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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
NUKO INFORMATION SYSTEMS, INC.
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(Name of Registrant as Specified in Its Charter)
NUKO INFORMATION SYSTEMS, INC.
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
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[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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NUKO INFORMATION SYSTEMS, INC.
2391 QUME DRIVE
SAN JOSE, CALIFORNIA 95131
November 14, 1996
To the Shareholders of NUKO Information Systems, Inc.
A Special Meeting of Shareholders of NUKO Information Systems, Inc. (the
"Company") will be held at the Company's principal facilities at 2391 Qume
Drive, San Jose, California, on Wednesday, December 11, 1996, at 10:00 a.m.,
California time. You are cordially invited to attend.
The Notice of Special Meeting and a Proxy Statement, which describe the
formal business to be conducted at the Special Meeting, follow this letter. As a
shareholder, it is in your best interest to express your views regarding these
matters by signing and returning your proxy enclosed herewith. This will ensure
the voting of your shares if you do not attend the Special Meeting.
At the Special Meeting we will be asking the shareholders of the Company to
change the Company's state of incorporation from New York to Delaware, as well
as to approve two stock option plans previously adopted by the Board of
Directors. The Board of Directors and management believe that Delaware corporate
law, because of its prominence and predictability, provides a reliable
foundation on which corporate governance decisions can be based. We believe that
reincorporation will therefore benefit you and the corporation you own.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES OF THE COMPANY'S
COMMON STOCK YOU OWN, AND ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE
SPECIAL MEETING. TO ENSURE YOUR REPRESENTATION AT THE SPECIAL MEETING, PLEASE
MARK, SIGN, DATE AND MAIL THE ENCLOSED PROXY PROMPTLY IN THE RETURN ENVELOPE
PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. THE GIVING
OF A PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE
SPECIAL MEETING. PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY
A BROKER, BANK OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE SPECIAL MEETING, YOU
MUST OBTAIN FROM THE RECORD HOLDER A PROXY ISSUED IN YOUR NAME.
Sincerely yours,
LOGO
PRATAP KESAV KONDAMOORI
Chairman of the Board, President and
Chief Executive Officer
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NUKO INFORMATION SYSTEMS, INC.
2391 QUME DRIVE
SAN JOSE, CALIFORNIA 95131
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
DECEMBER 11, 1996
To the Shareholders of NUKO Information Systems, Inc.:
Notice is hereby given that a Special Meeting of Shareholders of NUKO
Information Systems, Inc., (the "Company") will be held on Wednesday, December
11, 1996 at 10:00 a.m., California time, at the principal facilities of the
Company, located at 2391 Qume Drive, San Jose, California, for the following
purpose:
1. To approve a change in the Company's state of incorporation from
New York to Delaware.
2. To approve the adoption of the 1996 Stock Option Plan and the
reservation of 2,500,000 shares of Common Stock for issuance thereunder.
3. To approve the adoption of the 1996 Director Stock Option Plan and
the reservation of 200,000 shares of Common Stock for issuance thereunder.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. November 12, 1996 has been fixed as the
record date for the determination of shareholders entitled to notice of and to
vote at the Special Meeting and any adjournment or postponement thereof.
All shareholders are cordially invited to attend the Special Meeting.
However, to assure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed proxy as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any shareholder attending
the meeting may vote in person even if he or she returned a proxy.
By order of the Board of Directors
LOGO
JOHN H. GORMAN
Secretary
San Jose, California
November 14, 1996
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND RETURN THE
ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE-PREPAID
ENVELOPE. IF A QUORUM IS NOT REACHED, THE COMPANY WILL HAVE THE ADDED EXPENSE OF
RE-ISSUING THESE PROXY MATERIALS. IF YOU ATTEND THE MEETING AND SO DESIRE, YOU
MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON.
THANK YOU FOR ACTING PROMPTLY.
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PROXY STATEMENT
------------------------
SPECIAL MEETING OF SHAREHOLDERS OF
NUKO INFORMATION SYSTEMS, INC.
DECEMBER 11, 1996
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SOLICITATION AND VOTING RIGHTS
GENERAL
The enclosed proxy is solicited by and on behalf of the Board of Directors
of NUKO Information Systems, Inc. (the "Company") for use at a Special Meeting
of Shareholders (the "Special Meeting") to be held on Wednesday, December 11,
1996, at 10:00 a.m., California time, or at any postponements or adjournments
thereof, for the purposes set forth herein and in the accompanying Notice of
Special Meeting of Shareholders. The Special Meeting will be held at the
principal offices of the Company, located at 2391 Qume Drive, San Jose,
California 95131. These proxy solicitation materials were first mailed on or
about November 14, 1996 to all shareholders entitled to vote at the Special
Meeting.
SOLICITATION
All expenses incurred in connection with this solicitation, including
postage, printing, handling and the actual expenses incurred by brokerage
houses, custodians, nominees and fiduciaries in forwarding proxy materials to
beneficial owners, will be paid by the Company. In addition to solicitation by
mail, certain officers, directors and regular employees of the Company, who will
receive no additional compensation for their services, may solicit proxies by
telephone, telegram or personal call. In addition, Corporate Investor
Communications, Inc. ("CIC") will assist in the solicitation of proxies. CIC
will receive a fee totaling $3,000 plus out-of-pocket expenses for its services.
VOTING RIGHTS AND OUTSTANDING SHARES
The Company, a corporation existing and organized under the laws of the
State of New York, has one class of equity securities issued and outstanding,
consisting of 10,461,884 shares of common stock, $.001 par value (the "Common
Stock"), as of October 31, 1996. All of the shares of Common Stock are voting
shares, but only those shareholders of record as of the record date, November
12, 1996 (the "Record Date"), will be entitled to notice of and to vote at the
Special Meeting and at any and all postponements or adjournments of the Special
Meeting. Each shareholder is entitled to one vote for each share of Common Stock
held by such shareholder of record on each matter that may come before the
Special Meeting.
Votes cast by proxy or in person at the Special Meeting will be tabulated
by the Inspector of Elections (the "Inspector"). The Inspector will also
determine whether or not a quorum is present. The Inspector will separately
tabulate affirmative and negative votes, abstentions and broker "non-votes."
The presence in person or by proxy of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the Special Meeting will
constitute a quorum for the purpose of transacting business at the Special
Meeting. The Inspector will treat abstentions as shares that are present and
entitled to vote for purposes of determining the presence of a quorum. The
affirmative vote of the holders of two-thirds of all outstanding shares entitled
to vote thereon is required under New York law for approval of the
reincorporation of the Company from New York to Delaware. The affirmative vote
of a majority of shares entitled to vote at the Special Meeting is required
under New York law for the adoption by shareholders of the 1996 Stock Option
Plan and the 1996 Director Stock Option Plan. Boxes and a designated blank space
are provided on the proxy card for shareholders to mark if they wish to abstain
on the proposal. In accordance with New York law, such abstentions are not
counted in determining the votes cast in connection with any of the proposals to
be voted on at the Special Meeting. Any proxy which is returned using the form
of proxy enclosed and which is
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not marked as to a particular item will be voted for the proposals described
herein as the proxy holders deem advisable with respect to the item not marked.
If a broker indicates on the enclosed proxy or its substitute that it does not
have discretionary authority as to certain shares to vote on a particular
matter, those shares will not be considered as present with respect to that
matter. The Company believes that the tabulation procedures to be followed by
the Inspector are consistent with the general statutory requirements in New York
concerning voting of shares and determination of a quorum.
REVOCABILITY OF PROXIES
At the Special Meeting, valid proxies will be voted as specified by the
shareholder. Any shareholder giving a proxy in the accompanying form retains the
power to revoke it at any time prior to the exercise of the powers conferred in
the proxy and may do so by taking any of the following actions: (i) delivering
written notice of revocation to the Secretary of the Company, (ii) delivering to
the Secretary of the Company a duly executed proxy bearing a later date or (iii)
personally attending the Special Meeting and revoking the proxy. A shareholder's
attendance at the Special Meeting will not revoke the shareholder's proxy unless
the shareholder affirmatively indicates at the Special Meeting the intention to
vote the shareholder's shares in person. Please note, however, that if your
shares are held of record by a broker, bank or other nominee and you wish to
vote at the Special Meeting, you must obtain from the record holder a proxy
issued in your name.
PROPOSAL 1 -- REINCORPORATION IN DELAWARE
INTRODUCTION
The Board of Directors believes that the best interests of the Company and
its shareholders will be served by changing the state of incorporation of the
Company from New York to Delaware (the "Reincorporation Proposal" or the
"Proposed Reincorporation"). As discussed below, the principal reasons for
reincorporation are the greater flexibility of Delaware corporate law, the
substantial body of case law interpreting that law and the increased ability of
the Company to attract and retain qualified directors. The Company believes that
its shareholders will benefit from the well established principles of corporate
governance that Delaware law affords. The Reincorporation Proposal is not being
proposed in order to prevent an unsolicited takeover attempt, nor is it in
response to any present attempt known by the Board of Directors to acquire
control of the Company, obtain representation on the Board of Directors or take
significant action that affects the Company.
Shareholders are urged to read carefully the following discussion and the
related exhibits attached to this Proxy Statement before voting on the
Reincorporation Proposal. The discussion is not intended to be complete and is
qualified in its entirety by reference to (i) the Agreement and Plan of Merger
dated as of November 12, 1996 (the "Merger Agreement") between the Company and
NUKO Information Systems, Inc., a newly-formed Delaware corporation which is a
wholly owned subsidiary of the Company (referred to in this Proxy Statement as
"NUKO Delaware"), attached hereto as Exhibit A, (ii) the Amended and Restated
Certificate of Incorporation of NUKO Delaware to be filed immediately prior to
consummation of the Proposed Reincorporation, attached hereto as Exhibit B (the
"Delaware Certificate"), and (iii) the Bylaws of NUKO Delaware, attached hereto
as Exhibit C (the "Delaware Bylaws"). Throughout this discussion of the
Reincorporation Proposal, the Company is sometimes referred to as "NUKO New
York," and the term "NUKO Delaware" refers to the new Delaware corporation, the
proposed successor to the Company. NUKO Delaware has not engaged in any
activities except in connection with the Proposed Reincorporation. The mailing
address of NUKO Delaware's principal executive offices and its telephone number
are the same as those of the Company.
EFFECTUATION OF THE MERGER
General. The Reincorporation Proposal will be accomplished by merging NUKO
New York into NUKO Delaware (the "Merger"). Upon completion of the Merger, NUKO
New York will cease to exist and NUKO Delaware will continue to operate the
business of NUKO New York under the name NUKO Information Systems, Inc. Pursuant
to the Merger Agreement, each outstanding share of NUKO New York's
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Common Stock will automatically be converted into one share of NUKO Delaware's
Common Stock, $0.001 par value, and outstanding warrants and options
representing the right to purchase shares of NUKO New York's Common Stock will
be converted into warrants or options, as the case may be, to purchase an
equivalent number of shares of Common Stock of NUKO Delaware.
Share Certificates in the Names of Yondata or Growers Express. As of
November 1, 1996, there are approximately 1,067 shareholders of the Company who
hold certificates representing shares of Company Common Stock in the name of
Yondata Corporation ("Yondata") or Growers Express Incorporated ("Growers
Express"), both of which are predecessor entities of the Company. Shareholders
of the Company who hold certificates in the name of either Yondata or Growers
Express, as the case may be, shall receive shares of NUKO Delaware Common Stock
after applying the conversion ratio currently in effect for converting such
shares into shares of the Company. Accordingly, a shareholder holding a
certificate for shares of Yondata shall receive one share of NUKO Delaware for
every thirty (30) shares of Yondata represented by the certificate, and a
shareholder holding a certificate for shares of Growers Express shall receive
one share of NUKO Delaware for every three (3) shares of Growers Express
represented by the certificate.
Upon consummation of the Merger, each certificate representing issued and
outstanding shares of the Company's Common Stock, including certificates in the
names of Yondata or Growers Express, as the case may be, will represent that
number of shares of Common Stock of NUKO Delaware based on the ratio of the
Company's Common Stock to NUKO Delaware's Common Stock determined as set forth
above. Similarly, warrant certificates and option agreements issued by the
Company will automatically represent the corresponding rights to purchase shares
in NUKO Delaware.
IT WILL NOT BE NECESSARY FOR SHAREHOLDERS OF THE COMPANY HOLDING SHARE
CERTIFICATES IN THE NAME OF "NUKO INFORMATION SYSTEMS, INC." TO EXCHANGE THEIR
EXISTING STOCK CERTIFICATES FOR CERTIFICATES OF NUKO DELAWARE. OUTSTANDING STOCK
CERTIFICATES IN THE NAME OF "NUKO INFORMATION SYSTEMS, INC." SHOULD NOT BE
DESTROYED OR SENT TO THE COMPANY. NOTWITHSTANDING THE FOREGOING, IT WILL BE
NECESSARY FOR ALL SHAREHOLDERS OF THE COMPANY WHO HOLD CERTIFICATES IN THE NAME
OF "YONDATA CORPORATION" OR "GROWERS EXPRESS INCORPORATED" TO EXCHANGE THEIR
EXISTING STOCK CERTIFICATES FOR STOCK CERTIFICATES OF NUKO DELAWARE. Immediately
after the Special Meeting, and assuming approval of the Reincorporation Proposal
by the shareholders of the Company, each shareholder holding a certificate in
the name of Yondata or Growers Express will be required to sign and return a
Letter of Transmittal, along with their certificates representing shares of the
Company, specifying the procedures to exchange such certificates for a
certificate representing shares of NUKO Delaware. See "Exchange of Yondata and
Growers Express Certificates" herein.
Stock Option Plans. Upon the date on which the Merger is effective (the
"Effective Date"), NUKO Delaware will assume and continue the outstanding stock
options and all other employee benefit plans of the Company. Each outstanding
and unexercised option or other right to purchase shares of Company Common Stock
will become an option or warrant to purchase the same number of shares of NUKO
Delaware Common Stock on the same terms and conditions and at the same exercise
price applicable to any such Company Common Stock option or warrant at the
Effective Date.
Nasdaq. Following the Merger, the Common Stock of NUKO Delaware will be
listed on The Nasdaq Stock Market's National Market System ("Nasdaq") and
trading is expected to continue without interruption under the same Nasdaq
symbol as has been used for trading of the Common Stock of the Company.
VOTE REQUIRED FOR THE REINCORPORATION
Authorization, approval and adoption of the Merger Agreement and
consummation of the Merger requires the affirmative vote of two-thirds ( 2/3) of
the total number of votes represented by the outstanding shares of the Company's
Common Stock, with such holders being entitled to one (1) vote per share so
held. The Proposed Reincorporation has been unanimously approved by the
Company's Board of Directors. If approved by the shareholders, it is anticipated
that the Reincorporation Proposal will become effective as soon as practicable.
However, pursuant to the Merger Agreement, the Merger may be abandoned or the
Merger
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Agreement may be amended (except that the principal terms may not be amended
without shareholder approval) either before or after shareholder approval has
been obtained and prior to the Effective Date, if in the opinion of the Board of
Directors circumstances arise which made it inadvisable to proceed.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSED REINCORPORATION
IN DELAWARE. SINCE APPROVAL OF THE PROPOSED REINCORPORATION REQUIRES THE
AFFIRMATIVE VOTE OF TWO-THIRDS ( 2/3) OF THE OUTSTANDING SHARES OF THE COMPANY'S
COMMON STOCK, ABSTENTIONS AND BROKER NON-VOTES WILL HAVE THE EFFECT OF VOTES
AGAINST THE PROPOSED REINCORPORATION.
Shareholders may vote against the Merger, but not to demand appraisal
rights or receive payment of the fair market value of their shares of the
Company's Common Stock, pursuant to Section 910 of the New York Business
Corporation Law.
EXCHANGE OF YONDATA AND GROWERS EXPRESS CERTIFICATES
ChaseMellon Shareholder Services, L.L.C. shall act as exchange agent (the "
Exchange Agent") in the Merger. Promptly after the Effective Date, the Exchange
Agent shall cause to be mailed or delivered to each holder of record of a
certificate or certificates in the name of Yondata or Growers Express (the
"Certificates"): (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent and shall be in
such form and have such other provisions as the Company may reasonably specify)
and (ii) instructions for effecting the surrender of the Certificates in
exchange for certificates representing shares of NUKO Delaware Common Stock.
Upon surrender of a Certificate for cancellation to the Exchange Agent, together
with such letter of transmittal, duly completed and validly executed in
accordance with the instructions thereto, the holder of such Certificate shall
be entitled to receive in exchange therefor a certificate representing the
number of whole shares of NUKO Delaware Common Stock to which such holder is
entitled and the Certificate so surrendered shall forthwith be canceled. Until
so surrendered, each outstanding Certificate that, prior to the Effective Date,
represented shares of Company Common Stock will be deemed from and after the
Effective Date, for all corporate purposes other than the payment of dividends,
to evidence the ownership of the number of full shares of NUKO Delaware Common
Stock into which such shares of Company Common Stock shall have been so
converted.
No dividends or other distributions declared or made after the Effective
Date with respect to Company Common Stock will be paid to the holder of any
unsurrendered Certificate with respect to the shares of Company Common Stock
represented thereby until the holder of record of such Certificate shall
surrender such Certificate. Subject to applicable law, following surrender of
any such Certificate, there shall be paid to the record holder of the
certificates representing whole shares of Company Common Stock issued in
exchange therefor, without interest, at the time of such surrender, the amount
of dividends or other distributions with a record date after the Effective Date
theretofore paid with respect to such whole shares of Company Common Stock. The
Company has never declared dividends with respect to its Common Stock, and as of
the date hereof, the Board of Directors does not intend to declare any such
dividends in the foreseeable future.
If any Certificate for shares of Company Common Stock is to be issued in a
name other than that in which the Certificate surrendered in exchange therefor
is registered, it will be a condition of the issuance thereof that the
Certificate so surrendered will be properly endorsed and otherwise in proper
form for transfer and that the person requesting such exchange will have paid to
the Company or any agent designated by it any transfer or other taxes required
by reason of the issuance of a certificate for shares of NUKO Delaware Common
Stock in any name other than that of the registered holder of the certificate
surrendered, or established to the satisfaction of the Company or any agent
designated by it that such tax has been paid or is not payable.
IT WILL NOT BE NECESSARY FOR SHAREHOLDERS OF THE COMPANY HOLDING SHARE
CERTIFICATES IN THE NAME OF "NUKO INFORMATION SYSTEMS, INC." TO EXCHANGE THEIR
EXISTING STOCK CERTIFICATES FOR CERTIFICATES OF NUKO DELAWARE. OUTSTANDING STOCK
CERTIFICATES IN THE NAME OF "NUKO INFORMATION SYSTEMS, INC." SHOULD NOT BE
DESTROYED OR SENT TO THE COMPANY.
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Fractional Shares. No fraction of a share of NUKO Delaware Common Stock
will be issued. Any holder of Company Common Stock who would otherwise receive a
fractional share of NUKO Delaware Common Stock (after aggregating all fractional
shares of Company Common Stock to be received by such holder) shall receive cash
in amount equal to such fraction multiplied by the fair market value of the
Company's Common Stock, and a certificate representing such whole number of
shares of NUKO Delaware Common Stock to be issued to such holder. Fair market
value shall be determined by taking the average of the closing price for shares
of the Company's Common Stock as quoted on Nasdaq for the ten (10) days
preceding the Effective Date.
PRINCIPAL REASONS FOR THE PROPOSED REINCORPORATION
As the Company plans for the future, the Board of Directors and management
believe that it is essential to be able to draw upon well established principles
of corporate governance in making legal and business decisions. The prominence
and predictability of Delaware corporate law provide a reliable foundation on
which the Company's governance decisions can be based and the Company believes
that shareholders will benefit from the responsiveness of Delaware corporate law
to their needs and to those of the corporation they own.
Prominence, Predictability and Flexibility of Delaware Law. For many years
Delaware has followed a policy of encouraging incorporation in that state and,
in furtherance of that policy, has been a leader in adopting, construing and
implementing comprehensive, flexible corporate laws responsive to the legal and
business needs of corporations organized under its laws. Many corporations have
chosen Delaware initially as a state of incorporation or have subsequently
changed corporate domicile to Delaware in a manner similar to that proposed by
the Company. Because of Delaware's prominence as the state of incorporation for
many major corporations, both the legislature and courts in Delaware have
demonstrated an ability and a willingness to act quickly and effectively to meet
changing business needs. The Delaware courts have developed considerable
expertise in dealing with corporate issues and a substantial body of case law
has developed construing Delaware law and establishing public policies with
respect to corporate legal affairs.
Increased Ability to Attract and Retain Qualified Directors;
Indemnification. Both New York and Delaware law permit a corporation to include
a provision in its certificate of incorporation which reduces or limits the
monetary liability of directors for breaches of fiduciary duty in certain
circumstances. The increasing frequency of claims and litigation directed
against directors and officers has greatly expanded the risks facing directors
and officers of corporations in exercising their respective duties. The amount
of time and money required to respond to such claims and to defend such
litigation can be substantial. It is the Company's desire to reduce these risks
to its directors and officers and to limit situations in which monetary damages
can be recovered against directors so that the Company may continue to attract
and retain qualified directors who otherwise might be unwilling to serve because
of the risks involved. The Company believes that, in general, Delaware law
provides greater protection to directors than New York law and that Delaware
case law regarding a corporation's ability to limit director liability is more
developed and provides more guidance than New York law.
Accordingly, upon its Proposed Reincorporation, the Company intends to
enter into new agreements (the "Indemnification Agreements") with its officers
and directors providing for their indemnification by the Company to the fullest
extent permitted by Delaware law. Such Indemnification Agreements will supersede
the indemnification agreements currently in place between the Company and its
officers and directors, and will be substantially in the form attached hereto as
Exhibit D.
Well Established Principles of Corporate Governance. There is substantial
judicial precedent in the Delaware courts as to the legal principles applicable
to measures that may be taken by a corporation and as to the conduct of the
Board of Directors under the business judgment rule. The Company believes that
its shareholders will benefit from the well established principles of corporate
governance that Delaware law affords.
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ANTITAKEOVER IMPLICATIONS
Delaware, like many other states, permits a corporation to adopt a number
of measures through amendment of the certificate of incorporation or bylaws or
otherwise, which measures are designed to reduce a corporation's vulnerability
to unsolicited takeover attempts. The Reincorporation Proposal is not being
proposed in order to prevent an unsolicited takeover attempt, nor is it in
response to any present attempt known to the Board of Directors to acquire
control of the Company, obtain representation on the Board of Directors or take
significant action that affects the Company.
Nevertheless, certain effects of the Reincorporation Proposal may be
considered to have antitakeover implications. Section 203 ("Section 203") of the
Delaware General Corporation Law, from which NUKO Delaware does not intend to
opt out, restricts certain "business combinations" with "interested
stockholders" for three years following the date that a person or entity becomes
an interested stockholder, unless the Board of Directors approves the business
combination and/or other requirements are met. See "Significant Differences
Between the Corporation Laws of New York and Delaware -- Stockholder Approval of
Certain Business Combinations."
In addition, the Delaware Certificate and Bylaws contain provisions that
prevent NUKO Delaware stockholders from calling special meetings of stockholders
and from acting by written consent. Such provisions may make unsolicited
takeover attempts more difficult.
NO CHANGE WILL BE MADE IN THE NAME, BUSINESS OR PHYSICAL LOCATION OF THE COMPANY
The Proposed Reincorporation will effect a change in the legal domicile of
the Company and other changes of a legal nature, certain of which are described
in this Proxy Statement. However, the Proposed Reincorporation will not result
in any significant change in the name, business, management, location of the
principal executive offices, assets or liabilities of the Company. After the
Merger, the shares of Common Stock of NUKO Delaware will be traded, without
interruption, in the same principal markets and under the same Nasdaq symbol as
applies currently to the Company. The 1995 Stock Option Plan, the 1996 Stock
Option Plan and the 1996 Director Stock Option Plan (collectively, the "Plans")
will be assumed by NUKO Delaware, and 2,946,360 shares of Common Stock
outstanding or options issued pursuant to such Plans will automatically be
converted into, as the case may be, that number of shares of NUKO Delaware
Common Stock or an option to purchase that number of shares of Delaware Common
Stock, based on the ratio of the Company's Common Stock to NUKO Delaware's
Common Stock at the same option price per share, upon substantially the same
terms and subject to the same conditions, as set forth in the Plans.
Shareholders should note that approval of the Reincorporation Proposal will
constitute approval of the assumption of the foregoing plans by NUKO Delaware.
Prior to the Effective Date of the Merger, the Company expects to obtain
any requisite consents to such Merger from parties with whom it may have
material contractual arrangements (the "Material Agreements"). As a result, the
Company's rights and obligations under such Material Agreements will continue
and be assumed by NUKO Delaware.
SIGNIFICANT DIFFERENCES BETWEEN THE CHARTERS AND BYLAWS OF NUKO NEW YORK AND
NUKO DELAWARE
The provisions of the Delaware Certificate and Bylaws are similar to those
of the Company in many respects. However, the Reincorporation Proposal includes
the implementation of certain provisions in the Delaware Certificate and Bylaws
which alter the rights of shareholders and the powers of management. These
provisions have antitakeover implications and are described in detail below.
Approval by shareholders of the Proposed Reincorporation will constitute an
approval of the inclusion in the Delaware Certificate and Bylaws of each of the
provisions described below. In addition, NUKO Delaware could implement certain
other changes by amendment of its Certificate of Incorporation or Bylaws,
although amendments to the Certificate of Incorporation would be effective only
upon approval of the stockholders. For a discussion of such changes, see
"Significant Differences Between the Corporation Laws of New York and Delaware."
This discussion of the Delaware Certificate and Bylaws is qualified in its
entirety by reference to Exhibits B and C hereto, respectively. Copies of the
Certificate of Incorporation and Bylaws of NUKO New York (the "New York
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Certificate and Bylaws") are available for inspection at the principal executive
offices of the Company and will be sent to shareholders upon request. As used
herein, "Delaware Law" refers to the Delaware General Corporation Law and "New
York Law" refers to the New York Business Corporation Law.
Capitalization. The Certificate of Incorporation of the Company currently
authorizes the Company to issue up to 20,000,000 shares of Common Stock, par
value $.001, and 5,000,000 shares of Preferred Stock, par value $.001. Upon
consummation of the Proposed Reincorporation, the Certificate of Incorporation
of NUKO Delaware will provide that such company will have 40,000,000 authorized
shares of Common Stock, $.001 par value, and 5,000,000 shares of Preferred
Stock, par value $.001. The increase in the number of authorized shares will
allow the Company to issue additional shares of Common Stock before needing
additional shareholder approval with respect to such issuance (unless such
approval is required by Nasdaq). Like the Company's Certificate of
Incorporation, the Delaware Certificate will provide that the Board of Directors
is entitled to determine the powers, preferences and rights, and the
qualifications, limitations or restrictions, of the authorized and unissued
Preferred Stock. Although it has no present intention of doing so, the Board of
Directors, without stockholder approval, could authorize the issuance of
Preferred Stock upon terms or with any rights, preferences and privileges which
could have the effect of delaying or preventing a change in control of the
Company or modifying the effective rights of holders of the Company's Common
Stock. The Board of Directors could also utilize such shares for further
financings, possible acquisitions and other uses.
Monetary Liability of Directors. The Delaware Certificate includes
provisions (i) eliminating the personal liability of a director to the Company
and its shareholders for monetary damages for breaches of his fiduciary duties
as a director to the fullest extent permitted by Delaware Law as it exists or as
it may be amended and (ii) requiring the Company to indemnify directors and
officers to the fullest extent permitted by Delaware Law. The New York
Certificate currently provides for elimination of liability indemnification and
to the fullest extent permitted by New York Law.
Such provisions in the Delaware Certificate are prospective only and do not
eliminate or limit a director's liability (i) for violations of such director's
duty of loyalty; (ii) for acts or omissions not in good faith or involving
intentional misconduct or a knowing violation of the law; (iii) for willful or
negligent conduct in paying dividends or repurchasing stock out of other than
lawfully available funds; or (iv) for any transaction from which the director
derives an improper personal benefit.
In addition, the Bylaws of NUKO Delaware authorize the purchase of
insurance on behalf of directors, officers, employees and agents of the Company,
or persons serving at the request of the Company as directors, officers,
employees and agents of another company, against liability incurred by them in
such capacities whether or not the Company would have the power to indemnify
them against such liability under Delaware Law. The Bylaws of NUKO New York are
silent as to the purchase of such insurance, and the Company currently maintains
such insurance.
The provisions relating to elimination of liability, indemnification and
insurance in the Delaware Certificate and Bylaws are intended to afford
directors additional protection and limit their potential liability from suits
alleging a breach of the duty of care by a director. As a result of the
inclusion of such provisions, shareholders of the Company may be unable to
recover monetary damages against directors for actions taken by them that
constitute negligence or that are otherwise in violation of their fiduciary duty
of care, although it may be possible to obtain injunctive or other equitable
relief with respect to such actions. If equitable remedies are found not to be
available to shareholders in any particular situation, shareholders may not have
an effective remedy against a director in connection with such conduct.
Power to Call Special Shareholders' Meetings; Action by Written Consent of
Stockholders. Under the New York Bylaws, a special meeting of shareholders may
be called either by the board of directors, the president or the holders of
shares entitled to cast a majority of the votes at such meeting. Under Delaware
Law, a special meeting of stockholders may be called by the board of directors
or any other person authorized to do so in the certificate of incorporation
or the bylaws. Upon consummation of the Proposed Reincorporation, the
Delaware Certificate and Bylaws will authorize only the Board of Directors,
the Chairman of the Board or the President to call
a special meeting of stockholders.
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In addition, the New York Certificate and Bylaws authorize the NUKO New
York shareholders to take action by written consent of two-thirds ( 2/3) of the
outstanding voting shares. The Delaware Certificate and Bylaws, by contrast,
will not permit NUKO Delaware stockholders to take any action by written
consent.
Loans to Directors, Officers and Employees. Under New York Law, any loan
or guaranty to or for the benefit of a director of the corporation or its parent
requires approval of the shareholders. Pursuant to the Delaware Bylaws and in
accordance with Delaware Law, NUKO Delaware may make loans to, guarantee the
obligations of or otherwise assist its officers or other employees (including
directors who are also officers or employees) and those of its subsidiaries when
such action, in the judgment of the directors, may reasonably be expected to
benefit the corporation.
SIGNIFICANT DIFFERENCES BETWEEN THE CORPORATION LAWS OF NEW YORK AND DELAWARE
Although it is impractical to note all the differences between the
corporate laws of New York and Delaware, the following is a brief summary of
significant differences between the rights which a shareholder of the Company
presently has under New York Law and the rights such shareholder would have
under Delaware Law.
Approval of Certain Transactions
Delaware Law requires the affirmative vote of a majority of the outstanding
shares entitled to vote to authorize any such action, except that, unless
required by the Certificate of Incorporation, no authorizing shareholder vote is
required of a corporation surviving a merger if (i) such corporation's
Certificate of Incorporation is not amended by the merger; (ii) each share of
stock of such corporation will be an identical share of the surviving
corporation after the merger; and (iii) the merger results in no more than a 20%
increase in its outstanding common stock.
New York Law requires the affirmative vote of two-thirds ( 2/3) of a
corporation's outstanding shares entitled to vote in order to authorize a
merger, consolidation, dissolution, disposition of all or substantially all of
the corporation's assets, disposition of all of the corporation's shares in a
share exchange, guarantee not in furtherance of corporate purposes, or pledge of
corporate assets to secure such a guarantee. New York Law does not contain a
provision for authorizing mergers (other than those between a corporation and
its 90% owned subsidiary) without the approval of shareholders similar to that
under Delaware Law.
Consent Actions of Shareholders in Lieu of Meeting
Under Delaware Law, any action required or permitted to be taken by
shareholders at any annual or special meeting of shareholders may be taken
without a meeting, without prior notice and without a vote, if a consent, in
writing, setting forth the action so taken, is signed by the holders of
outstanding stock of no less than the minimum number of votes necessary to
authorize such action at a meeting at which all shares entitled to vote thereon
are present and voting, unless otherwise provided in the certificate of
incorporation. For example, an action requiring the vote of a majority of the
outstanding shares entitled to vote thereon, such as approval of a merger, may
be taken under Delaware Law by the consent in writing of the holders of a
majority of the Company's outstanding shares entitled to vote. Upon consummation
of the Proposed Reincorporation, the Delaware Certificate and Bylaws will not
permit any action to be taken by written consent of shareholders.
New York Law requires the unanimous consent in writing of the holders of
all outstanding shares entitled to vote thereon for any action requiring a vote
of shareholders, if such action is taken without a meeting, unless otherwise
provided in the certificate of incorporation. The New York Certificate
authorizes the shareholders of NUKO New York to take action by written consent
of the holders of at least two-thirds ( 2/3) of the outstanding voting shares.
Approval of Business Combination with Interested Stockholders
In recent years, a number of states have adopted special laws designed to
make certain kinds of "unfriendly" corporate takeovers, or other transactions
involving a corporation and one or more of its
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significant shareholders, more difficult. Under Section 203 of the Delaware Law,
certain "business combinations" with "interested stockholders" of Delaware
corporations are subject to a three-year moratorium unless specified conditions
are met.
Section 203 prohibits a Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for three years following the date
that such person or entity becomes an interested stockholder. With certain
exceptions, an interested stockholder is a person or entity who or which owns,
individually or with or through certain other persons or entities, fifteen
percent (15%) or more of the corporation's outstanding voting stock (including
any rights to acquire stock pursuant to an option, warrant, agreement,
arrangement or understanding, or upon the exercise of conversion or exchange
rights, and stock with respect to which the person has voting rights only), or
is an affiliate or associate of the corporation and was the owner, individually
or with or through certain other persons or entities, of fifteen percent (15%)
or more of such voting stock at any time within the previous three years, or is
an affiliate or associate of any of the foregoing.
For purposes of Section 203, the term "business combination" is defined
broadly to include mergers with or caused by the interested stockholder; sales
or other dispositions to the interested stockholder (except proportionately with
the corporation's other stockholders) of assets of the corporation or a direct
or indirect majority-owned subsidiary equal in aggregate market value to ten
percent (10%) or more of the aggregate market value of either the corporation's
consolidated assets or all of its outstanding stock; the issuance or transfer by
the corporation or a direct or indirect majority-owned subsidiary of stock of
the corporation or such subsidiary to the interested stockholder (except for
certain transfers in a conversion or exchange or a pro rata distribution or
certain other transactions, none of which increase the interested stockholder's
proportionate ownership of any class or series of the corporation's or such
subsidiary's stock or of the corporation's voting stock); or receipt by the
interested stockholder (except proportionately as a stockholder), directly or
indirectly, of any loans, advances, guarantees, pledges or other financial
benefits provided by or through the corporation or a subsidiary.
The three-year moratorium imposed on business combinations by Section 203
does not apply if: (i) prior to the date on which such stockholder becomes an
interested stockholder the board of directors approves either the business
combination or the transaction that resulted in the person or entity becoming an
interested stockholder; (ii) upon consummation of the transaction that made him
or her an interested stockholder, the interested stockholder owns at least
eighty-five percent (85%) of the corporation's voting stock outstanding at the
time the transaction commenced (excluding from the eight-five (85%) calculation
shares owned by directors who are also officers of the target corporation and
shares held by employee stock plans that do not give employee participants the
right to decide confidentially whether to accept a tender or exchange offer); or
(iii) on or after the date such person or entity becomes an interested
stockholder, the board approves the business combination and it is also approved
at a stockholder meeting by sixty-six and two-thirds percent (66 2/3%) of the
outstanding voting stock not owned by the interested stockholder.
Section 203 only applies to certain publicly held corporations that have a
class of voting stock that is (i) listed on a national securities exchange, (ii)
authorized for quotation on The Nasdaq Stock Market or (iii) held of record by
more than 2,000 stockholders. Although a Delaware corporation to which Section
203 applies may elect not to be governed by Section 203, NUKO Delaware does not
intend to so elect.
Section 203 will encourage any potential acquiror to negotiate with the
Company's Board of Directors. Section 203 also might have the effect of limiting
the ability of a potential acquiror to make a two-tiered bid for NUKO Delaware
in which all stockholders would not be treated equally. Shareholders should
note, however, that the application of Section 203 to NUKO Delaware will confer
upon the Board the power to reject a proposed business combination in certain
circumstances even though a potential acquiror may be offering a substantial
premium for NUKO Delaware's shares over the then-current market price. Section
203 would also discourage certain potential acquirors unwilling to comply with
its provisions. See "Shareholder Voting Rights" herein.
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New York Law generally prohibits a resident domestic corporation1 from
engaging in a business combination with an interested shareholder (the
beneficial owner of 20% of the corporation's stock) for a period of five (5)
years from the time the shareholder acquired the stock in such resident domestic
corporation, unless certain conditions are met. The Company, however, is not a
resident domestic corporation, so such restrictions do not apply to the Company.
Dissenters' Appraisal Rights
Under both New York and Delaware Law, a shareholder of a corporation
participating in certain major corporate transactions may, under varying
circumstances, be entitled to appraisal rights pursuant to which such
shareholder may receive cash in the amount of the fair market value of his or
her shares in lieu of the consideration he or she would otherwise receive in the
transaction.
New York Law provides that upon strict compliance with the applicable
statutory requirements and procedures, a dissenting shareholder has the right to
receive payment of the fair value of his shares if he objects to: (i) certain
mergers; (ii) consolidations; (iii) dispositions of assets requiring shareholder
approval; or (iv) certain amendments to the certificate of incorporation which
adversely affect the rights of such shareholder. In determining the "fair value"
of shares subject to such appraisal rights, New York courts usually utilize the
quoted market value of such shares if they are listed and actively traded on a
national securities exchange. The rationale behind this practice is that in an
efficient market such as a national securities exchange the fair value of such
shares is their market price.
Under Delaware Law, appraisal rights are not available with respect to the
sale, lease or exchange of all or substantially all of the assets of a
corporation or to stockholders of a corporation surviving a merger if no vote of
the stockholders of the surviving corporation is required to approve the merger
under certain provisions of Delaware Law. Moreover, rather than base a
calculation of fair market value on a quoted market price, Delaware Law provides
that appraisal rights are not available with respect to a merger or
consolidation by a corporation the shares of which are either listed on a
national securities exchange or are held of record by more than 2,000 holders if
such stockholders receive only shares of the surviving corporation or shares of
any other corporation that are either listed on a national securities exchange
or held of record by more than 2,000 holders, plus cash in lieu of fractional
shares of such corporations. When appraisal rights are available, fair market
value is determined exclusive of any element of value arising from the
accomplishment or expectation of the merger of consolidation.
Delaware Law embraces the efficient market concept by using an exemption
from its appraisal rights statute for shares listed on a national securities
exchange or held by more than 2,000 stockholders. Since holders of such shares
may obtain the fair value for their listed shares by selling them on such
exchange, there is little need to provide for a judicial determination of fair
value as under New York Law.
Number of Directors
Under Delaware Law, a corporation may have as few as one director and there
are no maximum limits. The specific number may be fixed in the certificate of
incorporation, but if so a change in the number of directors may be made only by
amendment of the certificate. If the certificate of incorporation is silent as
to the number of directors, the board of directors may fix or change the
authorized number of directors pursuant to a provision of the bylaws.
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1 "Resident domestic corporation" is defined as a corporation (1) incorporated
in New York with its principal executive offices as well as a significant
portion of its business operations in New York; and (2) having at least 10% of
its stock beneficially owned by New York residents, and includes a corporation
not having its principal executive offices and significant business operations
in New York if the corporation meets the other requirements above and also,
alone or in combination with one or more subsidiaries, of which it owns at least
80% of the voting stock, (i) has 250 or more employees employed primarily within
New York or (ii) has 25% or more of the total number of its own employees and
those of such subsidiaries so employed in New York.
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Under New York Law, the number of directors may not be less than three, and
any higher number may be fixed by the bylaws or by action of the shareholders or
of the board of directors under specific provisions of the bylaws adopted by the
shareholders. The number of directors may be increased or decreased by amendment
of the bylaws or by action of the shareholders or of the board of directors
under the specific provisions of a bylaw adopted by the shareholders, subject to
certain conditions.
Classification of the Board of Directors
New York Law permits a classified board with as many as four classes but
prohibits fewer than three directors in any class. Delaware Law permits a
classified board of directors with as many as three classes, but does not
specify a minimum number of directors for each class. In addition, Delaware Law
allows for the provision of disparate voting powers among directors or classes
of directors.
Indemnification
Both Delaware and New York Law require that, prior to indemnification of an
officer or director, a determination be made by a quorum of disinterested
directors, an independent legal counsel or the Company's shareholders, that such
executive has met the applicable statutory standard of conduct. Moreover, both
Delaware and New York Law allow for the advance payment of expenses to a
director or officer by the Company prior to the final disposition of an action
upon receipt of an undertaking by or on behalf of such director or officer to
repay such amount if it shall ultimately be determined that such executive is
not entitled to be indemnified by the Company.
Delaware Law specifically allows for the advance payment of expenses and
attorneys' fees, including fees in actions such as administrative or
investigative actions as well as civil or criminal proceedings. New York Law
does not clearly allow for advances in the case of administrative or
investigative proceedings. Under New York Law, advanceable expenses appear to
include attorneys' fees only in the context of indemnification by court action.
New York Law attempts to limit the possibility of indemnification without
knowledge of shareholders. If indemnification is sought by way of application to
a court, New York Law Section 724 permits a court to provide direct notice to
shareholders. Where there has been voluntary indemnification by the corporation,
New York Law Section 725(c) requires the corporation's management to fully
inform shareholders entitled to vote for directors before the next annual
meeting, unless the meeting is less than three months from the date of payment,
and in any case within fifteen months. Delaware Law takes a more liberal stance,
having no such notice requirements.
Additionally, New York Law applies certain restrictions on liability
insurance coverage for directors and officers. New York Law Section 726 does not
allow a corporation to insure its officers and directors against any amounts,
other than the cost of defense of an action, if such executive is adjudged to
have acted with active or deliberate dishonesty or to have gained illegal
financial profit or advantage from his or her actions. Such liability insurance
restrictions under New York Law may result in the Company having to pay and
indemnify a director against a large damage award, thus affecting a
shareholder's investment and the Company's assets and equity. Delaware Law,
however, empowers a corporation to purchase liability insurance coverage for
directors and officers against any liability asserted against such director or
officer and incurred by such director or officer, whether or not the corporation
would have the power to indemnify such director or officer against liability
under Delaware Law Section 145; the only applicable limits on insurance coverage
would be those imposed by the particular insurer or stemming from public policy.
Further, New York Law Section 726 requires a corporation to mail a statement to
its shareholders notifying them of the terms and provisions of any insurance
policy purchased or renewed and to report and explain all sums paid to directors
and officers under such a policy. Delaware does not have such a notice
requirement.
Upon consummation of the Merger, assuming shareholder approval at the
Special Meeting, such indemnification provisions contained in Delaware Law will
apply retroactively as well as prospectively. In addition to the provisions of
the Delaware Certificate, which are expansive with respect to the
indemnification of officers and directors, NUKO Delaware will take advantage of
Delaware's more liberal indemnification
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statute by adopting the Delaware Bylaws which institute the full rights of
indemnification that are made available by maintaining liability insurance
protection and by entering into indemnification agreements in the form attached
as Exhibit D.
Removal of Directors
Under Delaware Law, directors may be removed, with or without cause, by the
vote of the holders of a majority of the outstanding shares of all classes of
stock entitled to vote and present at a meeting of shareholders. Delaware Law
imposes additional restrictions on the removal of directors for corporations
with a classified board or cumulative voting or directors elected by the holders
of a specific class or series of shares.
New York Law provides that any or all of the directors of a corporation may
be removed for cause by a vote of the shareholders and that the certificate of
incorporation or by-laws may provide for removal without cause by vote of the
shareholders. New York Law also imposes additional restrictions on the removal
of directors of corporations with cumulative voting or directors elected by the
holders of a specific class or series of shares.
Loans to Directors
Delaware Law permits any corporation to lend money to, or guarantee an
obligation of, or otherwise assist any officer or other employee of the
corporation or of its subsidiary, including any officer or employee who is a
director of the corporation or its subsidiary, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. New York Law requires that loans to directors be
authorized by an affirmative vote of disinterested shareholders. For purposes of
such authorization, the shares held by the director who would be the borrower
are not entitled to vote.
Interested Director Transactions
Under Delaware Law, no contract or transaction between a corporation and
one or more of its directors of officers, or between a corporation and any other
corporation, partnership, association or other organization in which one or more
of its directors or officers are directors or officers, or have a financial
interest, is void or voidable solely for that reason or solely because the
director or officer is present at or participates in the meeting of the board or
committee which authorized the contract or transaction, or solely because his or
their votes are counted for such purpose, provided that (i) the material facts
concerning the individual's interest and the transaction are disclosed and the
transaction is approved by a majority of the disinterested directors of the
board or a committee of the board, or (ii) the material facts concerning the
individual's interest and the transaction are disclosed and the transaction is
approved in good faith by vote of the shareholders or (iii) the contract or
transaction is fair to the corporation as of the time it is authorized, approved
or ratified by the board of directors, a committee thereof or the shareholders.
New York Law provides that no transaction between the corporation and one
or more of its directors or an entity in which one or more of its directors are
directors or officers or have a substantial financial interest shall be void or
voidable solely for that reason. In addition, no such transaction shall be void
or voidable solely because the director is present at or votes at the meeting of
the board of directors or committee which authorized the transaction. In order
to avoid such a transaction being void or voidable, it must, after disclosure of
material facts (unless such facts were known), (i) be approved by the
disinterested directors or a committee of disinterested directors by a vote
sufficient for such purpose without counting the vote of any interested director
(or, if the vote of disinterested directors is insufficient to constitute an act
of the board under New York Law, by the unanimous vote of the disinterested
directors) or (ii) be approved by a vote of the shareholders. Alternatively, the
transaction will not be void or voidable if it is shown to have been fair to the
corporation at the time it was approved by the board of directors, a committee
thereof or the shareholders.
Dividends
Delaware Law generally provides that the directors of a corporation may
declare and pay dividends out of surplus or, when no surplus exists, out of net
profits for the fiscal year in which the dividend is declared and/or
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the preceding fiscal year. Dividends may not be paid out of net profits if the
capital of the corporation is less than the aggregate amount of capital
represented by the issued and outstanding stock of all classes having a
preference upon the distribution of assets.
Under New York Law, a corporation may declare and pay dividends on its
outstanding shares except when the corporation is insolvent or would thereby be
made insolvent, or when the declaration, payment or distribution would be
contrary to any restrictions contained in the certificate of incorporation. In
general, dividends may be declared or paid out of surplus only. When any
dividend is paid or any other distribution is made, in whole or in part, from
sources other than earned surplus, it must be accompanied by a written notice
disclosing the amounts by which such dividend or distribution affects stated
capital, capital surplus and earned surplus, or, if such amounts are not yet
determinable, disclosing the approximate effect of such dividend on stated
capital, capital surplus and earned surplus and stating that such amounts are
not yet determinable.
Share Repurchases and Redemptions
New York Law permits repurchases of shares and redemptions of redeemable
shares out of surplus except when the corporation is insolvent or would thereby
be made insolvent, and permits a corporation to purchase its own shares out of
stated capital, except when the corporation is insolvent or would thereby be
made insolvent, if the purchase is made for the purpose of (i) eliminating
fractions of shares, (ii) collecting or compromising indebtedness to the
corporation, or (iii) paying stockholders entitled to receive payment for their
shares under the appraisal provisions of New York Law. Further, under New York
Law a corporation may redeem or purchase its redeemable shares out of stated
capital except when currently the corporation is insolvent or would thereby be
made insolvent and except when such redemption or purchase would reduce net
assets below the stated capital remaining after giving effect to the
cancellation of such redeemable shares.
Under Delaware Law, a corporation may purchase or redeem shares of any
class except when its capital is impaired or such purchase would cause
impairment of capital, except that a corporation may purchase or redeem out of
capital any of its own shares which are entitled upon any distribution of its
assets, whether by dividend or liquidation, to a preference over another class
or series of its stock if such shares will be retired upon their acquisition and
the capital of the corporation reduced.
Consideration for Shares
New York Law requires that consideration for the issue of shares consist of
money or other property, tangible or intangible, or labor or services actually
received by or performed for the corporation or for its benefit or in its
formation or reorganization, or a combination thereof. Neither obligations of
the subscriber for future payments (i.e., notes) nor obligations of the
subscriber for future services shall constitute payment or part payment for
shares of a corporation. Further, certificates for shares may not be issued
until the full amount of the consideration therefor has been actually paid or
services actually performed (except in the case of shares purchased pursuant to
stock options under a plan permitting installment payments). When such
consideration has been paid in full, the shares shall be deemed to be fully paid
and nonassessable and the subscriber shall be entitled to all the rights and
privileges of a holder of such shares.
Delaware Law provides that shares of stock may be issued, and deemed to be
fully paid and nonassessable, if (i) the entire amount of such consideration has
been received by the corporation in the form of cash, services rendered,
personal property, real property, leases of real property or a combination
thereof; or (ii) not less than the amount of the consideration determined to be
capital has been received by the corporation in such form and the corporation
has received a binding obligation of the subscriber or purchaser to pay the
balance of the subscription or purchase price.
Preemptive Rights
Under New York Law, the holders of equity shares of a corporation generally
have preemptive rights unless otherwise provided in the corporation's
certificate of incorporation. A "preemptive right" is the right to purchase a
pro rata portion of equity shares or other securities (convertible into or
carrying rights or options to purchase equity shares) to be issued when the
proposed issuance of such equity shares, the conversion of such
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other securities or the exercise of such options or rights would adversely
affect the dividend or voting rights of the holders of such equity shares.
Delaware Law does not provide preemptive rights to the stockholders of a
corporation in the absence of a provision creating such rights in its
certificate of incorporation.
Rights and Options
New York Law requires stockholder approval of any plan pursuant to which
rights or options are to be granted to directors, officers or employees.
Delaware Law does not require stockholder approval of such plans, although
various other applicable legal requirements, such as rules of the Securities and
Exchange Commission and the Internal Revenue Code of 1986, may make stockholder
approval of certain rights or option plans necessary or desirable.
Stockholder Records
Under New York Law, a person must either (i) have been a stockholder of
record for at least six months, (ii) be a holder of at least 5% of any class of
a corporation's outstanding shares or (iii) be authorized in writing by the
holders of at least 5% of any class of a corporation's outstanding shares, in
order to examine the minutes of stockholder proceedings and the record of
stockholders of a corporation. Under Delaware Law, any stockholder with a proper
purpose may demand inspection of a corporation's stock ledger, a list of its
stockholders and its other books and records.
Notices and Record Date
Under Delaware Law, the board of directors may fix a record date for a
stockholder meeting and may give notices for such meetings which shall not be
more than sixty or less than ten days before the date of a meeting. New York Law
allows for a period of between ten and fifty days for notices or determinations
of a record date.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of certain federal income tax considerations
that may be relevant to holders of the Company Common Stock who receive NUKO
Delaware Common Stock in exchange for Company Common Stock as a result of the
Proposed Reincorporation. The discussion does not address all of the tax
consequences of the Proposed Reincorporation that may be relevant to particular
the Company shareholders, such as dealers in securities, or those Company
shareholders who acquired their shares upon the exercise of stock options, nor
does it address the tax consequences to holders of options or warrants to
acquire Company Common Stock. Furthermore, no foreign, state, or local tax
considerations are addressed herein. IN VIEW OF THE VARYING NATURE OF SUCH TAX
CONSEQUENCES, EACH SHAREHOLDER IS URGED TO CONSULT HIS OR HER OWN TAX ADVISOR AS
TO THE SPECIFIC TAX CONSEQUENCES OF THE PROPOSED REINCORPORATION, INCLUDING THE
APPLICABILITY OF FEDERAL, STATE, LOCAL OR FOREIGN TAX LAWS.
Subject to the limitations, qualifications and exceptions described herein,
and assuming the Proposed Reincorporation qualifies as a reorganization within
the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), the following tax consequences generally should result:
(a) No gain or loss should be recognized by holders of Company Common
Stock upon receipt of NUKO Delaware Common Stock pursuant to the Proposed
Reincorporation;
(b) The aggregate tax basis of the NUKO Delaware Common Stock received
by each shareholder in the Proposed Reincorporation should be equal to the
aggregate tax basis of Company Common Stock surrendered in exchange
therefor; and
(c) The holding period of the NUKO Delaware Common Stock received by
each shareholder of the Company should include the period for which such
shareholder held the Company Common Stock surrendered in exchange therefor,
provided that such Company Common Stock was held by the shareholder as a
capital asset at the time of Proposed Reincorporation.
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The Company has not requested a ruling from the Internal Revenue Service
(the "IRS") or an opinion of counsel with respect to the federal income tax
consequences of the Proposed Reincorporation under the Code. A successful IRS
challenge to the reorganization status of the Proposed Reincorporation (in
consequence of a failure to satisfy the "continuity of interest" requirement or
otherwise) would result in a shareholder recognizing gain or loss with respect
to each share of NUKO New York Common Stock exchanged in the Proposed
Reincorporation equal to the difference between the shareholder's basis in such
share and the fair market value, as of the time of the Proposed Reincorporation,
of the NUKO Delaware Common Stock received in exchange therefor. In such event,
a shareholder's aggregate basis in the shares of NUKO Delaware Common Stock
received in the exchange would equal their fair market value on such date, and
the shareholder's holding period for such shares would not include the period
during which the shareholder held NUKO New York Common Stock.
PROPOSAL 2 -- PROPOSAL TO APPROVE THE ADOPTION OF THE COMPANY'S
AMENDED AND RESTATED 1996 STOCK PLAN
On December 5, 1995, the Board of Directors adopted the 1996 Stock Plan and
reserved 2,000,000 shares of Common Stock for issuance thereunder. Subsequently,
the Board of Directors approved by unanimous written consent dated as of
November 7, 1996 (i) the amendment and restatement of the 1996 Stock Plan in its
entirety (as amended and restated, the "1996 Stock Plan"), and (ii) an increase
in the number of shares reserved for issuance thereunder from 2,000,000 to
2,500,000. As of October 31, 1996, 1,489,360 Options (each an "Option") to
purchase Common Stock had been granted pursuant to the 1996 Stock Plan.
At the Special Meeting, the shareholders are being asked to approve the
adoption of the 1996 Stock Plan and the reservation of shares thereunder. A copy
of the 1996 Stock Plan is attached hereto as Exhibit E.
SUMMARY OF THE 1996 STOCK PLAN
General. The purpose of the 1996 Stock Plan is to attract and retain the
best available personnel for positions of substantial responsibility with the
Company, to provide additional incentive to the employees (including directors
who are also employees) and consultants of the Company (individually, a "Service
Provider") and to promote the success of the Company's business. Options and
stock purchase rights may be granted under the 1996 Stock Plan. All Options
granted under the 1996 Stock Plan will be nonstatutory stock Options (the
recipient of an Option hereinafter referred to as an "Optionee").
Administration. The 1996 Stock Plan may generally be administered by the
Board or a Committee appointed by the Board (such administrator of the 1996
Stock Plan referred to herein as the "Administrator"). To the extent that the
Administrator determines it to be desirable to qualify Options granted under the
1996 Stock Plan as "performance-based compensation" within the meaning of
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
the 1996 Stock Plan shall be administered by a Committee of two or more "outside
directors" within the meaning of Section 162(m) of the Code. In addition, the
Administrator has the discretion to structure grants under the 1996 Stock Plan
so as to qualify for exemption under Rule 16b-3 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), or any successor rule thereto ("Rule
16b-3"). The Administrator has broad authority to take any necessary action with
respect to the administration of the 1996 Stock Plan and the Administrator's
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options or stock purchase rights under the
1996 Stock Plan.
Eligibility; Limitations. Nonstatutory stock Options and stock purchase
rights may be granted under the 1996 Stock Plan to Service Providers of the
Company and any parent or subsidiary of the Company. The Administrator, in its
discretion, selects the Service Providers to whom Options and stock purchase
rights may be granted, the time or times at which such Options and stock
purchase rights shall be granted, and the number of shares subject to each such
grant.
Section 162(m) of the Code places limits on the deductibility for federal
income tax purposes of compensation paid to certain executive officers of the
Company. In order to preserve the Company's ability to
15
<PAGE> 19
deduct the compensation income associated with Options granted to such persons,
the 1996 Stock Plan provides that no Service Provider may be granted, in any
fiscal year of the Company, Options to purchase more than 1,000,000 shares of
Common Stock. Notwithstanding this limit, however, in connection with a Service
Provider's initial services, he or she may be granted Options to purchase up to
an additional 1,000,000 shares of Common Stock.
Terms and Conditions of Options. Each Option is evidenced by a stock
option agreement between the Company and the Optionee, and is subject to the
following additional terms and conditions:
(a) Exercise Price. The Administrator determines the exercise price of
Options at the time the Options are granted.
(b) Exercise of Option; Form of Consideration. The Administrator
determines when Options become exercisable, and may in its discretion,
accelerate the vesting of any outstanding Option. Options granted under the 1996
Stock Plan generally vest and become exerciseable over five (5) years. The means
of payment for shares issued upon exercise of an Option is specified in each
Option agreement. The 1996 Stock Plan permits payment to be made by cash, check,
promissory note, other shares of Common Stock of the Company (with some
restrictions), cashless exercise, a reduction in the amount of any Company
liability to the Optionee, such other form of consideration as permitted by
applicable law, or any combination thereof.
(c) Termination of Employment. If an Optionee ceases to be a Service
Provider for any reason (other than death or disability), then all Options held
by the Optionee under the 1996 Stock Plan expire on the earlier of (i) the date
set forth in his or her notice of grant or (ii) the expiration date of such
Option. To the extent the Option is exercisable at the time of such termination,
the Optionee may exercise all or part of his or her Option at any time before
termination. If, on the date of termination, the Optionee is not vested as to
his or her entire Option, the shares of Common Stock covered by the unvested
portion of the Option revert back to the 1996 Stock Plan. If, after termination,
the Optionee does not exercise his or her Option within the time specified by
the Administrator, the Option shall terminate and the shares of Common Stock
covered by such Option shall revert to the 1996 Stock Plan.
(d) Death. If an Optionee ceases to be a Service Provider as a result of
his or her death, then all Options held by such Optionee under the 1996 Stock
Plan expire on the earlier of (i) the date set forth in his or her notice of
grant (generally, 12 months from the date of death) or (ii) the expiration date
of such Option. The Optionee (or the Optionee's estate or the person who
acquires the right to exercise the Option by bequest or inheritance), may
exercise all or part of the Option at any time before such expiration to the
extent that the Option would have been exercisable had the Optionee remained a
Service Provider for six months after the date of death. If an Optionee dies
within three months after ceasing to be a Service Provider, then all Options
held by such Optionee under the 1996 Stock Plan expire on the earlier of (i) the
date set forth in his or her notice of grant (generally, twelve months from the
date of death) or (ii) the expiration of such Option. The Optionee's estate (or
the person who acquires the right to exercise the Option by bequest or
inheritance), may exercise all or part of the Option at any time before such
expiration to the extent that the Option was exercisable at the time of such
termination. If, on the date of death, the Optionee is not vested as to his or
her entire Option, the shares of Common Stock covered by the unvested portion of
the Option revert back to the 1996 Stock Plan. If, after the Optionee's death,
the Option is not exercised within the time specified by the Administrator, the
Option shall terminate and the shares of Common Stock covered by such Option
shall revert to the 1996 Stock Plan.
(e) Disability. If an Optionee ceases to be a Service Provider as a result
of disability, then all Options held by such Optionee under the 1996 Stock Plan
expire on the earlier of (i) the date set forth in his or her notice of grant
(generally, 12 months from the date of such termination) or (ii) the expiration
date of such Option. The Optionee (or the Optionee's estate or the person who
acquires the right to exercise the Option by bequest or inheritance), may
exercise all or part of the Option at any time before such expiration to the
extent that the Option was exercisable at the time of such termination.
16
<PAGE> 20
(f) Nontransferability of Options: Unless specified otherwise by the
Administrator, Options granted under the 1996 Stock Plan are not transferable
other than by will or the laws of descent and distribution, and may be exercised
during the Optionee's lifetime only by the Optionee.
(g) Other Provisions: The stock Option agreement may contain other terms,
provisions and conditions not inconsistent with the 1996 Stock Plan as may be
determined by the Administrator.
Stock Purchase Rights. A stock purchase right gives the purchaser a right
to purchase Common Stock within a specified period of time. A stock purchase
right is accepted by the execution of a restricted stock purchase agreement
between the Company and the purchaser, accompanied by the payment of the
purchase price for the shares. Unless the Administrator determines otherwise,
the restricted stock purchase agreement shall give the Company a repurchase
Option exercisable upon the voluntary or involuntary termination of the
purchaser's employment or consulting relationship with the Company for any
reason (including death and disability). The purchase price for any shares
repurchased by the Company shall be the original price paid by the purchaser.
The repurchase Option lapses at a rate determined by the Administrator. Unless
specified otherwise by the Administrator, a stock purchase right is
nontransferable other than by will or the laws of descent and distribution, and
may be exercised during the purchaser's lifetime only by the purchaser.
Adjustments Upon Changes in Capitalization. In the event that the stock of
the Company changes by reason of any stock split, reverse stock split, stock
dividend, combination, reclassification or other similar change in the capital
structure of the Company effected without the receipt of consideration,
appropriate adjustments shall be made in the number and class of shares of stock
subject to the 1996 Stock Plan, the number and class of shares of stock subject
to any Option or stock purchase right outstanding under the 1996 Stock Plan, and
the exercise price of any such outstanding Option or stock purchase right.
Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Administrator in its discretion may provide for
an Optionee to have the right to exercise his or her Option until ten (10) days
prior to such transaction as to all of the Optioned stock covered thereby,
including shares of Common Stock as to which the Option would not otherwise be
exercisable. In addition, the Administrator may provide that any Company
repurchase Option applicable to any shares of Common Stock purchased upon
exercise of an Option or stock purchase right shall lapse as to all such shares,
provided the proposed dissolution or liquidation takes place at the time and in
the manner contemplated. To the extent it has not been previously exercised, an
Option or stock purchase right will terminate immediately prior to the
consummation of such proposed action.
Merger or Asset Sale. In the event of a merger of the Company with or into
another corporation, or the sale of substantially all of the assets of the
Company, each outstanding Option and stock purchase right shall be assumed (in
accordance with the provisions of the 1996 Stock Plan) or an equivalent Option
or right 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 or stock purchase right, the Optionee
shall fully vest in and have the right to exercise the Option or stock purchase
right as to all of the optioned stock, including shares of Common Stock as to
which it would not otherwise be vested or exercisable. If an Option or stock
purchase right becomes fully vested and exercisable in lieu of assumption or
substitution in the event of a merger or sale of assets, the Administrator shall
notify the Optionee that the Option or stock purchase right shall be fully
vested and exercisable for a period of fifteen (15) days from the date of such
notice, and the Option or stock purchase right shall terminate upon the
expiration of such period.
Amendment and Termination of the 1996 Stock Plan. The Board may amend,
alter, suspend or terminate the 1996 Stock Plan, or any part thereof, at any
time and for any reason. However, the Company shall obtain shareholder approval
for any amendment to the 1996 Stock Plan to the extent necessary to comply with
Rule 16b-3, Section 162(m) and Section 422 of the Code, or any similar rule or
statute. No such action by the Board or shareholders may alter or impair any
Option or stock purchase right previously granted under the 1996 Stock Plan
without the written consent of the Optionee or purchaser, as the case may be.
Unless terminated earlier, the 1996 Stock Plan shall terminate ten years from
the date of its approval by the shareholders or the Board of the Company,
whichever is earlier.
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<PAGE> 21
FEDERAL INCOME TAX CONSEQUENCES OF THE 1996 STOCK PLAN
Nonstatutory Stock Options. An Optionee does not recognize any taxable
income at the time he or she is granted a nonstatutory stock Option. Upon
exercise, the Optionee recognizes taxable income generally measured by the
excess of the then fair market value of the shares over the exercise price. Any
taxable income recognized in connection with an Option exercise by an employee
of the Company is subject to tax withholding by the Company. Subject to Section
162(m) of the Code, the Company is entitled to a deduction in the same amount as
the ordinary income recognized by the Optionee. Upon a disposition of such
shares by the Optionee, any difference between the sale price and the Optionee's
exercise price, to the extent not recognized as taxable income as provided
above, is treated as long-term or short-term capital gain or loss, depending on
the holding period.
Stock Purchase Rights. Stock purchase rights will generally be taxed in
the same manner as nonstatutory stock Options. However, restricted stock is
generally purchased upon the exercise of a stock purchase right. At the time of
purchase, restricted stock is subject to a "substantial risk of forfeiture"
within the meaning of Section 83 of the Code. As a result, the purchaser will
not recognize ordinary income at the time of purchase. Instead, the purchaser
will recognize ordinary income on the dates when a stock ceases to be subject to
a substantial risk of forfeiture. The stock will generally cease to be subject
to a substantial risk of forfeiture when it is no longer subject to the
Company's right to repurchase the stock upon the purchaser's termination of
employment with the Company. At such times, the purchaser will recognize
ordinary income measured as the difference between the purchase price and the
fair market value of the stock on the date the stock is no longer subject to a
substantial risk of forfeiture.
The purchaser may accelerate to the date of purchase his or her recognition
of ordinary income, if any, and the beginning of any capital gain holding period
by timely filing an election pursuant to Section 83(b) of the Code. In such
event, the ordinary income recognized, if any, is measured as the difference
between the purchase price and the fair market value of the stock on the date of
purchase, and the capital gain holding period commences on such date. The
ordinary income recognized by a purchaser who is an employee will be subject to
tax withholding by the Company. Different rules may apply if the purchaser is
also an officer, director, or 10% shareholder of the Company.
Subject to Section 162(m) of the Code, the Company is generally entitled to
a deduction in the same amount as the ordinary income recognized by the
purchaser with respect to a stock purchase right when the purchaser recognizes
such ordinary income.
Section 162(m) of the Code. Under Section 162(m) of the Code, which became
law in August 1993, income tax deductions of publicly-held corporations may be
limited to the extent total compensation (including base salary, annual bonus,
stock option exercises and non-qualified benefits paid in 1994 and thereafter)
for certain executive officers exceeds $1 million (less the amount of any
"excess parachute payments" as defined in Section 280G of the Code) in any
taxable year of the corporation. However, under Section 162(m), the deduction
limit does not apply to certain "performance-based" compensation which is paid
based upon the attainment of objective financial performance goals which are
established by an independent compensation committee pursuant to business
criteria which is adequately disclosed to, and approved by, stockholders of the
corporation and which meets certain other requirements. In addition, under a
special rule for stock options and stock appreciation rights, stock options and
stock appreciation rights will satisfy the "performance-based" exception if the
awards are made by a qualifying compensation committee, the plan sets the
maximum number of shares that can be granted to any person within a specified
period and the compensation is based solely on an increase in the stock price
after the grant date (i.e. the exercise price is equal to or greater than the
fair market value of the stock subject to the award on the grant date). The 1996
Stock Plan is intended to permit stock options granted under the 1996 Stock Plan
to qualify as "performance-based" compensation under the special rule of Section
162(m) which applies to such grants; however, grants of stock purchase rights
under the 1996 Stock Plan will not qualify as "performance-based" compensation
under Section 162(m) unless such awards are also granted under a separate
compensation plan which independently satisfies all of the general requirements
applicable to "performance-based" compensation under Section 162(m).
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<PAGE> 22
THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION
UPON OPTIONEES, HOLDERS OF STOCK PURCHASE RIGHTS, AND THE COMPANY WITH RESPECT
TO THE GRANT AND EXERCISE OF OPTIONS AND STOCK PURCHASE RIGHTS UNDER THE 1996
STOCK PLAN. IT DOES NOT PURPORT TO BE COMPLETE, AND DOES NOT DISCUSS THE TAX
CONSEQUENCES OF THE EMPLOYEE'S OR CONSULTANT'S DEATH OR THE PROVISIONS OF THE
INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE
EMPLOYEE OR CONSULTANT MAY RESIDE.
REQUIRED VOTE
At the Special Meeting, the shareholders are being asked to approve the
adoption of the 1996 Stock Plan and the reservation of shares thereunder. The
affirmative vote of the holders of a majority of the shares entitled to vote at
the Special Meeting will be required to approve the adoption of the 1996 Stock
Plan and the reservation of shares thereunder.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE APPROVAL
OF THE COMPANY'S 1996 STOCK PLAN AND THE RESERVATION OF SHARES THEREUNDER. SINCE
APPROVAL OF THE COMPANY'S 1996 STOCK PLAN REQUIRES THE AFFIRMATIVE VOTE OF A
MAJORITY OF THE OUTSTANDING SHARES OF THE COMPANY'S COMMON STOCK, ABSTENTIONS
AND BROKER NON-VOTES WILL HAVE THE EFFECT OF VOTES AGAINST THE APPROVAL OF THE
1996 STOCK PLAN.
PROPOSAL 3 -- PROPOSAL TO APPROVE THE ADOPTION OF THE COMPANY'S
AMENDED AND RESTATED 1996 DIRECTOR OPTION PLAN
The NUKO Information Systems, Inc. 1996 Director Stock Option Plan was
adopted by the Board of Directors of the Company in March 1996. Subsequently,
the Board of Directors approved by unanimous written consent dated as of
November 7, 1996, the Amended and Restated 1996 Director Option Plan (as amended
the "Director Option Plan") to amend and restate in its entirety the 1996
Director Option Plan. The Board of Directors has reserved 200,000 shares of
Common Stock for issuance under the Director Option Plan. As of October 31,
1996, options (each an "Option") to purchase 60,000 shares of Common Stock had
been granted under the Director Option Plan.
At the Special Meeting, the shareholders are being asked to approve
adoption of the Director Option Plan and the reservation of shares thereunder. A
copy of the Director Option Plan is attached hereto as Exhibit F.
SUMMARY OF THE DIRECTOR OPTION PLAN
General. The purpose of the Director Option Plan is to attract and retain
the best available personnel for service as non-employee directors ("Outside
Directors") of the Company, to provide additional incentive to the Outside
Directors of the Company to serve as directors, and to encourage their continued
service on the Board. All Options granted under the Director Option Plan shall
be nonstatutory stock options.
Administration. The Director Option Plan is designed to be effective
automatically without requiring administration. However, to the extent
administration is necessary, it will be provided by the Board. The
interpretation and construction of any provision of the Director Option Plan by
the Board shall be final and conclusive. Members of the Board receive no
additional compensation for their services in connection with the administration
of the Director Option Plan.
Automatic Grants. The Director Option Plan provides for the automatic
grant of 35,000 shares of Common Stock (the "First Option") to each Outside
Director on the date of the earlier of: (i) the effective date of the Director
Option Plan, or (ii) the date on which the person first becomes an Outside
Director, unless immediately prior to becoming a Outside Director, such person
was an employee and a director of the Company. After the First Option is granted
to the Outside Director, he or she shall automatically be granted an option to
purchase 10,000 shares (a "Subsequent Option") each year on the day after the
date of the annual shareholder's meeting of the Company.
Eligibility; Limitations. Options may be granted only to Outside
Directors. All Options shall be automatically granted in accordance with the
terms set forth in the Automatic Grants section of this summary.
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<PAGE> 23
Additional Terms and Conditions of Options. Each Option is evidenced by a
stock option agreement between the Company and the Outside Director, and is
subject to the following additional terms and conditions:
(a) Exercise Price. The exercise price for all options granted under the
Director Option Plan is the fair market value of the Company's Common Stock on
the date of grant. The fair market value of a share of Common Stock is generally
determined with reference to the last reported sale price for such stock on the
date of grant.
(b) Exercise of Option; Form of Consideration. The First Option and each
Subsequent Option shall become exercisable as to one thirty-sixth (1/36) of the
shares subject thereto on its date of grant, and as to an additional one
thirty-sixth (1/36) of the shares subject thereto each month thereafter so long
as the optionee continues to serve as an Outside Director on such dates. The
consideration to be paid for the shares to be issued upon exercise of an Option,
including the method of payment, shall consist of (i) cash, (ii) check, (iii)
other shares of Common Stock (with some restrictions), (iv) cashless exercise,
or (v) any combination of the foregoing methods of payment.
(c) Term of Option. Options granted under the Director Option Plan expire
10 years after the date of grant, and no Option may be exercised after the
expiration of its term.
(d) Termination of Status as a Director. The Director Option Plan provides
that if the optionee ceases to serve as a director of the Company, the optionee
may, but only within 3 months after the date he or she ceases to be a director,
exercise his or her Option to the extent that he or she was entitled to exercise
it at the date of such termination, provided that the Option is exercised no
later than its expiration date. If, on the date of termination, the optionee is
not vested as to his or her entire Option, the shares of Common Stock covered by
the unvested portion of the Option shall revert to the Director Option Plan. If,
after termination, the optionee does not exercise his or her Option within 3
months, the Option shall terminate, and the shares of Common Stock covered by
such Option shall revert to the Director Option Plan.
(e) Death or Disability. If an optionee is unable to continue service as a
director of the Company as a result of his or her death or total and permanent
disability, then all Options held by such optionee under the Director Option
Plan expire on the earlier of (i) 12 months from the date of such death or
disability or (ii) the expiration date of such Option. The optionee (or the
optionee's estate or the person who acquires the right to exercise the option by
bequest or inheritance), may exercise all or part of the Option at any time
before such expiration to the extent that the Option was exercisable at the time
of such termination. If, on the date of death or disability, the optionee is not
vested as to his or her entire Option, the shares of Common Stock covered by the
unvested portion of the Option shall revert to the Director Option Plan. If,
after death or disability, the optionee (or the optionee's estate or the person
who acquires the right to exercise the option by bequest or inheritance) does
not exercise his or her Option within 12 months, the Option shall terminate, and
the shares of Common Stock covered by such Option shall revert to the Director
Option Plan.
(g) Nontransferability of Options. Options granted under the Director
Option Plan are not transferable other than by will or the laws of descent and
distribution, and may be exercised during the optionee's lifetime only by the
optionee.
(h) Other Provisions. The stock option agreement may contain other terms,
provisions and conditions not inconsistent with the Director Option Plan as may
be determined by the Board.
Adjustments Upon Changes in Capitalization. In the event any change is
made in the Company's capitalization which results in an increase or decrease in
the number of issued shares of Common Stock without receipt of consideration by
the Company, an appropriate adjustment shall be made in the number of shares
under the Director Option Plan and the price per share covered by each
outstanding option. Such adjustment shall be made by the Board, 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.
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<PAGE> 24
Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, all outstanding Options will terminate immediately
prior to the consummation of such proposed action.
Merger or Asset Sale. In the event of a merger of the Company with or into
another corporation, or the sale of substantially all of the assets of the
Company, each outstanding Option shall be assumed (in accordance with the
provisions of the Director Option Plan) or an equivalent option substituted by
the successor corporation or a parent or subsidiary of the successor
corporation. Following such assumption or substitution, if the optionee's status
as an Outside Director or director of the successor corporation, as applicable,
is terminated other than upon a voluntary resignation by the optionee, the
Option or option shall become fully exercisable, including as to shares for
which it would not otherwise be exercisable. If the successor corporation does
not assume an outstanding Option or substitute for it an equivalent option, the
Option shall become fully vested and exercisable, including as to shares of
Common Stock for which it would not otherwise be exercisable. In such event the
Board shall notify the optionee that the Option shall be fully exercisable for a
period of thirty (30) days from the date of such notice, and upon the expiration
of such period the Option shall terminate.
Amendment and Termination of the Director Option Plan. The Board may at
any time amend, alter, suspend, or discontinue the Director Option Plan, but no
amendment, alteration, suspension, or discontinuation shall be made which would
impair the rights of any optionee under any grant theretofore made, without his
or her consent. In addition, to the extent necessary and desirable to comply
with any applicable law, regulation or stock exchange rule, the Company shall
obtain shareholder approval of any Director Option Plan amendment in such a
manner and to such a degree as required. No such action by the Board or
shareholders may alter or impair any Option previously granted under the
Director Option Plan without the written consent of the optionee. Unless
terminated earlier, the Director Option Plan shall terminate ten years from the
date of its approval by the shareholders or the Board of the Company, whichever
is earlier.
FEDERAL INCOME TAX CONSEQUENCES
Nonstatutory Stock Options. An optionee does not recognize any taxable
income at the time he or she is granted a nonstatutory stock option. Upon
exercise, the optionee recognizes taxable income generally measured by the
excess of the then fair market value of the shares over the exercise price. The
Company is entitled to a deduction in the same amount as the ordinary income
recognized by the optionee. Upon a disposition of such shares by the optionee,
any difference between the sale price and the optionee's exercise price, to the
extent not recognized as taxable income as provided above, is treated as
long-term or short-term capital gain or loss, depending on the holding period.
THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION
UPON OPTIONEES, AND THE COMPANY WITH RESPECT TO THE GRANT AND EXERCISE OF
OPTIONS UNDER THE DIRECTOR OPTION PLAN. IT DOES NOT PURPORT TO BE COMPLETE, AND
DOES NOT DISCUSS THE TAX CONSEQUENCES OF THE OUTSIDE DIRECTOR'S DEATH OR THE
PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY
IN WHICH THE OUTSIDE DIRECTOR MAY RESIDE.
REQUIRED VOTE
At the Special Meeting, the shareholders are being asked to approve the
adoption of the 1996 Director Option Plan and the reservation of shares
thereunder. The affirmative vote of the holders of a majority of the shares
entitled to vote at the Special Meeting will be required to approve the adoption
of the 1996 Director Option Plan and the reservation of shares thereunder.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE APPROVAL
OF THE COMPANY'S 1996 DIRECTOR OPTION PLAN AND THE RESERVATION OF SHARES
THEREUNDER. SINCE APPROVAL OF THE COMPANY'S 1996 DIRECTOR STOCK OPTION PLAN
REQUIRES THE AFFIRMATIVE VOTE OF A MAJORITY OF THE OUTSTANDING SHARES OF THE
COMPANY'S COMMON STOCK, ABSTENTIONS AND BROKER NON-VOTES WILL HAVE THE EFFECT OF
VOTES AGAINST THE APPROVAL OF THE 1996 DIRECTOR STOCK OPTION PLAN.
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<PAGE> 25
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of October 31, 1996
with respect to the shares of Common Stock beneficially owned by (i) persons
known by the Company to own more than five percent of the outstanding shares of
Common Stock; (ii) each director and nominee for director, (iii) the Chief
Executive Officer and the four other most highly compensated executive officers
of the Company as of December 31, 1995 whose salary and incentive compensation
for the eight-month fiscal period ended December 31, 1995 exceeded $100,000, and
(iv) all directors and executive officers of the Company as a group. Ownership
information is based upon information furnished by the respective individuals.
The address of each person holding 5% or more of the outstanding stock in the
following table is 2235 Qume Drive, San Jose, California 95131.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OF CLASS
- -------------------------------------------------------------- ----------------------- ----------
<S> <C> <C>
Pratap Kesav Kondamoori....................................... 1,273,220(2) 12.2%
H. R. (Ram) Kedlaya........................................... 1,192,257(3) 11.4%
Anders O. Field, Jr.
P.O. Box 8630
Incline Village, Nevada 89452............................... 490,296(4) 4.7%
Marc Dumont
37 chemin Jean-Achard
CH-1231 Conches (GE)
Switzerland................................................. 262,201(5)(6) 2.5%
Robert C. Marshall
c/o Nuko Information Systems, Inc.
2235 Qume Drive
San Jose, California 95131.................................. 8,750(7) --
All Executive Officers and Directors as a Group (8 persons)... 3,865,490(8) 37.0%
</TABLE>
- ---------------
(1) Beneficial ownership of directors, officers and 5% or more shareholders
includes both outstanding Common Stock and shares issuable upon exercise of
warrants or options that are currently exercisable or will become
exercisable within sixty days after the date of this table. Except as
indicated in the footnotes to this table and pursuant to applicable
community property laws, the persons named in the table have sole voting and
investment power with respect to all shares of Common Stock beneficially
owned by them.
(2) Includes 109,368 shares of Common Stock issuable upon exercise of stock
options that are currently exercisable or will become exercisable within
sixty days of the date of this table.
(3) Includes 29,967 shares of Common Stock issuable upon exercise of stock
options that are currently exercisable or will become exercisable within
sixty days of the date of this table.
(4) Includes 102,924 shares of Common Stock issuable upon exercise of stock
options that are currently exercisable or will become exercisable within
sixty days of the date of this table.
(5) Includes 33,400 shares issuable upon exercise of currently exercisable
Common Stock Purchase Warrants, and 8,750 shares issuable upon exercise of
stock options that are currently exercisable or will become exercisable
within sixty days of the date of this table.
(6) 220,051 of Marc Dumont's shares are held through Nutley Investments, S.A.,
an entity he controls.
(7) Includes 8,750 shares of Common Stock issuable upon exercise of stock
options that are currently exercisable or will become exercisable within
sixty days of the date of this table.
(8) Includes 33,400 shares issuable upon exercise of currently exercisable
Common Stock Purchase Warrants and 866,425 shares issuable upon exercise of
stock options exercisable within sixty days of the date of this table.
22
<PAGE> 26
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding compensation
paid by the Company for services rendered during the eight month fiscal period
ended December 31, 1995, and the two fiscal years ended April 30, 1995 to the
Company's Chief Executive Officer (the "Named Executive Officer"). No executive
officer of the Company received total annual salary and bonus, or annual salary
and other compensation, exceeding $100,000 in the last the last full fiscal year
or eight month fiscal period ended December 31, 1995.
SUMMARY COMPENSATION TABLE*
<TABLE>
<CAPTION>
AWARDS
----------
ANNUAL COMPENSATION SECURITIES
------------------- UNDERLYING ALL OTHER
PERIOD(1) SALARY(2) OPTIONS COMPENSATION
------------------- ------------------- ---------- ------------
<S> <C> <C> <C> <C>
Pratap Kesav Kondamoori............ Fiscal Year Ended $ 1,000
President and Chief Executive April 30, 1994
Officer $ 17,471(3)
Fiscal Year Ended
April 30,1995 $13,250 $ 27,748(4)
Eight Month Fiscal
Period Ended
December 31, 1995 $66,150 56,987(5) --
</TABLE>
- ---------------
* Prescribed columns in the Summary Compensation Table have been omitted if they
are not relevant to the named executive officer.
(1) Prior to May 27, 1994, Growers Express, Incorporated ("Growers Express"),
the predecessor of the Company was a dormant, non-operating company. The
Company believes compensation information pertaining to Growers Express, if
it had access to such information, which it does not, would nevertheless be
immaterial and irrelevant to current operations. Compensation information
for the named executive officer for the 1994 fiscal year reflects
compensation received from NUKO Information Systems, Inc. and NUKO
Technologies, Inc.
(2) During fiscal 1994 and 1995, due to the Company's cash flow problems, all
executive officers, including Mr. Kondamoori, agreed to defer certain
payments. The salary figure indicated in the above table for fiscal 1995
does not include $22,750 of accrued salary.
(3) Includes $5,125 paid for consulting fees and $12,346 as advances in fiscal
year 1994.
(4) Represents $27,748 as advances in the fiscal year ended April 30, 1995.
(5) Includes 13,608 options granted to spouse of the Named Executive Officer.
The Company established a 401(k) Plan for the benefit of its employees
effective August 1, 1996.
Employment Agreements. The Company has no formal employment agreement with
its Named Executive Officer. The Company has, however, entered into an
employment agreement with John H. Gorman, its Vice President, Chief Financial
Officer, Treasurer and Secretary. Pursuant to his employment agreement, which
has a three-year term, Mr. Gorman will receive an annual salary of $150,000 and
a one-time grant of options to acquire 250,000 shares of the Company's Common
Stock. Twenty-five percent of such options vest six months after the date of the
agreement, with one thirty-sixth (1/36) of the remainder vesting each month
thereafter until all options are vested. All of such options become immediately
exercisable upon a change of control of the Company. Mr. Gorman's employment
agreement also contains a relocation clause, pursuant to which the Company will
reimburse up to $100,000 of expenses incurred by Mr. Gorman in moving to
California from North Carolina, and a severance clause, which requires the
Company to pay to Mr. Gorman an amount equal to his yearly salary if he is
terminated without cause. The Company and Mr. Gorman also
23
<PAGE> 27
have entered into a loan agreement which calls for the Company to make an
interest-free loan of $300,000 to Mr. Gorman. The loan agreement provides that
one-third of the amount borrowed will be forgiven at the end of each year for
three years so long as Mr. Gorman continues to be employed by the Company.
COMPENSATION OF DIRECTORS
Compensation for non-employee directors is fixed at $12,000 per year. In
addition, all directors of the Company are eligible to participate in the
Directors Option Plan. The Company is currently authorized by resolution of the
Board of Directors to grant 10,000 options per year to existing non-employee
directors and 35,000 options to any new nonemployee director under the Directors
Option Plan.
STOCK OPTIONS
The NUKO Information Systems, Inc. 1995 Stock Option Plan (the "1995 Option
Plan") was adopted by the Board of Directors in May 1995. The Company had not
previously had a stock option plan. The Board of Directors reserved 1,400,000
shares of Common Stock for issuance under the 1995 Option Plan. Options granted
under the 1995 Option Plan may be either "incentive stock options" within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), or nonstatutory stock options at the discretion of the Board of
Directors and as reflected in the terms of the written option agreement. The
Board of Directors, at its discretion, may also grant rights to purchase Common
Stock directly, rather than pursuant to stock options.
The 1995 Option Plan is not a qualified deferred compensation plan under
Section 401(a) of the Code, and is not subject to the provisions of the Employee
Retirement Income Security Act of 1974, as amended.
In December 1996, the Board of Directors adopted the 1996 Option Plan, and
in March 1996 adopted the 1996 Director Stock Option Plan, and has reserved
2,500,000 and 200,000 shares of Common Stock, respectively, for issuance
thereunder. See, "Proposal No. 2 -- Proposal to Approve the Adoption of the
Company's 1996 Stock Option Plan" and "Proposal No. 3 -- Proposal to Approve the
Adoption of the Company's 1996 Director Stock Option Plan." The Named Executive
Officer is eligible to participate in each of these plans. As of October 31,
1996, 1,397,000 options have been granted under the 1995 Stock Option Plan,
1,489,360 have been granted under the 1996 Option Plan and 60,000 have been
granted under the Director Stock Option Plan.
The following table sets forth information regarding stock option grants
made during the eight month fiscal period ended December 31, 1995 to the Named
Executive Officer:
OPTION GRANTS IN EIGHT MONTH FISCAL PERIOD ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
% OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO EXERCISE OR
UNDERLYING EMPLOYEES BASE
NAME OPTIONS(#)(1) IN FISCAL YEAR PRICE($/SH) EXPIRATION DATE
- ------------------------------------- ------------- -------------- ----------- ---------------
<S> <C> <C> <C> <C>
Pratap Kesav Kondamoori.............. 56,987(2) 5.3% $ 2.375 May 25, 2000
</TABLE>
- ---------------
(1) The terms of such options, all of which are nonstatutory stock options, are
consistent with those of options granted to other employees under the
Company's 1995 Stock Option Plan. Of the options granted, 25% immediately
vested and the remainder vests in 36 equal monthly installments commencing
on the date of grant.
(2) Includes 13,608 options granted to the spouse of the Named Executive
Officer.
24
<PAGE> 28
EXERCISE OF STOCK OPTIONS
The following table sets forth information regarding exercises of stock
options during the eight month fiscal period ended December 31, 1995 by the
Named Executive Officer:
AGGREGATED OPTION/SAR EXERCISES SINCE PLAN INCEPTION AND
FISCAL YEAR-END OPTION/SAR VALUE
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FY-END (#) AT FY-END ($)
SHARES ---------------- ----------------
ACQUIRED ON EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) VALUE REALIZED ($) UNEXERCISABLE(1) UNEXERCISABLE(2)
- -------------------------------------- ------------ ------------------ ---------------- ----------------
<S> <C> <C> <C> <C>
Pratap Kesav Kondamoori............... 0 0 28,235(3) $190,586(3)
28,752(4) $194,076(4)
</TABLE>
- ---------------
(1) Includes both in-the-money and out-of-the-money options.
(2) Fair market value of the Company's Common Stock on December 31, 1995
($9.125, based on the closing bid price reported in the OTC Electronic
Bulletin Board), less the exercise price. The Company's Common Stock is now
traded on Nasdaq, and as of November 7, 1996 the price per share as quoted
thereon was $16.375.
(3) Exercisable options.
(4) Unexercisable options at December 31, 1995. Twenty-five percent (25%) of the
options are immediately exercisable, with the remainder of the options
vesting in equal monthly installments over a 36-month period commencing with
the date of grant.
BENEFIT PLANS SUBJECT TO STOCKHOLDER APPROVAL
The Board of Directors of the Company has adopted, subject to stockholder
approval, the 1996 Stock Option Plan pursuant to which options may be granted to
officers, directors, employees and consultants of the Company. See "PROPOSAL
2 -- PROPOSAL TO APPROVE THE ADOPTION OF THE COMPANY'S 1996 STOCK OPTION PLAN."
In addition, the Board of Directors of the Company has adopted, subject to
stockholder approval, the 1996 Director Stock Option Plan pursuant to which
options may be granted to officers, directors, employees and consultants of the
Company. See "PROPOSAL 3 -- PROPOSAL TO APPROVE THE ADOPTION OF THE COMPANY'S
1996 DIRECTOR STOCK OPTION PLAN."
Grants under the 1996 Option Plan are made at the discretion of the
Compensation Committee. Accordingly, future grants under the 1996 Option Plan
are not yet determinable.
25
<PAGE> 29
The following table sets forth grants of stock options received under the
1996 Option Plan and Directors Option Plan, by (1) the Named Executive Officer;
(2) all current executive officers as a group; (3) all current directors who are
not executive officers as a group; and (4) all employees, including all officers
who are not executive officers, as a group:
<TABLE>
<CAPTION>
1996 DIRECTOR'S STOCK
1996 STOCK OPTION PLAN OPTION PLAN(1)
------------------------- -------------------------
EXERCISE EXERCISE
PRICE NUMBER OF PRICE NUMBER
NAME OF POSITION (PER SHARE) SHARES (PER SHARE) SHARES
- ----------------------------------------------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Pratap Kesav Kondamoori........................ -- -- -- 0
President and Chief Executive Officer
Executive Group (8 persons).................... $6.875 905,000
$5.40 60,000
Non-Executive Director Group (3 persons)....... -- -- $7.75 60,000
Non-Executive Officer Employee Group........... $6.875 140,000 -- 0
$9.25 25,460
$5.40 150,000
$8.875 110,000
</TABLE>
- ---------------
(1) Only directors who are not executive officers or employees of the Company
are eligible to participate in the 1996 Directors Plan.
SUBMISSION OF SHAREHOLDER PROPOSALS
FOR THE 1997 ANNUAL SHAREHOLDERS' MEETING
Proposals of shareholders of the Company that are intended to be presented
by such shareholders at the Company's next Annual Meeting must be received by
the Company no later than January 31, 1997 in order that they may be included in
the Proxy Statement and form of proxy relating to that meeting. It is
recommended that shareholders submitting proposals direct them to the Secretary
of the Company and use certified mail -- return receipt requested in order to
provide proof of timely delivery.
OTHER MATTERS
Pursuant to the requirements of the Bylaws of the Company and New York law,
no other business may be presented for consideration at the Special Meeting.
By Order of the Board of Directors
LOGO
JOHN H. GORMAN
Secretary
San Jose, California
November 12, 1996
26
<PAGE> 30
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
OF NUKO INFORMATION SYSTEMS, INC.,
A DELAWARE CORPORATION,
AND
NUKO INFORMATION SYSTEMS, INC.,
A NEW YORK CORPORATION
THIS AGREEMENT AND PLAN OF MERGER dated as of November 12, 1996 (the
"Agreement") is between NUKO Information Systems, Inc., a Delaware corporation
("NUKO Delaware") and NUKO Information Systems, Inc., a New York corporation
("NUKO New York"). NUKO Delaware and NUKO New York are sometimes referred to
herein as the "Constituent Corporations."
RECITALS
WHEREAS, NUKO Delaware is a corporation duly organized and existing under
the laws of the State of Delaware and is authorized to issue 1,000 shares of
Common Stock, par value $.01, and no shares of Preferred Stock. As of the date
hereof, 100 shares of Common Stock are issued and outstanding, all of which are
held by NUKO New York, and no shares of Preferred Stock are issued and
outstanding; and
WHEREAS, NUKO New York is a corporation duly organized and existing under
the laws of the State of New York and is authorized to issue 20,000,000 shares
of Common Stock, par value $.001 per share, and 5,000,000 shares of Preferred
Stock, par value $.001 per share. As of the date hereof, 10,461,884 shares of
Common Stock and no shares of Preferred Stock were issued and outstanding; and
WHEREAS, the Board of Directors of NUKO New York has determined that, for
the purpose of effecting the reincorporation of NUKO New York in the State of
Delaware, it is advisable and in the best interests of NUKO New York and its
shareholders that NUKO New York merge with and into NUKO Delaware upon the terms
and conditions herein provided; and
WHEREAS, the New York Business Corporation Law permits the merger of a
business corporation of the state of New York with and into a business
corporation of another jurisdiction; and
WHEREAS, the Delaware General Corporation Law permits the merger of a
business corporation of another jurisdiction with and into a business
corporation of the state of Delaware; and
WHEREAS, the respective Boards of Directors of NUKO Delaware and NUKO New
York have approved this Agreement and have directed that this Agreement be
submitted to a vote of their respective sole stockholder and shareholders, and
executed by the undersigned officers;
NOW, THEREFORE, in consideration of the mutual agreements and covenants set
forth herein, NUKO Delaware and NUKO New York hereby agree, subject to the terms
and conditions hereinafter set forth, as follows:
I. MERGER
1.1 MERGER. In accordance with the provisions of this Agreement, the
Delaware General Corporation Law and the New York Business Corporation Law, NUKO
New York shall be merged with and into NUKO Delaware (the "Merger"), the
separate existence of NUKO New York shall cease in accordance with the
provisions of the New York Business Corporation Law and NUKO Delaware shall
survive the Merger and shall continue to be governed by the laws of the State of
Delaware, and NUKO Delaware shall be, and is herein sometimes referred as, the
"Surviving Corporation," and the name of the Surviving Corporation shall be NUKO
Information Systems, Inc.
<PAGE> 31
1.2 FILING AND EFFECTIVENESS. The Merger shall become effective when the
following actions shall have been completed:
(a) This Agreement and Merger shall have been adopted and approved by
the stockholders of each Constituent Corporation in accordance with the
requirements of the Delaware General Corporation Law and the New York
Business Corporation Law;
(b) An Amended and Restated Certificate of Incorporation of NUKO
Delaware, which among other things increases the authorized capital stock
of NUKO Delaware to 40,000,000 shares of Common Stock, par value $.001 per
share, and 5,000,000 shares of Preferred Stock, par value $.001 per share,
shall have been filed with the Secretary of State of Delaware;
(c) All of the conditions precedent to the consummation of the Merger
specified in this Agreement shall have been satisfied or duly waived by the
party entitled to satisfaction thereof; and
(d) An executed Certificate of Merger or an executed counterpart of
this Agreement meeting the requirements of the Delaware General Corporation
Law shall have been filed with the Secretary of State of the State of
Delaware.
The date and time when the Merger shall become effective, as aforesaid, is
herein called the "Effective Date of the Merger."
1.3 EFFECT OF THE MERGER. Upon the Effective Date of the Merger, the
separate existence of NUKO New York shall cease and NUKO Delaware, as the
Surviving Corporation (i) shall continue to possess all of its own assets,
rights, powers and property as constituted immediately prior to the Effective
Date of the Merger, (ii) shall be subject to all actions previously taken by its
own and NUKO New York's Board of Directors, (iii) shall succeed, without other
transfer, to all of the assets, rights, powers and property of NUKO New York in
the manner more fully set forth in Section 259 of the Delaware General
Corporation Law, (iv) shall continue to be subject to all of the debts,
liabilities and obligations of NUKO Delaware as constituted immediately prior to
the Effective Date of the Merger, and (v) shall succeed, without other transfer,
to all of the debts, liabilities and obligations of NUKO New York in the same
manner as if NUKO Delaware had itself incurred them, all as more fully provided
under the applicable provisions of the Delaware General Corporation Law and the
New York Business Corporation Law.
II. CHARTER DOCUMENTS, DIRECTORS AND OFFICERS
2.1 CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of NUKO
Delaware as in effect immediately prior to the Effective Date of the Merger
shall continue in full force and effect as the Certificate of Incorporation of
the Surviving Corporation until duly amended in accordance with the provisions
thereof and applicable law.
2.2 BYLAWS. The Bylaws of NUKO Delaware as in effect immediately prior to
the Effective Date of the Merger shall continue in full force and effect as the
Bylaws of the Surviving Corporation until duly amended in accordance with the
provisions thereof and applicable law.
2.3 DIRECTORS AND OFFICERS. The directors and officers of NUKO New York
immediately prior to the Effective Date of the Merger shall be the directors and
officers of the Surviving Corporation until their successors shall have been
duly elected and qualified or until as otherwise provided by law, the
Certificate of Incorporation of the Surviving Corporation or the Bylaws of the
Surviving Corporation.
III. MANNER OF CONVERSION OF STOCK
3.1 NUKO NEW YORK COMMON STOCK. Upon the Effective Date of the Merger,
each share of NUKO New York Common Stock issued and outstanding immediately
prior thereto shall, by virtue of the Merger and without any action by the
Constituent Corporations, the holder of such shares or any other person, be
converted into and exchanged for one (1) fully paid and nonassessable share of
Common Stock, $.001 par value, of the Surviving Corporation.
2
<PAGE> 32
3.2 CERTIFICATES IN THE NAMES OF YONDATA AND GROWERS EXPRESS. Upon the
Effective Date of the Merger, each share of NUKO New York represented by
certificates (the "Predecessor Entity Certificates") in the names of Yondata
Corporation ("Yondata") or Growers Express Corporation ("Growers Express") shall
be converted into and exchanged for shares of the Surviving Corporation after
applying the conversion ratio currently in effect for converting each such
Predecessor Entity Certificate into shares of NUKO New York. Accordingly, every
thirty (30) shares of Yondata shall be converted into and exchanged for one
fully paid and nonassessable share of Common Stock, $.001 par value, of the
Surviving Corporation, and every three (3) shares of Growers Express shall be
converted into and exchanged for one fully paid and nonassessable share of
Common Stock, $.001 par value, of the Surviving Corporation.
3.3 NUKO NEW YORK OPTIONS, WARRANTS AND STOCK PURCHASE RIGHTS.
(a) Upon the Effective Date of the Merger, the Surviving Corporation shall
assume the obligations of NUKO New York under the option plans and all other
employee benefit plans of NUKO New York. Each outstanding and unexercised
option, warrant or other right to purchase NUKO New York Common Stock (a
"Right") shall become an option, warrant or right to purchase the Surviving
Corporation's Common Stock, respectively, on the basis of one (1) share of the
Surviving Corporation's Common Stock for each share of NUKO New York Common
Stock, issuable pursuant to any such Right, on the same terms and conditions and
at an exercise price per share equal to the exercise price applicable to any
such NUKO New York Right at the Effective Date of the Merger. This Section
3.3(a) shall not apply to outstanding shares of NUKO New York Common Stock. Such
Common Stock is subject to Section 3.1 hereof.
(b) A number of shares of the Surviving Corporation's Common Stock shall be
reserved for issuance upon the exercise of options, warrants and stock purchase
rights equal to the number of shares of NUKO New York Common Stock so reserved
immediately prior to the Effective Date of the Merger.
3.4 NUKO DELAWARE COMMON STOCK. Upon the Effective Date of the Merger,
each share of Common Stock, $.001 par value, of NUKO Delaware issued and
outstanding immediately prior thereto shall, by virtue of the Merger and without
any action by the Constituent Corporations, the holder of such shares or any
other person, be canceled and returned to the status of authorized but unissued
shares.
3.5 EXCHANGE OF CERTIFICATES.
(a) It will not be necessary for shareholders of the NUKO New York holding
share certificates in the name of "NUKO Information Systems, Inc." to exchange
their existing stock certificates for certificates of the Surviving Corporation.
Outstanding stock certificates in the name of "NUKO Information Systems, Inc."
should not be destroyed or sent to the Surviving Corporation.
(b) ChaseMellon Shareholder Services, L.L.C. shall act as exchange agent
(the "Exchange Agent") in the Merger. Promptly after the Effective Date of the
Merger, the Exchange Agent shall cause to be mailed or delivered to each holder
of record of one or more Predecessor Entity Certificates which immediately prior
to the Effective Date of the Merger represented outstanding shares of NUKO New
York Common Stock, (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Predecessor Entity
Certificates shall pass, only upon delivery of the Predecessor Entity
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as the Surviving Corporation may reasonably specify) and (ii)
instructions for effecting the surrender of the Predecessor Entity Certificates
in exchange for certificates representing shares of the Surviving Corporation's
Common Stock. Upon surrender of a Predecessor Entity Certificate for
cancellation to the Exchange Agent, together with such letter of transmittal,
duly completed and validly executed in accordance with the instructions thereto,
the holder of such Predecessor Entity Certificate shall be entitled to receive
in exchange therefor a certificate representing the number of whole shares of
the Surviving Corporation's Common Stock to which such holder is entitled and
the Predecessor Entity Certificate so surrendered shall forthwith be canceled.
Until so surrendered, each outstanding Predecessor Entity Certificate that,
prior to the Effective Date, represented shares of NUKO New York Common Stock
will be deemed from and after the Effective Date, for all corporate purposes
other than the payment of dividends, to evidence the ownership of the number of
full shares of the Surviving
3
<PAGE> 33
Corporation's Common Stock into which such shares of NUKO New York Common Stock
shall have been converted.
No dividends or other distributions declared or made after the Effective
Date of the Merger with respect to Surviving Corporation Common Stock with a
record date after the Effective Date of the Merger will be paid to the holder of
any unsurrendered Predecessor Entity Certificate with respect to the shares of
the Surviving Corporation's Common Stock represented thereby until the holder of
record of such Predecessor Entity Certificate surrenders it. Subject to
applicable law, following surrender of any such Predecessor Entity Certificate,
there shall be paid to the record holder of the certificates representing whole
shares of the Surviving Corporation's Common Stock issued in exchange therefor,
without interest, at the time of such surrender, the amount of dividends or
other distributions with a record date after the Effective Date of the Merger
theretofore paid with respect to such whole shares of the Surviving
Corporation's Common Stock.
If any Certificate for shares of the Surviving Corporation's Common Stock
is to be issued in a name other than that in which the Predecessor Entity
Certificate surrendered in exchange therefor is registered, it will be a
condition of the issuance thereof that the Predecessor Entity Certificate so
surrendered will be properly endorsed and otherwise in proper form for transfer
and that the person requesting such exchange will have paid to the Surviving
Corporation or any agent designated by it any transfer or other taxes required
by reason of the issuance of a certificate for shares of the Surviving
Corporation's Common Stock in any name other than that of the registered holder
of the Predecessor Entity Certificate surrendered, or established to the
satisfaction of the Surviving Corporation or any agent designated by it that
such tax has been paid or is not payable.
(c) Each certificate representing Common Stock of the Surviving Corporation
so issued in the Merger shall bear the same legends, if any, with respect to the
restrictions on transferability as the Predecessor Entity Certificates so
converted and given in exchange therefor, unless otherwise determined by the
Board of Directors of the Surviving Corporation in compliance with applicable
laws, or other such additional legends as agreed upon by the holder and the
Surviving Corporation.
IV. GENERAL
4.1 COVENANTS OF NUKO DELAWARE. NUKO Delaware covenants and agrees that it
will, on or before the Effective Date of the Merger:
(a) qualify to do business as a foreign corporation in the State of
California and in connection therewith irrevocably appoint an agent for
service of process as required under the provisions of Section 2105 of the
California General Corporation Law;
(b) file any and all documents with the New York Franchise Tax Board
necessary for the assumption by NUKO Delaware of all of the franchise tax
liabilities of NUKO New York; and
(c) take such other actions as may be required by the New York
Business Corporation Law.
4.2 FURTHER ASSURANCES. From time to time, as and when required by NUKO
Delaware or by its successors or assigns, there shall be executed and delivered
on behalf of NUKO New York such deeds and other instruments, and there shall be
taken or caused to be taken by it such further and other actions as shall be
appropriate or necessary in order to vest or perfect in or conform of record or
otherwise by NUKO Delaware the title to and possession of all the property,
interests, assets, rights, privileges, immunities, powers, franchises and
authority of NUKO New York and otherwise to carry out the purposes of this
Agreement, and the officers and directors of NUKO Delaware are fully authorized
in the name and on behalf of NUKO New York or otherwise to take any and all such
action and to execute and deliver any and all such deeds and other instruments.
4.3 ABANDONMENT. At any time before the Effective Date of the Merger, this
Agreement may be terminated and the Merger may be abandoned for any reason
whatsoever by the Board of Directors of either NUKO New York or of NUKO
Delaware, or of both, notwithstanding the approval of this Agreement by the
shareholders of NUKO New York or by the sole stockholder of NUKO Delaware, or by
both.
4
<PAGE> 34
4.4 AMENDMENT. The Boards of Directors of the Constituent Corporations may
amend this Agreement at any time prior to the filing of this Agreement (or
certificate in lieu thereof) with the Secretaries of State of the States of
Delaware and New York, provided that an amendment made subsequent to the
adoption of this Agreement by the stockholders of either Constituent Corporation
shall not: (a) alter or change the amount or kind of shares, securities, cash,
property and/or rights to be received in exchange for or on conversion of all or
any of the shares of any class or series thereof of such Constituent
Corporation; (b) alter or change any term of the Certificate of Incorporation of
the Surviving Corporation to be effected by the Merger; or (c) alter or change
any of the terms and conditions of this Agreement if such alteration or change
would adversely affect the holders of any class or series of capital stock of
any Constituent Corporation.
4.5 REGISTERED OFFICE. The registered office of the Surviving Corporation
in the State of Delaware is at 1013 Center Road, Wilmington, Delaware, and The
Prentice-Hall Corporation Systems, Inc. is the registered agent of the Surviving
Corporation at such address.
4.6 AGREEMENT. Executed copies of this Agreement will be on file at the
principal place of business of the Surviving Corporation at 2235 Qume Drive, San
Jose, California 95131 and copies thereof will be furnished to any stockholder
of either Constituent Corporation, upon request and without cost.
4.7 GOVERNING LAW. This Agreement shall in all respects be construed,
interpreted and enforced in accordance with and governed by the laws of the
State of Delaware and, so far as applicable, the merger provisions of the New
York Business Corporation Law.
4.8 COUNTERPARTS. In order to facilitate the filing and recording of this
Agreement, the same may be executed in any number of counterparts, each of which
shall be deemed to be an original and all of which together shall constitute one
and the same instrument.
5
<PAGE> 35
IN WITNESS WHEREOF, this Agreement having first been approved by the
resolutions of the Board of Directors of NUKO Information Systems, Inc., a
Delaware corporation, and NUKO Information Systems, Inc., a New York
corporation, is hereby executed on behalf of each of such two corporations and
attested by their respective officers thereunto duly authorized.
NUKO INFORMATION SYSTEMS, INC.,
a Delaware corporation
By: /s/ Pratap Kesav Kondamoori
------------------------------------
Pratap Kesav Kondamoori
Chairman of the Board, President and
Chief Executive Officer
ATTEST:
/s/ John H. Gorman
- ---------------------------------------------------------
John H. Gorman
Secretary
NUKO INFORMATION SYSTEMS, INC.,
a New York corporation
By: /s/ Pratap Kesav Kondamoori
------------------------------------
Pratap Kesav Kondamoori
Chairman of the Board, President and
Chief Executive Officer
ATTEST:
/s/ John H. Gorman
- ---------------------------------------------------------
John H. Gorman
Secretary
6
<PAGE> 36
EXHIBIT B
NUKO DELAWARE CERTIFICATE
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
NUKO INFORMATION SYSTEMS, INC.
NUKO INFORMATION SYSTEMS, INC., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), DOES HEREBY CERTIFY:
1. The Corporation's original Certificate of Incorporation was filed on
November , 1996.
2. That by action taken by unanimous written consent of the Board of
Directors on November , 1996, resolutions were duly adopted setting forth a
proposed amendment and restatement of the Certificate of Incorporation of the
Corporation, declaring said amendment and restatement to be advisable and
directing its officers to submit said amendment and restatement to the sole
stockholder of the Corporation for consideration thereof. The resolution setting
forth the proposed amendment and restatement is as follows:
"THEREFORE, BE IT RESOLVED, that the Certificate of Incorporation of
the Corporation is hereby amended to read in its entirety as follows,
subject to the required consent of the sole stockholder of the corporation:
FIRST: The name of the Corporation (hereinafter the "Corporation") is
NUKO INFORMATION SYSTEMS, INC.
SECOND: The address, including street, number, city and county, of the
registered office of the Corporation in the State of Delaware is 1013
Centre Road, City of Wilmington, County of New Castle; and the name of the
Registered Agent of the Corporation in the State of Delaware is The
Prentice-Hall Corporation System, Inc.
THIRD: The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of Delaware.
FOURTH: The Corporation is authorized to issue two classes of shares
of capital stock to be designated respectively, "Preferred Stock" and
"Common Stock". The total number of shares which the Corporation is
authorized to issue is forty-five million (45,000,000). Five million
(5,000,000) shares shall be Preferred Stock and forty million (40,000,000)
shares shall be Common Stock. The Preferred Stock and the Common Stock
shall each have a par value of $.001 per share.
The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized subject to limitations
prescribed by law, to fix by resolution or resolutions the designations,
powers, preferences and rights, and the qualifications, limitations or
restrictions thereof, of each such series of Preferred Stock, including
without limitation authority to fix by resolution or resolutions, the
dividend rights, dividend rate, conversion rights, voting rights, rights
and terms of redemption (including sinking fund provisions), redemption
price or prices, and liquidation preferences of any wholly unissued series
of Preferred Stock, and the number of shares constituting any such series
and the designation thereof, or any of the foregoing.
The Board of Directors is further authorized to increase (but not
above the total number of authorized shares of the class) or decrease (but
not below the number of shares of any such series then outstanding) the
number of shares of any series, the number of which was fixed by it,
subsequent to the issue of shares of such series then outstanding, subject
to the powers, preferences and rights, and the qualifications, limitations
and restrictions thereof stated in the resolution of the Board of Directors
originally fixing the number of shares of such series. If the number of
shares of any series is so decreased, then the shares constituting such
decrease shall resume the status which they had prior to the adoption of
the resolution originally fixing the number of shares of such series.
<PAGE> 37
FIFTH: The name and the mailing address of the incorporator are as
follows:
<TABLE>
<CAPTION>
NAME MAILING ADDRESS
- -------------- ----------------------------
<S> <C>
Daniel Howard 701 "B" Street, Suite 2100
San Diego, California 92101
</TABLE>
SIXTH: The business and affairs of the Corporation shall be managed by
or under the direction of a Board of Directors consisting of not less than
4 nor more than 11 directors, the exact number of directors to be
determined from time to time solely by resolution adopted by the
affirmative vote of a majority of the entire Board of Directors.
SEVENTH: The Corporation is to have perpetual existence.
EIGHTH: The following provisions are inserted for the management of
the business and the conduct of the affairs of the Corporation and for the
further definition of the powers of the Corporation and its directors and
stockholders:
(1) The Board of Directors shall have the power to adopt, amend or
repeal the by-laws of the Corporation.
The stockholders may adopt, amend or repeal the by-laws only with
the affirmative vote of the holders of not less than 66 2/3% of the
total voting power of all outstanding securities of the Corporation then
entitled to vote generally in the election of directors, voting together
as a single class.
(2) Elections of directors need not be by written ballot unless the
by-laws of the Corporation so provide.
(3) Any action required or permitted to be taken at any annual or
special meeting of stockholders may be taken only upon the vote of
stockholders at an annual or special meeting duly noticed and called in
accordance with Delaware Law, and may not be taken by written consent of
stockholders without a meeting.
(4) Special meetings of stockholders may be called by the Board of
Directors, the Chairman of the Board of Directors, the President or the
Secretary of the Corporation and may not be called by any other person.
Notwithstanding the foregoing, whenever holders of one or more classes
or series of Preferred Stock shall have the right, voting separately as
a class or series, to elect directors, such holders may call special
meetings of such holders pursuant to the certificate of designation for
such classes or series.
NINTH: No director of this Corporation shall 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 involve intentional
misconduct or a knowing violation of the Law, (iii) under Section 174 of
the General Corporation law of Delaware, or (iv) for any transaction from
which the director derived an improper personal benefit."
3. That thereafter, by consent of the sole stockholder of all of the issued
and outstanding shares of stock of the Corporation in accordance with Section
228 of the General Corporation Law of the State of Delaware, all of the shares
of the Corporation were voted in favor of the amendment.
4. That said Amended and Restated Certificate of Incorporation was duly
adopted in accordance with the provisions of Sections 242 and 245 of the General
Corporation Law of the State of Delaware.
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IN WITNESS WHEREOF, NUKO INFORMATION SYSTEMS, INC. has caused this
Certificate to be signed by Pratap Kesav Kondamoori, its President and John H.
Gorman, its Secretary, this day of December, 1996.
NUKO INFORMATION SYSTEMS, INC.
a Delaware corporation
By:
--------------------------------------
Name: Pratap Kesav Kondamoori
Title: President
ATTEST
- ---------------------------------------------------------
Name: John H. Gorman
Title: Secretary
3
<PAGE> 39
EXHIBIT C
FORM OF
BYLAWS
OF
NUKO INFORMATION SYSTEMS, INC.
(A DELAWARE CORPORATION)
<PAGE> 40
BYLAWS OF
NUKO INFORMATION SYSTEMS, INC.
(A DELAWARE CORPORATION)
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I -- CORPORATE OFFICES......................................................... 1
1.1 REGISTERED OFFICE........................................................ 1
1.2 OTHER OFFICES............................................................ 1
ARTICLE II -- MEETINGS OF STOCKHOLDERS................................................. 1
2.1 PLACE OF MEETINGS........................................................ 1
2.2 ANNUAL MEETING........................................................... 1
2.3 SPECIAL MEETING.......................................................... 1
2.4 NOTICE OF STOCKHOLDERS' MEETINGS......................................... 1
2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER BUSINESS.......... 2
2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE............................. 2
2.7 QUORUM................................................................... 2
2.8 ADJOURNED MEETING; NOTICE................................................ 2
2.9 VOTING................................................................... 3
2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING.................. 3
2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING............................... 3
2.12 PROXIES.................................................................. 3
2.13 ORGANIZATION............................................................. 3
2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE.................................... 4
ARTICLE III -- DIRECTORS............................................................... 4
3.1 POWERS................................................................... 4
3.2 NUMBER OF DIRECTORS...................................................... 4
3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS................................. 4
3.4 RESIGNATION AND VACANCIES................................................ 4
3.5 REMOVAL OF DIRECTORS..................................................... 5
3.6 PLACE OF MEETINGS; MEETINGS BY TELEPHONE................................. 5
3.7 FIRST MEETINGS........................................................... 5
3.8 REGULAR MEETINGS......................................................... 5
3.9 SPECIAL MEETINGS; NOTICE................................................. 5
3.10 QUORUM................................................................... 6
3.11 WAIVER OF NOTICE......................................................... 6
3.12 ADJOURNMENT.............................................................. 6
3.13 NOTICE OF ADJOURNMENT.................................................... 6
3.14 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING........................ 6
3.15 FEES AND COMPENSATION OF DIRECTORS....................................... 6
3.16 APPROVAL OF LOANS TO OFFICERS............................................ 6
3.17 SOLE DIRECTOR PROVIDED BY CERTIFICATE OF INCORPORATION................... 7
</TABLE>
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<PAGE> 41
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE IV -- COMMITTEES............................................................... 7
4.1 COMMITTEES OF DIRECTORS.................................................. 7
4.2 MEETINGS AND ACTION OF COMMITTEES........................................ 7
4.3 COMMITTEE MINUTES........................................................ 7
ARTICLE V -- OFFICERS.................................................................. 8
5.1 OFFICERS................................................................. 8
5.2 ELECTION OF OFFICERS..................................................... 8
5.3 SUBORDINATE OFFICERS..................................................... 8
5.4 REMOVAL AND RESIGNATION OF OFFICERS...................................... 8
5.5 VACANCIES IN OFFICES..................................................... 8
5.6 CHAIRMAN OF THE BOARD.................................................... 8
5.7 PRESIDENT................................................................ 9
5.8 VICE PRESIDENTS.......................................................... 9
5.9 SECRETARY................................................................ 9
5.10 CHIEF FINANCIAL OFFICER.................................................. 9
5.11 ASSISTANT SECRETARY...................................................... 10
5.12 ADMINISTRATIVE OFFICERS.................................................. 10
5.13 AUTHORITY AND DUTIES OF OFFICERS......................................... 10
ARTICLE VI -- INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER AGENTS.....
10
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS................................ 10
6.2 INDEMNIFICATION OF OTHERS................................................ 11
6.3 INSURANCE................................................................ 11
ARTICLE VII -- RECORDS AND REPORTS..................................................... 11
7.1 MAINTENANCE AND INSPECTION OF RECORDS.................................... 11
7.2 INSPECTION BY DIRECTORS.................................................. 11
7.3 ANNUAL STATEMENT TO STOCKHOLDERS......................................... 12
7.4 REPRESENTATION OF SHARES OF OTHER CORPORATIONS........................... 12
7.5 CERTIFICATION AND INSPECTION OF BYLAWS................................... 12
ARTICLE VIII -- GENERAL MATTERS........................................................ 12
8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING.................... 12
8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS................................ 12
8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED........................ 12
8.4 STOCK CERTIFICATES; TRANSFER; PARTLY PAID SHARES......................... 13
8.5 SPECIAL DESIGNATION ON CERTIFICATES...................................... 13
8.6 LOST CERTIFICATES........................................................ 13
8.7 TRANSFER AGENTS AND REGISTRARS........................................... 14
8.8 CONSTRUCTION; DEFINITIONS................................................ 14
ARTICLE IX -- AMENDMENTS............................................................... 14
</TABLE>
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BYLAWS
OF
NUKO INFORMATION SYSTEMS, INC.
(A DELAWARE CORPORATION)
ARTICLE I
CORPORATE OFFICES
1.1 Registered Office
The registered office of the corporation shall be fixed in the certificate
of incorporation of the corporation.
1.2 Other Offices
The board of directors may at any time establish branch or subordinate
offices at any place or places where the corporation is qualified to do
business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 Place of Meetings
Meetings of stockholders shall be held at any place within or outside the
State of Delaware designated by the board of directors. In the absence of any
such designation, stockholders' meetings shall be held at the principal
executive office of the corporation.
2.2 Annual Meeting
The annual meeting of stockholders shall be held each year on a date and at
a time designated by the board of directors. In the absence of such designation,
the annual meeting of stockholders shall be held on the third Friday in May in
each year at 3:00 p.m. However, if such day falls on a legal holiday, then the
meeting shall be held at the same time and place on the next succeeding full
business day. At the meeting, directors shall be elected, and any other proper
business may be transacted.
2.3 Special Meeting
Special meetings of the stockholders, for any purpose, or purposes, unless
otherwise prescribed by statute or by the Certificate of Incorporation, may be
called by the Chairman of the Board or the President and shall be called by the
President or the Secretary at the request in writing of the Board of Directors.
Business transacted at any special meeting of stockholders shall be limited to
the purposes stated in the notice.
2.4 Notice of Stockholders' Meetings
Whenever stockholders are required or permitted to take any action at a
meeting, a written notice of the meeting shall be given which notice shall state
the place, date and hour of the meeting, and, in the case of a special meeting,
the purpose or purposes for which the meeting is called. The written notice of
any meeting shall be given to each stockholder entitled to vote at such meeting
not less than ten nor more than sixty days before the date of the meeting. If
mailed, notice is given when deposited in the United States mail, postage
prepaid, directed to the stockholder at his address as it appears on the records
of the corporation. To be properly brought before the meeting, business must be
of a nature that is appropriate for consideration at a meeting of stockholders
and must be (i) specified in the notice of meeting (or any supplement thereto)
given by or at the direction of the Board of Directors, (ii) otherwise properly
brought before the meeting by or at the direction of the Board of Directors, or
(iii) otherwise properly brought before the meeting by a stockholder. In
addition to any other applicable requirements, for business to be properly
brought before a stockholder's meeting by a stockholder, the stockholder must
have given timely notice thereof in writing to the Secretary of the Corporation.
To be timely, each such notice must be given either by personal delivery or by
United States mail, postage prepaid, to the Secretary of the Corporation not
later than (1) with respect to a matter to be
<PAGE> 43
brought before an annual meeting or a special meeting sixty (60) days prior to
the date set forth in the By-Laws for an annual meeting and (2) with respect to
a matter to be brought before a special meeting the close of business on the
tenth day following the date on which notice of such meeting is first given to
stockholders. The notice shall set forth (i) information concerning the
stockholder, including his or her name and address, (ii) a representation that
the stockholder is entitled to vote at such meeting and intends to appear in
person or by proxy at the meeting to present the matter specified in the notice,
and (iii) such other information as would be required to be included in a proxy
statement soliciting proxies for the presentation of such matter to the meeting.
Notwithstanding anything in these By-Laws to the contrary, no business
shall be transacted at an annual meeting except in accordance with the
procedures set forth in this section; provided, however, that nothing in this
section shall be deemed to preclude discussion by any stockholder of any
business properly brought before an annual meeting in accordance with these
By-Laws.
2.5 Advance Notice of Stockholder Nominees and Stockholder Business
To be properly brought before an annual meeting or special meeting,
nominations for the election of directors or other 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) otherwise properly brought before
the meeting by or at the direction of the board of directors or (c) otherwise
properly brought before the meeting by a stockholder.
2.6 Manner of Giving Notice; Affidavit of Notice
Written notice of any meeting of stockholders shall be given either
personally or by first-class mail or by telegraphic or other written
communication. Notices not personally delivered shall be sent charges prepaid
and shall be addressed to the stockholder at the address of that stockholder
appearing on the books of the corporation or given by the stockholder to the
corporation for the purpose of notice. Notice shall be deemed to have been given
at the time when delivered personally or deposited in the mail or sent by
telegram or other means of written communication.
An affidavit of the mailing or other means of giving any notice of any
stockholders' meeting, executed by the secretary, assistant secretary or any
transfer agent of the corporation giving the notice, shall be prima facie
evidence of the giving of such notice.
2.7 Quorum
The holders of a majority in voting power of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum is not present or
represented at any meeting of the stockholders, then either (i) the chairman of
the meeting or (ii) the stockholders entitled to vote thereat, present in person
or represented by proxy, shall have power to adjourn the meeting in accordance
with Section 2.7 of these bylaws.
When a quorum is present at any meeting, the vote of the holders of a
majority of the stock having voting power present in person or represented by
proxy shall decide any question brought before such meeting, unless the question
is one upon which, by express provision of the laws of the State of Delaware or
of the certificate of incorporation or these bylaws, a different vote is
required, in which case such express provision shall govern and control the
decision of the question.
If a quorum be initially present, the stockholders may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum, if any action taken is approved by a
majority of the stockholders initially constituting the quorum.
2.8 Adjourned Meeting; Notice
When a meeting is adjourned to another time and place, unless these bylaws
otherwise require, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the corporation may transact any business that
might have been transacted at the original meeting. If the adjournment is for
more than thirty (30) days, or if
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<PAGE> 44
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting.
2.9 Voting
The stockholders entitled to vote at any meeting of stockholders shall be
determined in accordance with the provisions of Section 2.11 of these bylaws,
subject to the provisions of Sections 217 and 218 of the General Corporation Law
of Delaware (relating to voting rights of fiduciaries, pledgors and joint
owners, and to voting trusts and other voting agreements).
Except as may be otherwise provided in the certificate of incorporation or
these bylaws, each stockholder shall be entitled to one vote for each share of
capital stock held by such stockholder.
2.10 Stockholder Action by Written Consent Without a Meeting
Unless otherwise provided in the Certificate of Incorporation, any action
required to be taken at any annual or special meeting of stockholders of the
corporation, or any action which may be taken at any annual or special meeting
of such stockholders, may not be taken without a meeting.
2.11 Record Date for Stockholder Notice; Voting
For purposes of determining the stockholders entitled to notice of any
meeting or to vote thereat, the board of directors may fix, in advance, a record
date, which shall not precede the date upon which the resolution fixing the
record date is adopted by the board of directors and which shall not be more
than sixty (60) days nor less than ten (10) days before the date of any such
meeting, and in such event only stockholders of record on the date so fixed are
entitled to notice and to vote, notwithstanding any transfer of any shares on
the books of the corporation after the record date.
If the board of directors does not so fix a record date, the record date
for determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the business day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the business day next preceding the day on which the
meeting is held.
A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting
unless the board of directors fixes a new record date for the adjourned meeting,
but the board of directors shall fix a new record date if the meeting is
adjourned for more than thirty (30) days from the date set for the original
meeting.
The record date for any other purpose shall be as provided in Section 8.1
of these bylaws.
2.12 Proxies
Every person entitled to vote for directors, or on any other matter, shall
have the right to do so either in person or by one or more agents authorized by
a written proxy signed by the person and filed with the secretary of the
corporation, but no such proxy shall be voted or acted upon after three (3)
years from its date, unless the proxy provides for a longer period. A proxy
shall be deemed signed if the stockholder's name is placed on the proxy (whether
by manual signature, typewriting, telegraphic transmission, telefacsimile or
otherwise) by the stockholder or the stockholder's attorney-in-fact. The
revocability of a proxy that states on its face that it is irrevocable shall be
governed by the provisions of Section 212(e) of the General Corporation Law of
Delaware.
2.13 Organization
The president, or in the absence of the president, the chairman of the
board, shall call the meeting of the stockholders to order, and shall act as
chairman of the meeting. In the absence of the president, the chairman of the
board, and all of the vice presidents, the stockholders shall appoint a chairman
for such meeting. The chairman of any meeting of stockholders shall determine
the order of business and the procedures at the meeting, including such matters
as the regulation of the manner of voting and the conduct of business. The
secretary of the corporation shall act as secretary of all meetings of the
stockholders, but in the absence of the
3
<PAGE> 45
secretary at any meeting of the stockholders, the chairman of the meeting may
appoint any person to act as secretary of the meeting.
2.14 List of Stockholders Entitled to Vote
The officer who has charge of the stock ledger of the corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any 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 list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
ARTICLE III
DIRECTORS
3.1 Powers
Subject to the provisions of the General Corporation Law of Delaware and to
any limitations in the certificate of incorporation or these bylaws relating to
action required to be approved by the stockholders or by the outstanding shares,
the business and affairs of the corporation shall be managed and all corporate
powers shall be exercised by or under the direction of the board of directors.
3.2 Number of Directors
The board of directors shall consist of five members. The number of
directors may be changed by an amendment to this bylaw, duly adopted by the
board of directors or by the stockholders, or by a duly adopted amendment to the
certificate of incorporation.
3.3 Election and Term of Office of Directors
Except as provided in Section 3.4 of these bylaws, directors shall be
elected at each annual meeting of stockholders to hold office until the next
annual meeting. Each director, including a director elected or appointed to fill
a vacancy, shall hold office until the expiration of the term for which elected
and until a successor has been elected and qualified.
3.4 Resignation and Vacancies
Any director may resign effective on giving written notice to the chairman
of the board, the president, the secretary or the board of directors, unless the
notice specifies a later time for that resignation to become effective. If the
resignation of a director is effective at a future time, the board of directors
may elect a successor to take office when the resignation becomes effective.
Vacancies in the board of directors for any reason, and newly created
directorships, may be filled by a majority of the directors then in office, even
if less than a quorum, or by a sole remaining director.
If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may call a special meeting of stockholders in accordance with
the provisions of the certificate of incorporation or these bylaws, or may apply
to the Court of Chancery for a decree summarily ordering an election as provided
in Section 211 of the General Corporation Law of Delaware.
If, at the time of filling any vacancy or any newly created directorship,
the directors then in office constitute less than a majority of the whole board
(as constituted immediately prior to any such increase), then the Court of
Chancery may, upon application of any stockholder or stockholders holding at
least ten (10)
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<PAGE> 46
percent of the total number of the shares at the time outstanding having the
right to vote for such directors, summarily order an election to be held to fill
any such vacancies or newly created directorships, or to replace the directors
chosen by the directors then in office as aforesaid, which election shall be
governed by the provisions of Section 211 of the General Corporation Law of
Delaware as far as applicable.
3.5 Removal of Directors
Unless otherwise restricted by statute, by the certificate of incorporation
or by these bylaws, any director or the entire board of directors may be
removed, with or without cause, by the holders of a majority of the shares then
entitled to vote at an election of directors; provided, however, that, if and so
long as stockholders of the corporation are entitled to cumulative voting, if
less than the entire board is to be removed, no director may be removed without
cause if the votes cast against his removal would be sufficient to elect him if
then cumulatively voted at an election of the entire board of directors.
3.6 Place of Meetings; Meetings by Telephone
Regular meetings of the board of directors may be held at any place within
or outside the State of Delaware that has been designated from time to time by
resolution of the board. In the absence of such a designation, regular meetings
shall be held at the principal executive office of the corporation. Special
meetings of the board may be held at any place within or outside the State of
Delaware that has been designated in the notice of the meeting or, if not stated
in the notice or if there is no notice, at the principal executive office of the
corporation.
Any meeting of the board, regular or special, may be held by conference
telephone or similar communication equipment, so long as all directors
participating in the meeting can hear one another; and all such participating
directors shall be deemed to be present in person at the meeting.
3.7 First Meetings
The first meeting of each newly elected board of directors shall be held at
such time and place as shall be fixed by the vote of the stockholders at the
annual meeting. In the event of the failure of the stockholders to fix the time
or place of such first meeting of the newly elected board of directors, or in
the event such meeting is not held at the time and place so fixed by the
stockholders, the meeting may be held at such time and place as shall be
specified in a notice given as hereinafter provided for special meetings of the
board of directors, or as shall be specified in a written waiver signed by all
of the directors.
3.8 Regular Meetings
Regular meetings of the board of directors may be held without notice at
such time as shall from time to time be determined by the board of directors. If
any regular meeting day shall fall on a legal holiday, then the meeting shall be
held at the same time and place on the next succeeding full business day.
3.9 Special Meetings; Notice
Special meetings of the board of directors for any purpose or purposes may
be called at any time by the chairman of the board, the president, any vice
president, the secretary or any two directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail,
telecopy or telegram, charges prepaid, addressed to each director at that
director's address as it is shown on the records of the corporation. If the
notice is mailed, it shall be deposited in the United States mail at least four
(4) days before the time of the holding of the meeting. If the notice is
delivered personally or by telephone, telecopy or telegram, it shall be
delivered personally or by telephone or to the telegraph company at least
forty-eight (48) hours before the time of the holding of the meeting. Any oral
notice given personally or by telephone may be communicated either to the
director or to a person at the office of the director who the person giving the
notice has reason to believe will promptly communicate it to the director. The
notice need not specify the purpose or the place of the meeting, if the meeting
is to be held at the principal executive office of the corporation.
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3.10 Quorum
A majority of the authorized number of directors shall constitute a quorum
for the transaction of business, except to adjourn as provided in Section 3.12
of these bylaws. Every act or decision done or made by a majority of the
directors present at a duly held meeting at which a quorum is present shall be
regarded as the act of the board of directors, subject to the provisions of the
certificate of incorporation and applicable law.
A meeting at which a quorum is initially present may continue to transact
business notwithstanding the withdrawal of directors, if any action taken is
approved by at least a majority of the quorum for that meeting.
3.11 Waiver of Notice
Notice of a meeting need not be given to any director (i) who signs a
waiver of notice, whether before or after the meeting, or (ii) who attends the
meeting other than for the express purposed of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. All such waivers shall be filed with the corporate records
or made part of the minutes of the meeting. A waiver of notice need not specify
the purpose of any regular or special meeting of the board of directors.
3.12 Adjournment
A majority of the directors present, whether or not constituting a quorum,
may adjourn any meeting of the board to another time and place.
3.13 Notice of Adjournment
Notice of the time and place of holding an adjourned meeting of the board
need not be given unless the meeting is adjourned for more than twenty-four (24)
hours. If the meeting is adjourned for more than twenty-four (24) hours, then
notice of the time and place of the adjourned meeting shall be given before the
adjourned meeting takes place, in the manner specified in Section 3.9 of these
bylaws, to the directors who were not present at the time of the adjournment.
3.14 Board Action by Written Consent Without a Meeting
Any action required or permitted to be taken by the board of directors may
be taken without a meeting, provided that all members of the board individually
or collectively consent in writing to that action. Such action by written
consent shall have the same force and effect as a unanimous vote of the board of
directors. Such written consent and any counterparts thereof shall be filed with
the minutes of the proceedings of the board of directors.
3.15 Fees and Compensation of Directors
Directors and members of committees may receive such compensation, if any,
for their services and such reimbursement of expenses as may be fixed or
determined by resolution of the board of directors. This Section 3.15 shall not
be construed to preclude any director from serving the corporation in any other
capacity as an officer, agent, employee or otherwise and receiving compensation
for those services.
3.16 Approval of Loans to Officers
The corporation may lend money to, or guarantee any obligation of, or
otherwise assist any officer or other employee of the corporation or any of its
subsidiaries, including any officer or employee who is a director of the
corporation or any of its subsidiaries, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest and may be unsecured, or secured in such manner as the board of
directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing contained in this section shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
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3.17 Sole Director Provided by Certificate of Incorporation
In the event only one director is required by these bylaws or the
certificate of incorporation, then any reference herein to notices, waivers,
consents, meetings or other actions by a majority or quorum of the directors
shall be deemed to refer to such notice, waiver, etc., by such sole director,
who shall have all the rights and duties and shall be entitled to exercise all
of the powers and shall assume all the responsibilities otherwise herein
described as given to the board of directors.
ARTICLE IV
COMMITTEES
4.1 Committees of Directors
The board of directors may, by resolution adopted by a majority of the
authorized number of directors, designate one (1) or more committees, each
consisting of two or more directors, to serve at the pleasure of the board. The
board may designate one (1) or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. The appointment of members or alternate members of a committee
requires the vote of a majority of the authorized number of directors. Any
committee, to the extent provided in the resolution of the board, shall have and
may exercise all the powers and authority of the board, but no such committee
shall have the power or authority to (i) amend the certificate of incorporation
(except that a committee may, to the extent authorized in the resolution or
resolutions providing for the issuance of shares of stock adopted by the board
of directors as provided in Section 151(a) of the General Corporation Law of
Delaware, fix the designations and any of the preferences or rights of such
shares relating to dividends, redemption, dissolution, any distribution of
assets of the corporation or the conversion into, or the exchange of such shares
for, shares of any other class or classes or any other series of the same or any
other class or classes of stock of the corporation), (ii) adopt an agreement of
merger or consolidation under Sections 251 or 252 of the General Corporation Law
of Delaware, (iii) recommend to the stockholders the sale, lease or exchange of
all or substantially all of the corporation's property and assets, (iv)
recommend to the stockholders a dissolution of the corporation or a revocation
of a dissolution or (v) amend the bylaws of the corporation; and, unless the
board resolution establishing the committee, the bylaws or the certificate of
incorporation expressly so provide, no such committee shall have the power or
authority 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 General
Corporation Law of Delaware.
4.2 Meetings and Action of Committees
Meetings and actions of committees shall be governed by, and held and taken
in accordance with, the following provisions of Article III of these bylaws:
Section 3.6 (place of meetings; meetings by telephone), Section 3.8 (regular
meetings), Section 3.9 (special meetings; notice), Section 3.10 (quorum),
Section 3.11 (waiver of notice), Section 3.12 (adjournment), Section 3.13
(notice of adjournment) and Section 3.14 (board action by written consent
without meeting), with such changes in the context of those bylaws as are
necessary to substitute the committee and its members for the board of directors
and its members; provided, however, that the time of regular meetings of
committees may be determined either by resolution of the board of directors or
by resolution of the committee, that special meetings of committees may also be
called by resolution of the board of directors, and that notice of special
meetings of committees shall also be given to all alternate members, who shall
have the right to attend all meetings of the committee. The board of directors
may adopt rules for the government of any committee not inconsistent with the
provisions of these bylaws.
4.3 Committee Minutes
Each committee shall keep regular minutes of its meetings and report the
same to the board of directors when required.
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ARTICLE V
OFFICERS
5.1 Officers
The Corporate Officers of the corporation shall be a president, a secretary
and a chief financial officer. The corporation may also have, at the discretion
of the board of directors, a chairman of the board, one or more vice presidents
(however denominated), one or more assistant secretaries, one or more assistant
treasurers, and such other officers as may be appointed in accordance with the
provisions of Section 5.3 of these bylaws. Any number of offices may be held by
the same person.
In addition to the Corporate Officers of the Company described above, there
may also be such Administrative Officers of the corporation as may be designated
and appointed from time to time by the president of the corporation in
accordance with the provisions of Section 5.12 of these bylaws.
5.2 Election of Officers
The Corporate Officers of the corporation, except such officers as may be
appointed in accordance with the provisions of Section 5.3 or Section 5.5 of
these bylaws, shall be chosen by the board of directors, subject to the rights,
if any, of an officer under any contract of employment, and shall hold their
respective offices for such terms as the board of directors may from time to
time determine.
5.3 Subordinate Officers
The board of directors may appoint, or may empower the president to
appoint, such other Corporate Officers as the business of the corporation may
require, each of whom shall hold office for such period, have such power and
authority, and perform such duties as are provided in these bylaws or as the
board of directors may from time to time determine.
The president may from time to time designate and appoint Administrative
Officers of the corporation in accordance with the provisions of Section 5.12 of
these bylaws.
5.4 Removal and Resignation of Officers
Subject to the rights, if any, of a Corporate Officer under any contract of
employment, any Corporate Officer may be removed, either with or without cause,
by the board of directors at any regular or special meeting of the board or,
except in case of a Corporate Officer chosen by the board of directors, by any
Corporate Officer upon whom such power of removal may be conferred by the board
of directors.
Any Corporate Officer may resign at any time by giving written notice to
the corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the Corporate
Officer is a party.
Any Administrative Officer designated and appointed by the president may be
removed, either with or without cause, at any time by the president. Any
Administrative Officer may resign at any time by giving written notice to the
president or to the secretary of the corporation.
5.5 Vacancies in Offices
A vacancy in any office because of death, resignation, removal,
disqualification or any other cause shall be filled in the manner prescribed in
these bylaws for regular appointments to that office.
5.6 Chairman of the Board
The chairman of the board, if such an officer be elected, shall, if
present, preside at meetings of the board of directors and exercise such other
powers and perform such other duties as may from time to time be assigned to him
by the board of directors or as may be prescribed by these bylaws. If there is
no president, then
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the chairman of the board shall also be the chief executive officer of the
corporation and shall have the powers and duties prescribed in Section 5.7 of
these bylaws.
5.7 President
Subject to such supervisory powers, if any, as may be given by the board of
directors to the chairman of the board, if there be such an officer, the
president shall be the chief executive officer of the corporation and shall,
subject to the control of the board of directors, have general supervision,
direction and control of the business and the officers of the corporation. He or
she shall preside at all meetings of the stockholders and, in the absence or
nonexistence of a chairman of the board, at all meetings of the board of
directors. He or she shall have the general powers and duties of management
usually vested in the office of president of a corporation, and shall have such
other powers and perform such other duties as may be prescribed by the board of
directors or these bylaws.
5.8 Vice Presidents
In the absence or disability of the president, and if there is no chairman
of the board, the vice presidents, if any, in order of their rank as fixed by
the board of directors or, if not ranked, a vice president designated by the
board of directors, shall perform all the duties of the president and when so
acting shall have all the powers of, and be subject to all the restrictions
upon, the president. The vice presidents shall have such other powers and
perform such other duties as from time to time may be prescribed for them
respectively by the board of directors, these bylaws, the president or the
chairman of the board.
5.9 Secretary
The secretary shall keep or cause to be kept, at the principal executive
office of the corporation or such other place as the board of directors may
direct, a book of minutes of all meetings and actions of the board of directors,
committees of directors and stockholders. The minutes shall show the time and
place of each meeting, whether regular or special (and, if special, how
authorized and the notice given), the names of those present at directors'
meetings or committee meetings, the number of shares present or represented at
stockholders' meetings and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal executive
office of the corporation or at the office of the corporation's transfer agent
or registrar, as determined by resolution of the board of directors, a share
register or a duplicate share register, showing the names of all stockholders
and their addresses, the number and classes of shares held by each, the number
and date of certificates evidencing such shares and the number and date of
cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings of
the stockholders and of the board of directors required to be given by law or by
these bylaws. He or she shall keep the seal of the corporation, if one be
adopted, in safe custody and shall have such other powers and perform such other
duties as may be prescribed by the board of directors or by these bylaws.
5.10 Chief Financial Officer
The chief financial officer shall keep and maintain, or cause to be kept
and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings and shares. The books of account shall at all reasonable times
be open to inspection by any director for a purpose reasonably related to his
position as a director.
The chief financial officer shall deposit all money and other valuables in
the name and to the credit of the corporation with such depositaries as may be
designated by the board of directors. He or she shall disburse the funds of the
corporation as may be ordered by the board of directors, shall render to the
president and directors, whenever they request it, an account of all of his or
her transactions as chief financial officer and of the financial condition of
the corporation, and shall have such other powers and perform such other duties
as may be prescribed by the board of directors or these bylaws.
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5.11 Assistant Secretary
The assistant secretary, if any, or, if there is more than one, the
assistant secretaries in the order determined by the board of directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the secretary or in the event of his or her inability or refusal
to act, perform the duties and exercise the powers of the secretary and shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.
5.12 Administrative Officers
In addition to the Corporate Officers of the corporation as provided in
Section 5.1 of these bylaws and such subordinate Corporate Officers as may be
appointed in accordance with Section 5.3 of these bylaws, there may also be such
Administrative Officers of the corporation as may be designated and appointed
from time to time by the president of the corporation. Administrative Officers
shall perform such duties and have such powers as from time to time may be
determined by the president or the board of directors in order to assist the
Corporate Officers in the furtherance of their duties. In the performance of
such duties and the exercise of such powers, however, such Administrative
Officers shall have limited authority to act on behalf of the corporation as the
board of directors shall establish, including but not limited to limitations on
the dollar amount and on the scope of agreements or commitments that may be made
by such Administrative Officers on behalf of the corporation, which limitations
may not be exceeded by such individuals or altered by the president without
further approval by the board of directors.
5.13 Authority and Duties of Officers
In addition to the foregoing powers, authority and duties, all officers of
the corporation shall respectively have such authority and powers and perform
such duties in the management of the business of the corporation as may be
designated from time to time by the board of directors.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES
AND OTHER AGENTS
6.1 Indemnification of Directors and Officers
The corporation shall, to the maximum extent and in the manner permitted by
the General Corporation Law of Delaware as the same now exists or may hereafter
be amended, indemnify any person against expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred in connection with any threatened, pending or completed action, suit,
or proceeding in which such person was or is a party or is threatened to be made
a party by reason of the fact that such person is or was a director or officer
of the corporation. For purposes of this Section 6.1, a "director" or "officer"
of the corporation shall mean any person (i) who is or was a director or officer
of the corporation, (ii) who is or was serving at the request of the corporation
as a director or officer of another corporation, partnership, joint venture,
trust or other enterprise, or (iii) who was a director or officer of a
corporation which was a predecessor corporation of the corporation or of another
enterprise at the request of such predecessor corporation.
The corporation shall be required to indemnify a director or officer in
connection with an action, suit, or proceeding (or part thereof) initiated by
such director or officer only if the initiation of such action, suit, or
proceeding (or part thereof) by the director or officer was authorized by the
board of Directors of the corporation.
The corporation shall pay the expenses (including attorney's fees) incurred
by a director or officer of the corporation entitled to indemnification
hereunder in defending any action, suit or proceeding referred to in this
Section 6.1 in advance of its final disposition; provided, however, that payment
of expenses incurred by a director or officer of the corporation in advance of
the final disposition of such action, suit or proceeding shall be made only upon
receipt of an undertaking by the director or officer to repay all amounts
advanced if it
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should ultimately be determined that the director or officer is not entitled to
be indemnified under this Section 6.1 or otherwise.
The rights conferred on any person by this Article shall not be exclusive
of any other rights which such person may have or hereafter acquire under any
statute, provision of the corporation's Certificate of Incorporation, these
bylaws, agreement, vote of the stockholders or disinterested directors or
otherwise.
Any repeal or modification of the foregoing provisions of this Article
shall not adversely affect any right or protection hereunder of any person in
respect of any act or omission occurring prior to the time of such repeal or
modification.
6.2 Indemnification of Others
The corporation shall have the power, to the maximum extent and in the
manner permitted by the General Corporation Law of Delaware as the same now
exists or may hereafter be amended, to indemnify any person (other than
directors and officers) against expenses (including attorneys' fees), judgments,
fines, and amounts paid in settlement actually and reasonably incurred in
connection with any threatened, pending or completed action, suit, or
proceeding, in which such person was or is a party or is threatened to be made a
party by reason of the fact that such person is or was an employee or agent of
the corporation. For purposes of this Section 6.2, an "employee" or "agent" of
the corporation (other than a director or officer) shall mean any person (i) who
is or was an employee or agent of the corporation, (ii) who is or was serving at
the request of the corporation as an employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, or (iii) who was an
employee or agent of a corporation which was a predecessor corporation of the
corporation or of another enterprise at the request of such predecessor
corporation.
6.3 Insurance
The corporation may purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him or her and incurred
by him or her in any such capacity, or arising out of his or her status as such,
whether or not the corporation would have the power to indemnify him or her
against such liability under the provisions of the General Corporation Law of
Delaware.
ARTICLE VII
RECORDS AND REPORTS
7.1 Maintenance and Inspection of Records
The corporation shall, either at its principal executive office or at such
place or places as designated by the board of directors, keep a record of its
stockholders listing their names and addresses and the number and class of
shares held by each stockholder, a copy of these bylaws as amended to date,
accounting books and other records of its business and properties.
Any stockholder of record, in person or by attorney or other agent, shall,
upon written demand under oath stating the purpose thereof, have the right
during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent to so act on
behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in Delaware or at its principal place of
business.
7.2 Inspection by Directors
Any director shall have the right to examine the corporation's stock
ledger, a list of its stockholders and its other books and records for a purpose
reasonably related to his or her position as a director.
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7.3 Annual Statement to Stockholders
The board of directors shall present at each annual meeting, and at any
special meeting of the stockholders when called for by vote of the stockholders,
a full and clear statement of the business and condition of the corporation.
7.4 Representation of Shares of Other Corporations
The chairman of the board, if any, the president, any vice president, the
chief financial officer, the secretary or any assistant secretary of this
corporation, or any other person authorized by the board of directors or the
president or a vice president, is authorized to vote, represent and exercise on
behalf of this corporation all rights incident to any and all shares of the
stock of any other corporation or corporations standing in the name of this
corporation. The authority herein granted may be exercised either by such person
directly or by any other person authorized to do so by proxy or power of
attorney duly executed by such person having the authority.
7.5 Certification and Inspection of Bylaws
The original or a copy of these bylaws, as amended or otherwise altered to
date, certified by the secretary, shall be kept at the corporation's principal
executive office and shall be open to inspection by the stockholders of the
corporation, at all reasonable times during office hours.
ARTICLE VIII
GENERAL MATTERS
8.1 Record Date for Purposes Other than Notice and Voting
For purposes of determining the stockholders entitled to receive payment of
any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the board of directors may fix, in advance, a record date, which shall not
precede the date upon which the resolution fixing the record date is adopted and
which shall not be more than sixty (60) days before any such action. In that
case, only stockholders of record at the close of business on the date so fixed
are entitled to receive the dividend, distribution or allotment of rights, or to
exercise such rights, as the case may be, notwithstanding any transfer of any
shares on the books of the corporation after the record date so fixed, except as
otherwise provided by law.
If the board of directors does not so fix a record date, then the record
date for determining stockholders for any such purpose shall be at the close of
business on the day on which the board of directors adopts the applicable
resolution.
8.2 Checks; Drafts; Evidences of Indebtedness
From time to time, the board of directors shall determine by resolution
which person or persons may sign or endorse all checks, drafts, other orders for
payment of money, notes or other evidences of indebtedness that are issued in
the name of or payable to the corporation, and only the persons so authorized
shall sign or endorse those instruments.
8.3 Corporate Contracts and Instruments: How Executed
The board of directors, except as otherwise provided in these bylaws, may
authorize and empower any officer or officers, or agent or agents, to enter into
any contract or execute any instrument in the name of and on behalf of the
corporation; such power and authority may be general or confined to specific
instances. Unless so authorized or ratified by the board of directors or within
the agency power of an officer, no officer, agent or employee shall have any
power or authority to bind the corporation by any contract or engagement or to
pledge its credit or to render it liable for any purpose or for any amount.
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8.4 Stock Certificates; Transfer; Partly Paid Shares
The shares of the corporation shall be represented by certificates,
provided that the board of directors of the corporation may provide by
resolution or resolutions that some or all of any or all classes or series of
its stock shall be uncertificated shares. Any such resolution shall not apply to
shares represented by a certificate until such certificate is surrendered to the
corporation. Notwithstanding the adoption of such a resolution by the board of
directors, every holder of stock represented by certificates and, upon request,
every holder of uncertificated shares, shall be entitled to have a certificate
signed by, or in the name of the corporation by, the chairman or vice-chairman
of the board of directors, or the president or vice-president, and by the
treasurer or an assistant treasurer, or the secretary or an assistant secretary
of such corporation representing the number of shares registered in certificate
form. Any or all of the signatures on the certificate may be a facsimile. In
case any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate has ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the corporation with the same effect as if he or she were such officer,
transfer agent or registrar at the date of issue.
Certificates for shares shall be of such form and device as the board of
directors may designate and shall state the name of the record holder of the
shares represented thereby; its number; date of issuance; the number of shares
for which it is issued; a summary statement or reference to the powers,
designations, preferences or other special rights of such stock and the
qualifications, limitations or restrictions of such preferences and/or rights,
if any; a statement or summary of liens, if any; a conspicuous notice of
restrictions upon transfer or registration of transfer, if any; a statement as
to any applicable voting trust agreement; if the shares be assessable, or, if
assessments are collectible by personal action, a plain statement of such facts.
Upon surrender to the secretary or transfer agent of the corporation of a
certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.
The corporation may issue the whole or any part of its shares as partly
paid and subject to call for the remainder of the consideration to be paid
therefor. Upon the face or back of each stock certificate issued to represent
any such partly paid shares, or upon the books and records of the corporation in
the case of uncertificated partly paid shares, the total amount of the
consideration to be paid therefor and the amount paid thereon shall be stated.
Upon the declaration of any dividend on fully paid shares, the corporation shall
declare a dividend upon partly paid shares of the same class, but only upon the
basis of the percentage of the consideration actually paid thereon.
8.5 Special Designation on Certificates
If the corporation is authorized to issue more than one class of stock or
more than one series of any class, then the powers, the designations, the
preferences and the 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 shall be set forth in full or
summarized on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock; provided, however, that,
except as otherwise provided in Section 202 of the General Corporation Law of
Delaware, in lieu of the foregoing requirements there may be set forth on the
face or back of the certificate that the corporation shall issue to represent
such class or series of stock a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, the designations,
the preferences and the 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.
8.6 Lost Certificates
Except as provided in this Section 8.6, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and cancelled at the same time. The board of
directors may, in case any share certificate or certificate for any other
security is lost, stolen or destroyed, authorize the issuance of replacement
certificates on such terms and conditions as the board may require; the
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board may require indemnification of the corporation secured by a bond or other
adequate security sufficient to protect the corporation against any claim that
may be made against it, including any expense or liability, on account of the
alleged loss, theft or destruction of the certificate or the issuance of the
replacement certificate.
8.7 Transfer Agents and Registrars
The board of directors may appoint one or more transfer agents or transfer
clerks, and one or more registrars, each of which shall be an incorporated bank
or trust company -- either domestic or foreign, who shall be appointed at such
times and places as the requirements of the corporation may necessitate and the
board of directors may designate.
8.8 Construction; Definitions
Unless the context requires otherwise, the general provisions, rules of
construction and definitions in the General Corporation Law of Delaware shall
govern the construction of these bylaws. Without limiting the generality of this
provision, as used in these bylaws, the singular number includes the plural, the
plural number includes the singular, and the term "person" includes both an
entity and a natural person.
ARTICLE IX
AMENDMENTS
The original or other bylaws of the corporation may be adopted, amended or
repealed by the stockholders entitled to vote; provided, however, that the
corporation may, in its certificate of incorporation, confer the power to adopt,
amend or repeal bylaws upon the directors. The fact that such power has been so
conferred upon the directors shall not divest the stockholders of the power, nor
limit their power to adopt, amend or repeal bylaws.
Whenever an amendment or new bylaw is adopted, it shall be copied in the
book of bylaws with the original bylaws, in the appropriate place. If any bylaw
is repealed, the fact of repeal with the date of the meeting at which the repeal
was enacted or the filing of the operative written consent(s) shall be stated in
said book.
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EXHIBIT D
NUKO INFORMATION SYSTEMS, INC.
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is effective as of this day of
December, 19 , by and between NUKO Information Systems, Inc., a
Delaware corporation (the "Company" or "NUKO"), and ("Indemnitee").
WHEREAS, the Company and Indemnitee recognize the continued difficulty in
obtaining liability insurance for its directors, officers, employees, agents and
fiduciaries, the significant increases in the cost of such insurance and the
general reductions in the coverage of such insurance;
WHEREAS, the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting directors, officers,
employees, agents and fiduciaries to expensive litigation risks at the same time
as the availability and coverage of liability insurance has been severely
limited;
WHEREAS, Indemnitee does not regard the current protection available as
adequate under the present circumstances, and the Indemnitee and other
directors, officers, employees, agents and fiduciaries of the Company may not be
willing to continue to serve in such capacities without additional protection;
WHEREAS, the Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve the Company and, in part, in
order to induce Indemnitee to continue to provide services to the Company,
wishes to provide for the indemnification and advancing of expenses to
Indemnitee to the maximum extent permitted by law; and
WHEREAS, in view of the considerations set forth above, the Company desires
that Indemnitee shall be indemnified by the Company as set forth herein.
NOW, THEREFORE, the Company and Indemnitee hereby agree as follows:
1. Indemnification.
(a) Indemnification of Expenses. The Company shall indemnify
Indemnitee to the fullest extent permitted by law if Indemnitee was or is
or becomes a party to or witness or other participant in, or is threatened
to be made a party to or witness or other participant in, any threatened,
pending or completed action, suit, proceeding or alternative dispute
resolution mechanism, or any hearing, inquiry or investigation that
Indemnitee in good faith believes might lead to the institution of any such
action, suit, proceeding or alternative dispute resolution mechanism,
whether civil, criminal, administrative, investigative or other
(hereinafter a "Claim") by reason of (or arising in part out of) any event
or occurrence related to the fact that Indemnitee is or was a director,
officer, employee, agent or fiduciary of the Company, or any subsidiary of
the Company, or is or was serving at the request of the Company as a
director, officer, employee, agent or fiduciary of another corporation,
partnership, joint venture, trust or other enterprise, or by reason of any
action or inaction on the part of Indemnitee while serving in such capacity
(hereinafter an "Indemnifiable Event") against any and all expenses
(including attorneys' fees and all other costs, expenses and obligations
incurred in connection with investigating, defending, being a witness in or
participating in (including on appeal), or preparing to defend, be a
witness in or participate in, any such action, suit, proceeding,
alternative dispute resolution mechanism, hearing, inquiry or
investigation), judgments, fines, penalties and amounts paid in settlement
(if such settlement is approved in advance by the Company, which approval
shall not be unreasonably withheld) of such Claim and any federal, state,
local or foreign taxes imposed on the Indemnitee as a result of the actual
or deemed receipt of any payments under this Agreement (collectively,
hereinafter "Expenses"), including all interest, assessments and other
charges paid or payable in connection with or in respect of such Expenses.
Such payment of Expenses shall be made by the Company as soon as
practicable but in any event no later than five (5) days after written
demand by Indemnitee therefor is presented to the Company.
<PAGE> 57
(b) Reviewing Party. Notwithstanding the foregoing, (i) the
obligations of the Company under Section 1(a) shall be subject to the
condition that the Reviewing Party (as described in Section 10(f) hereof)
shall not have determined (in a written opinion, in any case in which the
Independent Legal Counsel referred to in Section 1(c) hereof is involved)
that Indemnitee would not be permitted to be indemnified under applicable
law, and (ii) the obligation of the Company to make an advance payment of
Expenses to Indemnitee pursuant to Section 2(a) (an "Expense Advance")
shall be subject to the condition that, if, when and to the extent that the
Reviewing Party determines that Indemnitee would not be permitted to be so
indemnified under applicable law, the Company shall be entitled to be
reimbursed by Indemnitee (who hereby agrees to reimburse the Company) for
all such amounts theretofore paid; provided, however, that if Indemnitee
has commenced or thereafter commences legal proceedings in a court of
competent jurisdiction to secure a determination that Indemnitee should be
indemnified under applicable law, any determination made by the Reviewing
Party that Indemnitee would not be permitted to be indemnified under
applicable law shall not be binding and Indemnitee shall not be required to
reimburse the Company for any Expense Advance until a final judicial
determination is made with respect thereto (as to which all rights of
appeal therefrom have been exhausted or lapsed). Indemnitee's obligation to
reimburse the Company for any Expense Advance shall be unsecured and no
interest shall be charged thereon. If there has not been a Change in
Control (as defined in Section 10(c) hereof), the Reviewing Party shall be
selected by the Board of Directors, and if there has been such a Change in
Control (other than a Change in Control which has been approved by a
majority of the Company's Board of Directors who were directors immediately
prior to such Change in Control), the Reviewing Party shall be the
Independent Legal Counsel referred to in Section 1(c) hereof. If there has
been no determination by the Reviewing Party or if the Reviewing Party
determines that Indemnitee substantively would not be permitted to be
indemnified in whole or in part under applicable law, Indemnitee shall have
the right to commence litigation seeking an initial determination by the
court or challenging any such determination by the Reviewing Party or any
aspect thereof, including the legal or factual bases therefor, and the
Company hereby consents to service of process and to appear in any such
proceeding. Any determination by the Reviewing Party otherwise shall be
conclusive and binding on the Company and Indemnitee.
(c) Change in Control. The Company agrees that if there is a Change
in Control of the Company (other than a Change in Control which has been
approved by a majority of the Company's Board of Directors who were
directors immediately prior to such Change in Control) then with respect to
all matters thereafter arising concerning the rights of Indemnitee to
payments of Expenses and Expense Advances under this Agreement or any other
agreement or under the Company's Certificate of Incorporation or Bylaws as
now or hereafter in effect, Independent Legal Counsel (as defined in
Section 10(d) hereof) shall be selected by Indemnitee and approved by the
Company (which approval shall not be unreasonably withheld). Such counsel,
among other things, shall render its written opinion to the Company and
Indemnitee as to whether and to what extent Indemnitee would be permitted
to be indemnified under applicable law and the Company agrees to abide by
such opinion. The Company agrees to pay the reasonable fees of the
Independent Legal Counsel referred to above and to fully indemnify such
counsel against any and all expenses (including attorneys' fees), claims,
liabilities and damages arising out of or relating to this Agreement or its
engagement pursuant hereto.
(d) Establishment of Trust. In the event of a Potential Change in
Control (as defined in Section 10(e) hereof), the Company shall, upon
written request by Indemnitee, create a trust for the benefit of Indemnitee
and, from time to time upon written request of Indemnitee, shall fund such
trust in an amount sufficient to satisfy any and all Expenses reasonably
anticipated at the time of each such request to be incurred in connection
with investigating, preparing for and defending any Claim relating to an
Indemnifiable Event, and any and all judgments, fines, penalties and
settlement amounts of any and all Claims relating to an Indemnifiable Event
from time to time actually paid or claimed, reasonably anticipated or
proposed to be paid, provided that in no event shall more than $
be required to be deposited in any trust created hereunder in excess of
amounts deposited in respect of reasonably anticipated Expenses. The amount
or amounts to be deposited in the trust pursuant to the foregoing funding
obligation shall be determined by the Reviewing Party, in any case in which
the Independent Legal Counsel referred to above is involved. The terms of
the trust shall provide that upon a Change of
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<PAGE> 58
Control (i) the trust shall not be revoked or the principal thereof
invaded, without the written consent of Indemnitee, (ii) the trustee shall
advance, within five (5) business days of a request by Indemnitee, any and
all Expenses to Indemnitee (and Indemnitee hereby agrees to reimburse the
trust under the circumstances under which Indemnitee would be required to
reimburse the Company under Section 1(b) of this Agreement), (iii) the
trust shall continue to be funded by the Company in accordance with the
funding obligation set forth above, (iv) the trustee shall promptly pay to
Indemnitee all amounts for which Indemnitee shall be entitled to
indemnification pursuant to this Agreement or otherwise, and (v) all
unexpended funds in such trust shall revert to the Company upon a final
determination by the Reviewing Party or a court of competent jurisdiction,
as the case may be, that Indemnitee has been fully indemnified under the
terms of this Agreement. The trustee shall be chosen by Indemnitee. Nothing
in this Section 1(d) shall relieve the Company of any of its obligations
under this Agreement.
(e) Mandatory Payment of Expenses. Notwithstanding any other
provision of this Agreement other than Section 9 hereof, to the extent that
Indemnitee has been successful on the merits or otherwise, including,
without limitation, the dismissal of an action without prejudice, in
defense of any action, suit, proceeding, inquiry or investigation referred
to in Section (1)(a) hereof or in the defense of any claim, issue or matter
therein, Indemnitee shall be indemnified against all Expenses incurred by
Indemnitee in connection therewith.
2. Expenses; Indemnification Procedure.
(a) Advancement of Expenses. The Company shall advance all Expenses
incurred by Indemnitee. The advances to be made hereunder shall be paid by
the Company to Indemnitee as soon as practicable but in any event no later
than five (5) days after written demand by Indemnitee therefor to the
Company.
(b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a
condition precedent to Indemnitee's right to be indemnified under this
Agreement, give the Company notice in writing as soon as practicable of any
Claim made against Indemnitee for which indemnification will or could be
sought under this Agreement. Notice to the Company shall be directed to the
Chief Executive Officer of the Company at the address shown on the
signature page of this Agreement (or such other address as the Company
shall designate in writing to Indemnitee). In addition, Indemnitee shall
give the Company such information and cooperation as it may reasonably
require and as shall be within Indemnitee's power.
(c) No Presumptions; Burden of Proof. For purposes of this Agreement,
the termination of any Claim by judgment, order, settlement (whether with
or without court approval) or conviction, or upon a plea of nolo
contendere, or its equivalent, shall not create a presumption that
Indemnitee did not meet any particular standard of conduct or have any
particular belief or that a court has determined that indemnification is
not permitted by applicable law. In addition, neither the failure of the
Reviewing Party to have made a determination as to whether Indemnitee has
met any particular standard of conduct or had any particular belief, nor an
actual determination by the Reviewing Party that Indemnitee has not met
such standard of conduct or did not have such belief, prior to the
commencement of legal proceedings by Indemnitee to secure a judicial
determination that Indemnitee should be indemnified under applicable law,
shall be a defense to Indemnitee's claim or create a presumption that
Indemnitee has not met any particular standard of conduct or did not have
any particular belief. In connection with any determination by the
Reviewing Party or otherwise as to whether the Indemnitee is entitled to be
indemnified hereunder, the burden of proof shall be on the Company to
establish that Indemnitee is not so entitled.
(d) Notice to Insurers. If, at the time of the receipt by the Company
of a notice of a Claim pursuant to Section 2(b) hereof, the Company has
liability insurance in effect which may cover such Claim, the Company shall
give prompt notice of the commencement of such Claim to the insurers in
accordance with the procedures set forth in the respective policies. The
Company shall thereafter take all necessary or desirable action to cause
such insurers to pay, on behalf of the Indemnitee, all amounts payable as a
result of such action, suit, proceeding, inquiry or investigation in
accordance with the terms of such policies.
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<PAGE> 59
(e) Selection of Counsel. In the event the Company shall be obligated
hereunder to pay the Expenses of any Claim the Company, if appropriate,
shall be entitled to assume the defense of such Claim with counsel approved
by Indemnitee, upon the delivery to Indemnitee of written notice of its
election so to do. After delivery of such notice, approval of such counsel
by Indemnitee and the retention of such counsel by the Company, the Company
will not be liable to Indemnitee under this Agreement for any fees of
counsel subsequently incurred by Indemnitee with respect to the same Claim;
provided that, (i) Indemnitee shall have the right to employ Indemnitee's
counsel in any such Claim at Indemnitee's expense and (ii) if (A) the
employment of counsel by Indemnitee has been previously authorized by the
Company, (B) Indemnitee shall have reasonably concluded that there may be a
conflict of interest between the Company and Indemnitee in the conduct of
any such defense, or (C) the Company shall not continue to retain such
counsel to defend such Claim, then the fees and expenses of Indemnitee's
counsel shall be at the expense of the Company.
3. Additional Indemnification Rights; Nonexclusivity.
(a) Scope. The Company hereby agrees to indemnify the Indemnitee to
the fullest extent permitted by law, notwithstanding that such
indemnification is not specifically authorized by the other provisions of
this Agreement, the Company's Certificate of Incorporation, the Company's
Bylaws or by statute. In the event of any change after the date of this
Agreement in any applicable law, statute or rule which expands the right of
a Delaware corporation to indemnify a member of its board of directors or
an officer, employee, agent or fiduciary, it is the intent of the parties
hereto that Indemnitee shall enjoy by this Agreement the greater benefits
afforded by such change. In the event of any change in any applicable law,
statute or rule which narrows the right of a Delaware corporation to
indemnify a member of its board of directors or an officer, employee, agent
or fiduciary, such change, to the extent not otherwise required by such
law, statute or rule to be applied to this Agreement, shall have no effect
on this Agreement or the parties' rights and obligations hereunder except
as set forth in Section 8(a) hereof.
(b) Nonexclusivity. The indemnification provided by this Agreement
shall be in addition to any rights to which Indemnitee may be entitled
under the Company's Certificate of Incorporation, its Bylaws, any
agreement, any vote of stockholders or disinterested directors, the General
Corporation Law of the State of Delaware, or otherwise. The indemnification
provided under this Agreement shall continue as to Indemnitee for any
action taken or not taken while serving in an indemnified capacity even
though Indemnitee may have ceased to serve in such capacity.
4. No Duplication of Payments. The Company shall not be liable under this
Agreement to make any payment in connection with any Claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, Certificate of Incorporation, Bylaw or otherwise)
of the amounts otherwise indemnifiable hereunder.
5. Partial Indemnification. If Indemnitee is entitled under any provision
of this Agreement to indemnification by the Company for some or a portion of
Expenses incurred in connection with any Claim, but not, however, for all of the
total amount thereof, the Company shall nevertheless indemnify Indemnitee for
the portion of such Expenses to which Indemnitee is entitled.
6. Mutual Acknowledgment. Both the Company and Indemnitee acknowledge that
in certain instances, Federal law or applicable public policy may prohibit the
Company from indemnifying its directors, officers, employees, agents or
fiduciaries under this Agreement or otherwise. Indemnitee understands and
acknowledges that the Company has undertaken or may be required in the future to
undertake with the Securities and Exchange Commission to submit the question of
indemnification to a court in certain circumstances for a determination of the
Company's right under public policy to indemnify Indemnitee.
7. Liability Insurance. To the extent the Company maintains liability
insurance applicable to directors, officers, employees, agents or fiduciaries,
Indemnitee shall be covered by such policies in such a manner as to provide
Indemnitee the same rights and benefits as are accorded to the most favorably
insured of the Company's directors, if Indemnitee is a director; or of the
Company's officers, if Indemnitee is not a director
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<PAGE> 60
of the Company but is an officer; or of the Company's key employees, agents or
fiduciaries, if Indemnitee is not an officer or director but is a key employee,
agent or fiduciary.
8. Exceptions. Any other provision herein to the contrary notwithstanding,
the Company shall not be obligated pursuant to the terms of this Agreement:
(a) Excluded Action or Omissions. To indemnify Indemnitee for acts,
omissions or transactions from which Indemnitee may not be relieved of
liability under applicable law.
(b) Claims Initiated by Indemnitee. To indemnify or advance expenses
to Indemnitee with respect to Claims initiated or brought voluntarily by
Indemnitee and not by way of defense, except (i) with respect to actions or
proceedings brought to establish or enforce a right to indemnification
under this Agreement or any other agreement or insurance policy or under
the Company's Certificate of Incorporation or Bylaws now or hereafter in
effect relating to Claims for Indemnifiable Events, (ii) in specific cases
if the Board of Directors has approved the initiation or bringing of such
Claim, or (iii) as otherwise as required under Section 145 of the Delaware
General Corporation Law, regardless of whether Indemnitee ultimately is
determined to be entitled to such indemnification, advance expense payment
or insurance recovery, as the case may be.
(c) Lack of Good Faith. To indemnify Indemnitee for any expenses
incurred by the Indemnitee with respect to any proceeding instituted by
Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by the
Indemnitee in such proceeding was not made in good faith or was frivolous;
or
(d) Claims Under Section 16(b). To indemnify Indemnitee for expenses
and the payment of profits arising from the purchase and sale by Indemnitee
of securities in violation of Section 16(b) of the Securities Exchange Act
of 1934, as amended, or any similar successor statute.
9. Period of Limitations. No legal action shall be brought and no cause of
action shall be asserted by or in the right of the Company against Indemnitee,
Indemnitee's estate, spouse, heirs, executors or personal or legal
representatives after the expiration of two years from the date of accrual of
such cause of action, and any claim or cause of action of the Company shall be
extinguished and deemed released unless asserted by the timely filing of a legal
action within such two-year period; provided, however, that if any shorter
period of limitations is otherwise applicable to any such cause of action, such
shorter period shall govern.
10. Construction of Certain Phrases.
(a) For purposes of this Agreement, references to the "Company" shall
include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
employees, agents or fiduciaries, so that if Indemnitee is or was a
director, officer, employee, agent or fiduciary of such constituent
corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee, agent or fiduciary of another
corporation, partnership, joint venture, employee benefit plan, trust or
other enterprise, Indemnitee shall stand in the same position under the
provisions of this Agreement with respect to the resulting or surviving
corporation as Indemnitee would have with respect to such constituent
corporation if its separate existence had continued.
(b) For purposes of this Agreement, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include
any excise taxes assessed on Indemnitee with respect to an employee benefit
plan; and references to "serving at the request of the Company" shall
include any service as a director, officer, employee, agent or fiduciary of
the Company which imposes duties on, or involves services by, such
director, officer, employee, agent or fiduciary with respect to an employee
benefit plan, its participants or its beneficiaries; and if Indemnitee
acted in good faith and in a manner Indemnitee reasonably believed to be in
the interest of the participants and beneficiaries of an employee benefit
plan, Indemnitee shall be deemed to have acted in a manner "not opposed to
the best interests of the Company" as referred to in this Agreement.
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<PAGE> 61
(c) For purposes of this Agreement a "Change in Control" shall be
deemed to have occurred if (i) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended), other than a trustee or other fiduciary holding securities under
an employee benefit plan of the Company or a corporation owned directly or
indirectly by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing more than [20%] of
the total voting power represented by the Company's then outstanding Voting
Securities, (ii) during any period of two consecutive years, individuals
who at the beginning of such period constitute the Board of Directors of
the Company and any new director whose election by the Board of Directors
or nomination for election by the Company's stockholders was approved by a
vote of at least two thirds ( 2/3) of the directors then still in office
who either were directors at the beginning of the period or whose election
or nomination for election was previously so approved, cease for any reason
to constitute a majority thereof, or (iii) the stockholders of the Company
approve a merger or consolidation of the Company with any other corporation
other than a merger or consolidation which would result in the Voting
Securities of the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into
Voting Securities of the surviving entity) at least [80%] of the total
voting power represented by the Voting Securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation, or the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of (in one transaction or a series of
transactions) all of substantially all of the Company's assets.
(d) For purposes of this Agreement, "Independent Legal Counsel" shall
mean an attorney or firm of attorneys, selected in accordance with the
provisions of Section 1(c) hereof, who shall not have otherwise performed
services for the Company or Indemnitee within the last three years (other
than with respect to matters concerning the rights of Indemnitee under this
Agreement, or of other indemnitees under similar indemnity agreements).
(e) For purposes of this Agreement, a "Potential Change in Control"
shall be deemed to have occurred if: (i) the Company enters into an
agreement, the consummation of which would result in the occurrence of a
Change in Control, (ii) any person (including the Company) publicly
announces an intention to take or to consider taking actions which, if
consummated, would constitute a Change in Control, or (iii) any person,
other than a trustee or other fiduciary holding securities under an
employee benefit plan of the Company acting in such capacity or a
corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock
of the Company, who is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing [9.5%] or more of the
combined voting power of the Company's then outstanding Voting Securities,
increases his beneficial ownership of such securities by [five percentage
points (5%)] or more over the percentage so owned by such person; or (iv)
the Board of Directors adopts a resolution to the effect that, for purposes
of this Agreement, a Potential Change in Control has occurred.
(f) For purposes of this Agreement, a "Reviewing Party" shall mean any
appropriate person or body consisting of a member or members of the
Company's Board of Directors or any other person or body appointed by the
Board of Directors who is not a party to the particular Claim for which
Indemnitee is seeking indemnification, or Independent Legal Counsel.
(g) For purposes of this Agreement, "Voting Securities" shall mean any
securities of the Company that vote generally in the election of directors.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
12. Binding Effect; Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors, assigns, including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company, spouses, heirs,
and personal and legal representatives. The Company shall
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<PAGE> 62
require and cause any successor (whether direct or indirect by purchase, merger,
consolidation or otherwise) to all, substantially all, or a substantial part, of
the business and/or assets of the Company, by written agreement in form and
substance satisfactory to Indemnitee, expressly to assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform if no such succession had taken place. This Agreement
shall continue in effect regardless of whether Indemnitee continues to serve as
a director or officer of the Company or of any other enterprise at the Company's
request.
13. Attorneys' Fees. In the event that any action is instituted by
Indemnitee under this Agreement or under any liability insurance policies
maintained by the Company to enforce or interpret any of the terms hereof or
thereof, Indemnitee shall be entitled to be paid all Expenses incurred by
Indemnitee with respect to such action, regardless of whether Indemnitee is
ultimately successful in such action, and shall be entitled to the advancement
of Expenses with respect to such action, unless as a part of such action a court
of competent jurisdiction over such action determines that each of the material
assertions made by Indemnitee as a basis for such action were not made in good
faith or were frivolous. In the event of an action instituted by or in the name
of the Company under this Agreement to enforce or interpret any of the terms of
this Agreement, Indemnitee shall be entitled to be paid all Expenses incurred by
Indemnitee in defense of such action (including costs and expenses incurred with
respect to Indemnitee's counterclaims and cross-claims made in such action), and
shall be entitled to the advancement Expenses with respect to such action,
unless as a part of such action a court having jurisdiction over such action
determines that each of Indemnitee's material defenses to such action were made
in bad faith or were frivolous.
14. Notice. All notices, requests, demands and other communications under
this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and signed for by the party addressed, on the date of such
delivery, or (ii) if mailed by domestic certified or registered mail with
postage prepaid, on the third business day after the date postmarked. Addresses
for notice to either party are as shown on the signature page of this Agreement,
or as subsequently modified by written notice.
15. Consent to Jurisdiction. The Company and Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the State of Delaware
for all purposes in connection with any action or proceeding which arises out of
or relates to this Agreement and agree that any action instituted under this
Agreement shall be commenced, prosecuted and continued only in the Court of
Chancery of the State of Delaware in and for New Castle County, which shall be
the exclusive and only proper forum for adjudicating such a claim.
16. Severability. The provisions of this Agreement shall be severable in
the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.
Furthermore, to the fullest extent possible, the provisions of this Agreement
(including, without limitations, each portion of this Agreement containing any
provision held to be invalid, void or otherwise unenforceable, that is not
itself invalid, void or unenforceable) shall be construed so as to give effect
to the intent manifested by the provision held invalid, illegal or
unenforceable.
17. Choice of Law. This Agreement shall be governed by and its provisions
construed and enforced in accordance with the laws of the State of Delaware, as
applied to contracts between Delaware residents, entered into and to be
performed entirely within the State of Delaware, without regard to the conflict
of laws principles thereof.
18. Subrogation. In the event of payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all documents required and shall do
all acts that may be necessary to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.
19. Amendment and Termination. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless it is in writing signed
by both the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.
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20. Integration and Entire Agreement. This Agreement sets forth the entire
understanding between the parties hereto and supersedes and merges all previous
written and oral negotiations, commitments, understandings and agreements
relating to the subject matter hereof between the parties hereto.
21. No Construction as Employment Agreement. Nothing contained in this
Agreement shall be construed as giving Indemnitee any right to be retained in
the employ of the Company or any of its subsidiaries.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
NUKO INFORMATION SYSTEMS, INC.
By:
Title:
Address:
AGREED TO AND ACCEPTED
INDEMNITEE:
(Signature)
(Name of Indemnitee)
(Address)
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EXHIBIT E
NUKO INFORMATION SYSTEMS, INC.
1996 STOCK OPTION PLAN
(AS AMENDED AND RESTATED NOVEMBER 7, 1996)
1. Purposes of the Plan. The purposes of this Stock Plan are:
- to attract and retain the best available personnel for positions of
substantial responsibility,
- to provide additional incentive to Employees and Consultants, and
- to promote the success of the Company's business.
All Options granted under the Plan will be Nonstatutory Stock Options.
Stock Purchase Rights may also be granted under the Plan.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees as shall
be administering the Plan, in accordance with Section 4 of the Plan.
(b) "Applicable Laws" means the requirements relating to the
administration of stock option plans under U. S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or
quotation system on which the Common Stock is listed or quoted and the
applicable laws of any foreign country or jurisdiction where Options or
Stock Purchase Rights are, or will be, granted under the Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means a committee of Directors appointed by the Board
in accordance with Section 4 of the Plan.
(f) "Common Stock" means the Common Stock of the Company.
(g) "Company" means Nuko Information Systems, Inc., a Delaware
corporation.
(h) "Consultant" means any person, including an advisor, engaged by
the Company or a Parent or Subsidiary to render services to such entity.
(i) "Director" means a member of the Board.
(j) "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(k) "Employee" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. A
Service Provider shall not cease to be an Employee in the case of (i) any
leave of absence approved by the Company or (ii) transfers between
locations of the Company or between the Company, its Parent, any
Subsidiary, or any successor. Neither service as a Director nor payment of
a director's fee by the Company shall be sufficient to constitute
"employment" by the Company.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(m) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:
(i) 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
<PAGE> 65
market trading day prior to the time of determination, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market
Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on the last market trading day
prior to the day of determination, as reported in The Wall Street
Journal or such other source as the Administrator deems reliable;
(iii) In the absence of an established market for the Common Stock,
the Fair Market Value shall be determined in good faith by the
Administrator.
(n) "Nonstatutory Stock Option" means an Option not intended to
qualify as an incentive stock option within the meaning of Section 422 of
the Code and the regulation promulgated thereunder.
(o) "Notice of Grant" means a written or electronic notice evidencing
certain terms and conditions of an individual Option or Stock Purchase
Right grant. The Notice of Grant is part of the Option Agreement.
(p) "Officer" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(q) "Option" means a stock option granted pursuant to the Plan.
(r) "Option Agreement" means an agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant.
The Option Agreement is subject to the terms and conditions of the Plan.
(s) "Option Exchange Program" means a program whereby outstanding
options are surrendered in exchange for options with a lower exercise
price.
(t) "Optioned Stock" means the Common Stock subject to an Option or
Stock Purchase Right.
(u) "Optionee" means the holder of an outstanding Option or Stock
Purchase Right granted under the Plan.
(v) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(w) "Plan" means this 1996 Stock Option Plan.
(x) "Restricted Stock" means shares of Common Stock acquired pursuant
to a grant of Stock Purchase Rights under Section 11 below.
(y) "Restricted Stock Purchase Agreement" means a written agreement
between the Company and the Optionee evidencing the terms and restrictions
applying to stock purchased under a Stock Purchase Right. The Restricted
Stock Purchase Agreement is subject to the terms and conditions of the Plan
and the Notice of Grant.
(z) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any successor
to Rule 16b-3, as in effect when discretion is being exercised with respect
to the Plan.
(aa) "Section 16(b)" means Section 16(b) of the Exchange Act.
(bb) "Service Provider" means an Employee or Consultant.
(cc) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 13 of the Plan.
(dd) "Stock Purchase Right" means the right to purchase Common Stock
pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.
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(ee) "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 13 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 2,500,000 Shares. The Shares may be authorized, but unissued,
or reacquired Common Stock.
If an Option or Stock Purchase Right expires or becomes unexercisable
without having been exercised in full, or is surrendered pursuant to an Option
Exchange Program, the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated); provided, however, that Shares that have actually been issued under
the Plan, whether upon exercise of an Option or Right, shall not be returned to
the Plan and shall not become available for future distribution under the Plan,
except that if Shares of Restricted Stock are repurchased by the Company at
their original purchase price, such Shares shall become available for future
grant under the Plan.
4. Administration of the Plan.
(a) Procedure.
(i) Multiple Administrative Bodies. The Plan may be administered
by different Committees with respect to different groups of Service
Providers.
(ii) Section 162(m). To the extent that the Administrator
determines it to be desirable to qualify Options granted hereunder as
"performance-based compensation" within the meaning of Section 162(m) of
the Code, the Plan shall be administered by a Committee of two or more
"outside directors" within the meaning of Section 162(m) of the Code.
(iii) Rule 16b-3. To the extent desirable to qualify transactions
hereunder as exempt under Rule 16b-3, the transactions contemplated
hereunder shall be structured to satisfy the requirements for exemption
under Rule 16b-3.
(iv) Other Administration. Other than as provided above, the Plan
shall be administered by (A) the Board or (B) a Committee, which
committee shall be constituted to satisfy Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties
delegated by the Board to such Committee, the Administrator shall have the
authority, in its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options and Stock
Purchase Rights may be granted hereunder;
(iii) to determine the number of shares of Common Stock to be
covered by each Option and Stock Purchase Right granted hereunder;
(iv) to approve forms of agreement for use under the Plan;
(v) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any Option or Stock Purchase Right granted
hereunder. Such terms and conditions include, but are not limited to,
the exercise price, the time or times when Options or Stock Purchase
Rights may be exercised (which may be based on performance criteria),
any vesting acceleration or waiver of forfeiture restrictions, and any
restriction or limitation regarding any Option or Stock Purchase Right
or the shares of Common Stock relating thereto, based in each case on
such factors as the Administrator, in its sole discretion, shall
determine;
(vi) to reduce the exercise price of any Option or Stock Purchase
Right to the then current Fair Market Value if the Fair Market Value of
the Common Stock covered by such Option or Stock Purchase Right shall
have declined since the date the Option or Stock Purchase Right was
granted;
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(vii) to institute an Option Exchange Program;
(viii) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan;
(ix) to prescribe, amend and rescind rules and regulations relating
to the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax treatment
under foreign tax laws;
(x) to modify or amend each Option or Stock Purchase Right (subject
to Section 15(c) of the Plan), including the discretionary authority to
extend the post-termination exercisability period of Options longer than
is otherwise provided for in the Plan;
(xi) to allow Optionees to satisfy withholding tax obligations by
electing to have the Company withhold from the Shares to be issued upon
exercise of an Option or Stock Purchase Right that number of Shares
having a Fair Market Value equal to the amount required to be withheld.
The Fair Market Value of the Shares to be withheld shall be determined
on the date that the amount of tax to be withheld is to be determined.
All elections by an Optionee to have Shares withheld for this purpose
shall be made in such form and under such conditions as the
Administrator may deem necessary or advisable;
(xii) to authorize any person to execute on behalf of the Company
any instrument required to effect the grant of an Option or Stock
Purchase Right previously granted by the Administrator;
(xiii) to make all other determinations deemed necessary or
advisable for administering the Plan.
(c) Effect of Administrator's Decision. The Administrator's
decisions, determinations and interpretations shall be final and binding on
all Optionees and any other holders of Options or Stock Purchase Rights.
5. Eligibility. Nonstatutory Stock Options and Stock Purchase Rights
may be granted to Service Providers.
6. Limitations.
(a) Each Option shall be designated in the Option Agreement as a
Nonstatutory Stock Option.
(b) Neither the Plan nor any Option or Stock Purchase Right shall
confer upon an Optionee any right with respect to continuing the Optionee's
relationship as a Service Provider with the Company, nor shall they
interfere in any way with the Optionee's right or the Company's right to
terminate such relationship at any time, with or without cause.
(c) The following limitations shall apply to grants of Options:
(i) No Service Provider shall be granted, in any fiscal year of the
Company, Options to purchase more than 1,000,000 Shares.
(ii) In connection with his or her initial service, a Service
Provider may be granted Options to purchase up to an additional
1,000,000 Shares which shall not count against the limit set forth in
subsection (i) above.
(iii) The foregoing limitations shall be adjusted proportionately
in connection with any change in the Company's capitalization as
described in Section 13.
(iv) If an Option is cancelled in the same fiscal year of the
Company in which it was granted (other than in connection with a
transaction described in Section 13), the cancelled Option will be
counted against the limits set forth in subsections (i) and (ii) above.
For this purpose, if the exercise price of an Option is reduced, the
transaction will be treated as a cancellation of the Option and the
grant of a new Option.
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7. Term of Plan. Subject to Section 19 of the Plan, the Plan shall become
effective upon the earlier to occur of its adoption by the Board or its approval
by the shareholders of the Company. It shall continue in effect for a term of
ten (10) years unless terminated earlier under Section 15 of the Plan.
8. Term of Option. The term of each Option shall be stated in the Option
Agreement.
9. Option Exercise Price and Consideration.
(a) Exercise Price. The per share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
(i) In the case of a Nonstatutory Stock Option, the per Share
exercise price shall be determined by the Administrator. In the case of
a Nonstatutory Stock Option intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the per
Share exercise price shall be no less than 100% of the Fair Market Value
per Share on the date of grant.
(ii) Notwithstanding the foregoing, Options may be granted with a
per Share exercise price of less than 100% of the Fair Market Value per
Share on the date of grant pursuant to a merger or other corporate
transaction.
(b) Waiting Period and Exercise Dates. At the time an Option is
granted, the Administrator shall fix the period within which the Option may
be exercised and shall determine any conditions which must be satisfied
before the Option may be exercised.
(c) Form of Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the
method of payment. Such consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) promissory note;
(iv) other Shares which (A) in the case of Shares acquired upon
exercise of an option, have been owned by the Optionee for more than six
months on the date of surrender, and (B) have a Fair Market Value on the
date of surrender equal to the aggregate exercise price of the Shares as
to which said Option shall be exercised;
(v) consideration received by the Company under a cashless exercise
program implemented by the Company in connection with the Plan;
(vi) a reduction in the amount of any Company liability to the
Optionee, including any liability attributable to the Optionee's
participation in any Company-sponsored deferred compensation program or
arrangement;
(vii) any combination of the foregoing methods of payment; or
(viii) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.
10. Exercise of Option.
(a) Procedure for Exercise; Rights as a Stockholder. Any Option
granted hereunder shall be exercisable according to the terms of the Plan
and at such times and under such conditions as determined by the
Administrator and set forth in the Option Agreement. Unless the
Administrator provides otherwise, vesting of Options granted hereunder
shall be tolled during any unpaid leave of absence. An Option may not be
exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company receives: (i)
written or electronic notice of exercise (in accordance with the Option
Agreement) from the person entitled to exercise the Option, and
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<PAGE> 69
(ii) full payment for the Shares with respect to which the Option is
exercised. Full payment may consist of any consideration and method of
payment authorized by the Administrator and permitted by the Option
Agreement and the Plan. Shares issued upon exercise of an Option shall be
issued in the name of the Optionee or, if requested by the Optionee, in the
name of the Optionee and his or her spouse. Until the Shares are issued (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a stockholder shall exist with respect to
the Optioned Stock, notwithstanding the exercise of the Option. The Company
shall issue (or cause to be issued) such Shares promptly after the Option
is exercised. No adjustment will be made for a dividend or other right for
which the record date is prior to the date the Shares are issued, except as
provided in Section 13 of the Plan.
Exercising an Option in any manner shall decrease the number of Shares
thereafter available, both for purposes of the Plan and for sale under the
Option, by the number of Shares as to which the Option is exercised.
(b) Termination of Relationship as a Service Provider. If an Optionee
ceases to be a Service Provider, other than upon the Optionee's death or
Disability, the Optionee may exercise his or her Option within such period
of time as is specified in the Option Agreement to the extent that the
Option is vested on the date of termination (but in no event later than the
expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for three (3) months following the
Optionee's termination. If, on the date of termination, the Optionee is not
vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified by
the Administrator, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.
(c) Disability of Optionee. If an Optionee ceases to be a Service
Provider as a result of the Optionee's Disability, the Optionee may
exercise his or her Option within such period of time as is specified in
the Option Agreement to the extent the Option is vested on the date of
termination (but in no event later than the expiration of the term of such
Option as set forth in the Option Agreement). In the absence of a specified
time in the Option Agreement, the Option shall remain exercisable for
twelve (12) months following the Optionee's termination. If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the
Plan. If, after termination, the Optionee does not exercise his or her
Option within the time specified herein, the Option shall terminate, and
the Shares covered by such Option shall revert to the Plan.
(d) Death of Optionee.
(i) While a Service Provider. If an Optionee dies while a Service
Provider, the Option may be exercised within such period of time as is
specified in the Option Agreement (but in no event later than the
expiration of the term of such Option as set forth in the Notice of
Grant) by the Optionee's estate or by a person who acquires the right to
exercise the Option by bequest or inheritance, but only to the extent
that the Option would have vested had the Optionee remained a Service
Provider for six (6) months after the date of death. In the absence of a
specified time in the Option Agreement, the Option shall remain
exercisable for twelve (12) months following the Optionee's termination.
If, at the time of death, the Optionee is not vested (or is not deemed
vested by this Section 10(d)(i)) as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall immediately
revert to the Plan. The Option may be exercised by the executor or
administrator of the Optionee's estate or, if none, by the person(s)
entitled to exercise the Option under the Optionee's will or the laws of
descent or distribution. If the Option is not so exercised within the
time specified herein, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan.
(ii) Within Three Months of Termination as a Service Provider. If
an Optionee dies within three (3) months of ceasing to be a Service
Provider, the Option may be exercised within such period of time as is
specified in the Option Agreement (but in no event later than the
expiration of
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the term of such Option as set forth in the Notice of Grant), by the
Optionee's estate or by a person who acquires the right to exercise the
Option by bequest or inheritance, but only to the extent that the Option
is vested on the date of death. In the absence of a specified time in
the Option Agreement, the Option shall remain exercisable for twelve
(12) months following the Optionee's termination. If, at the time of
death, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall immediately
revert to the Plan. The Option may be exercised by the executor or
administrator of the Optionee's estate or, if none, by the person(s)
entitled to exercise the Option under the Optionee's will or the laws of
descent or distribution. If the Option is not so exercised within the
time specified herein, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan.
(e) Buyout Provisions. The Administrator may at any time offer to buy
out for a payment in cash or Shares, an Option previously granted based on
such terms and conditions as the Administrator shall establish and
communicate to the Optionee at the time that such offer is made.
11. Stock Purchase Rights.
(a) Rights to Purchase. Stock Purchase Rights may be issued either
alone, in addition to, or in tandem with other awards granted under the
Plan and/or cash awards made outside of the Plan. After the Administrator
determines that it will offer Stock Purchase Rights under the Plan, it
shall advise the offeree in writing or electronically, by means of a Notice
of Grant, of the terms, conditions and restrictions related to the offer,
including the number of Shares that the offeree shall be entitled to
purchase, the price to be paid, and the time within which the offeree must
accept such offer. The offer shall be accepted by execution of a Restricted
Stock Purchase Agreement in the form determined by the Administrator.
(b) Repurchase Option. Unless the Administrator determines otherwise,
the Restricted Stock Purchase Agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination
of the purchaser's service with the Company for any reason (including death
or Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the
purchaser to the Company. The repurchase option shall lapse at a rate
determined by the Administrator.
(c) Other Provisions. The Restricted Stock Purchase Agreement shall
contain such other terms, provisions and conditions not inconsistent with
the Plan as may be determined by the Administrator in its sole discretion.
(d) Rights as a Stockholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
stockholder, and shall be a stockholder when his or her purchase is entered
upon the records of the duly authorized transfer agent of the Company. No
adjustment will be made for a dividend or other right for which the record
date is prior to the date the Stock Purchase Right is exercised, except as
provided in Section 13 of the Plan.
12. Non-Transferability of Options and Stock Purchase Rights. Unless
determined otherwise by the Administrator, an Option or Stock Purchase Right may
not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee. If the
Administrator makes an Option or Stock Purchase Right transferable, such Option
or Stock Purchase Right shall contain such additional terms and conditions as
the Administrator deems appropriate.
13. Adjustments Upon Changes in Capitalization, Dissolution, Merger or
Asset Sale.
(a) Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock covered
by each outstanding Option and Stock Purchase Right, and the number of
shares of Common Stock which have been authorized for issuance under the
Plan but as to which no Options or Stock Purchase Rights have yet been
granted or which have
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been returned to the Plan upon cancellation or expiration of an Option or
Stock Purchase Right, as well as the price per share of Common Stock
covered by each such outstanding Option or Stock Purchase Right, 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 issued 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, 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 or Stock
Purchase Right.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify
each Optionee as soon as practicable prior to the effective date of such
proposed transaction. The Administrator in its discretion may provide for
an Optionee to have the right to exercise his or her Option until ten (10)
days prior to such transaction as to all of the Optioned Stock covered
thereby, including Shares as to which the Option would not otherwise be
exercisable. In addition, the Administrator may provide that any Company
repurchase option applicable to any Shares purchased upon exercise of an
Option or Stock Purchase Right shall lapse as to all such Shares, provided
the proposed dissolution or liquidation takes place at the time and in the
manner contemplated. To the extent it has not been previously exercised, an
Option or Stock Purchase Right will terminate immediately prior to the
consummation of such proposed action.
(c) Merger or Asset Sale. In the event of a merger of the Company
with or into another corporation, or the sale of substantially all of the
assets of the Company, each outstanding Option and Stock Purchase Right
shall be assumed or an equivalent option or right 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 or Stock Purchase Right, the Optionee shall
fully vest in and have the right to exercise the Option or Stock Purchase
Right as to all of the Optioned Stock, including Shares as to which it
would not otherwise be vested or exercisable. If an Option or Stock
Purchase Right becomes fully vested and exercisable in lieu of assumption
or substitution in the event of a merger or sale of assets, the
Administrator shall notify the Optionee in writing or electronically that
the Option or Stock Purchase Right shall be fully vested and exercisable
for a period of fifteen (15) days from the date of such notice, and the
Option or Stock Purchase Right shall terminate upon the expiration of such
period. For the purposes of this paragraph, the Option or Stock Purchase
Right shall be considered assumed if, following the merger or sale of
assets, the option or right confers the right to purchase or receive, for
each Share of Optioned Stock subject to the Option or Stock Purchase Right
immediately prior to the merger or sale of assets, the consideration
(whether stock, cash, or other securities or property) received in the
merger or sale of assets by holders of Common Stock for each Share held on
the effective date of the transaction (and if holders were offered a choice
of consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares); provided, however, that if such
consideration received in the merger or sale of assets is not solely common
stock of the successor corporation or its Parent, the Administrator may,
with the consent of the successor corporation, provide for the
consideration to be received upon the exercise of the Option or Stock
Purchase Right, for each Share of Optioned Stock subject to the Option or
Stock Purchase Right, to be solely common stock of the successor
corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.
14. Date of Grant. The date of grant of an Option or Stock Purchase Right
shall be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such other later
date as is determined by the Administrator. Notice of the determination shall be
provided to each Optionee within a reasonable time after the date of such grant.
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15. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend,
alter, suspend or terminate the Plan.
(b) Stockholder Approval. The Company shall obtain stockholder
approval of any Plan amendment to the extent necessary and desirable to
comply with Applicable Laws.
(c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any
Optionee, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the
Optionee and the Company. Termination of the Plan shall not affect the
Administrator's ability to exercise the powers granted to it hereunder with
respect to options granted under the Plan prior to the date of such
termination.
16. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to the
exercise of an Option or Stock Purchase Right unless the exercise of such
Option or Stock Purchase Right and the issuance and delivery of such Shares
shall comply with Applicable Laws and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
(b) Investment Representations. As a condition to the exercise of an
Option or Stock Purchase Right, the Company may require the person
exercising such Option or Stock Purchase Right 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 opinion of counsel for the Company, such a representation
is required.
17. Inability to Obtain Authority. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, 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.
18. Reservation of Shares. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
19. Stockholder Approval. Stockholder approval of the Plan shall be
obtained in the manner and to the degree required under Applicable Laws.
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EXHIBIT F
NUKO INFORMATION SYSTEMS, INC.
1996 DIRECTOR STOCK OPTION PLAN
(AS AMENDED AND RESTATED NOVEMBER 7, 1996)
1. Purposes of the Plan. The purposes of this 1996 Director Stock Option
Plan are to attract and retain the best available personnel for service as
Outside Directors (as defined herein) of the Company, to provide additional
incentive to the Outside Directors of the Company to serve as Directors, and to
encourage their continued service on the Board.
All options granted hereunder shall be nonstatutory stock options.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Common Stock" means the Common Stock of the Company.
(d) "Company" means Nuko Information Systems, Inc., a Delaware
corporation.
(e) "Director" means a member of the Board.
(f) "Employee" means any person, including officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. The
payment of a Director's fee by the Company shall not be sufficient in and
of itself to constitute "employment" by the Company.
(g) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(h) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:
(i) 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 prior to the time of
determination, as reported in The Wall Street Journal or such other
source as the Administrator deems reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market
Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on the date of determination,
as reported in The Wall Street Journal or such other source as the Board
deems reliable, or;
(iii) In the absence of an established market for the Common Stock,
the Fair Market Value thereof shall be determined in good faith by the
Board.
(i) "Inside Director" means a Director who is an Employee.
(j) "Option" means a stock option granted pursuant to the Plan.
(k) "Optioned Stock" means the Common Stock subject to an Option.
(l) "Optionee" means a Director who holds an Option.
(m) "Outside Director" means a Director who is not an Employee.
(n) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(o) "Plan" means this 1996 Director Stock Option Plan.
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(p) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 10 of the Plan.
(q) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Internal Revenue
Code of 1986.
3. Stock Subject to the Plan. Subject to the provisions of Section 10 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 200,000 Shares of Common Stock (the "Pool"). The Shares may be
authorized, but unissued, or reacquired Common Stock.
If an Option expires or becomes unexercisable without having been exercised
in full, the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated). Shares that have actually been issued under the Plan shall not be
returned to the Plan and shall not become available for future distribution
under the Plan.
4. Administration and Grants of Options under the Plan.
(a) Procedure for Grants. All grants of Options to Outside Directors
under this Plan shall be automatic and nondiscretionary and shall be made
strictly in accordance with the following provisions:
(i) No person shall have any discretion to select which Outside
Directors shall be granted Options or to determine the number of Shares
to be covered by Options granted to Outside Directors.
(ii) Each Outside Director shall be automatically granted an Option
to purchase 35,000 Shares on the date on which such person first becomes
an Outside Director, whether through election by the shareholders of the
Company or appointment by the Board to fill a vacancy; provided,
however, that an Inside Director who ceases to be an Inside Director but
who remains a Director shall not receive a First Option.
(iii) Each Outside Director shall be automatically granted an
Option to purchase 10,000 Shares on the day following the date of the
Company's annual stockholder's meeting each year, provided he or she is
then an Outside Director.
(iv) Notwithstanding the provisions of subsections (ii) and (iii)
hereof, any exercise of an Option granted before the Company has
obtained stockholder approval of the Plan in accordance with Section 16
hereof shall be conditioned upon obtaining such stockholder approval of
the Plan in accordance with Section 16 hereof.
(v) The terms of each Option granted hereunder shall be as follows:
(A) the term of the Option shall be ten (10) years.
(B) the Option shall be exercisable only while the Outside
Director remains a Director of the Company, except as set forth in
Sections 8 and 10 hereof.
(C) the exercise price per Share shall be 100% of the Fair
Market Value per Share on the date of grant of the Option. In the
event that the date of grant of the Option is not a trading day, the
exercise price per Share shall be the Fair Market Value on the next
trading day immediately following the date of grant of the Option.
(D) subject to Section 10 hereof, the Option shall be
immediately exercisable as to 1/36 of the Shares subject thereto and
shall become exercisable as to an additional 1/36 of the Shares
subject thereto each month thereafter, provided that the Optionee
continues to serve as a Director on such dates.
(vi) In the event that any Option granted under the Plan would
cause the number of Shares subject to outstanding Options plus the
number of Shares previously purchased under Options to exceed the Pool,
then the remaining Shares available for Option grant shall be granted
under Options to the Outside Directors on a pro rata basis. No further
grants shall be made until such time,
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if any, as additional Shares become available for grant under the Plan
through action of the Board or the stockholders to increase the number
of Shares which may be issued under the Plan or through cancellation or
expiration of Options previously granted hereunder.
5. Eligibility. Options may be granted only to Outside Directors. All
Options shall be automatically granted in accordance with the terms set forth in
Section 4 hereof.
The Plan shall not confer upon any Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in any way with any rights which the Director or the Company
may have to terminate the Director's relationship with the Company at any time.
6. Term of Plan. The Plan shall become effective upon the earlier to occur
of its adoption by the Board or its approval by the stockholders of the Company
as described in Section 16 of the Plan. It shall continue in effect for a term
of ten (10) years unless sooner terminated under Section 11 of the Plan.
7. Form of Consideration. The consideration to be paid for the Shares to
be issued upon exercise of an Option, including the method of payment, shall
consist of (i) cash, (ii) check, (iii) other shares which (x) in the case of
Shares acquired upon exercise of an Option, have been owned by the Optionee for
more than six (6) months on the date of surrender, and (y) have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the
Shares as to which said Option shall be exercised, (iv) consideration received
by the Company under a cashless exercise program implemented by the Company in
connection with the Plan, or (v) any combination of the foregoing methods of
payment.
8. Exercise of Option.
(a) Procedure for Exercise; Rights as a Stockholder. Any Option
granted hereunder shall be exercisable at such times as are set forth in
Section 4 hereof; provided, however, that no Options shall be exercisable
until stockholder approval of the Plan in accordance with Section 16 hereof
has been obtained.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may consist of any consideration and method of payment
allowable under Section 7 of the Plan. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a stockholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
A share certificate for the number of Shares so acquired shall be issued to the
Optionee as soon as practicable after exercise of the Option. No adjustment
shall be made for a dividend or other right for which the record date is prior
to the date the stock certificate is issued, except as provided in Section 10 of
the Plan.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Termination of Continuous Status as a Director. Subject to
Section 10 hereof, in the event an Optionee's status as a Director
terminates (other than upon the Optionee's death or total and permanent
disability (as defined in Section 22(e)(3) of the Code)), the Optionee may
exercise his or her Option, but only within three (3) months following the
date of such termination, and only to the extent that the Optionee was
entitled to exercise it on the date of such termination (but in no event
later than the expiration of its ten (10) year term). To the extent that
the Optionee was not entitled to exercise an Option on the date of such
termination, and to the extent that the Optionee does not exercise such
Option (to the extent otherwise so entitled) within the time specified
herein, the Option shall terminate.
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<PAGE> 76
(c) Disability of Optionee. In the event Optionee's status as a
Director terminates as a result of total and permanent disability (as
defined in Section 22(e)(3) of the Code), the Optionee may exercise his or
her Option, but only within twelve (12) months following the date of such
termination, and only to the extent that the Optionee was entitled to
exercise it on the date of such termination (but in no event later than the
expiration of its ten (10) year term). To the extent that the Optionee was
not entitled to exercise an Option on the date of termination, or if he or
she does not exercise such Option (to the extent otherwise so entitled)
within the time specified herein, the Option shall terminate.
(d) Death of Optionee. In the event of an Optionee's death, the
Optionee's estate or a person who acquired the right to exercise the Option
by bequest or inheritance may exercise the Option, but only within twelve
(12) months following the date of death, and only to the extent that the
Optionee was entitled to exercise it on the date of death (but in no event
later than the expiration of its ten (10) year term). To the extent that
the Optionee was not entitled to exercise an Option on the date of death,
and to the extent that the Optionee's estate or a person who acquired the
right to exercise such Option does not exercise such Option (to the extent
otherwise so entitled) within the time specified herein, the Option shall
terminate.
9. Non-Transferability of Options. The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
10. Adjustments Upon Changes in Capitalization, Dissolution, Merger or
Asset Sale.
(a) Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the number of Shares covered by each
outstanding Option, the number of Shares which have been authorized for
issuance under the Plan but as to which no Options have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an
Option, as well as the price per Share covered by each such outstanding
Option, and the number of Shares issuable pursuant to the automatic grant
provisions of Section 4 hereof shall be proportionately adjusted for any
increase or decrease in the number of issued Shares 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
issued Shares 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." 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
subject to an Option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option has
not been previously exercised, it shall terminate immediately prior to the
consummation of such proposed action.
(c) Merger or Asset Sale. In the event of a merger of the Company
with or into another corporation or the sale of substantially all of the
assets of the Company, outstanding Options may be assumed or equivalent
options may be substituted by the successor corporation or a Parent or
Subsidiary thereof (the "Successor Corporation"). If an Option is assumed
or substituted for, the Option or equivalent option shall continue to be
exercisable as provided in Section 4 hereof for so long as the Optionee
serves as a Director or a director of the Successor Corporation. Following
such assumption or substitution, if the Optionee's status as a Director or
director of the Successor Corporation, as applicable, is terminated other
than upon a voluntary resignation by the Optionee, the Option or option
shall become fully exercisable, including as to Shares for which it would
not otherwise be exercisable. Thereafter, the Option or option shall remain
exercisable in accordance with Sections 8(c) through (d) above.
If the Successor Corporation does not assume an outstanding Option or
substitute for it an equivalent option, the Option shall become fully vested and
exercisable, including as to Shares for which it would not otherwise be
exercisable. In such event the Board shall notify the Optionee that the Option
shall be fully
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<PAGE> 77
exercisable for a period of thirty (30) days from the date of such notice, and
upon the expiration of such period the Option shall terminate.
For the purposes of this Section 10(c), an Option shall be considered
assumed if, following the merger or sale of assets, the Option confers the right
to purchase or receive, for each Share of Optioned Stock subject to the Option
immediately prior to the merger or sale of assets, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each Share held on the effective date of
the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding Shares).
If such consideration received in the merger or sale of assets is not solely
common stock of the successor corporation or its Parent, the Board may, with the
consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option, for each Share of Optioned Stock
subject to the Option, to be solely common stock of the successor corporation or
its Parent equal in fair market value to the per share consideration received by
holders of Common Stock in the merger or sale of assets.
11. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend, alter,
suspend, or discontinue the Plan, but no amendment, alteration, suspension,
or discontinuation shall be made which would impair the rights of any
Optionee under any grant theretofore made, without his or her consent. In
addition, to the extent necessary and desirable to comply with any
applicable law, regulation or stock exchange rule, the Company shall obtain
stockholder approval of any Plan amendment in such a manner and to such a
degree as required.
(b) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated.
12. Time of Granting Options. The date of grant of an Option shall, for
all purposes, be the date determined in accordance with Section 4 hereof.
13. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and 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 opinion of
counsel for the Company, such a representation is required by any of the
aforementioned relevant provisions of law.
Inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, 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.
14. Reservation of Shares. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
15. Option Agreement. Options shall be evidenced by written option
agreements in such form as the Board shall approve.
16. Stockholder Approval. Continuance of the Plan shall be subject to
approval by the stockholders of the Company at or prior to the first annual
meeting of stockholders held subsequent to the granting of an Option hereunder.
Such stockholder approval shall be obtained in the degree and manner required
under applicable state and federal law and any stock exchange rules.
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PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF NUKO INFORMATION SYSTEMS, INC.
December 1996 Special Meeting of Shareholders
The undersigned Shareholder of NUKO Information Systems, Inc., a New York
corporation (the "Company"), hereby acknowledges receipt of the Notice of
Special Meeting of Shareholders and Proxy Statement, each dated November 14,
1996, and hereby appoints Pratap Kesav Kondamoori and H.R. Kedlaya, and each of
them, proxies and attorneys-in-fact with full power to each of substitution, on
behalf and in the name of the undersigned, to represent the undersigned at the
Special Meeting of Shareholders of the Company to be held on December 11, 1996
at 10:00 a.m., California Time, at 2391 Qume Drive, San Jose, California, and at
any adjournment or adjournments thereof, and to vote all shares of Common Stock
to which the undersigned would be entitled, if then and there personally
present, on the matters set forth below:
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
FOLD AND DETACH HERE
<PAGE> 79
Please mark
your votes as
indicated in
this example. [X]
FOR AGAINST ABSTAIN
1. Proposal approving the reincorporation of the [ ] [ ] [ ]
Company from New York to Delaware.
FOR AGAINST ABSTAIN
2. Proposal approving the adoption of the Company's [ ] [ ] [ ]
1996 Stock Option Plan and the reservation of
2,500,000 shares for issuance thereunder.
FOR AGAINST ABSTAIN
3. Proposal approving the adoption of the Company's [ ] [ ] [ ]
1996 Director Stock Option Plan and the reservation of
200,000 shares for issuance thereunder:
Any one of such attorneys-in-fact or substitutes as shall be present and shall
act at said meeting or any adjournment(s) thereof shall have and may exercise
all powers of said attorneys-in-fact hereunder.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER HEREIN SPECIFIED
BY THE UNDERSIGNED SHAREHOLDERS. IF NO DIRECTION IS INDICATED, THIS PROXY WILL
BE VOTED IN FAVOR OF PROPOSALS 1, 2 AND 3.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, YOU ARE URGED TO MARK,
SIGN, DATE AND PROMPTLY RETURN THIS PROXY, USING THE ENCLOSED ENVELOPE.
<TABLE>
<S> <C> <C> <C>
Signature _________________________________ Signature _________________________________ Dated ________________________________, 1996
(If Jointly Owned)
</TABLE>
(This proxy should be marked, dated, signed by the shareholder(s) exactly as his
or her name appears hereon and returned promptly in the enclosed envelope.
Executors, administrators, guardians, officers of corporations and others
signing in a fiduciary capacity should state their full titles as such. If
shares are held by joint tenants or as community property, both should sign.)
FOLD AND DETACH HERE
