SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or 12(g) of
The Securities Exchange Act of 1934
MENDOCINO PARTNERS, INC.
(Name of small business issuer in its charter)
Delaware 33-0619524
(State or Other Jurisdiction (IRS Employer Identification No.)
of Incorporation or Organization)
24351 Pasto Road, Suite B, Dana Point, California 92629
(Address of principal executive offices) (Zip Code)
(949) 489-2400
(Issuer's Telephone Number, Including Area Code)
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of Each Exchange on which
to be so registered each class is to be registered
None None
Securities to be registered pursuant to section 12(g) of the Act:
Common Stock, par value $.001
(Title of Class)
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PART I
Item 1. Business
Background
Mendocino Partners, Inc., a Delaware corporation (the "Company") was
incorporated on April 20, 1994. The Company has no operating history other than
organizational matters, and was formed specifically to be a "clean public shell"
and for the purpose of either merging with or acquiring an operating company
with operating history and assets. The Securities and Exchange Commission has
defined and designated these types of companies as "blind pools" and "blank
check" companies.
The primary activity of the Company will involve seeking merger or
acquisition candidates with whom it can either merge or acquire. The Company has
not selected any company for acquisition or merger and does not intend to limit
potential acquisition candidates to any particular field or industry, but does
retain the right to limit acquisition or merger candidates, if it so chooses, to
a particular field or industry. The Company's plans are in the conceptual stage
only.
The executive offices of the Company are located at 24351 Pasto Road,
Suite B, Dana Point, California 92629. Its telephone number is (949) 489-2400.
Plan of Operation - General
The Company was organized for the purpose of creating a corporate
vehicle to seek, investigate and, if such investigation warrants, acquire an
interest in one or more business opportunities presented to it by persons or
firms who or which desire to seek the perceived advantages of a publicly held
corporation. At this time,the Company has no plan, proposal, agreement,
understanding or arrangement to acquire or merge with any specific business or
company, and the Company has not identified any specific business or company for
investigation and evaluation. No member of Management or promotor of the Company
has had any material discussions with any other company with respect to any
acquisition of that company. Although the Company's Common Stock is currently
not freely tradeable, it will eventually become so under exemptions such as Rule
144 promulgated under the Securities Act of 1933. See "Description of
Securities." The Company will not restrict its search to any specific business,
industry or geographical location, and the Company may participate in a business
venture of virtually any kind or nature. The discussion of the proposed business
under this caption and throughout this Registration Statement is purposefully
general and is not meant to be restrictive of the Company's virtually unlimited
discretion to search for and enter into potential business opportunities.
The Company intends to obtain funds in one or more private placements
to finance the operation of any acquired business. Persons purchasing securities
in these placements and other shareholders will likely not have the opportunity
to participate in the decision relating to any acquisition. The Company's
proposed business is sometimes referred to as a "blind pool" because any
investors will entrust their investment monies to the Company's management
before they have a chance to analyze any ultimate use to which their money may
be put. Consequently, the Company's potential success is heavily dependent on
the Company's management, which will have virtually unlimited discretion in
searching for and entering into a business opportunity. The officers and
directors of the Company have limited experience in the proposed business of the
Company. There can be no assurance that the Company will be able to raise any
funds in private placements. In any private placement, management may purchase
shares on the same terms as offered in the private placement. (See "Risk
Factors" and "Management").
Management anticipates that it will only participate in one potential
business venture. This lack of diversification should be considered a
substantial risk in investing in the Company because it will not permit the
Company to offset potential losses from one venture against gains from another
(see "Risk Factors").
The Company may seek a business opportunity with a firm which only
recently commenced operations, or a developing company in need of additional
funds for expansion into new products or markets, or seeking to develop a new
product or service, or an established business which may be experiencing
financial or operating difficulties
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and is in the need for additional capital which is perceived to be easier to
raise by a public company. In some instances, a business opportunity may involve
the acquisition or merger with a corporation which does not need substantial
additional cash but which desires to establish a public trading market for its
common stock. The Company may purchase assets and establish wholly owned
subsidiaries in various business or purchase existing businesses as
subsidiaries.
The Company anticipates that the selection of a business opportunity in
which to participate will be complex and extremely risky. Because of general
economic conditions, rapid technological advances being made in some industries,
and shortages of available capital, management believes that there are numerous
firms seeking the benefits of a publicly traded corporation. Such perceived
benefits of a publicly traded corporation may include facilitating or improving
the terms on which additional equity financing may be sought, providing
liquidity for the principals of a business, creating a means for providing
incentive stock options or similar benefits to key employees, providing
liquidity (subject to restrictions of applicable statutes) for all shareholders,
and other factors. Potentially available business opportunities may occur in
many different industries and at various stages of development, all of which
will make the task of comparative investigation and analysis of such business
opportunities extremely difficult and complex.
As is customary in the industry, the Company may pay a finder's fee for
locating an acquisition prospect. If any such fee is paid, it will be approved
by the Company's Board of Directors and will be in accordance with the industry
standards. Such fees are customarily between 1% and 5% of the size of the
transaction, based upon a sliding scale of the amount involved. Such fees are
typically in the range of 5% on a $1,000,000 transaction ratably down to 1% in a
$4,000,000 transaction. Management has adopted a policy that such a finder's fee
or real estate brokerage fee could, in certain circumstances, be paid to any
employee, officer, director or 5% shareholder of the Company, if such person
plays a material role in bringing a transaction to the Company.
As part of any transaction, the acquired company may require that
Management or other stockholders of the Company sell all or a portion of their
shares to the acquired company, or to the principals of the acquired company. It
is anticipated that the sales price of such shares will be lower than the
current market price or anticipated market price of the Company's Common Stock.
The Company's funds are not expected to be used for purposes of any stock
purchase from insiders. The Company shareholders will not be provided the
opportunity to approve or consent to such sale. The opportunity to sell all or a
portion of their shares in connection with an acquisition may influence
management's decision to enter into a specific transaction. However, management
believes that since the anticipated sales price will be less than market value,
that the potential of a stock sale by management will be a material factor on
their decision to enter a specific transaction.
The above description of potential sales of management stock is not
based upon any corporate bylaw, shareholder or board resolution, or contract or
agreement. No other payments of cash or property are expected to be received by
Management in connection with any acquisition.
The Company has not formulated any policy regarding the use of
consultants or outside advisors, but does not anticipate that it will use the
services of such persons.
The Company has, and will continue to have following the completion of
this offering, insufficient capital with which to provide the owners of business
opportunities with any significant cash or other assets. However, management
believes the Company will offer owners of business opportunities the opportunity
to acquire a controlling ownership interest in a public company at substantially
less cost than is required to conduct an initial public offering. The owners of
the business opportunities will, however, incur significant post-merger or
acquisition registration costs in the event they wish to register a portion of
their shares for subsequent sale. The Company will also incur significant legal
and accounting costs in connection with the acquisition of a business
opportunity including the costs of preparing post-effective amendments, Forms
8-K, agreements and related reports and documents nevertheless, the officers and
directors of the Company have not conducted market research and are not aware of
statistical data which would support the perceived benefits of a merger or
acquisition transaction for the owners of a business opportunity.
The Company does not intend to make any loans to any prospective merger
or acquisition candidates or to
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unaffiliated third parties.
Sources of Opportunities
The Company anticipates that business opportunities for possible
acquisition will be referred by various sources, including its officers and
directors, professional advisers, securities broker-dealers, venture
capitalists, members of the financial community, and others who may present
unsolicited proposals.
The Company will seek a potential business opportunity from all known
sources, but will rely principally on personal contacts of its officers and
directors as well as indirect associations between them and other business and
professional people. It is not presently anticipated that the Company will
engage professional firms specializing in business acquisitions or
reorganizations.
The officers and directors of the Company are currently employed in
other positions and will devote only a portion of their time (not more than one
hour per week) to the business affairs of the Company, until such time as an
acquisition has been determined to be highly favorable, at which time they
expect to spend full time in investigating and closing any acquisition for a
period of two weeks. In addition, in the face of competing demands for their
time, the officers and directors may grant priority to their full-time positions
rather than to the Company.
Evaluation of Opportunities
The analysis of new business opportunities will be undertaken by or
under the supervision of the officers and directors of the Company (see
"Management"). Management intends to concentrate on identifying prospective
business opportunities which may be brought to its attention through present
associations with management. In analyzing prospective business opportunities,
management will consider such matters as the available technical, financial and
managerial resources; working capital and other financial requirements; history
of operation, if any; prospects for the future; present and expected
competition; the quality and experience of management services which may be
available and the depth of that management; the potential for further research,
development or exploration; specific risk factors not now foreseeable but which
then may be anticipated to impact the proposed activities of the Company; the
potential for growth or expansion; the potential for profit; the perceived
public recognition or acceptance of products, services or trades; name
identification; and other relevant factors. Officers and directors of each
Company will meet personally with management and key personnel of the firm
sponsoring the business opportunity as part of their investigation. To the
extent possible, the Company intends to utilize written reports and personal
investigation to evaluate the above factors. The Company will not acquire or
merge with any company for which audited financial statements cannot be
obtained.
It may be anticipated that any opportunity in which the Company
participates will present certain risks. Many of these risks cannot be
adequately identified prior to selection of the specific opportunity, and the
Company's shareholders must, therefore, depend on the ability of management to
identify and evaluate such risk. In the case of some of the opportunities
available to the Company, it may be anticipated that the promoters thereof have
been unable to develop a going concern or that such business is in its
development stage in that it has not generated significant revenues from its
principal business activities prior to the Company's participation. There is a
risk, even after the Company's participation in the activity and the related
expenditure of the Company's funds, that the combined enterprises will still be
unable to become a going concern or advance beyond the development stage. Many
of the opportunities may involve new and untested products, processes, or market
strategies which may not succeed. Such risks will be assumed by the Company and,
therefore, its shareholders.
The Company will not restrict its search for any specific kind of
business, but may acquire a venture which is in its preliminary or development
stage, which is already in operation, or in essentially any stage of its
corporate life. It is currently impossible to predict the status of any business
in which the Company may become engaged, in that such business may need
additional capital, may merely desire to have its shares publicly traded, or may
seek other perceived advantages which the Company may offer.
Acquisition of Opportunities
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In implementing a structure for a particular business acquisition, the
Company may become a party to a
merger, consolidation, reorganization, joint venture, franchise or licensing
agreement with another corporation or
entity. It may also purchase stock or assets of an existing business. On the
consummation of a transaction, it is
possible that the present management and shareholders of the Company will not
be in control of the Company. In
addition, a majority or all of the Company's officers and directors may, as part
of the terms of the acquisition transaction, resign and be replaced by new
officers and directors without a vote of the Company's shareholders.
It is anticipated that any securities issued in any such reorganization
would be issued in reliance on exemptions from registration under applicable
Federal and state securities laws. In some circumstances, however, as a
negotiated element of this transaction, the Company may agree to register such
securities either at the time the transaction is consummated, under certain
conditions, or at specified time thereafter. The issuance of substantial
additional securities and their potential sale into any trading market which may
develop in the Company's Common Stock may have a depressive effect on such
market. While the actual terms of a transaction to which the Company may be a
party cannot be predicted, it may be expected that the parties to the business
transaction will find it desirable to avoid the creation of a taxable event and
thereby structure the acquisition in a so called "tax free" reorganization under
Sections 368(a)(1) or 351 of the Internal Revenue Code of 1986, as amended (the
"Code"). In order to obtain tax free treatment under the Code, it may be
necessary for the owners of the acquired business to own 80% or more of the
voting stock of the surviving entity. In such event, the shareholders of the
Company, including investors in this offering, would retain less than 20% of the
issued and outstanding shares of the surviving entity, which could result in
significant dilution in the equity of such shareholders.
As part of the Company's investigation, officers and directors of the
Company will meet personally with management and key personnel, may visit and
inspect material facilities, obtain independent analysis or verification of
certain information provided, check reference of management and key personnel,
and take other reasonable investigative measures, to the extent of the Company's
limited financial resources and management expertise.
The manner in which each Company participates in an opportunity will
depend on the nature of the opportunity, the respective needs and desires of the
Company and other parties, the management of the opportunity, and the relative
negotiating strength of the Company and such other management.
With respect to any mergers or acquisitions, negotiations with target
company management will be expected to focus on the percentage of the Company
which target company shareholders would acquire in exchange for their
shareholdings in the target company. Depending upon, among other things, the
target company's assets and liabilities, the Company's shareholders will in all
likelihood hold a lesser percentage ownership interest in the Company following
any merger or acquisition. The percentage ownership may be subject to
significant reduction in the event the Company acquires a target company with
substantial assets. Any merger or acquisition effected by the Company can be
expected to have a significant dilative effect on the percentage of shares held
by the Company's then shareholders, including purchasers in this offering. (See
"Risk Factors).
The Company will not have sufficient funds (unless it is able to raise
funds in a private placement) to undertake any significant development,
marketing and manufacturing of any products which may be acquired. Accordingly,
following the acquisition of any such product, the Company will, in all
likelihood, be required to either seek debt or equity financing or obtain
funding from third parties, in exchange for which the Company would probably be
required to give up a substantial portion of its interest in any acquired
product. There is no assurance that the Company will be able either to obtain
additional financing or interest third parties in providing funding for the
further development, marketing and manufacturing of any products acquired.
It is anticipated that the investigation of specific business
opportunities and the negotiation, drafting and execution of relevant
agreements, disclosure documents and other instruments will require substantial
management time and attention and substantial costs for accountants, attorneys
and others. If a decision is made not to participate in a specific business
opportunity the costs therefore incurred in the related investigation would not
be recoverable. Furthermore, even if an agreement is reached for the
participation in a specific business opportunity, the failure to consummate that
transaction may result in the loss of the Company of the related costs incurred.
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Management believes that the Company may be able to benefit from the
use of "leverage" in the acquisition of a business opportunity. Leveraging a
transaction involves the acquisition of a business through incurring significant
indebtedness for a large percentage of the purchase price for that business.
Through a leveraged transaction, the Company would be required to use less of
its available funds for acquiring the business opportunity and, therefore, could
commit those funds to the operations of the business opportunity, to acquisition
of other business opportunities or to other activities. The borrowing involved
in a leveraged transaction will ordinarily be secured by the assets of the
business opportunity to be acquired. If the business opportunity acquired is not
able to generate sufficient revenues to make payments on the debt incurred by
the Company to acquire that business opportunity, the lender would be able to
exercise the remedies provided by law or by contract. These leveraging
techniques, while reducing the amount of funds that the Company must commit to
acquiring a business opportunity, may correspondingly increase the risk of loss
to the Company. No assurance can be given as to the terms or the availability of
financing for any acquisition by the Company. No assurance can be given as to
the terms or the availability of financing for any acquisition by the Company.
During periods when interest rates are relatively high, the benefits of
leveraging are not as great as during periods of lower interest rates because
the investment in the business opportunity held on a leveraged basis will only
be profitable if it generates sufficient revenues to cover the related debt and
other costs of the financing. Lenders from which the Company may obtain funds
for purposes of a leveraged buy-out may impose restrictions on the future
borrowing, distribution, and operating policies of the Company. It is not
possible at this time to predict the restrictions, if any, which lenders may
impose or the impact thereof on the Company.
Competition
The Company is an insignificant participant among firms which engage in
business combinations with, or financing of, development stage enterprises.
There are many established management and financial consulting companies and
venture capital firms which have significantly greater financial and personnel
resources, technical expertise and experience than the Company. In view of the
Company's limited financial resources and management availability, the Company
will continue to be a significant competitive disadvantage vis-a-vis the
Company's competitors.
Regulation and Taxation
The Investment Company Act of 1940 defines an "investment company" as
an issuer which is or holds itself out as being engaged primarily in the
business of investing, reinvesting or trading of securities. While the Company
does not intend to engage in such activities, the Company could become subject
to regulation under the Investment Company Act of 1940 in the event the Company
obtains or continues to hold a minority interest in a number of development
stage enterprises. The Company could be expected to incur significant
registration and compliance costs if required to register under the Investment
Company Act of 1940. Accordingly, management will continue to review the
Company's activities from time to time with a view toward reducing the
likelihood the Company could be classified as an "investment company."
The Company intend to structure a merger or acquisition in such manner
as to minimize Federal and state tax consequences to the Company and to any
target company.
Employees
The Company's only employees at the present time are its officers and
directors, who will devote as much time as the Board of Directors determine is
necessary to carry out the affairs of the Company. (See "Management").
Item 2. Plan of Operation
See "Business" above.
Item 3. Description of Property
The Company shares space with its sole officer. The Company pays its
own charges for long distance
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telephone calls and other miscellaneous secretarial, photocopying and similar
expenses.
Item 4. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information relating to the beneficial
ownership of Company common stock by those persons beneficially holding more
than 5% of the Company capital stock, by the Company's directors and executive
officers, and by all of the Company's directors and executive officers as a
group. The address of each person is care of the Company.
<TABLE>
<CAPTION>
Percentage
Name of Number of of Outstanding
Stockholder Shares Owned Common Stock
<S> <C> <C>
Jehu Hand 800,000 80.0%
Kimberly Peterson 93,850 9.4%
All officers and
directors as a group
(1 person) 800,000 80.0%
</TABLE>
Item 5. Directors, Executive Officers, Promoters and Control Persons
The member of the Board of Directors of the Company serve until the
next annual meeting of stockholders, or until his successor(s) have been
elected. The officer serves at the pleasure of the Board of Directors.
Information as to the director and executive officer of the Company is as
follows.
Jehu Hand has been President, Chief Financial Officer and Secretary of
the Company since its inception. Mr. Hand has been engaged in corporate and
securities law practice and has been a partner of the law firm of Hand & Hand
since 1992. Hand & Hand incorporated as a law corporation in May 1994. From
January 1992 to December 1992 he was the Vice President-Corporate Counsel and
Secretary of Laser Medical Technology, Inc., which designs, manufactures and
markets dental lasers and endodontics equipment. He was a director of Laser
Medical from February 1992 to February 1993. From January to October, 1992 Mr.
Hand was Of Counsel to the Law Firm of Lewis, D'Amato, Brisbois & Bisgaard. From
January 1991 to January 1992 he was a shareholder of McKittrick, Jackson,
DeMarco & Peckenpaugh, a law corporation. From January to December 1990 he was a
partner of Day, Campbell & Hand, and was an associate of its predecessor law
firm from July 1986 to December 1989. From 1984 to June 1986 Mr. Hand was an
associate attorney with Schwartz, Kelm, Warren & Rubenstein in Columbus, Ohio.
Jehu Hand received a J.D. from New York University School of Law and a B.A. from
Brigham Young University. He is a licensed real estate broker and a registered
principal (Series 7, 24 and 63) of SoCal Securities, a broker-dealer and member
of the National Association of Securities Dealers, Inc. He is also a director
and president of Las Vegas Airlines, Inc.
Conflicts of Interest
Certain conflicts of interest now exist and will continue to exist
between the Company and its officer and director due to the fact that each has
other business interests to which he devotes his primary attention. Each officer
and director may continue to do so notwithstanding the fact that management time
should be devoted to the business of the Company.
Certain conflicts of interest may exist between the Company and its
management, and conflicts may develop in the future. The officer and director of
the Company holds similar positions with a number of companies engaged in the
same business as the Company. In the event a business opportunity is presented
to the management, he will present the opportunity to the Company and to these
companies in a random order of priority.
The Company has not established policies or procedures for the resolution
of current or potential conflicts
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of interests between the Company, its officers and directors or affiliated
entities. There can be no assurance that management will resolve all conflicts
of interest in favor of the Company, and failure by management to conduct the
Company's business in the Company's best interest may result in liability to the
management. The officers and directors are accountable to the Company as
fiduciaries, which means that they are required to exercise good faith and
integrity in handling the Company's affairs. Shareholders who believe that the
Company has been harmed by failure of an officer or director to appropriately
resolve any conflict of interest may, subject to applicable rules of civil
procedure, be able to bring a class action or derivative suit to enforce their
rights and the Company's rights.
The Company has no arrangement, understanding or intention to enter
into any transaction for participating in any business opportunity with any
officer, director, or principal shareholder or with any firm or business
organization with which such persons are affiliated, whether by reason of stock
ownership, position as an officer or director, or otherwise.
The Company, by resolution of its Board of Directors and stockholders,
adopted a 1994 Stock Option Plan (the "Plan") on April 20, 1994. The Plan
enables the Company to offer an incentive based compensation system to
employees, officers and directors and to employees of companies who do business
with the Company.
In the discretion of a committee comprised of non-employee directors
(the "Committee"), directors, officers, and key employees of the Company and its
subsidiaries or employees of companies with which the Company does business
become participants in the Plan upon receiving grants in the form of stock
options or restricted stock. A total of 2,000,000 shares are authorized for
issuance under the Plan, of which no shares are issuable. The Company does not
intend to grant options until such time as a merger or acquisition has been
consummated. The Company may increase the number of shares authorized for
issuance under the Plan or may make other material modifications to the Plan
without shareholder approval. However, no amendment may change the existing
rights of any option holder.
Any shares which are subject to an award but are not used because the
terms and conditions of the award are not met, or any shares which are used by
participants to pay all or part of the purchase price of any option may again be
used for awards under the Plan. However, shares with respect to which a stock
appreciation right has been exercised may not again be made subject to an award.
Stock options may be granted as non-qualified stock options or
incentive stock options, but incentive stock options may not be granted at a
price less than 100% of the fair market value of the stock as of the date of
grant (110% as to any 10% shareholder at the time of grant); non-qualified stock
options may not be granted at a price less than 85% of fair market value of the
stock as of the date of grant. Restricted stock may not be granted under the
Plan in connection with incentive stock options.
Stock options may be exercised during a period of time fixed by the
Committee except that no stock option may be exercised more than ten years after
the date of grant or three years after death or disability, whichever is later.
In the discretion of the Committee, payment of the purchase price for the shares
of stock acquired through the exercise of a stock option may be made in cash,
shares of the Company's Common Stock or by delivery or recourse promissory notes
or a combination of notes, cash and shares of the Company's common stock or a
combination thereof. Incentive stock options may only be issued to directors,
officers and employees of the Company.
Stock options may be granted under the Plan may include the right to
acquire an Accelerated Ownership Non-Qualified Stock Option ("AO"). If an option
grant contains the AO feature and if a participant pays all or part of the
purchase price of the option with shares of the Company's common stock, then
upon exercise of the option the participant is granted an AO to purchase, at the
fair market value as of the date of the AO grant, the number of shares of common
stock the Company equal to the sum of the number of whole shares used by the
participant in payment of the purchase price and the number of whole shares, if
any, withheld by the Company as payment for withholding taxes. An AO may be
exercised between the date of grant and the date of expiration, which will be
the same as the date of expiration of the option to which the AO is related.
Stock appreciation rights and/or restricted stock may be granted in
conjunction with, or may be unrelated
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to stock options. A stock appreciation right entitles a participant to receive a
payment, in cash or common stock or a combination thereof, in an amount equal to
the excess of the fair market value of the stock at the time of exercise over
the fair market value as of the date of grant. Stock appreciation rights may be
exercised during a period of time fixed by the Committee not to exceed ten years
after the date of grant or three years after death or disability, whichever is
later. Restricted stock requires the recipient to continue in service as an
officer, director, employee or consultant for a fixed period of time for
ownership of the shares to vest. If restricted shares or stock appreciation
rights are issued in tandem with options, the restricted stock or stock
appreciation right is canceled upon exercise of the option and the option will
likewise terminate upon vesting of the restricted shares.
Item 6. Executive Compensation
No compensation is paid or anticipated to be paid by the Company until
an acquisition is made.
On acquisition of a business opportunity, current management may resign
and be replaced by persons associated with the business opportunity acquired,
particularly if the Company participates in a business opportunity by effecting
a reorganization, merger or consolidation. If any member of current management
remains after effecting a business opportunity acquisition, that member's time
commitment will likely be adjusted based on the nature and method of the
acquisition and location of the business which cannot be predicted. Compensation
of management will be determined by the new board of directors, and shareholders
of the Company will not have the opportunity to vote on or approve such
compensation.
Directors currently receive no compensation for their duties as
directors.
Item 7. Certain Relationships and Related Transactions
Not applicable.
Item 8. Description of Securities
Common Stock
The Company's Certificate of Incorporation authorizes the issuance of
20,000,000 shares of common stock, $.001 par value per share, of which 1,000,000
shares were outstanding as of June 30, 1999. Holders of shares of common stock
are entitled to one vote for each share on all matters to be voted on by the
stockholders. Holders of common stock have no cumulative voting rights. Holders
of shares of common stock are entitled to share ratably in dividends, if any, as
may be declared, from time to time by the Board of Directors in its discretion,
from funds legally available therefor. In the event of a liquidation,
dissolution or winding up of the Company, the holders of shares of common stock
are entitled to share pro rata all assets remaining after payment in full of all
liabilities. Holders of common stock have no preemptive rights to purchase the
Company's common stock. There are no conversion rights or redemption or sinking
fund provisions with respect to the common stock. All of the outstanding shares
of common stock are fully paid and non-assessable. The Company's Certificate of
Incorporation authorizes the Board of Directors to effect a forward or reverse
stock split without stockholder approval. Company stockholders have approved a
forward stock split and a name change, with the terms of the forward stock split
and the new name to be decided by the Board of Directors.
Preferred Stock
The Company's Certificate of Incorporation authorizes the issuance of
1,000,000 shares of preferred stock, $.001 par value, of which no shares are
issued and outstanding. The Company currently has no plans to issue any
preferred stock. The Company's Board of Directors has authority, without action
by the shareholders, to issue all or any portion of the authorized but unissued
preferred stock in one or more series and to determine the voting rights,
preferences as to dividends and liquidation, conversion rights, and other rights
of such series. The preferred stock, if and when issued, may carry rights
superior to those of common stock, however, no preferred stock may be issued
with rights equal or senior to the preferred stock without the consent of a
majority of the holders of preferred stock.
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The Company considers it desirable to have preferred stock available to
provide increased flexibility in structuring possible future acquisitions and
financings and in meeting corporate needs which may arise. If opportunities
arise that would make desirable the issuance of preferred stock through either
public offering or private placements, the provisions for preferred stock in the
Company's Certificate of Incorporation would avoid the possible delay and
expense of a shareholder's meeting, except as may be required by law or
regulatory authorities. Issuance of the preferred stock could result, however,
in a series of securities outstanding that will have certain preferences with
respect to dividends and liquidation over the common stock which would result in
dilution of the income per share and net book value of the common stock.
Issuance of additional common stock pursuant to any conversion right which may
be attached to the terms of any series of preferred stock may also result in
dilution of the net income per share and the net book value of the common stock.
The specific terms of any series of preferred stock will depend primarily on
market conditions, terms of a proposed acquisition or financing, and other
factors existing at the time of issuance. Therefore, it is not possible at this
time to determine in what respect a particular series of preferred stock will be
superior to the Company's common stock or any other series of preferred stock
which the Company may issue. The Board of Directors does not have any specific
plan for the issuance of preferred stock at the present time and does not intend
to issue any preferred stock, except on terms which it deems to be in the best
interest of the Company and its shareholders.
The issuance of Preferred Stock could have the effect of making it more
difficult for a third party to acquire a majority of the outstanding voting
stock of the Company. Further, certain provisions of Delaware law could delay or
make more difficult a merger, tender offer or proxy contest involving the
Company. While such provisions are intended to enable the Board of Directors to
maximize stockholder value, they may have the effect of discouraging takeovers
which could be in the best interest of certain stockholders. There is no
assurance that such provisions will not have an adverse effect on the market
value of the Company's stock in the future.
Shares Eligible for Future Sale
Of the outstanding shares of the Company, all but 200,000 shares are
subject to resale restrictions and, unless registered under the Securities Act
of 1933 (the "Act") or exempted under another provision of the Act, will be
ineligible for sale in the public market. Sales may be made after one year from
their acquisition based upon Rule 144.
In general, under Rule 144 as currently in effect a person (or persons
whose shares are aggregated) who has beneficially owned shares privately
acquired or indirectly from the Company or from an Affiliate, for at least one
year, or who is an Affiliate, is entitled to sell within any three-month period
a number of such shares that does not exceed the greater of 1% of the then
outstanding shares of the Company's Common Stock (approximately 4,000 shares) or
the average weekly trading volume in the Company's Common Stock during the four
calendar weeks immediately preceding such sale. Sales under Rule 144 are also
subject to certain manner of sale provisions, notice requirements and the
availability of current public information about the Company. A person (or
persons whose shares are aggregated) who is not deemed to have been an affiliate
at any time during the 90 days preceding a sale, and who has beneficially owned
shares for at least one year, is entitled to sell all such shares under Rule 144
without regard to the volume limitations, current public information
requirements, manner of sale provisions, or notice requirements.
Sales of substantial amounts of the Common Stock of the Company in the
public market could adversely affect prevailing market prices.
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Related Stockholders Matters
(a) Market Information
The Company's Common Stock is not currently trading and is not
expected to trade in the foreseeable future.
10
<PAGE>
(b) Holders
As of June 30, 1999, there were approximately 111 holders of
Company common stock.
(c) Dividends
The Company has not paid any dividends on its common stock.
The Company currently intends to retain any earnings for use in its business,
and therefore does not anticipate paying cash dividends in the foreseeable
future.
Item 2. Legal Proceedings
Not applicable.
Item 3. Changes in and Disagreements with Accountants
Not Applicable.
Item 4. Recent Sales of Unregistered Securities
There have been no issuances of securities for the past three years.
Item 5. Indemnification of Directors and Officers
The Company has adopted provisions in its certificate of incorporation
and bylaws that limit the liability of its directors and provide for
indemnification of its directors and officers to the full extent permitted under
the Delaware General Corporation Law. Under the Company's Certificate of
Incorporation, and as permitted under the Delaware General Corporation Law,
directors are not liable to the Company or its stockholders for monetary damages
arising from a breach of their fiduciary duty of care as directors. Such
provisions do not, however, relieve liability for breach of a director's duty of
loyalty to the Company or its stockholders, liability for acts or omissions not
in good faith or involving intentional misconduct or knowing violations of law,
liability for transactions in which the director derived as improper personal
benefit or liability for the payment of a dividend in violation of Delaware law.
Further, the provisions do not relieve a director's liability for violation of,
or otherwise relieve the Company or its directors from the necessity of
complying with, federal or state securities laws or affect the availability of
equitable remedies such as injunctive relief or recision.
At present, there is no pending litigation or proceeding involving a
director, officer, employee or agent of the Company where indemnification will
be required or permitted. The Company is not aware of any threatened litigation
or proceeding that may result in a claim for indemnification by any director or
officer.
PART F/S
The following financial statements are included herein:
Independent Auditors' Report
Balance Sheet at June 30, 1999
Statement of Operations for the period inception (April 20, 1994) to
June 30, 1999 and the two years ended June 30, 1999
Statement of Stockholders' Equity
Statement of Cash Flows for the period inception (April 20, 1994) to
June 30, 1999 and the two years ended June 30, 1999
Notes to Financial Statements
11
<PAGE>
PART III
Item 1. Index to Exhibits.
The following exhibits required by Part III of Form 1-A are
filed herewith:
Exhibit No. Document Description
2. Charter and Bylaws
2.1. Articles of Incorporation(1)
2.2 Bylaws(1)
6. Material Contracts
6.1. 1994 Stock Option Plan(1)
(1) Filed herewith
12
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
Dated: July 14, 1999 MENDOCINO PARTNERS, INC.
By:
Jehu Hand
President
<PAGE>
MENDOCINO PARTNERS, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1999 AND 1998
AND
INDEPENDENT AUDITORS= REPORT
<PAGE>
<TABLE>
<CAPTION>
MENDOCINO PARTNERS, INC.
(A Development Stage Company)
Table of Contents
<S> <C>
Independent Auditors= Report 1
Financial Statements
Statements of Financial Position 2
Statements of Operations 3
Statement of Changes in Stockholders= Equity 4
Statements of Cash Flows 5
Notes to Financial Statements 6
</TABLE>
<PAGE>
563 WEST 500 SOUTH, SUITE 410, BOUNTIFUL, UTAH 84010
(801) 294-3155 FAX (801) 294-3190
THURMAN SHAW & CO., L.C.
Certified Public Accountants James K. Thurman
Jeffrey L. Shaw
Justin R. Shaw
INDEPENDENT AUDITORS= REPORT
To the Board of Directors and Shareholders
Mendocino Partners, Inc.
We have audited the statements of financial position of Mendocino Partners, Inc.
( a development stage company) as of June 30, 1999 and 1998, and the related
statements of operations, changes in stockholders= equity and cash flows for the
years then ended and cumulative for the period April 20, 1994 (date of
inception) through June 30, 1999. These financial statements are the
responsibility of the Company=s management. Our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits in accordance with generally accepted auditing standards. Those standards
require that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material misstatements. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Mendocino Partners, Inc. (a
development stage company) as of June 30, 1999 and 1998, and the results of its
operations, changes in stockholders= equity and cash flows for the period April
20, 1994 (date of inception) through June 30, 1999, in conformity with generally
accepted accounting principles.
THURMAN SHAW & CO., L.C.
Bountiful, Utah
July 9, 1999
<PAGE>
8
<TABLE>
<CAPTION>
MENDOCINO PARTNERS, INC.
(A Development Stage Company)
Statements of Financial Position
June 30, 1999 and 1998
1999 1998
------------- ---------
ASSETS
<S> <C> <C>
Current assets-cash $ - $ -
------------- -----------
Other assets
Organization costs, net of accumulated
amortization of $1,015 and $858 - 157
------------- --------------
Total assets $ - $ 157
============= ==============
LIABILITIES AND STOCKHOLDERS= EQUITY
Current liabilities
Accounts payable $ 108 $ -
Accounts payable - related party 993 468
------------- --------------
Total current liabilities 1,101 468
------------- --------------
Stockholders= equity
Preferred stock, $.001 par value; 1,000,000 shares
authorized; no shares issued and outstanding
Common stock, $.001 par value; 20,000,000 shares
authorized; 1,000,000 shares issued and outstanding 1,000 1,000
Additional paid-in capital 15 15
Accumulated deficit during the development stage (2,116) (1,326)
------------- --------------
Total stockholders= equity (1,101) (311)
------------- --------------
Total liabilities and stockholders= equity $ - $ 157
============= ==============
</TABLE>
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
MENDOCINO PARTNERS, INC.
(A Development Stage Company)
Statements of Operations
Years Ended June 30, 1999 and 1998
and Cumulative from Inception to June 30, 1999
Cumulative
From
Inception
(April 20, 1994)
to June 30,
1999 1998 1999
-------------- ------------- ---------
<S> <C> <C> <C>
Revenues $ - $ - $ -
--------- --------- ------
Operating expenses
General and administrative 633 108 1,101
Amortization 157 204 1,015
-------------- ------------- --------------
Total operating expenses 790 312 2,116
-------------- ------------- --------------
Net (loss) $ (790) $ (312) $ (2,116)
============== ============= ==============
Net (loss) per share $ - $ - $ -
============== ============= ===========
Weighted average number of
shares outstanding 1,000,000 1,000,000 1,000,000
============== ============= ==============
</TABLE>
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
MENDOCINO PARTNERS, INC.
(A Development Stage Company)
Statement of Changes in Stockholders= Equity
From Inception (April 20, 1994) Through June 30, 1999
Accumulated
Deficit
Common Stock Additional During the
Paid-In Development
Shares Amount Capital Stage Total
Issuance of common stock
<S> <C> <C> <C> <C> <C>
for cash 1,000,000 $ 1,000 $ 15 $ - $ 1,015
Net (loss) - - - (42)
------------- ------------- ------------- -------------
(42)
Balances at June 30, 1994 1,000,000 1,000 15 (42) 973
Net (loss) - - - (338)
------------- ------------- ------------- -------------
(338)
Balances at June 30, 1995 1,000,000 1,000 15 (380) 635
Net (loss) - - - (320)
------------- ------------- ------------- -------------
(320)
Balances at June 30, 1996 1,000,000 1,000 15 (700) 315
Net (loss) - - - (314)
------------- ------------- ------------- -------------
(314)
Balances at June 30, 1997 1,000,000 1,000 15 (1,014) 1
Net (loss) - - - (312)
------------- ------------- ------------- -------------
(312)
Balances at June 30, 1998 1,000,000 1,000 15 (1,326) (311)
Net (loss) - - - (790)
------------- ------------- ------------- -------------
(790)
Balances at June 30, 1999 1,000,000 $ 1,000 $ 15 $ (2,116) $ (1,101)
============= ============= ============= ============= ==============
</TABLE>
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
MENDOCINO PARTNERS, INC.
(A Development Stage Company)
Statements of Cash Flows
Years Ended June 30, 1999 and 1998
and Cumulative from Inception to June 30, 1999
Cumulative
From
Inception
(April 20, 1994)
to June 30,
1999 1998 1999
------------- ------------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C>
Net (loss) $ (790) $ (312) $ (2,116)
Add item not requiring the use
of cash - amortization 157 204 1,015
Increase in accounts payable 633 108 1,101
------------- ------------- -------------
Net cash flows from operating activities - - -
------------- ------------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Organization costs - - (1,015)
------------- ------------- -------------
Net cash flows from investing activities - - (1,015)
------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock - - 1,015
------------- ------------- -------------
Net cash flows from financing activities - - 1,015
------------- ------------- -------------
Net decrease in cash - - -
Cash balance at beginning of period - - -
------------- ------------- ----------
Cash balance at end of period $ - $ - $ -
============= ============= ==========
</TABLE>
See accompanying notes to financial statements
<PAGE>
MENDOCINO PARTNERS, INC.
(A Development Stage Company)
Notes to Financial Statements
Years Ended June 30, 1999 and 1998
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Company was incorporated under the laws of the State of Delaware on
April 20, 1994, for the purpose of seeking out business opportunities,
including acquisitions. The Company is in the development stage and
will be very dependent on the skills, talents, and abilities of
management to successfully implement its business plan. Due to the
Company=s lack of capital, it is likely that the Company will not be
able to compete with larger and more experienced entities for business
opportunities which are lower risk and are more attractive for such
entities. Business opportunities in which the Company may participate
will likely be highly risky and speculative. Since inception, the
Company=s activities have been limited to organizational matters.
Organizational costs are amortized on a straight-line basis over five
years.
2. CASH AND CASH EQUIVALENTS
The Company considers all short-term investments with an original
maturity of three months or less to be cash equivalents.
3. RELATED PARTY TRANSACTIONS
The Company currently receives the use of office space free of charge
from an officer of the Company. The fair market value of the office
space in the same geographic region is $20 per month.
4. INCOME TAXES
The fiscal year end of the Company is June 30th and an income tax
return has not been filed. However, if an income tax return had been
filed, the Company would have a net operating loss carry forward of
$2,116 that would begin expiring in the year 2009.
5. STOCK OPTION PLAN
The Company has stock option plans for directors, officers, employees,
advisors, and employees of companies that do business with the Company,
which provide for non-qualified and qualified stock options. The Stock
Option Committee of the Board determines the option price which cannot
be less than the fair market value at the date of the grant or 110% of
the fair market value if the Optionee holds 10% or more of the
Company=s common stock. The price per share of shares subject to a
Non-Qualified Option shall not be less than 85% of the fair market
value at the date of the grant. Options generally expire either three
months after termination of employment, or ten years after date of
grant (five years if the optionee holds 10% or more of the Company=s
common stock at the time of grant). No options have been granted under
the plan.
CERTIFICATE OF INCORPORATION
OF
MENDOCINO PARTNERS, INC.
(a Delaware corporation)
The undersigned, in order to form a corporation pursuant to the General
Corporation Law of the State of Delaware, does hereby certify as follows:
FIRST: The name of the Corporation is Mendocino Partners, Inc.
SECOND: The address of the registered office of the Corporation in the
State of Delaware is WXYZ, Inc., 3640-A Concord Pike, in the City of Wilmington,
County of Newcastle, 19803. The name of its registered agent at the address is
WXYZ, Inc.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which corporations
may be organized under the General Corporation Law of the State of Delaware.
FOURTH: The total number of shares of all classes which the Corporation
is authorized to have outstanding is Twenty One Million (21,000,000) shares of
which stock Twenty Million (20,000,000) shares in the par value of $.001 each,
amounting in the aggregate of Twenty Thousand Dollars ($20,000) shall be common
stock and of which One Million (1,000,000) shares in the par value of $.001
each, amounting in the aggregate to One Thousand Dollars ($1,000) shall be
preferred stock. The board of directors is authorized, subject to limitations
prescribed by law, to provide for the issuance of the authorized shares of
preferred stock in series, and by filing a certificate pursuant to the
applicable law of the State of Delaware, to establish from time to time the
number of shares to be included in each such series and the qualifications,
limitations or restrictions thereof. The authority of the board with respect to
each series shall include, but not be limited to, determination of the
following:
(a) The number of shares constituting that series and the
distinctive designation of that series;
(b) The dividend rate on the shares of that series, whether
dividends shall be cumulative, and, if so, from which date or
dates, and the relative rights of priority, if any, of payment
of dividends on shares of that series;
(c) Whether that series shall have voting rights, in addition to
the voting rights provided by law, and, if so, the terms of
such voting rights;
(d) Whether that series shall have conversion privileges, and, if
so, the terms and conditions of such conversion, including
provision for adjustment of the conversion rate in such events
as the Board of Directors shall determine;
(e) Whether or not the shares of that series shall be redeemable,
and, if so, the terms and conditions of such redemption,
including the date or date upon or after which they shall be
redeemable, and the amount per share payable in case of
redemption, which amount may vary under different conditions,
and at different redemption rates;
(f) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so,
the terms and amount of such sinking fund;
(g) The rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding
up of the corporation, and the relative rights of priority, if
any, of payment of shares of that series;
(h) Any other relative rights, preferences and limitations of that
series, unless otherwise provided by the certificate of
determination.
2
<PAGE>
FIFTH: Election of directors ar an annual or special meeting of
stockholders need not be by written ballot unless the bylaws of the corporation
shall otherwise provide. The number of directors of the corporation which shall
constitute the whole board of directors shall be such as from time to time shall
be fixed by or in the manner provided in the bylaws.
SIXTH: In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized to make, repeal, alter,
amend and rescind the bylaws of the corporation.
SEVENTH: A director of the corporation shall not be personally liable
for monetary damages to the corporation or its stockholders for breach of any
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 law; (iii) under Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the director derives an
improper personal benefit.
EIGHTH: A director or officer of the corporation shall not be
disqualified by his or her office from dealing or contracting with the
corporation as a vendor, purchaser, employee, agent or otherwise. No
transaction, contract or act of the corporation shall be void or voidable or in
any way affected or invalidated by reason of the fact that any director or
officer of the Corporation is a member of any firm, a stockholder, director or
officer of any corporation or trustee or beneficiary of any trust that is in any
way interested in such transaction, contract or act. No director or officer
shall be accountable or responsible to the corporation for or in respect to any
transaction, contract or act of the corporation or for any gain or profit
directly or indirectly realized by him or her by reason of the fact that he or
she or any firm in which he or she is a member or any corporation of which he or
she is a stockholder, director, or officer, or any trust of which he or she is a
trustee, or beneficiary, is interest in such transaction, contract or act;
provided the fact that such director or officer or such firm, corporation,
trustee or beneficiary of such trust, is so interest shall have been disclosed
or shall have been known to the members of the board of directors as shall be
present at any meeting at which action upon such contract, transaction or act
shall have been taken. Any director may be counted in determining the existence
of a quorum at any meeting of the board of directors which shall authorize or
take action in respect to any such contract, transaction or act, and may vote
thereat to authorize, ratify or approve any such contract, transaction or act,
and any officer of the corporation may take any action within the scope of his
or her authority, respecting such contract, transaction or act with like force
and effect as if he or she or any firm of which he or she is a member, or any
corporation of which he or she is a stockholder, director or officer, or any
trust of which he or she is a trustee or beneficiary, were not interested in
such transaction, contract or act. Without limiting or qualifying the foregoing,
if in any judicial or other inquiry, suit, cause or proceeding, the question of
whether a director or officer of the corporation has acted in good faith is
material, and notwithstanding any statue or rule of law or equity to the
contrary (if any there be) his or her good faith shall be presumed in the
absence of proof to the contrary by clear and convincing evidence.
NINTH: Whenever a compromise or arrangement is proposed between the
corporation and its creditors or any class of them and/or between the
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the corporation under the
provisions of Section 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for the
corporation under the provisions of Section 279 of Title 8 of the Delaware Code,
order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the corporation, as the case may be, to
be summoned in such manner as the said court directs. If a majority in number
representing three-fourths in value of the creditors of class of creditors,
and/or the stockholders or class of stockholders of the corporation, as the case
may be, agree to any compromise or arrangement and to any reorganization of this
corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the corporation, as the case may be, and also on the
corporation.
3
<PAGE>
TENTH: The corporation reserves the right to amend and repeal any
provision contained in this certificate of incorporation in the manner
prescribed by the laws of the State of Delaware. All rights herein conferred are
granted subject to this reservation.
ELEVENTH: The incorporator is Jehu Hand whose mailing address is 24351
Cabot Road, Suite 207,
Laguna Hills. California 92653.
I, the undersigned, being the incorporator, for the purpose of forming
a corporation under the laws of the State of Delaware do make, file and record
this Certificate of Incorporation, do certify that the facts herein stated are
true, and, accordingly, have hereunto set my hand this 18th day of April, 1994.
/s/ Jehu Hand
Jehu Hand,
Incorporator
BYLAWS FOR THE REGULATION, EXCEPT AS
OTHERWISE PROVIDED BY STATUTE OR ITS
CERTIFICATE OF INCORPORATION, OF
MENDOCINO PARTNERS, INC.
a Delaware corporation
ARTICLE I
OFFICES
Section 1. Principal Executive Office. The principal executive office
of the corporation shall be located
as directed by the board of directors.
Section 2. Other Offices. Other business offices may at any time be
established by the board of directors
at any place or places by them or where the corporation is qualified to do
business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. All meetings of stockholders shall be
held at the principal executive office of the corporation, or at any other place
within or without the State of Delaware which may be designated either by the
board of directors or by the written consent of all persons entitled to vote
thereat and not present at the meeting, given either before or after the meeting
and filed with the secretary of the corporation.
Section 2. Annual Meetings. The annual meetings of stockholders shall
be fixed by the board of directors. At such meetings directors shall be elected,
reports of the affairs of the corporation shall be considered, and any other
business may be transacted which is within the powers of the stockholders.
Section 3. Special Meetings. Special meetings of the stockholders, for
the purpose of taking any action permitted by the stockholders under the
Delaware General Corporation Law and the certificate of incorporation of the
corporation, may be called at any time by the chairman of the board or the
president, or by the board of directors, or by one or more holders of shares
entitled to cast in the aggregate not less than twenty percent (20%) of the
votes at the meeting. Upon request in writing that a special meeting of
stockholders be called for any proper purpose, directed to the chairman of the
board, president, vice president or secretary by any person (other than the
board of directors) entitled to call a special meeting of stockholders, the
officer forthwith shall cause notice to be given to stockholders entitled to
vote that a meeting will be held at a time requested by the person or persons
calling the meeting, not less than thirty-five (35) nor more than sixty (60)
days after receipt of the request.
-1-
<PAGE>
Section 4. Notice of Annual or Special Meeting. Written notice of each
annual or special meeting of stockholders shall be given not less than ten (10)
nor more than sixty (60) days before the date of the meeting to each stockholder
entitled to vote thereat. Such written notice shall be given either personally
or by mail or other means of written communication, charges prepaid, addressed
to such stockholder at his address appearing on the books of the corporation or
given by him to the corporation for the purpose of notice. If any notice or
report addressed to the stockholder at the address of such stockholder appearing
on the books of the corporation is returned to the corporation by the United
States Postal Service as unable to deliver the notice or report to the
stockholder at such address, all future notices or reports shall be deemed to
have been duly given without further mailing if the same shall be available for
the stockholder upon written demand of the stockholder at the principal
executive office of the corporation for a period of one (1) year from the date
of the giving of the notice or report to all other stockholders. If a
stockholder gives no address, notice shall be deemed to have been given him if
sent by mail or other means of written communication addressed to the place
where the principal executive office of the corporation is situated, or if
published at least once in some newspaper of general circulation in the county
in which said principal executive office is located.
Any such notice shall be deemed to have been given at the time when
delivered personally or deposited in the mail or sent by other means of written
communication. An affidavit of mailing of any such notice in accordance with the
foregoing provisions, executed by the secretary, assistant secretary or any
transfer agent of the corporation, shall be prima facie evidence of the giving
of the notice.
Section 5. Quorum. The presence in person or by proxy of the holders of
a majority of the shares entitled to vote at any meeting shall constitute a
quorum for the transaction of business at any meeting of stockholders. The
stockholders present at a duly called or held meeting at which a quorum is
present may continue to do business until adjournment, notwithstanding the
withdrawal of enough stockholders to leave less than a quorum, if any action
taken (other than adjournment) is approved by at least a majority of the shares
required to constitute a quorum.
Section 6. Adjourned Meeting and Notice Thereof. Any stockholders'
meeting, annual or special, whether or not a quorum is present, may be adjourned
from time to time by the vote of a majority of the shares, the holders of which
are either present in person or represented by proxy thereat, but in the absence
of a quorum at the commencement of the meeting, no other business may be
transacted at such meeting.
When any stockholders' meeting, either annual or special, is adjourned
for thirty (30) days or more, or if after adjournment a new record date is fixed
for the adjourned meeting, notice of the adjourned meeting shall be given as in
the case of an original meeting. Except as provided above, it shall not be
necessary to give any notice of the time and place of the adjourned meeting or
of the business to be transacted thereat, other than by announcement of the time
and place thereof at the meeting at which such adjournment is taken.
Section 7. Voting. The stockholders entitled to vote at any meeting of
stockholders shall be determined in accordance with the Delaware General
Corporation Law (relating to voting of shares held by a fiduciary, in the name
of a corporation, or in joint ownership). The stockholders may vote by voice
vote or by ballot; provided, however, that all elections for director shall be
by ballot. If a quorum is present, the affirmative vote of the majority of the
shares represented at the meeting and entitled to vote on any matter shall be
the act of the stockholders, unless the vote of a greater number of voting by
classes is required by the Delaware General Corporation Law or the certificate
of incorporation.
Section 8. Validation of Defectively Called or Noticed Meeting. The
transactions of any meeting of stockholders, either annual or special, however
called and noticed, shall be as valid as though had at a meeting duly held after
regular call and notice, if a quorum be present either in person or by proxy,
and if, either before or after the meeting, each of the persons entitled to
vote, not present in person or by proxy, or who, though present, has, at the
beginning of the meeting, properly objected to the transaction of any business
because the meeting was not lawfully called or convened, or to particular
matters of business legally required to be included in the notice, but not so
included, signs a written waiver of notice, or a consent to the holding of such
meeting, or an approval of the minutes thereof. All such waivers, consents or
approvals shall be filed with the corporate records or made a part of the
minutes of the meeting. Neither the business to be transacted at nor the purpose
of any regular or special meeting of stockholders need be specified in any
written waiver of notice or consent, except that if action is taken
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or proposed to be taken for approval of any of those matters specified in
paragraph (e) of Section 4 above, the waiver of notice or consent shall state
the general nature of the proposal.
Section 9. Action Without Meeting. Directors may be elected without a
meeting by a consent in writing, setting forth the action so taken, signed by
all of the persons who would be entitled to vote for the election of directors,
provided that, without prior notice except as hereinafter set forth, a director
may be elected at any time to fill a vacancy not filled by the directors by the
written consent of persons holding a majority of the outstanding shares entitled
to vote for the election of directors.
Any other action which, under any provision of the Delaware General
Corporation Law, may be taken at a meeting of the stockholders, may be taken
without a meeting, and without prior notice except as hereinafter set forth, if
a consent in writing, setting forth the action so taken, is signed by the
holders of outstanding shares having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted, unless the consents
of all stockholders entitled to vote have been solicited in writing.
Unless, as provided in Section 12 of this Article II, the board of
directors has fixed a record date for the determination of stockholders entitled
to notice of and to give such written consent, the record date for such
determination shall be the day on which the first written consent is given. All
such written consents shall be filed with the secretary of the corporation.
Any stockholder giving a written consent, or the stockholder's proxy
holders, or a transferee of the shares or a personal representative of the
stockholder or their respective proxy holders, may revoke the consent by a
writing received by the corporation prior to the time that written consents of
the number of shares required to authorize the proposed action have been filed
with the secretary of the corporation, but may not do so thereafter. Such
revocation is effective upon its receipt by the secretary of the corporation.
Section 10. Proxies. Every person entitled to vote or execute consents
shall have the right to do so either in person or by one or more agents
authorized by a written proxy executed by such person or his duly authorized
agent and filed with the secretary of the corporation. Subject to the Delaware
General Corporation Law in the case of any proxy which states that it is
irrevocable, any proxy duly executed shall continue in full force and effect
until (i) an instrument revoking it or a duly executed proxy bearing a later
date is filed with the secretary of the corporation prior to the vote pursuant
thereto, (ii) the person executing the proxy attends the meeting and votes in
person, or (iii) written notice of the death or incapacity of the maker of such
proxy is received by the corporation before the vote pursuant thereto is
counted; provided that no such proxy shall be valid after the expiration of
three (3) years from the date of its execution, unless otherwise provided for in
the proxy. The dates contained on the forms of proxy shall presumptively
determine the order of execution of the proxies, regardless of the postmark
dates on the envelopes in which they are mailed.
Without limiting the manner in which a stockholder may authorize
another person or persons to act for him as proxy, the following shall
constitute a valid means by which a stockholder may grant such authority.
(a) A stockholder may execute a writing authorizing another person
or persons to act for him as proxy. Execution may be
accomplished by the stockholder or his authorized officer,
director, employee or agent signing such writing or causing
his or her signature to be affixed to such writing by any
reasonable means including, but not limited to, by facsimile
signature.
(b) A stockholder may authorize another person or persons to act
for him as proxy by transmitting or
authorizing the transmission of a telegram, cablegram, or
other means of electronic transmission
to the person who will be the holder of the proxy or to a
proxy solicitation firm, proxy support
service organization or like agent duly authorized by the
person who will be the holder of the
proxy to receive such transmission, provided that any such
telegram, cablegram or other means of
electronic transmission must either set forth or be submitted
with information from which it can
be determined that the telegram, cablegram or other electronic
transmission was authorized by the
stockholder. If it is determined that such telegrams,
cablegrams or other electronic transmissions
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are valid, the inspectors or, if there are no inspectors, such
other persons making that determination shall specify the
information upon which they relied.
(c) Any copy, facsimile telecommunication or other reliable
reproduction of the writing or transmission described in
Paragraphs (a) or (b) may be substituted or used in lieu of
the original writing or transmission for any and all purposes
for which the original writing or transmission could be used,
provided that such copy, facsimile telecommunication or other
reproduction shall be a complete reproduction of the entire
original writing or transmission.
Section 11. Inspectors of Election. In advance of any meeting of
stockholders, the board of directors may appoint any person or persons other
than nominees for office as inspectors of election to act at such meeting or any
adjournment thereof. If inspectors of election be not so appointed, the chairman
of any such meeting may, and on the request of any stockholder or his proxy
shall, make such appointment at the meeting. The number of inspectors shall be
either one (1) or three (3). If appointed at a meeting on the request of one or
more stockholders or proxies, the majority of shares represented in person or by
proxy shall determine whether one (1) or three (3) inspectors are to be
appointed. In case any person appointed as inspector fails to appear or fails or
refuses to act, the vacancy may, and on the request of any stockholder or a
stockholder's proxy shall, be filled by appointment by the board of directors in
advance of the meeting, or at the meeting by the chairman of the meeting.
The duties of such inspectors shall be as prescribed by the Delaware
General Corporation Law and shall include: determining the number of shares
outstanding and the voting power of each, the shares represented at the meeting,
the existence of a quorum, the authenticity, validity and effect of proxies;
receiving votes, ballots or consents; hearing and determining all challenges and
questions in any way arising in connection with the right to vote; counting and
tabulating all votes or consents; determining when the polls shall close;
determining the result; and such acts as may be proper to conduct the election
or vote with fairness to all stockholders.
The inspectors of election shall perform their duties impartially, in
good faith, to the best of their ability and as expeditiously as is practical.
If there are three (3) inspectors of election, the decision, act or certificate
of a majority is effective in all respects as the decision, act or certificate
of all. Any report or certificate made by the inspectors of election is prima
facie evidence of the facts stated therein.
Section 12. Record Date for Stockholder Notice, Voting and Giving
Consents. For purposes of determining the stockholders entitled to notice of any
meeting or to vote or entitled to give consent to corporate action without a
meeting, the board of directors may fix, in advance, a record date, which shall
not be more than sixty (60) days nor less than ten (10) days before the date of
any such meeting nor more than sixty (60) days before any such action without a
meeting, and in this event only stockholders of record on the date so fixed are
entitled to notice and to vote or to give consents, as the case may be,
notwithstanding any transfer of any shares on the books of the corporation after
the record date, except as otherwise provided in the Delaware General
Corporation Law.
If the board of directors does not so fix a record date:
(a) 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.
(b) The record date for determining stockholders entitled to give
consent to corporate action in writing without a meeting, (i)
when no prior action by the board has been taken, shall be the
day on which the first written consent is given, or (ii) when
prior action of the board is required by the Delaware General
Corporation Law, shall be at the close of business on the day
on which the board adopts the resolution relating to that
action, or the sixtieth (60th) day before the date of such
other action, whichever is later.
ARTICLE III
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DIRECTORS
Section 1. Powers. Subject to the provisions of the Delaware General
Corporation Law, and to any limitations in the certificate of incorporation and
these bylaws, relating to action required to be approved by the stockholders or
approved by the outstanding shares, all corporate powers shall be exercised by
or under the authority of, and the business and affairs of the corporation shall
be managed by, the board of directors. Without prejudice to such general powers,
but subject to the same limitations, it is hereby expressly declared that the
board of directors shall have the following powers, to wit:
(a) To select and remove all the officers, agents and employees of
the corporation, prescribe such powers and duties for them as
may not be inconsistent with law, with the certificate of
incorporation or with these bylaws, fix their compensation and
require from them security for faithful service.
(b) To conduct, manage and control the affairs and business of the
corporation, and to make such rules and regulations therefor
not inconsistent with law, or with the certificate of
incorporation or with these bylaws, as they may deem best.
(c) To change the principal executive office and principal office
for the transaction of the corporation
from one location to another; to fix and locate from time to
time one or more subsidiary offices
of the corporation within or without the State of Delaware;
to designate any place within or
without the State of Delaware for the holding of any
stockholders' meeting or meetings; and to
adopt, make and use a corporate seal, and to prescribe the
forms of certificates of stock, and to
alter the form of such seal and of such certificates from
time to time, as in their judgment they
may deem best, provided such seal and such certificates
shall at all times comply with the
provisions of law.
(d) To authorize the issuance of shares of stock of the
corporation from time to time, upon such terms as may be
lawful.
(e) To borrow money and incur indebtedness for the purposes of the
corporation, and to cause to be executed and delivered
therefor, in the corporate name, promissory notes, bonds,
debentures, deeds of trust, mortgages, pledges, hypothecations
or other evidences of debt and securities therefor.
Section 2. Number and Qualification of Directors. The authorized number
of directors shall be no less than one, and shall be such maximum number of
persons as may be determined from time to time by resolutions of the board of
directors.
Section 3. Election and Term of Office. The directors shall be elected
at each annual meeting of stockholders but, if any such annual meeting is not
held or the directors are not elected thereat, the directors may be elected at
any special meeting of stockholders held for that purpose. All directors shall
hold office until their respective successors are elected and qualified, subject
to the Delaware General Corporation Law and the provisions of these bylaws with
respect to vacancies on the board of directors.
Section 4. Vacancies. A vacancy in the board of directors shall be
deemed to exist in case of the death, resignation or removal of any director, or
if the board of directors by resolution declares vacant the office of a director
who has been declared of unsound mind by order of court or convicted of a
felony, or if the authorized number of directors be increased, or if the
stockholders fail, at any annual or special meeting of stockholders at which any
director or directors are elected, to elect the full authorized number of
directors to be voted for at that meeting.
Vacancies in the board of directors, except for a vacancy created by
the removal of a director, may be filled by a majority of the remaining
directors, though less than a quorum, or by a sole remaining director, and each
director so elected shall hold office until his successor is elected at an
annual or a special meeting of the stockholders. A vacancy in the board of
directors created by the removal of a director may only be filled by the vote
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of a majority of the shares entitled to vote represented at a duly held meeting
at which a quorum is present, or by the written consent of the holders of a
majority of the outstanding shares entitled to vote.
The stockholders may elect a director or directors at any time to fill
any vacancy or vacancies not filled by the directors. Any such election by
written consent shall require the consent of holders of a majority of the
outstanding shares entitled to vote.
Any director may resign effective upon giving written notice to the
chairman of the board, the chief executive officer, the president, the secretary
or the board of directors of the corporation, unless the notice specifies a
later time for the effectiveness of such resignation. If the board of directors
accepts the resignation of a director tendered to take effect at a future time,
the board of directors or the stockholders shall have power to elect a successor
or take office when the resignation is to become effective.
No reduction of the authorized number of directors shall have the
effect of removing any director prior to the expiration of his term of office.
Section 5. Place of Meeting. Regular meetings of the board of directors
shall be held at any place within or without the State of Delaware which has
been designated from time to time by resolution by the board or by written
consent of all members of the board of directors. In the absence of such
designation, regular meetings shall be held at the principal executive office of
the corporation. Special meetings of the board may be held either at a place so
designated or at the principal executive office.
Section 6. Annual Meeting. Immediately following each annual meeting of
stockholders, the board of directors shall hold a regular meeting at the place
of said annual meeting or at such other place as shall be fixed by the board of
directors, for the purpose of organization, election of officers, and the
transaction of other business.
Call and notice of such meetings are hereby dispensed with.
Section 7. Other Regular Meetings. Other regular meetings of the board
of directors shall be held without call on the date and at the time which the
board of directors may from time to time designate; provided, however, that
should the day so designated fall upon a Saturday, Sunday or legal holiday
observed by the corporation at its principal executive office, then said meeting
shall be held at the same time on the next day thereafter ensuing which is a
full business day. Notice of all such regular meetings of the board of directors
is hereby dispensed with.
Section 8. Special Meetings. Special meetings of the board of
directors for any purpose or purposes shall
be called at any time by the chairman of the board, the president, any vice
president, the secretary or by any director.
Special meetings of the board of directors shall be held upon four (4)
days' written notice or forty-eight (48) hours' notice given personally or by
telephone, telegraph, telex or other similar means of communication. Any such
notice shall be addressed or delivered to each director at such director's
address as it is shown upon the records of the corporation or as may have been
given to the corporation by the director for purposes of notice or, if such
address is not shown on such records or is not readily ascertainable, at the
place in which the meetings of the directors are regularly held.
Notice by mail shall be deemed to have been given at the time a written
notice is deposited in the United States mail, postage prepaid. Any other
written notice shall be deemed to have been given at the time it is personally
delivered to the recipient or is delivered to a common carrier for transmission,
or actually transmitted by the person giving the notice by electronic means, to
the recipient. Oral notice shall be deemed to have been given at the time it is
communicated to the recipient or to a person at the office of the recipient who
the person giving the notice has reason to believe will promptly communicate it
to the recipient.
Any notice shall state the date, place and hour of the meeting. Notice
given to a director in accordance with this section shall constitute due, legal
and personal notice to such director.
Section 9. Action at a Meeting: Quorum and Required Vote. The
presence of a majority of the
authorized number of directors at a meeting of the board of directors
constitutes a quorum for the transaction of
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business, except as hereinafter provided. Every act or decision done or made by
a majority of the directors present at a meeting duly held at which a quorum is
present shall be regarded as the act of the board of directors, unless a greater
number, or the same number, after disqualifying one or more directors from
voting, is required by law, by the certificate of incorporation or by these
bylaws. A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, provided that any
action taken is approved by at least a majority of the required quorum for such
meeting.
Section 10. Validation of Defectively Called or Noticed Meetings. The
transactions of any meeting of the board of directors, however called and
noticed or wherever held, shall be as valid as though had at a meeting duly held
after regular call and notice, if a quorum is present and if, either before or
after the meeting, each of the directors not present or who, though present, has
prior to the meeting or at its commencement, protested the lack of proper notice
to him, signs a written waiver of notice or a consent to holding such meeting or
an approval of the minutes thereof. All such waivers, consents or approvals
shall be filed with the corporate records or made a part of the minutes or the
meeting.
Section 11. Adjournment. A majority of the directors present, whether
or not constituting a quorum, may
adjourn any board of directors' meeting to another time or place.
Section 12. Notice of Adjournment. If a meeting is adjourned for more
than twenty-four (24) hours, notice of any adjournment to another time or place
shall be given prior to the time of the adjourned meeting to the directors who
were not present at the time of adjournment; otherwise, notice of the time and
place of holding an adjourned meeting need not be given to absent directors if
the time and place be fixed at the meeting adjourned.
Section 13. Participation in Meetings by Conference Telephone. Members
of the board of directors may participate in a meeting through use of conference
telephone or similar communications equipment, so long as all members
participating in such meeting can hear one another. Participating in a meeting
as permitted in this Section constitutes presence in person at such meeting.
Section 14. Action Without Meeting. Any action by the board of
directors may be taken without a meeting if all members of the board shall
individually or collectively consent in writing to such action. Such written
consent or consents shall be filed with the minutes of the proceedings of the
board and shall have the same force and effect as a unanimous vote of such
directors.
Section 15. Fees and Compensation. Directors and members of committees
may receive such compensation, if any, for their services, and such
reimbursement for expenses, as may be fixed or determined by resolution of the
board of directors.
Section 16. Committees. The board of directors may, by resolution
adopted by a majority of the authorized number of directors, designate an
executive and other committees, each consisting of two (2) or more directors, to
serve at the pleasure of the board of directors, and may prescribe the manner in
which proceedings of any such committee meetings of such committee may be
regularly scheduled in advance and may be called at any time by any two (2)
members thereof; otherwise, the provisions of these bylaws with respect to
notice and conduct of meetings of the board of directors shall govern. Any such
committee, to the extent provided in a resolution of the board of directors,
shall have all of the authority of the board of directors, except as limited by
the Delaware General Corporation Law.
ARTICLE IV
OFFICERS
Section 1. Officers. The officers of the corporation shall be a chief
executive officer, a president, a secretary and a chief financial officer. The
corporation may also have, at the discretion of the board of directors, a
chairman of the board, one or more vice presidents, one or more assistant
secretaries, one or more assistant treasurers, and such other officers as may be
appointed in accordance with the provisions of Section 3 of this Article. Any
number of offices may be held by the same person.
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Section 2. Election. The officers of the corporation, except such
officers as may be appointed in accordance with the provisions of Section 3 or
Section 6 of this Article, shall be chosen annually by, and shall serve at the
pleasure of, the board of directors, and each shall hold his office until he or
she shall resign or shall be removed or otherwise disqualified to serve, or his
or her successor shall be elected and qualified.
Section 3. Subordinate Officer. The board of directors or the chief
executive officer may appoint such other officers as the business of the
corporation may require, each of whom shall hold office for such period, have
such authority and perform such duties as are provided in these bylaws or as the
board of directors may from time to time determine.
Section 4. Removal and Resignation. Subject to the rights, if any, of
an officer under any contract of employment, any officer may be removed, either
with or without cause, by the board of directors, at any regular or special
meeting thereof, or, except in case of an officer chosen by the board of
directors, by any officer upon whom such power or removal may be conferred by
the board of directors.
Any officer may resign at any time by giving written notice to the
board of directors, or to the president or to the secretary of the corporation.
Any resignation is without prejudice to the rights, if any, of the corporation
under any contract to which such officer is a party. Any such resignation shall
take effect at the date of the receipt of such notice or at any later time
specified therein; and, unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
Section 5. Vacancies. 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 election or appointment to such
office.
Section 6. Chairman of the Board. The chairman of the board, if there
be such an office, shall preside at all meetings of the board of directors and
exercise and perform such other powers and duties as may be from time to time
assigned to him by the board of directors or prescribed by these bylaws.
Section 7. Chief Executive Officer. 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 chief executive officer 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 officers of the corporation. He shall preside at all meetings of
the stockholders and at all meetings of the board of directors. He shall be ex
officio a member of all the standing committees, including the executive
committee, if any, and shall have the general power and duties of management
usually vested in the office of president of a corporation, and shall have such
other powers and duties as may be prescribed by the board of directors or these
bylaws.
Section 8. President. The president shall be the chief operating
officer of the corporation, and in the event of absence or disability of the
chief executive officer, or if no chief executive officer has been appointed by
the board of directors, shall perform all the duties of the chief executive
officer, and when so acting shall have all the powers of, and be subject to all
the restrictions upon, the chief executive officer.
Section 9. Vice Presidents. In the absence or disability of the
president, the vice presidents 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, if there be such an officer or officers, 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, if
there be such an officer or officers, 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 or these bylaws.
Section 10. Secretary. The secretary shall record or cause to be
recorded, and shall keep or cause to be kept, at the principal executive office
or such other place as the board of directors may order, a book of minutes of
all meetings and actions, of the stockholders, the board directors and all
committees thereof, with the time and place of holding of meetings, whether
regular or special, and, if special, how authorized, the notice thereof given,
the names of those present at directors' meetings, the number of shares present
or represented at stockholders' meetings,
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and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office or at the office of the corpora-tion's transfer agent, or
registrar, if one be appointed, a share register, or a duplicate share register,
showing the names of the stockholders and their addresses, the number and
classes of shares held by each, the number and date of certificates issued for
the same, and the number and date of cancellation of every certificate
surrendered for cancellation.
Section 11. Chief Financial Officer. The chief financial officer shall
keep and maintain, or cause to be kept and maintained, adequate and colored
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.
The chief financial officer shall deposit all moneys and other
valuables in the name and to the credit of the corporation with such
depositories as may be designated by the board of directors. He shall disburse
the funds of the corporation as may be ordered by the board of directors, shall
render to the president and directors, whenever they request it, an account of
all of his transactions as chief financial officer and of the financial
condition of the corporation, and shall have such other powers and perform such
other duties as may be prescribed by the board of directors or these bylaws.
Section 12. Assistant Secretaries and Assistant Treasurers. In the
absence or disability of the secretary or the chief financial officer, their
duties shall be performed and their powers exercised, respectively, by any
assistant secretary or any assistant treasurer which the board of directors may
have elected or appointed. The assistant secretaries and the assistant
treasurers shall have such other duties and powers as may have been delegated to
them, respectively, by the secretary or the chief financial officer or by the
board of directors.
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ARTICLE V
INDEMNIFICATION OF DIRECTORS,
OFFICERS, EMPLOYEES AND OTHER AGENTS
Section 1. Definitions. For the purpose of this Article V, "agent"
means any person who is or was a director, officer, employee or other agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another foreign or domestic corporation,
partnership, joint venture, trust or other enterprise, or was a director,
officer, employee or agent of a foreign or domestic corporation which was a
predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation; "proceeding" means any threatened,
pending or completed action or proceeding, whether civil, criminal,
administrative or investigative; and "expenses" includes, without limitation,
attorneys' fees and any expenses of establishing a right to indemnification
under Section 4 or Section 5(c) of this Article V.
Section 2. Actions by Third Parties. The corporation shall indemnify
any person who was or is a party, or is threatened to be made a party, to any
proceeding (other than an action by or in the right of the corporation) by
reason of the fact that such person is or was an agent of the corporation,
against expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred in connection with such proceeding to the fullest extent
permitted by the laws of the State of Delaware as they may exist from time to
time.
Section 3. Actions by or in the Right of the Corporation. The
corporation shall indemnify any person who was or is a party, or is threatened
to be made a party, to any threatened, pending or completed action by or in the
right of the corporation to procure a judgment in its favor by reason of the
fact that such person is or was an agent of the corporation, against expenses
actually and reasonably incurred by such person in connection with the defense
or settlement of such action to the fullest extent permitted by the laws of the
State of Delaware as they may exist from time to time.
Section 4. Advance of Expenses. Expenses incurred in defending any
proceeding may be advanced by the corporation prior to the final disposition of
such proceeding upon receipt of a request therefor and an undertaking by or on
behalf of the agent to repay such amount unless it shall be determined
ultimately that the agent is not entitled to be indemnified as authorized in
this Article V.
Section 5. Contractual Nature. The provision of this Article V shall be
deemed to be a contract between the corporation and each director and officer
who serves in such capacity at any time while this Article is in effect, and any
repeal or modification thereof shall not affect any rights or obligations then
existing with respect to any state of facts then or theretofore existing or any
action, suit or proceeding theretofore existing or any action, suit or
proceeding theretofore or thereafter brought based in whole or in part upon any
such state of facts.
Section 6. Insurance. Upon and in the event of a determination by the
board of directors to purchase such insurance, the corporation shall purchase
and maintain insurance on behalf of any agent of the corporation against any
liability asserted against or incurred by the agent in such capacity or arising
out of the agent's status as such whether or not the corporation would have the
power to indemnify the agent against such liability under the provisions of this
Article V. All amounts received by an agent under any such policy of insurance
shall be applied against, but shall not limit, the amounts to which the agent is
entitled pursuant to the foregoing provisions of this Article V.
Section 7. ERISA. To assure indemnification under this provision of all
such persons who are or were "fiduciaries" of an employee benefit plan governed
by the Employee Retirement Income Security Act of 1974, as amended from time to
time ("ERISA"), the provisions of this Article V shall, except as limited by
Section 410 of ERISA, be interpreted as follows: an "other enterprise" shall be
deemed to include an employee benefit plan; the corporation shall be deemed to
have requested a person to serve as an employee of an employee benefit plan
where the performance by such person of his duties to the corporation also
imposes duties on, or otherwise involves services by , such person to the plan
or participants or beneficiaries of the plan; excise taxes assessed on a person
with respect to an employee benefit plan in the performance of such person's
duties for a purpose reasonably believed by such person to be in compliance with
ERISA and the terms of the plan shall be deemed to be for a purpose which is not
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opposed to the best interests of the corporation.
ARTICLE VI
GENERAL CORPORATE MATTERS
Section 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 entitled to
exercise any right in respect of any other lawful action (other than as provided
in Section 12 of Article II of these bylaws), the board of directors may fix, in
advance, a record date, which shall not be more than sixty (60) days before any
such action, and in that case only stockholders of record on the date so fixed
are entitled to receive the dividend, distribution, or allotment of rights or to
exercise the rights, as the case may be, notwithstanding any transfer of any
shares on the books of the corporation after the record date so fixed, except as
otherwise provided in the Delaware General Corporation Law.
If the board of directors does not so fix a record date, the record
date for determining stockholders for any such purpose shall be at the close of
business on the day on which the board adopts the applicable resolution or the
sixtieth (60th) day before the date of that action, whichever is later.
Section 2. Inspection of Corporate Records. The accounting books and
records, the records of stockholders, and minutes of proceedings of the
stockholders and the board and committees of the board of directors of the
corporation and any subsidiary of the corporation shall be open to inspection
upon the written demand on the corporation of any stockholder or holder of a
voting trust certificate at any reasonable time during usual business hours, for
a purpose reasonably related to such holder's interests as a share- holder or as
the holder of such voting trust certificate. Such inspection by a stockholder or
holder of a voting trust certificate may be made in person or by an agent or
attorney, and the right of inspection includes the right to copy and make
extracts.
A stockholder or stockholders holding at least five percent (5%) in the
aggregate of the outstanding voting shares of the corporation or who hold at
least one percent (1%) of such voting shares and have filed a Schedule 14B with
the United States Securities and Exchange Commission relating to the election of
directors of the corporation shall have (in person, or by agent or attorney) the
right to inspect and copy the record of stockholders' names and addresses and
shareholdings during usual business hours upon five (5) business days' prior
written demand upon the corporation and to obtain from the transfer agent, if
any, for the corporation, upon written demand and upon the tender of its usual
charges, a list of the stockholders' names and addresses, who are entitled to
vote for the election of directors, and their shareholdings, and of the most
recent record date for which it has been compiled or as of a date specified by
the stockholder subsequent to the date of demand. The list shall be made
available on or before the later of five (5) business days after the demand is
received or the date specified therein as the date as of which the list is to be
compiled.
Every director shall have the absolute right at any reasonable time to
inspect and copy all books, records and documents of every kind and to inspect
the physical properties of the corporation. Such inspection by a director may be
made in person or by agent or attorney, and the right of inspection includes the
right to copy and make extracts.
Section 3. Inspection of Bylaws. The corporation shall keep in its
principal executive office in California, or if its principal executive office
is not in California, then at its principal business office in California (or
otherwise provide upon written request of any stockholder) the original or a
copy of the bylaws as amended or otherwise altered to date, certified by the
secretary, which shall be open to inspection by the stockholders at all
reasonable times during office hours.
Section 4. Checks, Drafts, Etc. All checks, drafts or other orders for
payment of money, notes or other evidences of indebtedness, issued in the name
of or payable to the corporation, shall be signed or endorsed by such person or
persons and in such manner as, from time to time, shall be determined by
resolution of the board of directors.
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Section 5. Contracts and Instruments; How Executed. The board of
directors, except as in these bylaws otherwise provided, may authorize any
officer or officers, agent or agents, to enter into any contract or execute any
instrument in the name of and on behalf of the corporation, and such authority
may be general or confined to specific instances; and, unless so authorized or
ratified by the board of directors, 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 to any amount.
Section 6. Certificate for Shares. Every holder of shares in the
corporation shall be entitled to have a certificate signed in the name of the
corporation by the chairman of the board or the president or a vice president
and by the chief financial officer or an assistant treasurer or the secretary or
any assistant secretary, certifying the number of shares and the Class or series
of shares owned by the stockholder. Any of the signatures on the certificate may
be facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have 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 such
person were an officer, transfer agent or registrar at the date of issue.
Any such certificate shall also contain such legend or other statement
as may be required by applicable state securities laws, the federal securities
laws, and any agreement between the corporation and the stockholders thereof.
Certificates for shares may be issued prior to full payment under such
restrictions and for such purposes as the board of directors or these bylaws may
provide; provided, however, that on any certificate issued to represent any
partly paid shares, the total amount of the consideration to be paid therefor
and the amount paid thereon shall be stated.
Except as provided in this Section 6, no new certificate for shares
shall be issued in lieu of an old one unless the latter is surrendered and
canceled at the same time. The board of directors may, however, in case any
certificate for shares is alleged to have been lost, stolen, or destroyed,
authorize the issuance of a new certificate in lieu thereof, and the corporation
may require that the corporation be given a bond or other adequate security
sufficient to indemnify it against any claim that may be made against it
(including expense or liability) on account of the alleged loss, theft, or
destruction of such certificate of the issuance of such new certificate.
Section 7. Representation of Shares of Other Corporations. The
president or any other officer or officers authorized by the board of directors
or the president are each authorized to vote, represent and exercise on behalf
of the corporation all rights incident to any and all shares of any other
corporation or corporations standing in the name of the corporation. The
authority herein granted may be exercised either by any such officer in person
or by any other person authorized so to do by proxy or power of attorney duly
executed by said officer.
Section 8. Construction and Definitions. Unless the context otherwise
requires, the general provisions, rules of construction and definitions
contained in the Delaware General Corporation Law shall govern the construction
of these bylaws. Without limiting the generality of the foregoing, the masculine
gender includes the feminine and neuter, the singular number includes the plural
and the plural number includes the singular, and the term "person" includes a
corporation as well as a natural person.
ARTICLE VII
AMENDMENTS TO BYLAWS
Section 1. Amendment by Stockholders. New bylaws may be adopted or
these bylaws may be amended or repealed by the vote or written consent of
holders of a majority of the outstanding shares entitled to vote; provided,
however, that if the certificate of incorporation of the corporation sets forth
the number of authorized directors of the corporation, the authorized number of
directors may be changed only by an amendment of the certificate of
incorporation.
1994 STOCK OPTION PLAN OF
MENDOCINO PARTNERS, INC.
Mendocino Partners, Inc., a corporation organized under the laws of
the State of Delaware (the "Company"), hereby adopts this 1994 Stock Option Plan
(the "Plan"). The purposes of this Plan are as follows:
(1) To further the growth, development, and financial success of the
Company by providing additional Incentives to its Directors, Officers, Employees
and advisors, and employees of companies who do business with the Company by
assisting them to become owners of capital stock of the Company and thus
permitting them to benefit directly from its growth, development, and financial
success.
(2) To enable the Company to obtain and retain the services of the
type of directors, officers, employees and advisors considered essential to the
long-range success of the Company by providing and offering them an opportunity
to become owners of capital stock of the Company under options, Including
options that are intended to qualify as "Incentive stock options" under Section
422 of the Internal Revenue Code of 1986, as amended.
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Plan, they shall have
the meaning specified below unless the context clearly indicates to the
contrary. The masculine pronoun shall Include the feminine and neuter, and the
singular shall Include the plural, where the context so indicates.
"AO Option" shall mean an Accelerated Ownership Non-Qualified Stock
Option granted in accordance with Section 4.5 hereof.
"Board" shall mean the Board of Directors of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Committee" shall mean the Stock Option Committee of the Board,
appointed as provided in Section 6.1.
"Companion Grant" shall have the definition set forth in Section
4.9 hereof.
"Company" shall mean Mendocino Partners, Inc.. In addition,
"Company" shall mean any corporation assuming, or issuing new employee stock
options in substitution for, Options outstanding under the Plan, in a
transaction to which Section 425(a) of the Code applies.
"Director" shall mean a member of the Board.
"Employee" shall mean any employee (as defined in accordance with
the Regulations and Revenue Rulings then applicable under Section 3401(c) of the
Code) of the Company, whether such employee is so employed at the time this Plan
is adopted or becomes so employed subsequent to the adoption of this Plan, and
(except for Incentive Stock Options), consultants or employees of companies who
do business with the Company.
"Incentive Stock Option" shall mean an Option which qualifies under
Section 422 of the Code and which is designated as an Incentive Stock Option by
the Committee.
"Non-Qualified Option" shall mean an Option which is not an
Incentive Stock Option and which is designated as a Non-Qualified Option by the
Committee.
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"Officer" shall mean an officer of the Company.
"Option" shall mean an option to purchase capital stock of the
Company granted under the Plan.
"Options" Includes both Incentive Stock Options and Non-Qualified Options.
"Optionee" shall mean a Director, Officer, or Employee to whom an
Option is granted under the Plan.
"Plan" shall mean this 1994 Stock Option Plan of the Company.
"Restricted Stock" shall mean common stock of the Company granted
under the conditions set forth in Section 4.10.
"Secretary" shall mean the Secretary of the Company.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Termination of Employment" shall mean the time when the
employee-employer relationship or directorship between the Optionee and the
Company is terminated for any reason, with or without cause, Including, but not
by way of limitation, a termination by resignation, discharge, death or
retirement, but excluding terminations where there is a simultaneous
reemployment by the Company. The Committee, in its absolute discretion, shall
determine the effect of all other matters and questions relating to Termination
of Employment, Including, but not by way of limitation, the question of whether
a Termination of Employment resulted from a discharge for good cause, and all
questions of whether particular leaves of absence constitute Terminations of
Employment; provided, however, that, with respect to Incentive Stock Options, a
leave of absence shall constitute a Termination of Employment if, and to the
extent that, such leave of absence interrupts employment for the purposes of
Section 422(a)(2) of the Code and the then applicable Regulations and Revenue
Rulings under said Section.
ARTICLE II
SHARES SUBJECT TO PLAN
Section 2.1 - Shares Subject to Plan
The shares of stock subject to Options shall be shares of the
Company's par value $.001 Common Stock. The aggregate number of such shares
which may be issued upon exercise of Options or as Restricted Stock shall not
exceed 2,000,000.
Section 2.2 - Limitation on Incentive Stock Option Grants
Subject to the overall limitations of Section 2.1, the aggregate
fair market value (determined as of the time the option is granted) of stock
with respect to which "Incentive stock options" (within the meaning of Section
422 of the Code) are exercisable for the first time by any Director, Officer or
Employee in any calendar year (under the Plan and all other Incentive stock
option plans of the Company) shall not exceed $100,000.
Section 2.3 - Unexercised Options
If any Option expires or is canceled without having been fully
exercised, or is forfeited under the terms of a Restricted Stock grant, the
number of shares subject to such Option or grant but as to which such Option was
not exercised prior to its expiration or cancellation or shares which were
forfeited may again be optioned or granted hereunder, subject to the limitations
of Sections 2.1 and 2.2.
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Section 2.4 - Changes in Company's Shares
In the event that the outstanding shares of Common Stock of the
Company are hereafter changed into or exchanged for a different number or kind
of shares or other securities of the Company, or of another corporation, by
reason of reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, stock dividend or combination of shares,
appropriate adjustments shall be made by the Committee in the number and kind of
shares for the purchase of which Options may be granted, Including adjustments
of the limitations in Sections 2.1 and 2.2 on the maximum number and kind of
shares which may be issued on exercise of Options or Restricted Stock which may
be issued.
ARTICLE III
GRANTING OF OPTIONS
Section 3.1 - Eligibility
Any Director, Officer, advisor or Employee of the Company or
employee of a company that does business with the Company shall be eligible to
be granted Options, except as provided in Sections 3.2 and 6.4(a). However, no
Incentive Stock Option shall be granted to any Director or other person who is
not an Employee of the Company.
Section 3.2 - Qualification of Incentive Stock Options
No Incentive Stock Option shall be granted unless such Option,
when granted, qualifies as an "Incentive stock option" under Section 422 of the
Code.
Section 3.3 - Granting of Options
(a) The Committee shall from time to time, in its absolute
discretion:
(i) Determine which individuals are Directors, Officers,
or Employees or advisors or employees of persons with whom the
Company does business and select from among those persons
(Including those to whom Options have been previously granted
under the Plan) such of them as in its opinion should be granted
Options; and
(ii) Determine the number of shares to be subject to such
Options granted to such selected persons, and determine whether
such Options are to be Incentive Stock Options or Non-Qualified
Options, whether stock appreciation rights should be granted for
all or part of the Options granted, and, if Non-Qualified
Options, whether such options are AO Options; and
(iii) Determine the terms and conditions of such
Options, consistent with the Plan.
(b) Upon the selection of a Director, Officer, Employee or other
person to be granted an Option, the Committee shall instruct the Secretary to
issue such Option and may impose such conditions on the grant of such Option as
it deems appropriate. Without limiting the generality of the preceding sentence,
the Committee may, in its discretion and on such terms as it deems appropriate,
require as a condition to the grant of a Non-Qualified Option that the Optionee
surrender for cancellation some or all of the unexercised Non-Qualified Options
which have been previously granted to him. A Non-Qualified Option the grant of
which is conditioned upon such surrender may have an option price lower (or
higher) than the option price of the surrendered Non-Qualified Option, may cover
the same (or a lesser or greater) number of shares as the surrendered
Non-Qualified Option, may contain such other terms as the Committee deems
appropriate and shall be exercisable in accordance with its terms, without
regard to the number of shares, price, option period, or any other term or
condition of the surrendered Non-Qualified Option.
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ARTICLE IV
TERMS OF OPTIONS
Section 4.1 - Option Agreement
Each Option shall be evidenced by a written Stock Option
Agreement, which shall be executed by the Optionee and an authorized Officer of
the Company and which shall contain such terms and conditions as the Committee
shall determine, consistent with the Plan. Stock Option Agreements evidencing
Incentive Stock Options shall contain such terms and conditions as may be
necessary to qualify such Options as "Incentive stock options" under Section 422
of the Code.
Section 4.2 - Option Price
(a) The price of the shares subject to each Option shall be set
by the Committee; provided, however, that the price per share of shares subject
to an Incentive Stock Option shall be not less than 100% of the fair market
value of such shares on the date such Option is granted, or 110% of the fair
market value of the Optionee holds 10% or more of the Company's Common Stock,
and that the price per share of shares subject to a Non-Qualified Option shall
not be less than 85% of the fair market value of such shares on the date such
Option is granted.
(b) For purposes of the Plan, the fair market value of a share
of the Company's stock as of a given date shall be: (i) the closing price of a
share of the Company's stock on the principal exchange on which shares of the
Company's stock are then trading, if any, on such date, or, if shares were not
traded on such date, then on the next preceding trading day during which a sale
occurred; or (ii) if such stock is not traded on an exchange but is quoted on
NASDAQ or a successor quotation system, (1) the last sales price (if the stock
is then listed as a National Market Issue under the NASD National Market System)
or (2) the mean between the closing representative bid and asked prices (in all
other cases) for the stock on such date as reported by NASDAQ or such successor
quotation system; or (iii) if such stock is not publicly traded on an exchange
and not quoted on NASDAQ or a successor quotation system, the mean between the
closing bid and asked prices for the stock on such date as determined in good
faith by the Committee; or (iv) if the Company's stock is not publicly traded,
the fair market value established by the Committee acting in good faith.
Section 4.3 - Commencement of Exercisability
(a) Except as the Committee may otherwise provide, or in the
case of death or disability of the Optionee, with respect to Options or common
stock issued to persons which are at the time of such grant subject to Section
16 of the Securities Exchange Act of 1934 with respect to the Company, (i) no
Option may be exercised in whole or in part during the six months after such
Option is granted, and (ii) the Company common stock acquired under this Plan
shall not be sold for at least six months after acquisition.
(b) Subject to the provisions of Sections 4.3(a), 4.3(c) and
7.3, Options shall become exercisable at such times and in such installments
(which may be cumulative) as the Committee shall provide in the terms of each
individual Option; provided, however, that by a resolution adopted after an
Option is granted the Committee may, on such terms and conditions as it may
determine to be appropriate and subject to Sections 4.3(a), 4.3(c) and 7.3,
accelerate the time at which such Option or any portion thereof may be
exercised, and provided further, that no less than 20% of each Option shall vest
and be exercisable on each anniversary of the granting thereof.
(c) No portion of an Option which is unexercisable at
Termination of Employment shall thereafter become exercisable.
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Section 4.4 - Expiration of Options
(a) No Incentive Stock Option may be exercised to any extent by
anyone after the first to occur of the following events:
(i) The later of the expiration of ten years from the
date the Option was granted (five years if the Optionee holds at
the time of grant 10% or more of the Company's Common Stock) or
the expiration of three years from the date of the Optionee's
death; or
(ii) Except in the case of any Optionee who is disabled
(within the meaning of Section 22(e)(3) of the Code), the
expiration of three months from the date of the Optionee's
Termination of Employment for any reason other than such
Optionee's death unless the Optionee dies within said
three-month period; or
(iii) In the case of an Optionee who is disabled (within
the meaning of Section 22(e)(3) of the Code), the expiration of
three years from the date of the Optionee's Termination of
Employment for any reason other than such Optionee's death
unless the Optionee dies within said three-year period.
(b) Subject to the provisions of Section 4.5(a), the Committee
shall provide, in the terms of each individual Option, when such Option expires
and becomes unexercisable; and (without limiting the generality of the
foregoing) the Committee may provide in the terms of individual Options that
said Options expire immediately upon a Termination of Employment for any reason.
Section 4.5 - Accelerated Ownership Non-Qualified Options
The committee may determine at the time of granting any
Non-Qualified Option that such option should be an Accelerated Ownership
Non-Qualified Stock Option ("AO Option"). AO Options shall have the same terms
as Non-Qualified Options, except that should an Optionee exercise his or her AO
Option, in whole or part, by delivering shares of the Company's Common Stock
pursuant to Section 5.3 (b)(ii) (provided such shares have been held by Optionee
for more than six months) the Optionee is thereby automatically granted an
additional AO Option or Options, at the fair market value as of the date of the
original AO Option grant, for a number of shares of Company Common Stock equal
to the sum of the whole shares used by Optionee in payment of the Option price
and the number of whole shares, if any, withheld by the Company pursuant to
Section 5.7. The additional AO Option shall be exercisable at any time from the
date of grant to the expiration date of the Option to which the AO Option is
related.
Section 4.6 - Reservation of Rights
Nothing in this Plan or in any Stock Option Agreement hereunder
shall confer upon any Employee-Optionee any right to continue in the employ of
the Company or shall interfere with or restrict in any way the rights of the
Company, which are hereby expressly reserved, to discharge any Optionee at any
time for any reason whatsoever, with or without cause.
Section 4.7 - Adjustments in Outstanding Options
In the event that the outstanding shares of the stock subject to
Options are changed into or exchanged for a different number or kind of shares
of the Company or other securities of the Company by reason of merger,
consolidation, recapitalization, reclassification, stock split-up, stock
dividend, or combination of shares, the Committee shall make an appropriate and
equitable adjustment in the number and kind of shares as to which all
outstanding Options, or portions thereof then unexercised, shall be exercisable,
to the end that after such event the Optionee's proportionate interest shall be
maintained as before the occurrence of such event. Such adjustment in an
outstanding Option shall be made without change in the total price applicable to
the Option or the unexercised portion of the Option (except for any change in
the aggregate price resulting from rounding-off of share quantities or prices)
and with any necessary corresponding adjustment in Option price per share;
provided, however, that, in
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the case of Incentive Stock Options, each such adjustment shall be made in such
manner as not to constitute a "modification" within the meaning of Section
424(h)(3) of the Code. Any such adjustment made by the Committee shall be final
and binding upon all Optionees, the Company and all other interested persons.
Section 4.8 - Merger, Consolidation, Acquisition, Liquidation or Dissolution
The Committee shall provide by the terms of each Option that,
upon or in connection with the merger or consolidation of the Company with or
into another corporation, the acquisition by another corporation or person of
all or substantially all of the Company's assets or 80% or more of the Company's
then outstanding voting stock or the liquidation or dissolution of the Company,
such Option shall be assumed or an equivalent option substituted by any
successor corporation of the Company. The Committee may also, in its absolute
discretion and on such terms and conditions as it deems appropriate, provide,
either by the terms of such Option or by a resolution adopted prior to the
occurrence of such merger, consolidation, acquisition, liquidation, or
dissolution, that, for some period of time prior to such event, such Option
shall be exercisable as to all shares covered thereby, notwithstanding anything
to the contrary in Section 4.3(a), Section 4.3(b), and/or any installment
provisions of such Option.
Section 4.9 - Stock Appreciation Rights
Stock appreciation rights may be granted, at the discretion of
the Committee, separately or concurrently with the grant of any option granted
under the Plan ("Companion Grant"). A stock appreciation right shall extend to
all or a portion of the shares covered by the Companion Grant. If a stock
appreciation right extends to less than all the shares covered by the Companion
Grant and if a portion of the option contained in the Companion Grant is
thereafter exercised, the number of shares subject to the unexercised stock
appreciation right shall be reduced only if and to the extent that the remaining
portion of the Option contained in the Companion Grant covers fewer shares than
the unexercised stock appreciation right would otherwise cover. A stock
appreciation right shall entitle the Optionee (subject to the conditions and
limitations set forth below), under surrender of a then exercisable portion of
the Option contained in the Companion Grant (subject to the maximum number of
shares to which the stock appreciation right extends), to receive payment of an
amount determined pursuant to subparagraph (b) of the following paragraph.
Stock appreciation rights shall be subject to the following
terms and to such other terms and conditions not Inconsistent with the Plan as
the Committee may determine:
(a) A stock appreciation right shall be exercisable by the
Optionee only at such time or times, and to the extent, that the Option
contained in the Companion Grant could have been exercised and only when the
fair market value of the stock subject to the Option contained in the Companion
Grant exceeds the exercise price of such option.
(b) Upon exercise of the stock appreciation right and surrender
of an exercisable portion of the Option contained in the Companion Grant, the
Optionee shall be entitled to receive payment of an amount (subject to (d)
below) determined by multiplying the difference obtained by subtracting the
option exercise price per share of Common Stock subject to the Companion Grant
from the fair market value of a share of Common Stock on the date of exercise of
the stock appreciation right, by the number of shares with respect to which the
stock appreciation right is exercised.
(c) The Committee, at its sole discretion, may settle the amount
determined in subparagraph (b) above solely in cash, solely in shares of Common
Stock (valued as determined in subparagraph (b) above), or partly in such shares
and partly in cash; provided, however, that in any event cash shall be paid in
lieu of fractional shares.
(d) The maximum amount per share which will be payable upon
exercise of a stock appreciation right shall be the option exercise price of the
Option contained in the Companion Grant.
(e) An Optionee may exercise a stock appreciation right only
during the third through twelfth business day following the Company's regular
public release of quarterly or annual financial summary statements
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of sales and earnings.
Section 4.10 - Restricted Stock
Restricted Stock may be granted, at the discretion of the
Committee, separately or concurrently with the grant of any option under the
Plan. In any grant of Restricted Stock, the Committee may determine the time
and/or events which shall cause the Restricted Stock to vest and cease to be
forfeitable. If Restricted Stock is granted on conjunction with any option, the
Restricted Stock shall be canceled, on a share by share basis, upon exercise of
the related option, and the option will likewise terminate upon vesting of the
Restricted Stock. Restricted Stock may not be issued in connection with
Incentive Stock Options.
ARTICLE V
EXERCISE OF OPTIONS
Section 5.1 - Person Eligible to Exercise
During the lifetime of the Optionee, only he or she or a legal
representative thereof may exercise an Option granted to him or her, or any
portion thereof. After the death of the Optionee, any exercisable portion of an
Option may, prior to the time when such portion becomes unexercisable under
Section 4.4 or Section 4.7, be exercised by his or her personal representative
or by any person empowered to do so under the deceased Optionee's will or under
the then applicable laws of descent and distribution.
Section 5.2 - Partial Exercise
At any time and from time to time prior to the time when any
exercisable Option or exercisable portion thereof becomes unexercisable under
Section 4.4 or Section 4.7, such Option or portion thereof may be exercised in
whole or in part; provided, however that the Company shall not be required to
issue fractional shares and the Committee may, by the terms of the Option,
require any partial exercise to be with respect to a specified minimum number of
shares.
Section 5.3 - Manner of Exercise
An exercisable Option, or any exercisable portion thereof, may
be exercised solely by delivery to the Secretary or his office of all of the
following prior to the time when such Option or such portion becomes
unexercisable under Section 4.4 or Section 4.7:
(a) Notice in writing signed by the Optionee or other person
then entitled to exercise such Option or portion, stating that such Option or
portion is exercised, such notice complying with all applicable rules
established by the Committee; and
(b) (i) Full payment (in cash or by check) for the shares
with respect to which such Option
or portion is thereby exercised; or
(ii) Shares of any class of the Company's stock owned by
the Optionee duly endorsed for transfer to the Company with a
fair market value (as determinable under Section 4.2(b)) on the
date of delivery equal to the aggregate Option price of the
shares with respect to which such Option or portion is thereby
exercised; or
(iii) With the consent of the Committee, a full
recourse promissory note bearing interest
(at least such rate as shall then preclude the imputation of
interest under the Code or any successor
provision) and payable upon such terms as may be prescribed by
the Committee. The Committee
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may also prescribe the form of such note and the security to be
given for such note. No Option may, however, be exercised by
delivery of a promissory note or by a loan from the Company when
or where such loan or other extension of credit is prohibited by
law; or
(iv) Any combination of the consideration provided in
the foregoing subsections (i), (ii),
and (iii); and
(c) Such representations and documents as the Committee, in its
absolute discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act and any other federal or state
securities laws or regulations. The Committee may, in its absolute discretion,
also take whatever additional actions it deems appropriate to effect such
compliance Including, without limitation, placing legends on share certificates
and issuing stop-transfer orders to transfer agents and registrars; and
(d) In the event that the Option or portion thereof shall be
exercised pursuant to Section 5.1 by any person or persons other than the
Optionee, appropriate proof of the right of such person or persons to exercise
the Option or portion thereof.
Section 5.4 - Conditions to Issuance of Stock Certificates
The shares of stock issuable and deliverable upon the exercise
of an Option, or any portion thereof, may be either previously authorized but
unissued shares or issued shares which have then been reacquired by the Company.
The Company shall not be required to issue or deliver any certificate or
certificates for shares of stock purchased upon the exercise of any Option or
portion thereof prior to fulfillment of all of the following conditions:
(a) The completion of any registration or other qualification of
such shares under any state or federal law or under the rulings or regulations
of the Securities and Exchange Commission or any other governmental regulatory
body, which the Committee shall, in its absolute discretion, deem necessary or
advisable; and
(b) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and
(c) The payment to the Company of all amounts which it is
required to withhold under federal, state, or local law in connection with the
exercise of the Option; and
(d) The lapse of such reasonable period of time following the
exercise of the Option as the Committee may establish from time to time for
reasons of administrative convenience.
Section 5.5 - Rights as Shareholders
The holders of Options shall not be, nor have any of the rights
or privileges of, shareholders of the Company in respect of any shares
purchasable upon the exercise of any part of an Option unless and until
certificates representing such shares have been issued by the Company to such
holders.
Section 5.6 - Transfer Restrictions
The Committee, in its absolute discretion, may impose such
restrictions on the transferability of the shares purchasable upon the exercise
of an Option as it deems appropriate. Any such restriction shall be set forth in
the respective Stock Option Agreement and may be referred to on the certificates
evidencing such shares. The Committee may require the Director, Officer, or
Employee to give the Company prompt notice of any disposition of shares of
stock, acquired by exercise of an Incentive Stock Option, within two years from
the date of granting such Option or one year after the transfer of such shares
to such Director, Officer, or Employee. The Committee may direct that the
certificates evidencing shares acquired by exercise of an Option refer to such
requirement to give prompt notice of disposition.
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Section 5.7 - Withholding Tax
Should any amount be required to be withheld for payment of
taxes under the code from an Optionee with respect to the exercise of any
Option, Optionee in his or her discretion may pay such withholding tax in shares
of the Company's common stock, at the fair market value of such common stock on
the date of payment.
Section 5.8 - Reports
The Company shall provide to each Optionee a copy of the
Company's annual report when released to the Company's stockholders.
ARTICLE VI
ADMINISTRATION
Section 6.1 - Stock Option Committee
The Stock Option Committee shall consist of at least two
Directors, appointed by and holding office at the pleasure of the Board.
Appointment of Committee members shall be effective upon acceptance of
appointment. Committee members may resign at any time by delivering written
notice to the Board. Vacancies in the Committee shall be filled by the Board.
After the Company's common stock becomes registered under the
Securities Exchange Act of 1934, as amended, unless otherwise provided by the
Board of Directors, no Options, stock appreciation rights or Restricted Stock
may be granted to any member of the Stock Option Committee. No person shall be
eligible to serve on the Stock Option Committee unless he is then a
"disinterested person" within the meaning of Rule 16b-3 which has been adopted
by the Securities and Exchange Commission under the Securities Exchange Act of
1934, if and as such Rule is then in effect. This paragraph may be waived for
successive six (6) month periods by the Board of Directors.
Section 6.2 - Duties and Powers of Committee
It shall be the duty of the Committee to conduct the general
administration of the Plan in accordance with its provisions. The Committee
shall have the power to interpret the Plan and the Options and to adopt or amend
such rules for the administration, interpretation and application of the Plan as
are consistent therewith and to interpret, amend or revoke any such rules. The
Committee may accelerate the exercise date of any option and determine the right
of any person to exercise the rights on behalf of any Optionee. Any such
interpretations and rules in regard to Incentive Stock Options shall be
consistent with the basic purpose of the Plan to grant "Incentive stock options"
within the meaning of Section 422 of the Code. In its absolute discretion, the
Board may at any time and from time to time exercise any and all rights and
duties of the Committee under the Plan.
Section 6.3 - Majority Rule
The Committee shall act by a majority of its members in office.
The Committee may act either by vote at a meeting or by a memorandum or other
written instrument signed by a majority of the Committee.
Section 6.4 - Compensation; Professional Assistance; Good Faith Actions
Members of the Committee shall receive such compensation for
their services as members as may be determined by the Board. All expenses and
liabilities Incurred by members of the Committee in connection with the
administration of the Plan shall be borne by the Company. The Committee may,
with the approval of the Board, employ attorneys, consultants, accountants,
appraisers, brokers, or other persons. The Committee, the Company and its
Officers and Directors shall be entitled to rely upon the advice, opinions, or
valuations of any such persons. All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and binding
upon all Optionees, the Company, and all other interested persons. No member of
the Committee shall be
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personally liable for any action, determination, or interpretation made in good
faith with respect to the Plan or the Options, and all members of the Committee
shall be fully protected by the Company in respect to any such action,
determination, or interpretation.
ARTICLE VII
OTHER PROVISIONS
Section 7.1 - Options Not Transferable
No Option or interest or right therein or part thereof shall be
liable for the debts, contracts, or engagements of the Optionee or his
successors in interest or shall be subject to disposition by transfer,
alienation, or any other means whether such disposition be voluntary or
involuntary or by operation of law, by judgment, levy, attachment, garnishment,
or any other legal or equitable proceedings (Including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect; provided,
however, that nothing in this Section 7.1 shall prevent transfers by will or by
the applicable laws of descent and distribution.
Section 7.2 - Amendment, Suspension or Termination of the Plan
The Plan may be wholly or partially amended or otherwise
modified, suspended or terminated at any time or from time to time by the Board
or the Committee. Neither the amendment, suspension, nor termination of the Plan
shall, without the consent of the holder of the Option, alter or impair any
rights or obligations under any Option theretofore granted. No Option may be
granted during any period of suspension nor after termination of the Plan, and
in no event may any Option be granted under this Plan after the first to occur
of the following events:
(a) The expiration of ten years from the date the Plan is
adopted; or
(b) The expiration of ten years from the date the Plan is
approved by the Company's shareholders under Section 7.3.
Section 7.3 - Approval of Plan by Shareholders
This Plan will be submitted for the approval of the Company's
shareholders within 12 months after the date of the Board's initial adoption of
the Plan. Incentive Stock Options may be granted prior to such shareholder
approval; provided, however, that such Incentive Stock Options shall not be
exercisable prior to the time when the Plan is approved by the shareholders;
provided, further, that if such approval has not been obtained at the end of
said 12-month period, all Incentive Stock Options previously granted under the
Plan shall thereupon be canceled and become null and void.
Section 7.4 - Effect of Plan Upon Other Option and Compensation Plans
The adoption of this Plan shall not affect any other
compensation or Incentive plans in effect for the Company. Nothing in this Plan
shall be construed to limit the right of the Company (a) to establish any other
forms of Incentives or compensation for employees of the Company or (b) to grant
or assume options otherwise than under this Plan in connection with any proper
corporate purpose, Including, but not by way of limitation, the grant or
assumption of options in connection with the acquisition by purchase, lease,
merger, consolidation, or otherwise of the business, stock, or assets of any
corporation, firm, or association.
Section 7.5 - Titles
Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of the Plan.
* * * *
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I hereby certify that the foregoing Plan was duly adopted by the
Board of Directors and Stockholders of Mendocino Partners, Inc. on April 20,
1994.
Jehu Hand
Secretary
Corporate Seal
* * * *
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<PAGE>
1994 STOCK OPTION PLAN OF MENDOCINO PARTNERS, INC.
[FORM OF] STOCK OPTION AGREEMENT
This Stock Option Agreement (the "Agreement") is made by and
between Mendocino Partners, Inc., a Delaware corporation (the "Company"), and
_______ (the "Optionee") as of the date set forth on the signature page hereto.
R E C I T A L S
A. The Board of Directors of the Company (the "Board") has
established the 1994 Stock Option Plan of the Company (the "Plan"), for the
purpose of providing to Employees and Directors of the Company and others an
opportunity to acquire shares of the Company's $.001 par value common stock (the
"Shares"); and
B. The Board of Directors or the Stock Option Committee of the
Company's Board of Directors (the "Committee") appointed to administer the Plan
has determined that it would be to the advantage and best interest of the
Company and its shareholders to grant the non-qualified stock option, Incentive
stock option or restricted stock grant provided for herein (the "Option") to the
Optionee as an inducement to remain in the service of the Company and as an
Incentive for Increased efforts during such service, and has advised the Company
thereof and instructed it to issue the Option.
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Agreement, they
shall have the meaning specified below unless the context clearly indicates to
the contrary. Capitalized terms used herein and not otherwise defined shall have
the meaning set forth in the Plan. The masculine pronoun shall Include the
feminine and neuter, and the singular the plural, where the context so
indicates.
Section 1.1 - Code
"Code" shall mean the Internal Revenue Code of 1986, as amended.
Section 1.2 - Company
"Company" shall mean Mendocino Partners, Inc.. In addition,
"Company" shall mean any corporation assuming, or issuing new employee stock
options in substitution for the Option and Incentive Stock Options (as defined
in Section 1.7 of the Plan), outstanding under the Plan, in a transaction to
which Section 425(a) of the Code applies.
Section 1.3 - Option
"Option" shall mean the option to purchase $.001 par value
common stock of the Company granted under this Agreement.
<PAGE>
Section 1.4 - Plan
"Plan" shall mean the 1994 Stock Option Plan of the Company.
Section 1.5 - Secretary
"Secretary" shall mean the Secretary of the Company.
Section 1.6 - Securities Act
"Securities Act" shall mean the Securities Act of 1933, as amended.
ARTICLE II
GRANT OF OPTION
Section 2.1 - Grant of Option
In consideration of the Optionee's agreement to render faithful
and efficient services to the Company and for other good and valuable
consideration, on the date set forth on the Signature Page hereof (the "Date of
Grant"), the Company irrevocably grants to the Optionee the option to purchase
any part or all of an aggregate of the number of Shares set forth on the
Signature Page hereof and upon the terms and conditions set forth in this
Agreement.
Section 2.2 - Purchase Price
The purchase price of the Shares covered by the Option shall be
the amount set forth on the Signature Page hereof and shall be without
commission or other charge (the "Purchase Price").
Section 2.3 - Reservation of Rights
Nothing in the Plan or in this or any Stock Option Agreement
shall confer upon the Optionee any right to continue in the employ of the
Company or any Subsidiary or shall interfere with or restrict in any way the
rights of the Company and its Subsidiaries, which are hereby expressly reserved,
to discharge the Optionee at any time for any reason whatsoever, with or without
cause.
Section 2.4 - Adjustments in Option
In the event that the outstanding Shares subject to the Option
are changed into or exchanged for a different number or kind of shares of the
Company or other securities of the Company by reason of merger, consolidation,
recapitalization, reclassification, stock split up, stock dividend, or
combination of shares, the Committee shall make an appropriate and equitable
adjustment in the number and kind of shares as to which the Option, or portions
thereof then unexercised, shall be exercisable, to the end that after such event
the Optionee's proportionate interest shall be maintained as before the
occurrence of such event. Such adjustment in the Option shall be made without
change in the total price applicable to the unexercised portion of the Option
(except for any change in the aggregate price resulting from rounding-off of
share quantities or prices) and with any necessary corresponding adjustment in
the Purchase Price. Any such adjustment made by the Committee shall be final and
binding upon the Optionee, the Company, the Subsidiaries and all other
interested persons.
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ARTICLE III
PERIOD OF EXERCISABILITY
Section 3.1 - Commencement of Exercisability
(a) The Option shall become exercisable in cumulative
installments as set forth on the signature page hereto.
(b) Excluding Saturdays, Sundays, and nationally recognized
holidays, if the Optionee is absent from employment for any reason other than
vacation for an aggregate period exceeding sixty (60) days during the annual
period between the Date of Grant and the First Anniversary Date or any
successive Anniversary Date and the following Anniversary Date, then the latter
Anniversary Date shall be postponed by the number of all such days of absence.
This paragraph (b) shall not apply to Optionees who are Directors but not
Employees of the Company.
Section 3.2 - Duration of Exercisability
The installments provided for in Section 3.1 are cumulative.
Each such installment which becomes exercisable pursuant to Section 3.1 shall
remain exercisable until the expiration date set forth on the signature page of
this Agreement or until it becomes unexercisable under the Plan, whichever is
sooner.
Section 3.3 - Assumption of Option; Acceleration of Exercisability
In the event of the merger or consolidation of the Company with
or into another corporation, or the acquisition by another corporation or person
of all or substantially all of the Company's assets or eighty percent (80%) or
more of the Company's then outstanding voting stock, or the liquidation or
dissolution of the Company, such Option shall be assumed or an equivalent option
substituted by any successor corporation of the Company. The Company undertakes
to make reasonable and adequate provision for such assumption or substitution of
the Option upon or in connection with such merger, consolidation, acquisition,
liquidation, or dissolution. The Committee may also, in its absolute discretion
and upon such terms and conditions as it deems appropriate, by resolution
adopted prior to such event, provide that at some time prior to the effective
date of such event this Option shall be exercisable as to all of the Shares
covered hereby, notwithstanding that this Option may not yet have become fully
exercisable under Section 3.1.
Section 3.4 - Option Not Transferable
Neither the Option nor any interest or right therein or part
thereof shall be liable for the debts, contracts, or engagements of the Optionee
or his successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment, or any other means
whether such disposition be voluntary or involuntary or by operation of law, by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (Including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect; provided, however, that this Section 3.5
shall not prevent transfers by will or by the applicable laws of descent and
distribution.
ARTICLE IV
EXERCISE OF OPTION
Section 4.1 - Person Eligible to Exercise
During the lifetime of the Optionee, only he or she may exercise
the Option or any portion thereof. After the death of the Optionee, any
exercisable portion of the Option may, prior to the time when the Option becomes
unexercisable, be exercised by his or her personal representative or by any
person empowered to do so
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<PAGE>
under the Optionee's will or under the then applicable laws of descent and
distribution.
Section 4.2 - Partial Exercise
Any exercisable portion of the Option or the entire Option, if
then wholly exercisable, may be exercised in whole or in part at any time prior
to the time when the Option or portion thereof becomes unexercisable under the
Plan; provided, however, that each partial exercise shall be for not less than
one hundred (100) Shares (or minimum installment set forth in Section 3.1, if a
smaller number of Shares) and shall be for whole Shares only.
Section 4.3 - Manner of Exercise
The Option, or any exercisable portion thereof, may be exercised
solely by delivery to the Secretary or the Secretary's office of all of the
following prior to the time when the Option or such portion becomes
unexercisable under the Plan:
(a) Notice in writing signed by the Optionee or the other person
then entitled to exercise the Option or portion thereof, stating that the Option
or portion thereof is thereby exercised, such notice complying with all
applicable rules established by the Committee; and
(b) (i) Full payment (in cash or by check) for the Shares with
respect to which such Option or
portion is exercised; or
(ii) Shares of any class of the Company's stock owned by the
Optionee duly endorsed for transfer to the Company with a fair
market value on the date of delivery equal to the aggregate
Option price of the Shares with respect to which such Option or
portion is thereby exercised; or
(iii) With the consent of the Committee, a full recourse
promissory note bearing interest (at least such rate as shall
then preclude the imputation of interest under the Code or any
successor provision) and payable upon such terms as may be
prescribed by the Committee. The Committee may also prescribe
the form of such note and the security to be given for such
note. No Option may, however, be exercised by delivery of a
promissory note or by a loan from the Company when or where such
loan or other extension of credit is prohibited by law; or
(iv) Any combination of the consideration provided in the
foregoing subsections (i), (ii), and (ii);
and
(c) Full payment to the Company of all amounts which, under
federal, state or local law, it is required to withhold upon exercise of the
Option; and
(d) In the event the Option or portion thereof shall be
exercised pursuant to Section 4.1 by any person or persons other than the
Optionee, appropriate proof of the right of such person or persons to exercise
the Option.
Section 4.4 - Conditions to Issuance of Stock Certificates
The Shares deliverable upon the exercise of the Option, or any
portion thereof, may be either previously authorized but unissued Shares or
issued Shares which have then been reacquired by the Company. Such Shares shall
be fully paid and non-assessable. The Company shall not be required to issue or
deliver any certificate or certificates for Shares purchased upon the exercise
of the Option or portion thereof prior to fulfillment of all of the following
conditions:
(a) The completion of any registration or other qualification of
such Shares under any state or federal law or under rulings or regulations of
the Securities and Exchange Commission or of any other governmental regulatory
body, which the Committee shall, in its absolute discretion, deem necessary or
advisable;
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<PAGE>
(b) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable;
(c) The payment to the Company of all amounts which, under
federal, state, or local law, it is required to withhold upon exercise of the
Option; and
(d) The lapse of such reasonable period of time following the
exercise of the Option as the Committee may from time to time establish for
reasons of administrative convenience.
It is understood that the Shares deliverable upon exercise of the Option have
been registered under the Securities Act, and the Company shall use its best
efforts to keep such registration current.
Section 4.5 - Rights as Stockholder
The holder of the Option shall not be, nor have any of the
rights or privileges of, a stockholder of the Company in respect of any Shares
purchasable upon the exercise of any part of the Option unless and until
certificates representing such Shares shall have been issued by the Company to
such holder.
ARTICLE V
OTHER PROVISIONS
Section 5.1 - Administration
The Committee shall have the power to interpret the Plan and
this Agreement and to adopt such rules for the administration, interpretation
and application of the Plan as are consistent therewith and to interpret or
revoke any such rules. All actions taken and all interpretations and
determinations made by the Committee or the Special Committee in good faith
shall be final and binding upon the Optionee, the Company, the Subsidiaries and
all other interested persons. No member of the Committee or the Special
Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or the Option. In its
absolute discretion, the Board may at any time and from time to time exercise
any and all rights and duties of the Committee under the Plan and this
Agreement.
Section 5.2 - Shares to Be Reserved
The Company shall at all times during the term of the Option
reserve and keep available such number of Shares as will be sufficient to
satisfy the requirements of this Agreement.
Section 5.3 - Notices
Any notice to be given under the terms of this Agreement to the
Company shall be addressed to the Company in care of its Secretary, and any
notice to be given to the Optionee shall be addressed to him or her at the
address set forth on the Signature Page hereof. By a notice given pursuant to
this Section 5.3, either party may hereafter designate a different address for
delivery of notices. Any notice which is required to be given to the Optionee
shall, if the Optionee is then deceased, be given to the Optionee's personal
representative if such representative has previously informed the Company of his
status and address by written notice under this Section 5.3. Any notice shall be
deemed duly given when enclosed in a properly sealed envelope or wrapper
addressed as aforesaid and deposited (with postage prepaid) in a post office or
branch post office regularly maintained by the United States Postal Service.
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<PAGE>
Section 5.4 - Titles
Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of this Agreement.
Section 5.5 - Construction
This Agreement shall be administered, interpreted, and enforced
under the laws of the State of Delaware.
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<PAGE>
SIGNATURE PAGE
1994 STOCK OPTION PLAN OF MENDOCINO PARTNERS, INC.
Incentive Stock Option
In tandem with stock appreciation right
No stock appreciation right
Non-Qualified Option
AO Option
In tandem with stock appreciation right No stock
appreciation right In tandem with Restricted Stock No
Restricted Stock
Restricted stock grant without accompanying option
Purchase Price:
Number of Shares:
Vesting: Immediate as to the entire option.
Expiration:
I have read the Stock Option Agreement indicated above which was
adopted for use in connection with the 1994 Stock Option Plan. As Optionee, I
hereby agree to all of the terms of the Agreement.
Date of Grant: ___________
Optionee Name
Address
Optionee Social Security Number or Taxpayer Identification
Number:
Optionee Signature
The Company hereby agrees to all of the terms of the Agreement.
MENDOCINO PARTNERS, INC.
By:
Its:
