participant in the Plan by
completing a subscription agreement authorizing payroll deductions in the form
prescribed by the Company and filing it with the Company's payroll office no
less than 15 days prior to the applicable Enrollment Date.
(b) Payroll deductions for a participant shall commence on the first
payroll following the Enrollment Date and shall end on the last payroll in the
Offering Period to which such authorization is applicable, unless sooner
terminated by the participant as provided in Section 10 hereof.
6. Payroll Deductions.
(a) At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made on each pay day
during the Offering Period in an amount equal to a specified percentage of the
Compensation which he or she receives on each pay day during the Offering
Period.
(b) All payroll deductions made for a participant shall be credited
to his or her account under the Plan and shall be withheld in whole percentages
only. A participant may not make any additional payments into such account.
(c) A participant may discontinue his or her participation in the
Plan as provided in Section 10 hereof and may request, in that event, that the
amount withheld up to the date of his withdrawal be (i) applied to the purchase
of shares at the end of the current Offering Period; or (ii) refunded to him in
full as soon as reasonably practicable after his date of withdrawal in
accordance with Section 10. A participant who elects to withdraw from
participation during an Offering Period will not be allowed to re-subscribe to
participate in the Plan until the Offering Period beginning after the Offering
Period subsequent to the period in which such participant withdrew from the
Plan. Other than the right of withdrawal described above, a participant may not
increase or decrease the rate of his or her payroll deductions during any
Offering Period. A participant's subscription agreement shall remain in effect
for successive Offering Periods unless terminated as provided in Section 10
hereof.
(d) Notwithstanding the foregoing, to the extent necessary to comply
with ss. 423(b)(8) of the Code and Section 3(b) hereof, a participant's payroll
deductions may be decreased to zero percent (0%) at any time during an Offering
Period. Payroll deductions shall recommence at the rate provided in such
participant's subscription agreement at the beginning of the first Offering
Period which is scheduled to end in the following calendar year, unless
terminated by the participant as provided in Section 10 hereof.
(e) At the time the option is exercised, in whole or in part, or at
the time some or all of the Company's Common Stock issued under the Plan is
disposed of, the participant must make adequate provision for the Company's
federal, state, or other tax withholding obligations, as well as costs,
commissions, fees or expenses, if any, which arise upon the participant's
exercise of the option or disposition of the Common Stock. All costs, withheld
amounts, fees, commissions, expenses, etc., associated with exercise of the
option or disposition of the Common Stock shall be borne by the participant. At
any time, the Company may, but shall not be obligated to, withhold from the
participant's compensation the amount necessary for the Company to meet
applicable withholding obligations, including any withholding required to make
available to the Company any tax deductions or benefits attributable to sale or
other disposition of Common Stock by the Employee.
7. Grant of Option. On the Enrollment Date of each Offering Period, each
eligible Employee participating in such Offering Period shall be granted an
option to purchase on the Exercise Date of such Offering Period (at the
applicable Purchase Price) up to a number of shares of the Company's Common
Stock determined by dividing such Employee's payroll deductions accumulated
prior to such Exercise Date and retained in the participant's account as of the
Exercise Date by the applicable Purchase Price; provided that such purchase
shall be subject to the limitations set forth in Sections 3(b) and 12 hereof.
Exercise of the option shall occur as provided in Section 8 hereof, unless the
participant has withdrawn pursuant to Section 10 hereof. The Option shall expire
on the last day of the Offering Period.
8. Exercise of Option. Unless a participant withdraws from the Plan as
provided in Section 10 hereof, his or her option for the purchase of shares
shall be exercised automatically on the Exercise Date, and the maximum number of
shares subject to option shall be purchased for such participant at the
applicable Purchase Price with the accumulated payroll deductions in his or her
account. Fractional shares may be delivered. Upon a participant's exercise of
his Option and his purchase of shares at the end of an Offering Period
hereunder, such participant shall not be allowed to sell any of such shares
until the end of the Offering Period next following the Offering Period in which
such shares were purchased. During a participant's lifetime, a participant's
option to purchase shares hereunder is exercisable only by him or her.
9. Delivery. Upon request by a participant, the Company, through its share
transfer agent or other third-party administrator, shall as promptly as
practicable arrange the delivery to such participant, as appropriate, of a
certificate or certificates representing the shares purchased under this Plan by
the participant's exercise of options hereunder.
10. Withdrawal.
(a) A participant may discontinue his participation in the Plan at
any time prior to the 15th day before the end of an Offering Period by giving
written notice to the Company in the form prescribed by the Company. The
withdrawing participant may request that all but not less than all the payroll
deductions credited to his or her account and not yet used to exercise his or
her option under the Plan be (i) applied to the purchase of shares at the end of
the current Offering Period; or (ii) refunded to him. If the participant
requests a refund hereunder, all of the participant's payroll deductions
credited to his or her account shall be paid to such participant as soon as
reasonably practicable after receipt of such notice of withdrawal and such
participant's option for the Offering Period shall be automatically terminated,
and no further payroll deductions for the purchase of shares shall be made for
such Offering Period. If a participant withdraws from an Offering Period, as
provided above, payroll deductions shall not resume at the beginning of the
succeeding Offering Period, and shall not resume at the next succeeding Offering
Period unless the participant delivers to the Company a new subscription
agreement.
(b) A participant's withdrawal from an Offering Period shall not
have any effect upon his or her eligibility to participate in any similar plan
which may hereafter be adopted by the Company except that he or she shall not be
allowed to participate in the next succeeding Offering Period which commences
after the termination of the Offering Period from which the participant
withdraws.
11. Termination of Employment. Upon a participant's ceasing to be an
Employee for any reason, other than death, he or she shall be deemed to have
elected to withdraw from the Plan, and his or her option for the purchase of
shares shall be exercised automatically on the Exercise Date, and the maximum
number of shares subject to option shall be purchased for such participant at
the applicable Purchase Price with the accumulated payroll deductions in his or
her account. In the event of the participant's death while employed by the
Company during an Offering Period when the participant has a subscription
agreement and payroll deductions in effect, the participant's beneficiary
designated under Section 15 may elect, in accordance with Section 10, to
request: (i) a refund of all but not less than all of the payroll deductions
credited to the deceased participant's account; or (ii) to apply such payroll
deductions to the purchase of shares at the end of the Offering Period in which
the participant died. If such beneficiary elects a refund of the participant's
accumulated payroll deductions, such amount shall be paid to such beneficiary as
soon as reasonably practicable and the participant's option for the Offering
Period shall be automatically terminated.
12. Interest. No interest shall accrue on the payroll deductions of
a participant in the Plan.
13. Stock.
(a) The maximum number of shares of the Company's Common Stock which
shall be made available for sale under the Plan shall be Five Hundred Thousand
(500,000) shares, subject to adjustment upon changes in capitalization of the
Company as provided in Section 19 hereof. If, on a given Exercise Date, the
number of shares with respect to which options are to be exercised exceeds the
number of shares then available under the Plan, the Company shall make a pro
rata allocation of the shares remaining available for purchase in as uniform a
manner as shall be practicable and as it shall determine to be equitable.
(b) The participant shall have no interest or voting right in shares
covered by his option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan shall be
registered in the name of the participant only.
14. Administration. The Plan shall be administered by the Board or a
committee of members of the Board appointed by the Board. The Board or its
committee shall have full and exclusive discretionary authority to construe,
interpret and apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan. Every finding, decision and
determination made by the Board or its committee shall, to the full extent
permitted by law, be final and binding upon all parties.
15. Designation of Beneficiary.
(a) A participant may file a written designation of a beneficiary
who is to receive any shares and cash, if any, from the participant's account
under the Plan in the event of such participant's death subsequent to an
Exercise Date on which the option is exercised but prior to delivery to such
participant of such shares and cash. In addition, a participant may file a
written designation of a beneficiary who is to receive any shares or cash from
the participant's account under the Plan in the event of such participant's
death prior to exercise of the option, in accordance with Section 11. If a
participant is married and the designated beneficiary is not the spouse, spousal
consent shall be required for such designation to be effective.
(b) Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
deliver such shares and/or cash to the executor or administrator of the estate
of the participant, or if no such executor or administrator has been appointed
(to the knowledge of the Company), the Company, in its discretion, may deliver
such shares and/or cash to the spouse or to any one or more dependents or
relatives of the participant, or if no spouse, dependent or relative is known to
the company, then to such other person as the Company may designate.
16. Transferability. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 15 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 10 hereof.
17. Use of Funds. All payroll deductions received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.
18. Reports. Individual accounts shall be maintained for each participant
in the Plan. Statements of account shall be given to participating Employees at
least annually, which statements shall set forth the amounts of payroll
deductions, the Purchase Price, the number of shares purchased and the remaining
cash balance, if any.
19. Adjustments Upon Changes in Capitalization, Dissolution,
Liquidation, Merger of Asset Sale.
(a) Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the Reserves, the maximum number of shares each
participant may purchase per Offering Period (pursuant to Section 7), as well as
the price per share and the number of shares of Common Stock covered by each
option under the Plan which has not yet been exercised shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board
(or its committee), whose determination in that respect shall be final, binding
and conclusive. Except as expressly provided herein, no issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of Common Stock subject to an
option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Offering Period then in progress
shall be shortened by setting a new Exercise Date (the "New Exercise Date"), and
shall terminate immediately prior to the consummation of such proposed
dissolution or liquidation, unless provided otherwise by the Board (or its
committee). The New Exercise Date shall be before the date of the Company's
proposed dissolution or liquidation. The Board (or its committee) shall notify
each participant in writing, at least ten (10) business days prior to the New
Exercise Date, that the Exercise Date for the participant's option has been
changed to the New Exercise Date and that the participant's option shall be
exercised automatically on the New Exercise Date, unless prior to such date the
participant has withdrawn from the Offering Period as provided in Section 10
hereof.
(c) Merger or Asset Sale. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, each outstanding option shall be assumed or an
equivalent option substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the option, any Offering Periods
then in progress shall be shortened by setting a new Exercise Date (the "New
Exercise Date") and any Offering Periods then in progress shall end on the New
Exercise Date. The New Exercise Date shall be before the date of the Company's
proposed sale or merger. The Board (or its committee) shall notify each
participant in writing, at least ten (10) business days prior to the New
Exercise Date, that the Exercise Date for the participant's option has been
changed to the New Exercise Date and that the participant's option shall be
exercised automatically on the New Exercise Date, unless prior to such date the
participant has withdrawn from the Offering Period as provided in Section 10
hereof.
20. Amendment or Termination.
(a) The Board of Directors of the Company may at any time and for
any reason terminate or amend the Plan. Except as provided in Section 19 hereof,
no such termination can affect options previously granted, provided that an
Offering Period may be terminated by the Board of Directors on any Exercise Date
if the Board determines that the termination of the Plan is in the best
interests of the Company and its shareholders. Except as provided in Section 19
hereof, no amendment may make any change in any option theretofore granted which
adversely affects the rights of any participant. To the extent necessary to
comply with ss. 423 of the Code (or any successor rule or provision or any other
applicable law, regulation or stock exchange rule), the Company shall obtain
shareholder approval in such a manner and to such a degree as required.
(b) Without shareholder consent and without regard to whether any
participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods, limit
the frequency and/or number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's Compensation, and establish such other limitations or procedures
as the Board (or its committee) determines in its sole discretion advisable
which are consistent with the Plan.
(c) Notwithstanding anything hereinabove to the contrary, the Board
may not make any amendment to the Plan to increase or decrease the maximum
number, or the price, of shares subject to option under the Plan, except as
provided in Section 19, without shareholder consent.
21. Notices. All notices or other communications by a participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.
22. Conditions Upon Issuance of Shares. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, the requirements of
any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
As a condition to the exercise of an option, the Company may require
the person exercising such option to represent and warrant at the time of any
such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
option of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
23. Term of Plan. The Plan shall become effective upon the earlier to
occur of October 1, 1999, or its approval by the stockholders of the Company. It
shall continue in effect for a term of ten (10) years unless sooner terminated
under Section 20 hereof.
