<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 1, 2000
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
IMPRESSE CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C> <C>
DELAWARE 7389 94-3288153
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification Number)
Incorporation or Organization)
</TABLE>
1309 SOUTH MARY AVENUE
SUNNYVALE, CA 94087
(408) 530-2000
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
NIMISH MEHTA
CHIEF EXECUTIVE OFFICER
1309 SOUTH MARY AVENUE
SUNNYVALE, CA 94087
(408) 530-2000
(Name, Address Including Zip Code, and Telephone Number Including Area Code, of
Agent for Service)
------------------------------
COPIES TO:
<TABLE>
<S> <C>
JOSHUA L. GREEN BRUCE DALLAS
JON E. GAVENMAN DAVIS POLK & WARDWELL
VENTURE LAW GROUP 1600 El Camino Real
A Professional Corporation Menlo Park, CA 94025
2800 Sand Hill Road (650) 752-2000
Menlo Park, CA 94025
(650) 854-4488
</TABLE>
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
--------------------------
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 (the "Securities Act"), check the following box. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / ______
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / ______
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / ______
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
TITLE OF EACH CLASS PROPOSED MAXIMUM AGGREGATE
OF SECURITIES TO BE REGISTERED OFFERING PRICE(1) AMOUNT OF REGISTRATION FEE
<S> <C> <C>
Common Stock, par value $0.001........................ $65,000,000 $17,160
</TABLE>
(1) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457(o) under the Securities Act.
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PROSPECTUS (SUBJECT TO COMPLETION)
ISSUED FEBRUARY 1, 2000
THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PRELIMINARY
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING
OFFERS TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
<PAGE>
SHARES
[LOGO]
COMMON STOCK
-----------------
IMPRESSE CORPORATION IS OFFERING SHARES OF ITS COMMON STOCK. THIS IS
OUR INITIAL PUBLIC OFFERING AND NO PUBLIC MARKET CURRENTLY EXISTS FOR OUR
SHARES. WE ANTICIPATE THAT THE INITIAL PUBLIC OFFERING PRICE WILL BE BETWEEN
$ AND $ PER SHARE.
-------------------
WE HAVE APPLIED FOR OUR COMMON STOCK TO BE QUOTED ON THE NASDAQ NATIONAL MARKET
UNDER THE SYMBOL "IMPC."
-------------------
INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 5.
-------------------
PRICE $ A SHARE
-------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS IMPRESSE
-------- ------------- -----------
<S> <C> <C> <C>
PER SHARE.......................................... $ $ $
TOTAL.............................................. $ $ $
</TABLE>
IMPRESSE HAS GRANTED THE UNDERWRITERS THE RIGHT TO PURCHASE UP TO AN ADDITIONAL
SHARES OF COMMON STOCK TO COVER OVER-ALLOTMENTS.
THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE NOT
APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
MORGAN STANLEY & CO. INCORPORATED EXPECTS TO DELIVER THE SHARES TO PURCHASERS ON
, 2000.
-------------------
MORGAN STANLEY DEAN WITTER
MERRILL LYNCH & CO.
DEUTSCHE BANC ALEX. BROWN
, 2000
<PAGE>
[artwork]
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 5
Special Note Regarding Forward-Looking
Statements.......................... 14
Use of Proceeds....................... 15
Dividend Policy....................... 15
Capitalization........................ 16
Dilution.............................. 17
Selected Financial Data............... 18
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 19
</TABLE>
<TABLE>
Business.............................. 24
<CAPTION>
PAGE
----
<S> <C>
Management............................ 37
Related Party Transactions............ 46
Principal Stockholders................ 48
Description of Capital Stock.......... 51
Shares Eligible for Future Sale....... 54
Underwriters.......................... 56
Legal Matters......................... 58
Experts............................... 58
Additional Information................ 58
Index to Financial Statements......... F-1
</TABLE>
------------------------
You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell, and seeking offers to
buy, shares of our common stock only in jurisdictions where offers and sales are
permitted. The information contained in this prospectus is accurate only as of
the date of this prospectus, regardless of the time of delivery of this
prospectus or any sale of our common stock.
UNTIL , 2000 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS THAT BUY, SELL OR TRADE OUR COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS DELIVERY
REQUIREMENT IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A PROSPECTUS
WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
2
<PAGE>
PROSPECTUS SUMMARY
YOU SHOULD READ THE FOLLOWING SUMMARY TOGETHER WITH THE MORE DETAILED
INFORMATION REGARDING IMPRESSE AND OUR COMMON STOCK BEING SOLD IN THIS OFFERING
AND OUR FINANCIAL STATEMENTS AND NOTES APPEARING ELSEWHERE IN THIS PROSPECTUS.
Impresse is a leading provider of business-to-business e-commerce solutions
for the creation and procurement of commercially printed materials. Our hosted
impresse.com service provides a platform for corporations, their commercial
print suppliers, their design, advertising and marketing agencies and other
participants in the print supply chain to design, specify, price, order, track,
fulfill and pay for print jobs.
Both corporate print buyers and their printers save time and increase their
productivity by replacing inefficient manual processes with the real-time
collaboration capabilities of our impresse.com service. For example, by
automating the process of requesting quotes for print jobs, our impresse.com
service allows corporations to access a broader range of printers and compare
more bids, more efficiently, thereby creating the opportunity to reduce print
product costs. Corporations further benefit from enterprise-wide consolidation
of transaction information, which can be utilized to make better print
procurement decisions and achieve economies of scale. Printers benefit from our
service because more potential customers can reach them through our network. In
addition, because our service streamlines the print procurement process,
printers can better allocate their time and resources to cultivate new, and
improve existing, customer relationships.
Virtually all businesses rely on commercially printed materials as the
primary medium for important business communications, such as marketing
brochures, promotional materials, direct mail, annual reports, product and user
manuals and other informational items. According to Raine Consulting, Inc., a
graphic arts industry consulting firm, large corporations typically spend
approximately 2% to 3% of their revenue on commercially printed materials. Based
on estimates by CAP Ventures, a print industry research firm, sales in the U.S.
printing and publishing industry totaled approximately $292 billion in 1998, of
which over $150 billion was derived from the commercial printing segments we
target.
The commercial print industry is a particularly attractive market for our
impresse.com service because:
- it is highly fragmented, with over 51,000 commercial printers in the U.S.,
according to the Printing Industries of America, an industry trade
association;
- 78% of commercial printers have access to and use the Internet, according
to Harris Interactive, a market research firm;
- most commercial printing content is digitally stored and can be readily
transferred through the Internet; and
- traditional methods of print procurement are cumbersome, time-consuming,
labor-intensive and prone to error.
Since print buyers and the corporations they represent have significant
market leverage relative to their commercial print suppliers, our strategy is to
target large multinational corporations that represent the greatest aggregate
demand for commercial print. We believe that their significant buying power will
enable us to attract a critical mass of printers to our network. To further
accelerate the growth of our network, we intend to leverage our existing
strategic relationships with key industry leaders such as Adobe Systems, Ariba,
Hewlett-Packard, Oracle, Logic Associates and WAM!NET to gain access to their
corporate customers, and to establish additional strategic relationships.
As of January 28, 2000 we had signed agreements to use our impresse.com
service with 62 corporations and agencies and 106 of their commercial print
suppliers. Some of our large corporate customers include 3Com, A.G. Edwards,
AutoNation, Dayton Hudson, Enron, McKesson HBOC and Whirlpool.
3
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Common stock offered.................................... shares
Common stock to be outstanding after this offering...... shares
Use of proceeds......................................... For working capital and general corporate
purposes. See "Use of Proceeds."
Proposed Nasdaq National Market symbol.................. IMPC
</TABLE>
The number of shares of our common stock to be outstanding immediately after
this offering is based on the number of shares outstanding as of December 31,
1999. This number does not take into account as of December 31, 1999 1,768,525
shares of our common stock subject to outstanding options issued under our 1997
Stock Option Plan at a weighted average exercise price of $1.11 per share,
483,428 shares of our common stock issuable upon the exercise of outstanding
warrants at a weighted average exercise price of $1.98 per share and 31,837
shares available for future grant under our 1997 Stock Option Plan. This number
also does not include 156,250 shares of common stock issuable upon exercise of
options granted after December 31, 1999, 4,932,463 additional shares of common
stock reserved for issuance in January 2000 under the 1997 Stock Option Plan,
the 2000 Directors' Stock Plan, and the 2000 Employee Stock Purchase Plan,
80,308 shares of common stock issuable upon the exercise of a warrant issued in
January 2000 with an exercise price of $12.39 per share and the issuance of
189,668 shares of Series C convertible preferred stock in January 2000. Unless
otherwise specifically stated, the information in this prospectus reflects the
conversion of all outstanding shares of our preferred stock into shares of
common stock upon completion of this offering, and assumes no exercise of the
underwriters' over-allotment option.
SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PERIOD FROM
OCTOBER 7, 1997
(INCEPTION) THROUGH YEAR ENDED
DECEMBER 31, DECEMBER 31,
1998 1999
------------------- ------------
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue
Services.................................................. $ -- $ 4
Other license............................................. -- 160
Total revenue........................................... -- 164
Gross loss.................................................. -- (356)
Loss from operations........................................ (4,478) (19,855)
Net loss.................................................... (4,370) (19,800)
Basic and diluted net loss per share........................ $ (3.35) $ (7.36)
Shares used to compute basic and diluted net loss per
share..................................................... 1,306 2,691
Pro forma basic and diluted net loss per share
(unaudited)............................................... $ (1.30)
Shares used to compute pro forma basic and diluted net loss
per share (unaudited)..................................... 15,227
</TABLE>
The As Adjusted column below reflects our sale of shares of common
stock in this offering at an assumed initial public offering price of $ per
share and the application of our estimated net proceeds, after deducting
estimated underwriting discounts and commissions and estimated offering expenses
payable by us.
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999
------------------------
ACTUAL AS ADJUSTED
---------- -----------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $48,077 $
Working capital............................................. 44,834
Total assets................................................ 60,367
Long-term debt and capital lease obligation, less current
portion................................................... 4,416
Total liabilities........................................... 11,281
Total stockholders' equity.................................. 49,085
</TABLE>
We were incorporated in California in October 1997, and will be
reincorporated in Delaware prior to the closing of this offering. Our principal
executive offices are located at 1309 South Mary Avenue, Sunnyvale, California
94087, and our telephone number is (408) 530-2000. We maintain a worldwide web
site at www.impresse.com. The information in our web site is not incorporated by
reference into this prospectus. Impresse, Impresse's logo, and impresse.com are
some of our trademarks. Each other trademark, trade name or service mark of any
other company appearing in this prospectus is the property of its holder.
4
<PAGE>
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW BEFORE MAKING AN
INVESTMENT DECISION. THE RISKS DESCRIBED BELOW ARE NOT THE ONLY ONES FACING OUR
COMPANY. ADDITIONAL RISKS NOT PRESENTLY KNOWN TO US OR THAT WE CURRENTLY DEEM
IMMATERIAL MAY ALSO IMPAIR OUR BUSINESS OPERATIONS.
OUR BUSINESS, FINANCIAL CONDITION OR RESULTS OF OPERATIONS COULD BE
MATERIALLY ADVERSELY AFFECTED BY ANY OF THESE RISKS. THE TRADING PRICE OF OUR
COMMON STOCK COULD DECLINE DUE TO ANY OF THESE RISKS, AND YOU MAY LOSE ALL OR
PART OF YOUR INVESTMENT.
THIS PROSPECTUS ALSO CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS
AND UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS,
INCLUDING THE RISKS FACED BY US DESCRIBED BELOW AND ELSEWHERE IN THIS
PROSPECTUS.
RISKS RELATED TO OUR BUSINESS
OUR LIMITED OPERATING HISTORY MAKES IT DIFFICULT FOR YOU TO EVALUATE OUR
BUSINESS AND OUR PROSPECTS.
We were founded in October 1997 and have a limited operating history. From
inception through the three months ended September 1999, we were a development
stage company and did not have significant sales. In August 1999, we launched
our impresse.com service. For the year ended December 31, 1999, we generated
total revenue of approximately $164,000, of which approximately $4,000 was
derived from our impresse.com service. Currently, we intend to focus our
resources on further developing our impresse.com service. We expect to encounter
risks and difficulties frequently encountered by early-stage companies in new
and rapidly evolving markets. Many of these risks are described in more detail
in this "Risk Factors" section. If we do not successfully address these risks,
our business could be seriously harmed.
Due to our limited operating history, we believe that period-to-period
comparisons of our revenue and results of operation are not meaningful. As a
result, you should not rely on our revenue or results of operations for any
prior period as an indication of future performance or prospects.
THE MARKET FOR OUR IMPRESSE.COM SERVICE IS AT AN EARLY STAGE AND OUR
BUSINESS MODEL REQUIRES A CRITICAL MASS OF BUYERS AND SUPPLIERS OF
COMMERCIAL PRINT.
Our success depends on our ability to attract a critical mass of buyers and
suppliers of commercial print to use our impresse.com service for their
commercial print procurement and collaboration requirements. However, the market
for business-to-business e-commerce generally, and Internet-based print
procurement and collaboration solutions specifically, is at an early stage of
development, and our impresse.com service may fail to achieve market acceptance.
We may not be able to encourage buyers or suppliers of commercial print to
abandon familiar, traditional print procurement processes because of comfort
with existing purchasing habits and direct supplier relationships, the costs and
resources required to switch purchasing methods, security and confidentiality
concerns, supplier resistance to increased pricing transparency or general
reticence about technology or the Internet, among other factors. If we fail to
attract and maintain a critical mass of buyers and suppliers of commercial
print, we may be unable to provide all of the benefits associated with a network
of interdependent buyers and sellers, including a wider breadth of product
offerings, the ability to manage project bids and access to the diverse
industries that comprise the demand for commercial print. As a result, our
impresse.com service may not achieve widespread market acceptance and our
business could be seriously harmed.
WE HAVE A HISTORY OF LOSSES AND ANTICIPATE CONTINUED LOSSES FOR THE
FORESEEABLE FUTURE.
We have had substantial losses since our inception and we anticipate that we
will continue to incur net losses for the foreseeable future. In addition, we
have not derived significant revenue to date from our impresse.com service. We
cannot be certain that we will ever achieve or sustain profitability. As of
December 31, 1999, we had an accumulated deficit of $24.2 million. The extent of
future losses is
5
<PAGE>
contingent, in part, on the amount of growth in our revenue relative to our
operating expenses, which we anticipate will increase as we incur expenses
related to the development, operation and marketing of our impresse.com service.
If we fail to generate revenue at anticipated rates, or if our operating
expenses increase without an adjustment or a commensurate increase in revenue,
our business, results of operations and financial condition will be negatively
affected.
WE EXPECT TO DEPEND ON OUR IMPRESSE.COM SERVICE FOR SUBSTANTIALLY ALL OF OUR
REVENUE FOR THE FORESEEABLE FUTURE.
Because we no longer intend to sell our intranet software solution, we
anticipate that revenue from our impresse.com service will constitute
substantially all of our revenue for the foreseeable future. However, we cannot
be sure that buyers and suppliers of commercial print will accept our business
model of charging a fixed percentage fee based on the gross dollar volume of
print processed through our impresse.com service. Consequently, a decline in the
demand for and usage of our impresse.com service, or its failure to achieve
broad market acceptance, would seriously harm our business.
We may not be able to supplement or replace our current sources of revenue
by offering additional products or services, and, even if we enhance the
features and functionality of our impresse.com service, we face additional risks
associated with the development and management of these enhancements. If we fail
to increase the commercial print volume transacted through our impresse.com
service, or if we are unable to offer alternative or supplemental
revenue-generating products or services, our revenue may not grow as we
anticipate or at all, which will negatively affect our business, financial
condition and results of operations.
FLUCTUATIONS IN AND THE UNPREDICTABILITY OF OUR QUARTERLY RESULTS MAY
NEGATIVELY AFFECT THE TRADING PRICE OF OUR COMMON STOCK.
Our revenue and results of operations may fluctuate significantly in the
future as a result of a variety of factors, many of which are outside of our
control. As a result, you should not rely on period-to-period comparisons of
revenue and results of operations as an indication of our future performance.
Some of the factors that may affect our revenue and results of operations
include:
- demand for and market acceptance of our Internet-based print procurement
and collaboration solution;
- introduction of new and enhanced Internet-based print procurement and
collaboration solutions and services by us or our competitors;
- budgeting cycles of customers and users;
- loss of one or more of our key customers or strategic relationships;
- changes in our pricing policy or those of our competitors;
- amount and timing of capital expenditures and other costs relating to the
expansion of our operations;
- timing and number of new hires;
- technical difficulties with our web site or our impresse.com service; or
- general economic conditions.
In addition, due to our limited operating history, the risks described
above, competition in the printing industry, and the resulting uncertainty as to
the success of our business model, it is difficult to accurately predict our
revenue and operating results. Because our revenue is generated on a
per-transaction basis, the timing of our revenue recognition is contingent upon
the timing of the mutual decision of the print buyer
6
<PAGE>
and the selected printer to initiate a print job through our impresse.com
service. The timing of this decision may be affected by factors outside of our
control, including seasonal and industry-specific fluctuations in demand for
commercial print. As a result, it is possible that in some future periods our
financial results may fall below the expectations of market analysts or
investors. In this event, the market price of our common stock would likely
fall.
We may from time to time make pricing, service or marketing decisions or
enter into strategic business combinations that could have a negative effect on
our business, results of operations and financial condition for any number of
quarterly periods. In addition, in order to accelerate the promotion of our
impresse.com brand, we intend to increase significantly our marketing budget.
These increases in expenses may negatively affect our results of operations for
a number of quarterly periods and we cannot assure that these measures will
increase our revenue.
Due to our relatively short operating history, we have limited meaningful
historical financial data upon which to base our planned operating expenses.
Accordingly, our expense levels are based in part on our expectations as to
future revenue from new customers and are relatively fixed in the short term. We
cannot be certain that we will be able to accurately predict our revenue,
particularly in light of our limited operating history, the intense competition
in the printing industry, and the resulting uncertainty as to the success of our
business model. If we fail to accurately predict revenue in relation to fixed
expense levels and we are unable to adjust our operating expenses in a timely
manner in response to lower than expected revenue, our business, results of
operations and financial condition could be negatively affected.
WE FACE INTENSE COMPETITION THAT COULD NEGATIVELY AFFECT OUR BUSINESS.
The market for business-to-business e-commerce and online print procurement
is new and rapidly evolving, and competition is intense and is expected to
increase significantly in the future.
We face competition from:
- other companies with commercial print-focused e-commerce offerings as well
as existing business-to-business e-commerce companies which may decide to
offer competing Internet-based print procurement and collaboration
solutions;
- large commercial printers which have developed or may acquire or develop
proprietary Internet-based e-commerce solutions;
- large multinational corporations with internally developed print
procurement and collaboration solutions; and
- traditional enterprise software companies which may develop alternative
print procurement and collaboration solutions.
We may not be able to compete successfully against our current or future
competitors and competition could have a material adverse effect on our
business, results of operations and financial condition. Our competitors and
potential competitors may develop superior e-commerce solutions for print
procurement that achieve greater market acceptance than our solution. Further,
the market for commercial printing includes traditional print providers and
other providers of online commercial print-related services which may seek to
expand their on-line presence to offer services similar to those offered by our
impresse.com service. Many of our current and potential competitors have longer
operating histories, significantly greater financial, technical and marketing
resources, significantly greater name recognition and a larger installed base of
customers than us. If we are unable to provide competitive services, our
business will be negatively affected.
7
<PAGE>
IF WE ARE UNABLE TO DESIGN THE CORRECT FEATURES AND FUNCTIONALITY FOR OUR
IMPRESSE.COM SERVICE, WE MAY FAIL TO ATTRACT NEW CUSTOMERS OR WE MAY LOSE
EXISTING CUSTOMERS.
Our revenue is derived from the use of our impresse.com service, and, more
specifically, through the execution of commercial print transactions by buyers
and suppliers. If buyers or suppliers of commercial print choose not to use our
impresse.com service, we will not generate revenue. Our success depends upon our
ability to accurately determine and implement the features and functionality
that encourage and facilitate the execution of transactions through our
impresse.com service. We cannot be certain that the features and functionality
that we currently offer, or the features and functionality that we may offer in
the future, will be sufficient to encourage the use of our impresse.com service.
If we are unable to determine or design in the appropriate features and
functionality for our impresse.com service, our business will be negatively
affected.
TECHNOLOGY DEVELOPMENTS COULD REDUCE THE DEMAND FOR OUR IMPRESSE.COM SERVICE
OR OTHERWISE ADVERSELY AFFECT OUR REVENUE.
In recent years, the market for printed business materials has experienced
significant changes due to advances in computer and communication technologies.
Certain products that were once commercially printed are now generated on
computers through word processing or desktop publishing software. In addition,
some information is now disseminated in a digital or electronic format rather
than in a paper format. These trends could continue in the future, resulting in
decreased demand for our impresse.com service and a corresponding decrease in
our revenue.
WE DEPEND ON OUR KEY PERSONNEL TO MANAGE OUR BUSINESS EFFECTIVELY IN A
RAPIDLY CHANGING MARKET.
Our performance is substantially dependent on the performance of our
executive officers and other key employees. Our failure to successfully manage
our personnel requirements would have a negative effect on our business, results
of operations and financial condition. We may experience difficulty from time to
time in hiring and retaining the personnel necessary to support the growth of
our business. The loss of the services of any of our executive officers or other
key employees could have a negative effect on our business, results of
operations and financial condition. Competition for senior management,
experienced sales and marketing personnel, software developers, qualified
engineers and other employees is intense, and we cannot be certain that we will
be successful in attracting and retaining such personnel.
WE WILL NEED TO MANAGE OUR EXPANDING BUSINESS EFFECTIVELY IN ORDER TO MEET
CUSTOMER AND INVESTOR EXPECTATIONS.
We have rapidly and significantly expanded our operations and expect to
continue to do so. This growth has placed, and is expected to continue to place,
a significant strain on our sales, marketing, managerial, operational, financial
and other resources. If we cannot manage our growth effectively, it is likely
that our revenue and results of operations will not meet customer and investor
expectations. Since our inception in October 1997, we have grown to 146
employees as of December 31, 1999. We expect to hire a significant number of new
employees to support our business.
Our current information systems, procedures and controls may not continue to
support our operations and may hinder our ability to exploit the market for
Internet-based print procurement and collaboration solutions. We are in the
process of evaluating our accounting and management information systems and
anticipate that we may expand existing systems and implement new systems within
the next twelve months. We anticipate requiring additional space to accommodate
our growth in the next twelve months. We could experience interruptions to our
business when we add or transition to new accounting or management information
systems, or when we relocate to new facilities.
8
<PAGE>
OUR IMPRESSE.COM SERVICE IS NEW AND FACES RAPID TECHNOLOGICAL CHANGES AND IF
WE DO NOT RESPOND APPROPRIATELY, WE COULD BE NEGATIVELY AFFECTED.
The market for our impresse.com service is characterized by rapid
technological advances, evolving standards in the Internet and software markets,
changes in customer requirements, and frequent new product and service
introductions and enhancements. As a result, our future success depends upon our
ability to enhance our current impresse.com service, to develop and introduce
new solutions and services that will achieve market acceptance, and where
necessary to integrate our Internet-based print procurement and collaboration
solution with our customers' printing needs. If we do not adequately respond to
the need to develop and introduce new solutions or services, or to integrate
with our customers' printing needs, then our business, revenue, operating
results and financial condition will be negatively affected. For example, if we
incur substantial costs and expend significant resources developing new
technology that fails in the marketplace, we are unable to develop technology
that is a success in the marketplace, our technology does not integrate with our
customers, or our technology is surpassed by the technology of a competitor, we
may lose market share and revenue as our customers switch to our competitors'
offerings. Failure to provide this integration may delay or altogether dissuade
the market or a particular customer from adopting our impresse.com service,
which could have a material adverse effect on our business, financial condition
and results of operations.
Major enhancements and new solutions and services often require long
development and testing periods. In addition, our impresse.com service is
complex and, despite vigorous testing and quality control procedures, may
contain undetected errors or "bugs" when first implemented or updated. Any
inability to timely deliver a quality solution and services could have a
negative effect on our business, results of operations and financial condition.
WE DEPEND ON OUR INTELLECTUAL PROPERTY RIGHTS AND ARE SUBJECT TO THE RISK OF
INFRINGEMENT.
Our intellectual property is important to our business, and we seek to
protect our intellectual property through copyrights, trademarks, trade secrets
and confidentiality provisions in our customer, supplier and strategic
relationship agreements, nondisclosure agreements with third parties, and
invention assignment agreements with our employees and contractors. We cannot
assure you that measures we take to protect our intellectual property will be
successful or that third-parties will develop an alternative procurement
solution that does not infringe our intellectual property. Although we currently
have a non-exclusive license to a United States patent directed to a network
hosted system for automating the specification and management of printing, we
could be subject to intellectual property infringement claims by others. Our
failure to protect against misappropriation of our intellectual property, or
claims that we are infringing the intellectual property of third parties could
have a negative effect on our business, financial condition and results of
operations. See "Business--Intellectual Property, Proprietary Rights and
Licensing."
WE MAY NOT BE ABLE TO ESTABLISH AND DEVELOP SUFFICIENT BRAND RECOGNITION IN
ORDER TO ATTRACT THE NECESSARY CRITICAL MASS OF BUYERS AND SUPPLIERS OF
COMMERCIAL PRINT TO OUR IMPRESSE.COM SERVICE.
We believe that establishing and maintaining the identity of our brand is
crucial to attract a critical mass of commercial print buyers and suppliers to
our impresse.com service. The promotion and enhancement of our brand will depend
largely on our ability to provide value-added services, which cannot be assured.
If users do not perceive our impresse.com brand to be of high quality, or if we
introduce new services or enter into new business ventures that are not
favorably received by users, we will risk diluting our brand and decreasing the
likelihood that commercial print buyers and suppliers will transact their print
jobs through our impresse.com service. Furthermore, in order to attract and
retain buyers and suppliers of commercial print services and to promote and
maintain our brand in response to competitive pressures, we may find it
necessary to increase substantially our financial commitment to creating and
maintaining a distinct brand loyalty among our customers. If we are unable to
provide high quality service, or otherwise fail to promote and maintain our
brand, or if we incur excessive expenses in an attempt to improve our
9
<PAGE>
impresse.com service, or promote and maintain our brand, our business, results
of operation and financial condition could be materially and adversely affected.
RISKS RELATED TO BUSINESS-TO-BUSINESS E-COMMERCE
OUR BUSINESS WILL SUFFER IF BUYERS AND SUPPLIERS OF COMMERCIAL PRINT DO NOT
ACCEPT INTERNET-BASED SOLUTIONS.
Business-to-business e-commerce is a new and emerging business practice that
remains largely untested in the marketplace. Growth in the demand for our
impresse.com service depends on the adoption of e-commerce and Internet
solutions by buyers and suppliers of commercial print, which requires their
acceptance of a new way of purchasing and selling commercial print. Our business
could suffer if Internet-based print procurement and collaboration solutions are
not accepted or perceived to be effective by buyers and suppliers of commercial
print.
SECURITY PROBLEMS WITH THE INTERNET OR TRANSACTING BUSINESS OVER THE
INTERNET MAY INHIBIT THE GROWTH OF OUR INTERNET-BASED PRINT PROCUREMENT AND
COLLABORATION SOLUTION.
The secure transmission of confidential information over the Internet is
essential to maintaining buyer and supplier confidence in our solution.
Substantial security breaches on our system or other Internet-based systems
could significantly harm our business. We have incurred substantial expense to
protect against security breaches and their consequences and we may incur
additional expense to remedy any security breaches. A party that is able to
circumvent our security systems could steal proprietary information or cause
interruptions in our operations. Security breaches also could damage our
reputation and expose us to a risk of loss or litigation and possible liability.
Our insurance policies may not be adequate to reimburse us for losses caused by
security breaches. We cannot guarantee that our security measures will prevent
security breaches. Customers generally are concerned with security and privacy
on the Internet and any publicized security problems could inhibit the growth of
the Internet and, therefore, our impresse.com service as a means of conducting
transactions.
SYSTEM FAILURE MAY CAUSE INTERRUPTION OF OUR SERVICES.
The performance of our server and networking hardware and software
infrastructure is critical to our business and reputation and our ability to
process transactions, provide high quality customer service, and attract and
retain customers, suppliers, users and strategic partners. Currently our
infrastructure and systems are located in one site at Exodus Communications. We
anticipate adding a mirror site at a different, distant location. Until then, we
depend on our single-site infrastructure and any disruption to this
infrastructure resulting from a natural disaster or other event could result in
an interruption in our service, fewer transactions and, if sustained or
repeated, could impair our reputation and the attractiveness of our services,
which would have an adverse effect on our business, financial condition and
results of operations.
Our systems and operations are vulnerable to damage or interruption from
human error, natural disasters, power loss, telecommunications failures,
break-ins, sabotage, computer viruses, intentional acts of vandalism and similar
events. We do not have a formal disaster recovery plan or alternative provider
of hosting services. In addition, we do not necessarily carry sufficient
business interruption insurance to compensate for losses that could occur. Any
failure on our part to expand our system or Internet infrastructure to keep up
with the demands of our customers and users, or any system failure that causes
an interruption in service or a decrease in responsiveness of our Internet-based
procurement solution or web site, could result in fewer transactions and, if
sustained or repeated, could harm our reputation and the attractiveness of our
brand name, which would adversely affect our business, financial condition and
results of operations.
10
<PAGE>
THE ACCELERATED GROWTH AND INCREASING VOLUME OF INTERNET TRAFFIC MAY CAUSE
PERFORMANCE PROBLEMS WHICH MAY SLOW ADOPTION OF OUR INTERNET-BASED PRINT
PROCUREMENT AND COLLABORATION SOLUTION.
The growth of Internet traffic volume over a relatively short period of time
has caused frequent periods of decreased Internet performance, delays, and in
some cases, system outages. This decreased performance is caused by limitations
inherent in the technology infrastructure supporting the Internet, and the
technology infrastructure supporting the internal networks of Internet users. If
Internet usage continues to grow rapidly, the infrastructure of the Internet and
its users may be unable to support the demands of growing e-commerce usage, and
the Internet's performance and reliability may decline. If our existing or
potential customers experience frequent outages or delays on the Internet, the
adoption or use of our impresse.com service by these existing or potential
customers may grow more slowly than we expect or even decline. Our ability to
increase the speed and reliability of our impresse.com service, however, is
limited by and depends upon the reliability of both the Internet and the
internal networks of our existing and potential customers. As a result, the
sustained growth and success of our impresse.com service is dependent upon
improvements in the infrastructure supporting both the Internet and the internal
networks of the buyers and suppliers of commercial print using our impresse.com
service. If these improvements are not made in a timely fashion, we may have
difficulty attracting new buyers and suppliers of commercial print, or
maintaining our existing buyers and suppliers of commercial print, either of
which could have a negative impact on our business, revenue, financial condition
and results of operations.
REGULATION OR TAXATION OF THE INTERNET OR TRANSACTING BUSINESS OVER THE
INTERNET MAY INHIBIT THE GROWTH OF OUR INTERNET-BASED PRINT PROCUREMENT AND
COLLABORATION SOLUTION.
Due to the increasing popularity and use of the Internet and of e-commerce,
it is possible that a number of taxes, laws and regulations may be adopted in
the U.S. and abroad with particular applicability to the Internet and e-commerce
transactions. It is possible that governments will adopt taxes and enact
legislation that may be applicable to us in areas such as content, product
distribution, network security, encryption and the use of key escrow, data and
privacy protection, electronic authentication or "digital" signatures, illegal
and harmful content, access charges and re-transmission activities. Moreover,
the applicability to the Internet of existing laws governing issues such as
property ownership, content, taxation, defamation and personal privacy is
uncertain. Any taxes, laws or regulations may limit the growth of the Internet,
dampen e-commerce and reduce the number of transactions, increase our cost of
doing business or increase our legal exposure. Any of these factors could have a
negative effect on our business, revenue, financial condition and results of
operations.
RISKS RELATED TO THIS OFFERING
THERE HAS BEEN NO PRIOR MARKET FOR OUR COMMON STOCK AND WE EXPECT THE PRICE
OF OUR COMMON STOCK TO BE VOLATILE.
Prior to this offering, you could not buy or sell our common stock publicly.
An active public market for our common stock may not develop or be sustained
after the offering. Although the initial public offering price will be
determined based on several factors, the initial offering price may vary from
the market price after the offering. The market price of the common stock may
fluctuate significantly in response to a number of factors, some which are
beyond our control, including:
- quarterly variations in our operating results;
- changes in financial estimates of our performance by securities analysts;
- changes in market valuation of Internet commerce companies generally;
- announcements by us of significant contracts, acquisitions, strategic
partnerships, joint ventures or capital commitments;
11
<PAGE>
- loss of a major customer, supplier or strategic partner;
- additions or departures of any of our key personnel;
- future sales of our common stock; and
- stock market price and volume fluctuations, which are particularly common
among the highly volatile securities of Internet companies.
In the past, securities class action litigation has often been brought
against a company following periods of volatility in the market price of its
securities. We may in the future be the target of similar litigation. Securities
litigation could result in substantial costs and divert management's attention
and resources, which could have a negative effect on our business, operating
results and financial condition.
WE MAY REQUIRE ADDITIONAL CAPITAL THAT COULD HAVE A NEGATIVE EFFECT ON YOUR
INVESTMENT.
We currently anticipate that the net proceeds of the offering, together with
our existing credit facilities and available funds, will be sufficient to meet
our anticipated working capital and capital expenditure needs for the next 18
months. We may need to raise additional funds in the future in order to fund
rapid expansion, to pursue customer sales and implementation, to develop new or
enhanced solutions and services, to respond to competitive pressures or to
acquire complementary businesses, technologies or services.
If we raise additional funds through the issuance of equity or convertible
debt securities, the percentage ownership of our stockholders will be reduced,
stockholders may experience additional dilution and such securities may have
powers, preferences and rights that are senior to those of the rights of our
common stock. We cannot be certain that additional financing will be available
on terms favorable to us, if at all. If adequate funds are not available or not
available on acceptable terms, we may be unable to fund our expansion, promote
our brand identity, take advantage of unanticipated acquisition opportunities,
develop or enhance services or respond to competitive pressures. Any such
inability could have a negative effect on our business, results of operations
and financial condition.
OUR STOCK PRICE COULD BE AFFECTED BY SHARES OF OUR COMMON STOCK BECOMING
AVAILABLE FOR SALE IN THE FUTURE.
Sales of substantial number of shares common stock in the public market
after this offering could depress the market price of our common stock and could
impair our ability to raise capital through the sale of additional equity
securities. For a description of shares of our common stock that are available
for future sale, see "Shares Eligible for Future Sale."
WE HAVE BROAD DISCRETION IN HOW WE USE THE PROCEEDS FROM THIS OFFERING IN
WAYS WITH WHICH YOU MAY NOT AGREE.
Our management will have broad discretion over the manner in which the
proceeds of this offering are applied. As a result, our management may spend
some or all of the proceeds from this offering in ways with which any of the
stockholders may disagree. See "Use of Proceeds."
OFFICERS AND DIRECTORS AND THEIR AFFILIATES WILL CONTINUE TO HAVE
SUBSTANTIAL CONTROL OVER IMPRESSE AFTER THE OFFERING.
After completion of this offering, our executive officers and directors and
their affiliates will beneficially own approximately % of the shares of common
stock ( % if the underwriters exercise the over-allotment option in full). As a
result, our officers, directors and their affiliates will have the ability to
influence the election of our Board of Directors and the outcome of corporate
actions requiring
12
<PAGE>
stockholder approval. This concentration of ownership may have the effect of
delaying or preventing a change in control of Impresse. See "Principal
Stockholders."
WE HAVE ADOPTED ANTI-TAKEOVER PROVISIONS THAT COULD AFFECT THE SALE OF
IMPRESSE.
Some of the provisions of our Amended and Restated Certificate of
Incorporation and bylaws could make it more difficult for a third party to
acquire us, even if a change of control would be beneficial to our stockholders.
These provisions could depress the price of our common stock and deprive our
stockholders of the opportunity to realize a premium on their shares of common
stock in connection with a sale of Impresse. See "Description of Capital Stock."
13
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements under "Prospectus Summary," "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Business," and elsewhere in this prospectus are forward-looking
statements. Some of these forward-looking statements are attributed to third
parties and relate to their statements relating to the growth of Internet users,
e-commerce, and the market for web-based network printing services. These
statements involve known and unknown risks, uncertainties, and other factors
that may cause our or our industry's actual results, levels of activity,
performance, or achievements to be materially different from any future results,
levels of activity, performance, or achievements expressed or implied by
forward-looking statements. Such factors include, among other things, those
listed under "Risk Factors" and elsewhere in this prospectus.
In some cases, you can identify forward-looking statements by terminology
such as "may," "will," "should," "expects," "plans," "anticipates," "believes,"
"estimates," "predicts," "potential," or "continue" or the negative of these
terms or other comparable terminology.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, growth rates,
levels of activity, performance, or achievements. Moreover, neither we nor any
other person assumes responsibility for the accuracy and completeness of these
statements. We are under no duty to update any of the forward-looking statements
after the date of this prospectus to conform these statements to actual results.
14
<PAGE>
USE OF PROCEEDS
Our net proceeds from the sale of the shares of common stock offered
hereby are estimated to be approximately $ million, at an assumed initial
public offering price of $ per share, after deducting estimated underwriting
discounts and commissions and estimated offering expenses payable by us. The
primary purposes of this offering are to obtain additional capital, create a
public market for our common stock and facilitate future access to public equity
markets. We intend to use the net proceeds of this offering for general
corporate purposes, including working capital, expenses associated with
advertising campaigns, brand promotions and other marketing efforts and capital
expenditures. We also may use a portion of the net proceeds to acquire or invest
in complementary businesses, technologies, products or services, although no
specific acquisitions are currently planned. Our management will have broad
discretion in the application of the net proceeds. Pending these uses, we intend
to invest the net proceeds from this offering in short-term, interest-bearing,
investment-grade securities.
DIVIDEND POLICY
We have not declared or paid any cash dividends on our capital stock since
inception and we do not expect to pay any cash dividends in the foreseeable
future. We currently intend to retain future earnings, if any, to finance the
expansion of our business. The terms of certain of our current credit facilities
prohibit the payment of cash dividends on our capital stock without the prior
written consent of the applicable creditors.
15
<PAGE>
CAPITALIZATION
The Actual column in the following table sets forth our actual
capitalization as of December 31, 1999. The Pro Forma column in the following
table gives effect to:
- the filing of our Certificate of Incorporation to provide for authorized
capital stock of 150,000,000 shares of common stock and 5,000,000 shares
of undesignated preferred stock; and
- the conversion of all outstanding shares of preferred stock into
16,247,360 shares of common stock upon the closing of this offering.
The As Adjusted column in the following table gives effect to this offering
and our receipt of the net proceeds at an assumed initial public offering price
of $ per share, after deducting estimated underwriting discounts and
commissions and estimated offering expenses payable by us.
The following table does not include:
- 1,768,525 shares of common stock issuable on exercise of options
outstanding as of December 31, 1999, with a weighted average exercise
price of $1.11 per share;
- 483,428 shares of common stock issuable upon the exercise of warrants
outstanding as of December 31, 1999, with a weighted average exercise
price of $1.98 per share;
- 156,250 shares of common stock issuable upon exercise of options granted
after December 31, 1999;
- 4,964,300 shares of common stock reserved for issuance under the 1997
Stock Option Plan, the 2000 Directors' Stock Plan and the 2000 Employee
Stock Purchase Plan;
- 80,308 shares of common stock issuable upon the exercise of a warrant
issued in January 2000 with an exercise price of $12.39 per share; and
- the issuance of 189,668 shares of Series C convertible preferred stock in
January 2000.
See "Management--Stock Plans" and Note 7, 8 and 11 of Notes to Financial
Statements.
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999
----------------------------------
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- -----------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C>
Capital lease obligation less current portion............... $ 118 $ 118 $
Long-term debt, less current portion........................ 4,298 4,298
Stockholders' equity:
Convertible preferred stock, $.001 par value;
17,180,485 shares in 1999, and 5,000,000 shares pro
forma and as adjusted authorized; 16,247,360 shares in
1999, no shares pro forma, and no shares as adjusted
issued and outstanding................................ 16 --
Common stock, $.001 par value;
27,420,000 shares in 1999, and 150,000,000 shares pro
forma and as adjusted authorized; 8,902,761 shares in
1999 and 25,150,121 shares pro forma,
shares as adjusted issued and outstanding............. 9 25
Additional paid-in capital.................................. 87,235 87,235
Deferred stock compensation................................. (13,470) (13,470)
Notes receivable from stockholders.......................... (535) (535)
Accumulated deficit......................................... (24,170) (24,170)
-------- ------- -------
Total stockholders' equity................................ 49,085 49,085
-------- ------- -------
Total capitalization.................................... $ 53,501 $53,501 $
======== ======= =======
</TABLE>
16
<PAGE>
DILUTION
Our pro forma net tangible book value as of December 31, 1999 was $45.7
million, or $1.82 per share. Pro forma net tangible book value per share is
determined by dividing the pro forma number of shares of common stock, after
giving effect to the conversion of all outstanding shares of our convertible
preferred stock into 16,247,360 shares of common stock, into our net tangible
book value, which is equal to total tangible assets less total liabilities.
Dilution per share represents the difference between the amount per share paid
by purchasers of shares of common stock in this offering and the net tangible
book value per share of common stock immediately after completion of this
offering. After giving effect to the sale of shares of our common stock
offered in this offering at an assumed initial public offering price of $
per share and after deducting estimated underwriting discounts and commissions
and estimated offering expenses payable by us, our pro forma net tangible book
value as of December 31, 1999 would have been approximately $ million, or
$ per share. This represents an immediate increase in pro forma net
tangible book value of $ per share to existing stockholders and an
immediate dilution of $ per share to new investors purchasing shares at the
assumed initial public offering price. The following table illustrates this per
share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share.......... $
Pro forma net tangible book value per share as of
December 31, 1999.................................... $ 1.82
Increase in pro forma net tangible book value per share
attributable to new investors..........................
-------
Pro forma net tangible book value per share after this
offering...............................................
-------
Dilution per share to new investors...................... $
=======
</TABLE>
If the underwriters exercise their over-allotment option in full, the
dilution to new investors will be $ per share.
The following table summarizes as of December 31, 1999 on the pro forma
basis described above, after giving effect to the conversion of convertible
preferred stock into common stock, the number of shares of common stock
purchased from us, the total consideration paid to us and the average price per
share paid by existing stockholders and by investors purchasing shares of common
stock in this offering, before deducting estimated underwriting discounts and
commissions and estimated offering expenses payable by us:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
--------------------- ---------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
---------- -------- ----------- -------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders.................... 25,150,121 % $69,040,458 % $2.74
New investors............................
---------- ------ ----------- ------
Totals............................... 100.0% $ 100.0%
========== ====== =========== ======
</TABLE>
The foregoing discussion and tables exclude:
- 1,768,525 shares of common stock issuable on exercise of options
outstanding as of December 31, 1999, with a weighted average exercise
price of $1.11 per share;
- 483,428 shares of common stock issuable upon the exercise of warrants
outstanding as of December 31, 1999 with a weighted average exercise price
of $1.98 per share;
- 156,250 shares of common stock issuable upon exercise of options granted
after December 31, 1999;
- 4,964,300 shares of common stock reserved for issuance under the 1997
Stock Option Plan, the 2000 Directors' Stock Plan and the 2000 Employee
Stock Purchase Plan;
- 80,308 shares of common stock issuable upon the exercise of a warrant
issued in January 2000 with an exercise price of $12.39 per share; and
- the issuance of 189,668 shares of Series C convertible preferred stock in
January 2000.
See "Management--Stock Plans" and Notes 7, 8 and 11 of Notes to Financial
Statements.
17
<PAGE>
SELECTED FINANCIAL DATA
The following selected financial data should be read in conjunction with our
financial statements and related notes and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" included elsewhere in this
prospectus. The statement of operations data for the period from October 7, 1997
(inception) through December 31, 1998 and for the year ended December 31, 1999,
and the balance sheet data at December 31, 1998 and 1999, have been derived from
financial statements that have been audited by Ernst and Young, LLP, independent
auditors, included elsewhere in this prospectus. See Note 1 of notes to
financial statements for an explanation of the determination of the shares used
in computing basic and diluted net loss per share.
<TABLE>
<CAPTION>
PERIOD FROM
OCTOBER 7, 1997
(INCEPTION)
THROUGH YEAR ENDED
DECEMBER 31, DECEMBER 31,
1998 1999
--------------- -------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
Services.................................................. $ -- $ 4
Other license............................................. -- 160
------- --------
Total revenue......................................... -- 164
Cost of revenue............................................. -- 520
------- --------
Gross loss............................................ -- (356)
------- --------
Operating expenses:
Sales and marketing....................................... 1,086 7,861
Research and development.................................. 2,578 6,396
General and administrative................................ 775 2,052
Stock compensation and warrant expense.................... 40 3,189
------- --------
Total operating expenses.............................. 4,479 19,498
------- --------
Loss from operations........................................ (4,479) (19,854)
Interest income, net........................................ 109 54
------- --------
Net loss.................................................... $(4,370) $(19,800)
======= ========
Basic and diluted net loss per share........................ $ (3.35) $ (7.36)
======= ========
Shares used to compute basic and diluted net loss per
share..................................................... 1,306 2,691
======= ========
Pro forma basic and diluted net loss per share
(unaudited)............................................... $ (1.30)
========
Shares used to compute pro forma basic and diluted net loss
per share (unaudited)..................................... 15,227
========
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
----------------------------------
1998 1999
------------- ----------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $11,425 $ 48,077
Working capital............................................. 9,524 44,834
Total assets................................................ 12,925 60,367
Long-term debt and capital lease obligation, less current
portion................................................... 285 4,416
Total liabilities........................................... 2,422 11,281
Total stockholders' equity.................................. 10,503 49,085
</TABLE>
18
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION AND ANALYSIS OF OUR FINANCIAL CONDITION AND RESULTS
OF OPERATIONS SHOULD BE READ IN CONJUNCTION WITH "SELECTED FINANCIAL DATA" AND
OUR FINANCIAL STATEMENTS AND RELATED NOTES APPEARING ELSEWHERE IN THIS
PROSPECTUS. THIS DISCUSSION AND ANALYSIS CONTAINS FORWARD-LOOKING STATEMENTS
THAT INVOLVE RISKS, UNCERTAINTIES AND ASSUMPTIONS. THE ACTUAL RESULTS MAY DIFFER
MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A
RESULT OF CERTAIN FACTORS, INCLUDING, BUT NOT LIMITED TO, THOSE SET FORTH UNDER
"RISK FACTORS" AND ELSEWHERE IN THIS PROSPECTUS.
OVERVIEW
Impresse is a leading provider of business-to-business e-commerce solutions
for the procurement of commercially printed materials. Our impresse.com service
provides corporations and their commercial print suppliers with integrated
procurement and collaboration capabilities, industry-specific business
intelligence, improved price discovery, corporate systems integration and other
complementary services. Our impresse.com service also provides the transaction
automation and volume aggregation of an e-commerce marketplace.
We were founded in October 1997 and were a development stage company from
inception through the three months ended September 30, 1999. During this period
we did not have significant sales and our operating activities were related
primarily to the design and development of our e-commerce solutions, building
our corporate infrastructure, establishing relationships with suppliers and
customers and raising capital. We focused our initial development efforts on an
intranet software solution designed to automate the commercial print procurement
processes within large corporations. In mid-1999, however, we recognized the
opportunity to build upon our initial software development efforts to create a
broader, Internet-based business-to-business e-commerce solution. Accordingly,
we shifted our efforts to the development of our impresse.com service which we
launched in August 1999.
The first sale of our impresse.com service occurred during the three months
ended December 31, 1999. During this period we recognized services revenue of
approximately $4,000 derived from 42 print transactions processed through our
impresse.com service, with an average per-transaction gross dollar value of
approximately $6,000, and other related services. In addition, we derived
$160,000 of other license revenue during the three months ended December 31,
1999 from the licensing of our intranet software solution, which our customers
used to process 3,146 print transactions.
Our ability to generate significant future revenue is uncertain. We have
incurred significant losses since inception and, as of December 31, 1999, we had
an accumulated deficit of approximately $24.2 million, including a net loss in
the year ended December 31, 1999 of $19.8 million. We currently expect our
losses to increase in the future and we cannot assure you that we will ever
achieve or sustain profitability. We believe our success depends on establishing
additional customer relationships with large corporations and their printers,
increasing the commercial print volume transacted through our impresse.com
service, enhancing the features and functionality of our service and
accelerating market awareness of our impresse.com service. Accordingly, we
intend to continue to invest heavily in sales, marketing, and research and
development activities.
We have a limited operating history upon which to base an evaluation of our
business and we cannot assure you that our revenue will increase in future
periods. Our business and prospects must be considered in light of the risks,
expenses and difficulties frequently encountered by companies in our stage of
development, particularly companies in new and rapidly evolving markets such as
business-to-business e-commerce.
Our operating results for the period from October 7, 1997 (inception)
through December 31, 1997 were insignificant and have been combined with our
results for the year ended December 31, 1998.
19
<PAGE>
QUARTERLY RESULTS OF OPERATIONS
Because we were a development stage company from inception through the three
months ended September 30, 1999 and have a limited operating history, we believe
that period-to-period comparisons prior to 1999 are less meaningful than an
analysis of recent quarterly operating results. Accordingly, we are providing a
discussion and analysis of our results of operations that is focused on the six
quarters in the period ended December 31, 1999.
The following table presents our unaudited quarterly operating results for
the six quarters in the period ended December 31, 1999. You should read the
following table together with our financial statements and related notes
included elsewhere in this prospectus. We have prepared this unaudited
information on the same basis as our audited financial statements. This table
includes all adjustments, consisting only of normal recurring adjustments, that
we consider necessary for a fair presentation of our financial position and
operating results for the quarters presented. You should not draw any
conclusions about our future results from the operating results of any quarter.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------------------------------------------
SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31,
1998 1998 1999 1999 1999 1999
--------- -------- -------- -------- --------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
Services..................................... $ -- $ -- $ -- $ -- $ -- $ 4
Other license................................ -- -- -- -- -- 160
------- ------- ------- ------- ------- -------
Total revenue.............................. -- -- -- -- -- 164
Cost of revenue................................ -- -- -- -- -- 520
------- ------- ------- ------- ------- -------
Gross loss................................... -- -- -- -- -- (356)
Operating expenses:
Sales and marketing.......................... 475 363 745 1,244 2,161 3,711
Research and development..................... 742 1,063 1,265 1,411 1,633 2,087
General and administrative................... 196 314 250 405 444 952
Stock compensation and warrant expense....... -- -- 32 162 657 2,339
------- ------- ------- ------- ------- -------
Total operating expenses................... 1,413 1,740 2,292 3,222 4,895 9,089
------- ------- ------- ------- ------- -------
Loss from operations........................... (1,413) (1,740) (2,292) (3,222) (4,895) (9,445)
Interest income, net........................... 22 2 76 47 (100) 31
------- ------- ------- ------- ------- -------
Net loss....................................... $(1,391) $(1,738) $(2,216) $(3,175) $(4,995) $(9,414)
======= ======= ======= ======= ======= =======
</TABLE>
RESULTS OF OPERATIONS
REVENUE
From inception through the three months ended September 30, 1999, we were a
development stage company and had no revenue. For the three months ended
December 31, 1999, our total revenue was approximately $164,000. Services
revenue derived from our impresse.com service through December 31, 1999 was
approximately $4,000. Services revenue includes revenue from the use of our
impresse.com service and other related services. We charge a fixed percentage
fee to print suppliers based on the gross dollar value of print volume procured
through our impresse.com service and we recognize revenue from the use of our
service upon completion of the print project.
For the three months ended December 31, 1999, we recorded other license
revenue totaling $160,000 from the licensing of our intranet software solution.
We recognized other license revenue in connection with sales of our intranet
software solution under Statement of Position, or SOP, 97-2, SOFTWARE REVENUE
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RECOGNITION, and SOP 98-9, MODIFICATION OF SOP 97-2, SOFTWARE REVENUE
RECOGNITION, WITH RESPECT TO CERTAIN TRANSACTIONS. We recognized this other
license revenue upon installation and acceptance of our software by the customer
provided that collection was probable. In the event we granted our customers the
right to specified upgrades, other license revenue was deferred until delivery
of the specified upgrade.
We no longer intend to market or license our intranet software solution as a
stand-alone product and expect to derive substantially all of our revenue for
the foreseeable future from sales of our impresse.com service.
COST OF REVENUE
Cost of revenue consists primarily of expenses associated with the
maintenance and support of our impresse.com service, including personnel,
facilities overhead, equipment depreciation costs and web hosting fees. During
the three months ended December 31, 1999, cost of revenue increased primarily
due to development of the infrastructure supporting the impresse.com service,
costs associated with the licensing of our intranet software solution and the
increase in revenue. Our gross margin for the three months ended December 31,
1999 was negative. We expect our gross margins to remain negative or relatively
low until our revenue sufficiently scales to cover our cost of revenue. Cost of
revenue also included, in connection with the licensing of our intranet software
solution, personnel and related overhead expenses associated with
implementation, training services and customer support.
OPERATING EXPENSES
SALES AND MARKETING. Sales and marketing expenses consist primarily of
advertising and promotion costs in support of the development of our marketing
strategy and payroll, commissions and related expenses for personnel engaged in
sales and marketing activities. Sales and marketing expenses have increased each
quarter since inception as we have expanded our sales and marketing efforts. We
intend to aggressively expand our customer relationships in order to increase
revenue and expand our brand awareness. Consequently, we expect to increase our
sales and marketing expenses in absolute dollars in future periods.
As part of our growth strategy, we are actively seeking to co-market our
impresse.com service through industry leaders with strong relationships with
potential customers. These co-marketing relationships provide us with sales and
marketing leverage in signing-up customers and their printers. Payments made in
connection with these agreements will be charged to sales and marketing as
incurred. As of December 31, 1999, we had concluded sales and marketing alliance
agreements with several companies in the operating resources procurement and the
print and graphic arts markets including the following:
In November 1999, we concluded an agreement with Adobe Systems for our
impresse.com service to serve as the exclusive print procurement solution for
Adobe's adobe.com graphic arts portal. The agreement includes the marketing of
impresse.com to Adobe's graphic arts application users and technology
cooperation to integrate certain technologies, such as PDF workflows, with our
impresse.com service. As part of this agreement, we are required to pay Adobe
referral fees based on a percentage of the services revenue from Adobe-sourced
customers, subject to guaranteed minimums. The agreement has an initial term of
one year and may be renewed upon mutual consent.
In August 1999, we signed a co-selling and co-marketing agreement with
Hewlett-Packard to enable our impresse.com service to be marketed with
Hewlett-Packard's eServices. Our impresse.com service is synergistic with other
Hewlett-Packard's eProcurement initiatives and we plan to undertake joint
marketing and selling activities with Hewlett-Packard to access its customers
and partners. As part of this agreement, we are required to pay Hewlett-Packard,
subject to guaranteed minimums, a percentage of the services revenue derived
from Hewlett-Packard-sourced customers.
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RESEARCH AND DEVELOPMENT. Research and development expenses consist of
personnel and other expenses associated with developing and enhancing software
in support of our impresse.com service. Our research and development expenses
have increased each quarter since inception primarily due to increased staffing
and associated costs related to the design and development of our impresse.com
service. We believe that our success is dependent in large part on continued
enhancement of our impresse.com service. Accordingly, we expect research and
development expenses to increase in absolute dollars in future periods.
In late 1999 we agreed to license intellectual property from a third party.
We will amortize the corresponding intangible asset on a straight line basis
over 18 months and this amortization is being charged to research and
development expense.
GENERAL AND ADMINISTRATIVE. General and administrative expenses consist
primarily of salaries for administrative and executive personnel, occupancy
costs and fees for professional services. General and administrative expenses
have increased primarily as a result of the addition of key executives and
finance and administrative personnel as well as increased professional service
fees. We expect general and administrative expenses to increase in absolute
dollars in future periods to support our expanded operations and the expenses
associated with being a public company.
STOCK COMPENSATION AND WARRANT EXPENSE. We recorded aggregate deferred
compensation of $16.4 million in connection with certain stock options granted
through December 31, 1999. For the year ended December 31, 1999, we amortized
$2.9 million related to stock options. We estimate that we will record
additional deferred compensation of $1.1 million related to stock option grants
made subsequent to December 31, 1999. These deferred compensation amounts are
being amortized using an accelerated method over the vesting period of the stock
options, which is typically four years.
In connection with our strategic co-marketing and facility operating lease
agreements, we issued fully vested and non-forfeitable warrants to purchase
convertible preferred and common stock. The value of these warrants, determined
using the Black-Scholes model, was approximately $2 million. These warrants,
starting in the quarter ended December 31, 1999, are being amortized over their
respective estimated periods of benefit. We amortized approximately $292,000
related to these warrants in the quarter ended December 31, 1999.
INTEREST INCOME, NET
Interest income, net, has been derived primarily from earnings on cash
investments, offset by interest expense associated with capital lease financing
and equipment and term loans.
In connection with term and equipment loan agreements, we issued fully
vested and non-forfeitable warrants to purchase convertible preferred stock. The
value of the warrants, determined using the Black-Scholes model, was
approximately $446,000. These warrants are being amortized over the term of the
loans. We amortized, in the aggregate, approximately $87,000 related to these
warrants in the quarters ended September 30 and December 31, 1999.
INCOME TAXES
We incurred operating losses and accordingly did not record a provision for
income taxes for any of the periods presented. At December 31, 1999, we had net
operating loss carryforwards and tax credits for federal income tax purposes of
approximately $20.0 million and $300,000, respectively. In addition, we had
state net operating loss and research and development credit carryforwards of
approximately $20.0 million and $300,000, respectively. These net operating loss
carryforwards and credits will expire at various dates beginning in 2005 through
2019 if not utilized. Significant future changes in our share ownership, as
defined in the Tax Reform Act of 1986 and similar state provisions, may restrict
the utilization of these
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carryforwards. A valuation allowance has been recorded for the entire deferred
tax asset as a result of uncertainties regarding the realization of the assets
due to our lack of earnings history.
LIQUIDITY AND CAPITAL RESOURCES
We have funded our operations primarily through the private sale of our
equity securities, through which we have raised net proceeds of approximately
$67.3 million from inception through December 31, 1999. We have also financed
our operations through capital lease financing and equipment and term loans. As
of December 31, 1999, our principal sources of liquidity included approximately
$49.1 million of cash and cash equivalents and short term investments. Further,
in January 2000, we obtained additional credit facilities comprising a
$7 million subordinated loan and a $3 million equipment lease.
Cash used in operating activities totaled $14.9 million in the year ended
December 31, 1999, primarily due to our net losses, which were partially offset
by non-cash charges of depreciation and amortization of deferred stock
compensation and deferred expenses related to warrants and increases in accounts
payable and accrued expenses.
Cash used in investing activities totaled $8.8 million in the year ended
December 31, 1999. We have made substantial investments in computer equipment
and software as well as office furniture and leasehold improvements.
Net cash provided by financing activities was $60.4 million in 1999,
primarily from the sale of preferred stock and proceeds from equipment and term
loans.
We expect to fund future operating expenses from revenue generated through
our impresse.com service, public or private financings and the proceeds of this
offering. We currently anticipate that the net proceeds from this offering,
together with our current cash, cash equivalents, capital lease financing, and
additional credit facilities obtained in January 2000 will be sufficient to meet
our anticipated cash needs for working capital and capital expenditures for at
least the next 18 months. However, we may need to raise additional funds in
future periods through public or private financings, or other arrangements to
fund our operations and potential acquisitions, if any, over a long-term basis
until we achieve profitability, if ever. Any such additional financings, if
needed, might not be available on reasonable terms or at all. Failure to raise
capital when needed could seriously harm our business and results of operations.
If additional funds were raised through the issuance of equity securities, the
percentage of ownership of our stockholders would be reduced. Furthermore, such
equity securities might have rights, preferences or privileges senior to our
common stock.
RECENT ACCOUNTING PRONOUNCEMENT
In June 1998, the FASB issued FAS 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS
AND HEDGING ACTIVITIES, which we will be required to adopt for the year ending
December 31, 2001. FAS 133 establishes new methods of accounting for derivative
financial instruments and hedging activities related to those instruments as
well as other hedging activities. Because we do not currently hold any
derivative financial instruments and are not currently engaged in hedging
activities, the adoption of FAS 133 is not expected to have a material impact on
our financial condition or results of operations.
QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
Our sales to date have been made to U.S. customers and, as a result, we have
not had any exposure to factors such as changes in foreign currency exchange
rates or weak economic conditions in foreign markets. However, in future
periods, we expect to sell in foreign markets, including Europe and Asia. As our
sales are made in U.S. dollars, a strengthening of the U.S. dollar could cause
our impresse.com service to be less attractive in foreign markets. Most of our
cash equivalents, short-term investments and capital lease obligations are at
fixed interest rates, therefore the fair value of these investments is affected
by changes in the market interest rates. However, because our investment
portfolio is primarily comprised of investments in money market funds and
high-grade commercial paper with short maturities, an immediate 10% change in
market interest rates would not have a material effect on the fair market value
of our portfolio. Therefore, we would not expect our operating results or cash
flows to be affected to any significant degree by the effect of a sudden change
in market interest rates on our investment portfolio.
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BUSINESS
OVERVIEW
Impresse is a leading provider of business-to-business e-commerce solutions
for the creation and procurement of commercially printed materials. Our hosted
impresse.com service, provides a platform for corporations, their commercial
print suppliers, their design, advertising and marketing agencies and other
participants in the print supply chain to design, specify, price, order, track,
fulfill and pay for print jobs.
We believe our service provides significant benefits for print buyers, the
corporations they represent and their commercial printers. As of January 28,
2000 we had signed agreements to use our impresse.com service with 62
corporations and agencies and 106 of their commercial print suppliers.
INDUSTRY BACKGROUND
GROWTH OF BUSINESS-TO-BUSINESS ELECTRONIC COMMERCE
The Internet and its increasingly rapid adoption by companies as a business
communication and collaboration platform have created new opportunities for
companies to streamline complex business processes and achieve efficiencies.
Forrester Research estimates that business-to-business e-commerce in the United
States will grow from $109 billion in 1999 to $1.3 trillion in 2003. Forrester
Research also estimates that 92% of U.S. companies with 5,000 or more employees
will be using the Internet as a channel for commerce by 2002.
In response to this growing demand, a number of business-to-business
e-commerce solutions targeted at a variety of industries and business processes
have been developed and introduced in recent years. Many of these solutions have
been Internet-based marketplaces which connect large numbers of disparate buyers
and suppliers and enable automated transaction execution. This capability allows
companies to reach a broader base of customers and suppliers, access a greater
selection of products and services, and achieve economies of scale associated
with the aggregation of transaction volume. However, basic Internet-based
marketplaces do not provide the additional value-added processes and features
which many industries require, especially those industries that are
characterized by a high level of transaction and process complexity.
EVOLUTION OF THE INTERNET-BASED BUSINESS-TO-BUSINESS MARKETPLACE: THE EHUB
An electronic hub, or eHub, significantly extends the benefits of a basic
Internet-based marketplace by fully integrating essential yet decentralized
processes such as collaboration, procurement, tracking, reporting, logistics and
payment, both within companies and across the entire supply chain. Industries
characterized by a high degree of product customization, complex business
processes, highly iterative design, production and fulfillment workflows, and
significant dependence on information exchange are particularly suited to
benefit from an eHub. An eHub is easily distinguished from a basic
Internet-based marketplace because it incorporates the following additional
features and services:
- COLLABORATION CAPABILITY. The capability for all participants, including
designers, marketers, buyers, manufacturers, logistics providers, and
financial services providers, to communicate and collaborate efficiently
through the Internet.
- BUSINESS INTELLIGENCE. Access to business intelligence obtained through
the consolidation of company-specific transaction information and
industry-wide performance and quality data enables buyers and suppliers to
make better procurement and fulfillment decisions and to more efficiently
identify, qualify and select their business partners.
- IMPROVED PRICE DISCOVERY. The ability to standardize the request for
quotation process, and utilize bid preparation and job estimation
technologies facilitates improved price discovery and bid analysis.
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- CORPORATE SYSTEMS INTEGRATION. The ability to integrate with corporate
procurement and enterprise resource planning systems and to be customized
for each supply chain participant enables process efficiencies and cost
reductions.
- COMPLEMENTARY SERVICES. The ability to offer complementary third-party
financial, logistical and materials management services extends the value
of the eHub.
THE COMMERCIAL PRINT MARKET
Virtually all businesses rely on commercially printed materials as the
primary medium for important business communications, such as marketing
brochures, promotional materials, direct mail, annual reports, product and user
manuals, and other informational items. According to Raine Consulting Inc., a
graphic arts industry consulting firm, large corporations spend approximately
2.0% to 3.0% of their revenue on commercially printed materials. Based on
estimates by CAP Ventures, a print industry research firm, sales in the U.S.
printing and publishing industry totaled approximately $292 billion in 1998, of
which over $150 billion was derived from the commercial printing segments we
target.
Despite its large size, the commercial print industry has experienced little
consolidation and continues to be highly fragmented and geographically
dispersed. According to the Printing Industries of America, an industry trade
group, there are more than 51,000 commercial printers in the United States, of
which more than 40,000 are small and medium sized businesses with fewer than 20
employees servicing local or regional markets. Statistics compiled by the U.S.
Department of Commerce indicate that less than 1% of commercial printers have
annual revenue in excess of $35 million, while 78% of commercial printers have
annual revenue of less than $2 million.
Commercial print businesses are generally characterized by high fixed costs,
low margins and excess capacity. Moreover, print buyers incur low costs in
switching from one printer to another to obtain better terms or a higher level
of quality and timeliness. As a result of these market dynamics, print buyers
and the corporations they represent have significant market leverage relative to
their suppliers in determining the terms of print transactions.
TRADITIONAL COMMERCIAL PRINT PROCUREMENT PROCESSES
In most large corporations there are numerous individual print buyers
responsible for procuring commercially printed materials. A print job typically
begins with the print buyer requesting quotes from a number of printers. Due to
the time-consuming process of issuing requests for quotes and receiving and
comparing non-standardized bids from competing printers, print buyers are
limited in the number of bids they are able to review. Once a printer is
selected, the print buyer and the printer's customer service personnel
communicate frequently to coordinate project design, modifications, rework,
proofing, timing, scheduling and delivery. These communications today are still
typically conducted through a combination of face-to-face meetings and
telephone, paper, fax and e-mail correspondence. Moreover, print buyers in large
corporations often manage several print jobs simultaneously, each of which must
satisfy precise design and quality specifications and be completed within
budgetary constraints and delivery timetables. Print buyers also face problems
related to the management, storage and delivery of the large content data files
required for each print job. As a result of these factors, commercial print
procurement can be logistically complex, time-consuming, inefficient, and prone
to errors.
Because of the decentralized manner in which commercial print buying is
conducted, large corporations typically fail to exploit their inherent buying
power or to achieve economies of scale in print procurement. Many large
corporations lack the systems necessary to compile enterprise-wide or even
divisional print purchasing information that could be utilized to negotiate
better volume discounts, eliminate redundancies, streamline the vendor selection
and qualification process, and automate internal approvals. In addition, many
large corporations suffer from a problem known as "maverick buying," which
occurs when individual print buyers do not utilize approved printers or
otherwise fail to follow internal
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procurement guidelines. Without sufficient procurement protocols or mechanisms
for oversight, large corporations are often unable to effectively control and
manage print buying.
Printers also experience significant inefficiencies in the traditional
commercial print procurement process. Many printers do not have access to
sophisticated software to assist them in preparing competitive bids based on
accurate cost estimates and managing capacity utilization, scheduling and
fulfillment logistics. As a result, the profitability of an individual print job
is often unknown until it is completed. Printers also suffer from the
inefficiencies, miscommunications, errors and delays that result from the manual
nature of the print workflow. Consequently, printers spend significant time
investigating and responding to status requests and problems and often
experience frequent rework and related cost overruns.
Without fully automated and integrated e-commerce technologies specifically
designed for the commercial print industry, both buyers and suppliers of
commercial print incur substantial extraneous costs. CAP Ventures estimates that
for every $1 of printing costs there are approximately $10 of associated
processing costs, including the costs of creating, designing and revising the
printed material as well as ordering, warehousing, distribution and inventory
obsolescence costs.
OPPORTUNITY FOR A BUSINESS-TO-BUSINESS EHUB IN COMMERCIAL PRINTING
Because the commercial print market is large and highly fragmented, we
believe that an Internet-based marketplace for the print industry would result
in immediate efficiencies by enabling the aggregation of print demand and the
matching of numerous buyers and suppliers of commercial print. However, we also
believe that a basic Internet-based marketplace, in contrast with an eHub, is
incapable of addressing many of the needs of corporations and their printers
because of the complexities and inefficiencies of commercial print procurement
workflows and the custom nature of each print job that requires collaboration
among multiple parties. An effective eHub for the commercial print procurement
process will address these needs by providing:
- sufficient industry-specific functionality;
- flexibility to incorporate the unique procurement workflow processes of
the diverse companies that use commercial print;
- sufficient technological flexibility to integrate with existing
information technologies, such as operating resources procurement systems
and enterprise resource planning systems, thereby enabling corporations
and their printers to leverage their prior investments in these
technologies; and
- data collection, reporting and analytical tools that enable analysis of
end-user spending patterns and other print buying trends so that savings
opportunities can be identified by corporations and their printers.
In addition, we believe a successful business-to-business eHub is
particularly useful for the commercial print industry because most pre-printed
content is already digitally stored and can be transferred electronically.
Collaboration throughout the commercial print procurement process can therefore
be conducted over the Internet, potentially eliminating shipping, mailing and
other distribution costs since the content can be broadly distributed
electronically for printing and distribution in many locations. Moreover, Harris
Interactive, a market research firm, estimates that in 1998, 78% of commercial
printers had access to the Internet, which should accelerate the adoption of
Internet-based services and features.
THE IMPRESSE SOLUTION
We have created an eHub for the commercial print industry that can provide
corporations and their commercial print suppliers with integrated procurement
and collaboration capabilities, industry-specific
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business intelligence, improved price discovery, corporate systems integration
and other complementary services. Our impresse.com eHub also provides the
transaction automation and volume aggregation of an e-commerce marketplace. Our
strategy of charging a fixed percentage fee based on the gross dollar value of
print volume procured through our impresse.com service provides price
transparency to corporations and their commercial print suppliers. Our
impresse.com service can be accessed through standard web-browsers without the
need to install additional software, and requires minimal training.
We believe our impresse.com service provides the following benefits:
BENEFITS TO CORPORATIONS AND THEIR PRINT BUYERS
REDUCED PROCESSING COSTS AND INCREASED PRODUCTIVITY. By automating the
print procurement process, our impresse.com service allows print buyers to
replace inefficient manual processes with real-time collaboration capabilities.
This simplifies the daily work routines of print buyers and enables them to
manage multiple print jobs with multiple printers simultaneously, increasing
their productivity. These real-time collaboration capabilities also enable print
buyers to reduce print job processing costs and turnaround times by reducing
miscommunications with the printer that lead to errors, cost overruns, waste and
delays. Moreover, the collaboration capabilities of our impresse.com service can
be extended to all members of the project team to streamline the complex and
iterative interactions among the print buyer, the printer's customer service
representatives and, in many cases, multiple project managers, marketing
communications professionals, graphic designers and advertising agencies. Our
impresse.com service also incorporates bid analysis capabilities that enable
more efficient comparison of quotes from multiple printers.
ENHANCED CORPORATE PRINT PROCUREMENT. Our impresse.com service enables
procurement managers to consolidate and analyze company-wide purchasing
information. This information can be used to monitor and control aggregate
commercial print expenditures and eliminate maverick buying practices. Our
impresse.com service automates the request for quotes process, which enables
corporations to conduct broader and more efficient bidding potentially leading
to better prices for their print jobs. The customization features of our
impresse.com service enable managers to create pre-programmed business rules
specific to their company that standardize procurement workflows and facilitate
the coordination of commercial print purchasing by multiple buyers. Our
impresse.com service can also be integrated with our customers' existing
internal information systems, enabling them to process financial and operating
information relevant to their use of our impresse.com service. In addition, our
impresse.com service can be used to find new printers and develop approved
printer lists based on location, project specifications, printer specialization,
cost and performance histories and other relevant selection criteria.
BENEFITS TO PRINTERS
Printers can expand their client base beyond local and regional markets by
being able to respond to requests for quotes transmitted broadly using our
impresse.com service. Printers therefore can develop more approved supplier
relationships without a commensurate direct selling effort. We believe that as
corporations utilize our impresse.com service to curb maverick buying practices,
their print buyers will direct more business to the printers on their approved
supplier lists, allowing the approved printers to generate greater print volumes
from these relationships. As a result, printers can allocate sales and other
resources to developing new, and improving existing, client relationships and
achieving production efficiencies. In addition, our impresse.com service allows
for easier tracking and on-line response to customer inquiries regarding project
status leading to better customer service. This capability reduces printers'
administrative costs by reducing the time spent by customer service personnel on
these tasks.
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THE IMPRESSE GROWTH STRATEGY
Our objective is to be the leading eHub in the emerging market for
business-to-business e-commerce for corporate commercial print procurement and
collaboration. Key elements of our strategy to achieve this objective include:
TARGET LARGE MULTINATIONAL CORPORATIONS ACROSS MULTIPLE INDUSTRIES. We
primarily target large multinational corporations that represent the greatest
aggregate demand for commercial print. We believe that as these corporations
realize the benefits of our impresse.com service and begin to channel their
commercial print spending through our eHub, their significant buying power will
attract an increasing number of printers to our service. In addition, we believe
that large corporations will enable us to expand our selling efforts to their
business partners by providing strong customer references.
LEVERAGE STRATEGIC RELATIONSHIPS TO EXPAND CUSTOMER BASE. We will continue
to leverage our strategic relationships with industry leaders in information
technology and e-commerce to accelerate the adoption of our impresse.com
service. We believe that the endorsement of our eHub by our strategic partners
gives us the credibility to access their customers. In addition, the
complementary nature of our services and those of our partners will facilitate
our co-selling and joint marketing initiatives. We believe that our current
strategic relationships, as well as others we intend to pursue, will enable us
to rapidly and widely deploy our impresse.com service.
FACILITATE AND PROMOTE INCREASED USAGE OF OUR EHUB. We will continue to
expand the customization and integration capabilities of our eHub in order to
minimize the time and capital required for our customers to deploy our service
on an enterprise-wide basis. We also intend to continue to provide training,
technical and customization support. Moreover, we do not currently charge
transaction fees to our print buying customers for their use of our eHub.
Instead, we charge a transaction fee to printers which is computed as a fixed
percentage of the gross dollar value of commercial print material procured
through our impresse.com service. We believe our print buyer-oriented strategy
will assist us in promoting initial usage of our eHub by the large corporations
we target and will cause them to encourage printers to join our network.
IMPROVE AND EXPAND OUR SERVICE. We will continue to improve our technology
and expand our impresse.com service, in part by leveraging our strategic
relationships, to meet the evolving needs of our customers, promote broad market
adoption and increased usage of our service, and create additional sources of
revenue. We will continue to expend substantial efforts to develop, purchase or
license technological and other value-added enhancements to our eHub to increase
its reliability, functionality and ease of integration with existing information
systems installed by our customers. We will continue to devote considerable
attention to improve our user interface to ensure that our impresse.com service
is easy to use.
PROVIDE SUPERIOR CUSTOMER SERVICE. We believe that a loyal customer base
will facilitate increased procurement activity, the development of a strong
brand, and valuable customer referrals. We intend to continue to employ rigorous
recruiting, training, evaluation and compensation practices to help us attract
and retain qualified employees who are dedicated to delivering outstanding
results to our customers.
OUR IMPRESSE.COM SERVICE
Our impresse.com service is designed to be a comprehensive
business-to-business e-commerce solution for corporate commercial print
collaboration and procurement. It is a hosted service designed to create a
worldwide print supply network that can be accessed through standard web
browsers by corporations, their commercial print suppliers and other
participants in the print supply chain, including graphic design, advertising
and marketing agencies, logistics and payments providers and equipment and
material suppliers. Our impresse.com service utilizes advanced privacy and
encryption technology, which controls access and provides security of
confidential corporate information.
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Key features and services of our impresse.com service include:
COLLABORATION
PROJECTTRACKER. This feature manages data stored on the impresse.com
service so that project team members can log onto the service at any time and
examine and track the overall status of the project and the most recent actions
taken, including change order tracking. Team members can also access historical
records and audit standard and customizable milestones, requests, transactions,
changes and approvals for projects processed through the service.
TEAMTRACKER. This feature gives project managers, usually a corporate print
buyer or printer, a way to create "teams" for projects and assign customizable
profiles and permissions to each individual team member. The project team
members within a company, at the company's advertising and design agencies and
at the commercial print providers can be notified as needed about the status of
a project and specific milestones and are able to review and update project
information depending upon their authorizations.
CONTENTTRACKER. This feature permits browser-based uploads of digital
content files to the impresse.com servers and tracks and manages all content
information associated with a specific project. Content items such as digital
files and proofs can be intelligently monitored through our impresse.com service
because of the association with individual projects, whether they are
transferred electronically through our impresse.com service, through other
networks, or sent physically by courier or overnight delivery.
ARCHIVAL. Our impresse.com service provides current and historical records
of status and audit of all requests, orders, changes and approvals for projects
processed through our impresse.com service, by way of a comprehensive on-line
transaction archive.
DIGITAL ASSET MANAGEMENT. Digital asset management allows print buyers in
corporations to store and retrieve their print-ready content files on our
servers for future reordering.
PROCUREMENT
NEW PROJECT SPECIFICATION. Our impresse.com service provides an interactive
browser-based interface for selecting, updating and changing project
specifications.
REQUEST FOR QUOTES PROCESSING. Our impresse.com service allows a print
buyer to quickly and accurately submit requests for quotes to multiple printers
for formal quotes, and to subsequently track bids and finalize orders.
QUOTE COMPARISON AND NEGOTIATION. Our impresse.com service streamlines the
comparison of quotes from multiple commercial printers and facilitates the
on-going negotiation of specifications and quote parameters, enabling more
efficient and accurate parameter and price recommendation and selection.
PRINT BUYER AND PRINTER ADMINISTRATION. Our impresse.com service simplifies
administration at the corporate level of multiple authorized print buyers and
lists of approved printers, based on project types and business rules.
PRINTER PERFORMANCE MONITORING. Our impresse.com service enables the
ongoing performance measurement of printers on our network along key metrics to
maintain a real-time performance profile for printers, which print buyers can
use to evaluate and select approved printers.
MANAGEMENT REPORTING. Our impresse.com service generates management reports
for companies and printers about projects, orders and print buying trends.
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CUSTOMIZATION AND INTEGRATION
CUSTOMIZED TEMPLATES. Using our SmartForms(SM) technology we can customize
the user interface and print project templates of our impresse.com service to
meet the unique needs of each print buying customer.
CUSTOMIZED WORKFLOWS. Using our SmartFlows(SM) technology, we can customize
print procurement and collaboration processes from printer selection to pricing
and approval, to suit company-specific needs on a project-by-project basis.
INTEGRATION CAPABILITY. Our SmartLinks(SM) technology allows us to
integrate our impresse.com service with our customers' information systems, such
as operating resources procurement, enterprise resource planning or print
management systems. In addition, our impresse.com service can be integrated with
the e-commerce solutions of our strategic partners, enabling our customers to
conveniently use both impresse.com and our partners' services to conduct
e-commerce.
OUR CUSTOMERS
We market our impresse.com service to corporations, their advertising,
design and marketing agencies, and their commercial printers.
As of January 28, 2000, we had signed agreements to use our impresse.com
service with 62 corporations and agencies, of which 37 agreements were signed
through December 31, 1999. Among these corporations and agencies are:
<TABLE>
<S> <C>
3com Harding Marketing Communications
A.G. Edwards Hello Direct
Adobe System Hewlett-Packard (Enterprise Storage Unit)
Alan Davenport Design LMN Design
Ariba McKesson HBOC
Aspect Development MetLife
AutoNation Nikken
Benchmarking Partners ONeal McClure
Bindco P.S. Print Smart
Chicago Color Graphics Pearson Communications
Cicero Graphic Resources Penrose Press
Clarify Reliastar Life Insurance
ACCPAC, a division of Computer Associates Resort Maps North
CPS Communications The Creative Network
Curb-Crowser Design The Graphics Resource
Dayton Hudson The Prodigal Media Company
Diebold Think New Ideas
DirecTV TPG Sports
Enron Visual Printing
Federal Home Loan Mortagage WAM!NET
Fleming Companies Whirlpool
</TABLE>
After we sign an agreement with a corporation, our dedicated printer sales
force works with its print buyers to sign up its commercial printers to use our
impresse.com service. As of January 28, 2000, 106 commercial printers had
entered into agreements to pay our fixed percentage fee to use our impresse.com
service, of which 66 agreements had been signed through December 31, 1999.
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STRATEGIC RELATIONSHIPS
We are actively seeking to co-market our impresse.com service through
industry leaders with strong relationships with potential corporate customers
and leading commercial printers. We believe that co-marketing relationships
provide us with sales and marketing leverage in signing up major corporations
and commercial printers to use our impresse.com service. Potential candidates
for strategic relationships include leading operating resources procurement
solution providers, major distributors and resuppliers of operating resources
procurement solutions and leading technology and solutions providers in the
commercial print and graphic arts market. As of January 28, 2000, we were
actively engaged in programs and had concluded sales and marketing alliance
agreements with the companies detailed below:
ADOBE SYSTEMS INC.
In November 1999, we concluded an agreement with Adobe Systems for the
impresse.com service to serve as the exclusive print procurement solution for
Adobe's adobe.com graphic arts portal. The agreement includes marketing of
impresse.com to Adobe's graphic arts application users and technology
cooperation to integrate certain technologies, such as PDF workflows, with our
impresse.com service.
ARIBA, INC.
We are engaged in sales and marketing programs with Ariba and have a sales
promotion activity underway with Ariba's North American sales program. We plan
to undertake further co-marketing and joint selling activities with Ariba in
2000 to promote the integrated impresse.com service and Ariba ORMS solution to
large multinational corporations. At the Fall 1999 Ariba users' group meeting,
our development team demonstrated the SmartLink that enables cXML integration of
our impresse.com service with the Ariba ORMS solution. This integration makes it
simple for an Ariba enterprise customer to use the impresse.com service for the
procurement of printed materials, with a link from the Ariba ORMS directly to
our impresse.com service. In this configuration, the Ariba ORMS solution
integrates to the corporation's financial systems and provides the purchase
order requisition and approval processes, while the impresse.com service works
as part of the purchase process and automates the procurement and collaboration
workflow between the corporation and its commercial print providers. Our
marketing activities with Ariba began in September 1999, when we signed an
agreement to be an ASL, or Ariba Supplier Link, partner.
HEWLETT-PACKARD
In August 1999, we signed a co-selling and co-marketing agreement with
Hewlett-Packard to enable our impresse.com service to be marketed with
Hewlett-Packard's eServices. Our impresse.com service is synergistic with other
Hewlett-Packard eProcurement initiatives and we plan to undertake joint
marketing and selling activities with Hewlett-Packard to access its customers
and partners. In 1999, we conducted a direct mail promotion and a web seminar,
and in 2000 we began co-selling activities with Hewlett-Packard's field sales
teams to target Hewlett-Packard's corporate customers and partners.
LOGIC ASSOCIATES
In January 2000, we entered into an alliance agreement with Logic
Associates, a leading developer and marketer of print management solutions.
Logic's solution is used by commercial printers for business management tasks
such as print job estimating, scheduling, and accounting. We plan to develop a
SmartLink to connect our impresse.com service with Logic's print management
solutions and to engage in joint marketing activities to reach Logic's
commercial printer customers.
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<PAGE>
ORACLE CORPORATION
In October 1999, we signed an agreement to be an Oracle Supplier Network
partner. In the near-term, we plan to complete the SmartLink XML technology
integration which will connect our impresse.com service with Oracle's Internet
procurement solution. We also plan to undertake co-marketing and joint selling
activities with Oracle to promote our impresse.com service to Oracle's Internet
procurement customers.
WAM!NET
In November 1999, we concluded a co-marketing agreement with WAM!NET, one of
the largest providers of managed private network services to the graphic arts
industry. WAM!NET is used by corporations, service bureaus and commercial
printers as a reliable private communications service for the transmission of
the large content files needed for print production. Our sales and marketing
activities with WAM!NET include special customer incentives and sales force
promotions. In 2000, through this agreement, we expect additional joint
promotions of the impresse.com service to WAM!NET customers.
TECHNOLOGY AGREEMENTS
To enable our impresse.com service to leverage the latest technology
standards, we have technology relationships in place with the industry's leading
solution providers such as Adobe Systems, Apple Computer, BEA Systems, Microsoft
and Seagate.
TECHNOLOGY
Our impresse.com service is a comprehensive business-to-business e-commerce
solution that resides entirely on our servers and is accessible by standard web
browsers. This design requires minimal software installation by the customer and
enables rapid deployment of applications, enhancements and updates. Our
impresse.com service is built using open object-oriented architecture, and is
designed to be scaleable, secure, robust, and highly available. Our technology
enables our impresse.com service to be integrated with the internal business and
information systems of our customers and to be customized to meet their
business-specific requirements. Our data center provides us with very reliable
and redundant high bandwidth Internet connectivity, electrical power, and
climate control, all within a physically secure, access-controlled facility.
SYSTEM ARCHITECTURE
Our impresse.com service includes four layers of technology:
- COMMUNICATION AND MESSAGING. This technology layer allows our
impresse.com service to connect with our customers' enterprise
applications using standard Internet protocols that work across a
corporation's network. This layer is implemented using standard network
and security equipment and standard web servers, and supports standard
Internet protocols such as HTTP (HyperText Transport Protocol, a protocol
for exchanging information on the Internet), SSL (Secure Sockets Layer, a
client-server protocol for encrypting data transmissions), FTP (File
Transfer Protocol, a client-server protocol which allows a user on one
computer to transfer files to and from another computer over a network),
SMTP (Simple Mail Transfer Protocol, a protocol used in sending and
receiving e-mail), and XML (eXtensible Markup Language, a language to
define document structures and elements, useful when exchanging data
between different computing systems).
- APPLICATION SERVICES. This layer delivers the collaboration and
procurement functionality of our impresse.com service. Our impresse.com
service uses third-party and proprietary software to deliver its
commercial print procurement services.
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- DATA AND CONTENT MANAGEMENT. This layer manages the transaction and
database information and the bills-of-materials, job specifications and
content of our customers' printed items. It is implemented using standard
servers, relational database management software, and advanced storage and
backup systems configured to meet the requirements of our impresse.com
service.
- ENTERPRISE SERVICES. This layer enables the administrative services
which allow us to operate our impresse.com service, including financial
services, customer service and support, data mining and reporting, and
sales force automation.
CUSTOMER INTEGRATION
The impresse.com service can be configured and integrated to meet a
customer's specific needs, including:
- LOG IN AND AUTHENTICATION. Our impresse.com service permits companies to
manage their own user population by controlling the authentication and
authorization process. Companies can control access to projects, job
specifications, quotes, document content and lists of commercial printers.
Industry-standard protocols and best practices are used to secure access
to this data, both physically and electronically.
- CUSTOMIZED TEMPLATES AND WORKFLOWS. The graphical user interface,
project templates and application behavior of our impresse.com service can
be uniquely tailored for each customer using SmartForms(SM) and
SmartFlows(SM) technology. For instance, corporations can customize our
service to create job specification templates, select a specific set of
commercial printers from a vendor list, pre-configure reports, and
customize procurement and collaboration workflows in accordance with their
internal business rules and policies.
- ENTERPRISE APPLICATION INTEGRATION. Using SmartLinks(SM) technology, the
impresse.com service can be integrated across network firewalls with
internal enterprise resource planning applications and proprietary
internal systems used by corporations and their printers. Our SmartLink
integrations generally utilize standard XML-based messaging, which enables
faster implementations.
- OPERATIONAL SUPPORT. We offer technical support as part of our customer
service efforts to respond to any service disruption experienced by our
customers. In addition to standard site instrumentation and monitoring
software, we have developed custom monitoring agents that measure key
impresse.com application parameters. This proprietary software enables us
to provide high quality operational support and availability.
SALES, MARKETING AND CUSTOMER SERVICE AND SUPPORT
We market and sell our impresse.com service through a combination of our
direct sales force, internal telemarketing sales and strategic relationships
with partners such as Adobe Systems, Ariba, Hewlett-Packard, Logic Associates,
Oracle and WAM!NET. Our primary sales efforts target the purchasing
decision-makers and potential users in large multinational corporations who will
influence the decision to adopt an Internet-based commercial print procurement
and collaboration solution. These typically include print procurement, marketing
communications and print production executives. After we sign a print buying
agreement with a corporation, we obtain a list of the preferred or approved
printers with whom its print buyers do the most commercial printing. Our
dedicated printer sales force then calls on these printers to sign them up to
use our impresse.com service.
Our sales and marketing strategy is designed to inform corporations and
commercial printers about both the technical and business benefits, including
cost savings and return on investment, of our impresse.com service, and to
promote the adoption by large corporations and their commercial print suppliers
through education and training. Our field sales force focuses on large
multinational corporations,
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<PAGE>
their graphic arts, design and marketing agencies, and their commercial
printers. Our telephone sales group primarily focuses on generating leads for
our field sales force.
We conduct a variety of marketing programs to educate our target market,
create awareness and attract large multinational corporations and their
commercial printers to use our impresse.com service. To achieve these goals, we
engage in marketing activities such as seminars, direct mailings, advertising,
trade shows, speaking engagements and web site marketing. We also conduct
comprehensive public relations programs to establish and maintain relationships
with key trade press, industry associations, business press and industry
analysts. In addition, we engage in customer-specific marketing programs to
educate print buyers to use our impresse.com service for their commercial print
orders.
We believe that good account management, customer service and support will
enable us to establish and maintain long-term relationships with the large
multinational corporations and printers on our eHub and encourage their
continued use of our impresse.com service. Our customer service and support
personnel respond to customer inquiries and technical questions and investigate
the status of orders, shipments and payments. At any time during the print
procurement process, a customer can contact our service and support staff by
telephone or e-mail by following prompts located throughout our web site. We
intend to expand our direct sales force and customer services organization and
to establish additional sales offices.
Our sales, marketing and customer service and support groups consisted of 84
individuals as of December 31, 1999, 43 of whom were located at our Sunnyvale,
California headquarters and 41 of whom were located in regional offices.
DEVELOPMENT AND NETWORK OPERATIONS
Our development organization is focused on developing and enhancing our
service and maintaining and improving our technology platform and
infrastructure. As of December 31, 1999, our development group was comprised of
38 employees responsible for development and quality assurance, and our network
operations staff was comprised of 9 employees, all located in Sunnyvale,
California.
COMPETITION
The market for Internet-based business-to-business e-commerce solutions for
commercial printing is new and rapidly evolving. Competition in this market is
intense and is expected to increase significantly in the future. Barriers to
entry are relatively insubstantial. We believe that the critical success factors
for companies seeking to create comprehensive business-to-business e-commerce
solutions include the following:
- industry-specific expertise,
- quality and reliability of the solution,
- breadth, depth and customizability of solution offerings,
- ease of use and integration with corporate information systems,
- focus on corporations and their internal users,
- brand recognition,
- installed base of customers, and
- customer service and support.
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<PAGE>
We face competition from four main areas:
- companies with commercial print-focused e-commerce offerings including
Collabria, ImageX.com, Noosh.com and PrintCafe and existing
business-to-business e-commerce companies which may decide to introduce
competing offerings,
- large commercial printers which have developed or may acquire or develop
proprietary e-commerce solutions,
- large multinational corporations with internally developed print
procurement and collaboration solutions, and
- traditional enterprise software companies, such as SAP, Baan and
PeopleSoft, that may develop alternative print procurement and
collaboration solutions.
Our current and potential competitors may develop Internet-based procurement
solutions that achieve greater market acceptance than our solution. Many of our
existing and potential competitors have greater name recognition, larger
customer bases and significantly greater financial, technical and marketing
resources than we do. Such competitors can undertake more extensive marketing
campaigns for their brands, products and services, adopt more aggressive pricing
policies and make more attractive offers to customers, potential employees,
distribution partners, and commercial print suppliers.
In addition, many of our prospective customers have established
relationships with some of our potential competitors. Accordingly, we cannot be
certain that we will be able to expand and retain our base of print buyers and
commercial print suppliers. We may not be able to compete successfully against
our current or future competitors and competition could have a material adverse
effect on our business, results of operations and financial condition.
Our ongoing ability to compete effectively also depends on our ability to
respond to technological change by providing feature enhancements and expanded
service offerings, the quality and reliability of our operations, customer
service and support, and the effectiveness of our sales and marketing programs.
INTELLECTUAL PROPERTY, PROPRIETARY RIGHTS AND LICENSING
We have taken reasonable and customary steps to protect our discoveries,
research and development and intellectual property by implementing a patent
disclosure and filing program with the assistance of experienced patent counsel.
Currently, we have several pending U.S. and international patent applications
relating to various aspects of our eHub.
We have entered into a non-exclusive license agreement under which we
obtained rights to use the technology covered by a United States patent. This
patent covers automated printing control systems that allow for interaction
between print purchasers and printers across computer networks such as the
Internet. We believe that this patent is the first United States patent to
address business-to-business interaction for print procurement via the Internet.
We are the first licensee of this patent and have secured a preferred licensee
status.
LEGAL PROCEEDINGS
We are not currently involved in any material legal proceedings.
EMPLOYEES
As of December 31, 1999, we had 146 full-time employees, including 46 in
research and development and network operations, 84 in sales, marketing and
customer service and support and 16 in general and administrative functions. We
also employ independent contractors to support our engineering, sales,
marketing, customer services and support and administrative organizations.
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FACILITIES
Our executive administrative and operating offices are located in
approximately 20,000 square feet of leased office space in Sunnyvale, California
under a lease expiring in 2007. We have entered into a lease for an additional
35,000 square feet of office space at the same location commencing in June 2000
and expiring in 2007. We also have sales offices in the metropolitan areas of
Atlanta, Boston, Chicago, Cincinnati, Dallas, Denver, Detroit, Los Angeles,
Minneapolis, New York, Philadelphia, Seattle, St. Louis, and Washington D.C.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is information regarding our directors and executive
officers as of December 31, 1999.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- -------- --------
<S> <C> <C>
Nimish Mehta................ 41 President, Chief Executive Officer and Director
Sanjai K. Bijawat........... 41 Vice President and Chief Financial Officer
Robert W. Jones............. 52 Vice President, Customer Services
Siva V. Kumar............... 41 Vice President, Marketing and Chairman of the Board
Philip C. Nelson............ 36 Chief Technology Officer
Scott J. Yetter............. 38 Vice President, North American Sales and Field Marketing
Eric Archambeau (1)......... 41 Director
Bruce Dunlevie (1).......... 43 Director
Steven J. Gilbert (2)....... 52 Director
Paul Levy (2)............... 44 Director
Russell Siegelman (2)....... 38 Director
Hatim A. Tyabji (1)......... 54 Director
</TABLE>
- ------------------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
NIMISH MEHTA has served as President and Chief Executive Officer of Impresse
since August 1998. From October 1995 to July 1998, Mr. Mehta served as Senior
Vice President of the Industry & Front Office Applications Division of Oracle
Corporation, an enterprise software company. From August 1993 to October 1995,
Mr. Mehta served as Vice President of Oracle's Workgroup Solutions Division.
Prior to joining Oracle, Mr. Mehta held various product management and
development positions with AT&T Bell Laboratories and Octek Inc. Mr. Mehta holds
a Bachelor of Technology degree in Electrical Engineering from the Indian
Institute of Technology, New Delhi, a Master of Science degree in Electrical
Engineering from the University of Toronto and a Master of Business
Administration degree from the Sloan School of Management at the Massachusetts
Institute of Technology.
SANJAI K. BIJAWAT has served as Vice President and Chief Financial Officer
of Impresse since July 1999. From December 1997 to July 1999, Mr. Bijawat served
as Managing Director in the Media & Telecommunications and Corporate Investment
Banking Groups at BT Alex. Brown, a New York based investment banking company.
From June 1992 to December 1997, Mr. Bijawat served as Vice President of BT
Securities Corporation and Bankers Trust Company. Prior to joining Bankers Trust
Company, Mr. Bijawat held various systems engineering and management positions
with Micronix Corporation and Raychem Corporation. Mr. Bijawat holds a Bachelor
of Technology degree in Mechanical Enginering from the Indian Institute of
Technology, Bombay, a Master of Science degree in Mechanical Engineering from
Stanford University and a Master of Business Administration degree from the
Harvard Graduate School of Business Administration.
ROBERT W. JONES has served as Vice President, Customer Services of Impresse
since March 1999. Prior to joining Impresse, Mr. Jones was Director of
Professional Services at Genesys Telecommunication Laboratory, an enterprise
software company, from May 1997 to March 1999. From May 1989 through May 1997,
Mr. Jones was with Oracle Corporation where he served in various management
positions in Oracle's Professional Services organization. Mr. Jones began his
professional career with Arthur Andersen & Co. in its Management Information
Consulting Division. Mr. Jones holds a Bachelor of Arts degree from the
University of Notre Dame and a Master of Business Administration degree from the
University of Oklahoma.
SIVA V. KUMAR, a co-founder of Impresse, has served as its Vice President,
Marketing and Chairman of the Board of Directors since inception in
October 1997. From October 1997 to August 1998, Mr. Kumar
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<PAGE>
also served as the Chief Executive Officer of Impresse. From January 1995 to
June 1997, Mr. Kumar served as the Vice President of Marketing of Chromatic
Research, a multimedia company. Prior to joining Chromatic Research, Mr. Kumar
was a Vice President at New Media Ventures, a venture capital firm. Before this,
Mr. Kumar was the Vice President of Marketing and General Manager of the PC and
Macintosh Division at Frame Technology, a desktop publishing software company.
Mr. Kumar has previously held senior marketing positions at Apple Computer,
Oracle Corporation and Intel Corporation. Mr. Kumar holds a Bachelor of
Technology degree from the Indian Institute of Technology, Madras, a Master of
Science degree from Pennsylvania State University and a Master of Business
Administration degree from the University of Chicago.
PHILIP C. NELSON, a co-founder of Impresse, has served as Chief Technical
Officer since inception in October 1997, Vice President, Engineering from
inception through November 1999, and as a director of Impresse from inception
until August 1998. In April 1988, Mr Nelson co-founded Verity, Inc. and from
April 1988 until July 1997 served in various engineering capacities at Verity,
including Vice President of Engineering and Chief Technology Officer. Prior to
co-founding Verity, Mr Nelson held various technical positions at Advanced
Decision Systems and Brigham & Women's Hospital. Mr. Nelson holds Bachelor of
Science degrees in Electrical Engineering and Computer Science from the
Massachusetts Institute of Technology.
SCOTT J. YETTER has served as Vice President, North American Sales and Field
Marketing of Impresse since February 1999. Prior to joining Impresse,
Mr. Yetter was Vice President, Sales & Marketing, North America at American
Software USA, Inc. from June 1998 to February 1999. From October 1996 to May
1998, Mr. Yetter served as the Vice President & General Manager, Northeast Area
for American Software. Prior to that Mr. Yetter held various management and
sales executive positions with i2 Technologies, JBA International, American
Software, NCR Corporation and Otis Elevator Company. Mr. Yetter holds a Bachelor
of Science degree in Industrial Engineering from the Georgia Institute of
Technology.
ERIC ARCHAMBEAU has served as a director of Impresse since December 1998.
Since September 1998, Mr. Archambeau has been a partner of Atlas Venture, a
venture capital firm. Prior to joining Atlas Venture, Mr. Archambeau was a
co-founder and initial CEO of Trading Dynamics, a leading business to business
dynamic trading engine software company, now a wholly-owned subsidiary of Ariba,
Inc. From 1995 to 1997, he was a co-founder, President and CEO of RightPoint, a
leading Enterprise Marketing Software company, now a wholly-owned subsidiary of
E.piphany, Inc. Prior to 1995 he held a variety of managerial positions in the
high technology industry, from engineering to corporate development, at firms
such as VLSI Technology in San Jose and Lagardere Group in Paris.
Mr. Archambeau is a graduate of Ecole Centrale in Lyon, France. He holds a
Master of Science in electrical engineering from the University of California,
Berkeley, a degree in electrical engineering from Stanford University, a PhD in
Computer Science from Grenoble University and a Master of Business
Administration degree from Santa Clara University.
BRUCE DUNLEVIE has served as a director of Impresse since December 1997.
Mr. Dunlevie is a general partner of Benchmark Capital LLC, a venture capital
firm founded by Mr. Dunlevie in May 1995. From 1989 to 1995 Mr. Dunlevie served
as a general partner of Merrill, Pickard, Anderson & Eyre. Mr. Dunlevie has also
served as Vice President and General Manager of the Personal Computer Division
of Everex Systems, Inc., a personal computer manufacturer, and as an investment
banker with Goldman, Sachs & Co. He is also a director of Wink Communications
and Rambus, Inc. Mr. Dunlevie holds a Bachelor of Arts degree from Rice
University and a Master of Business Administration degree from the Stanford
Graduate School of Business.
STEVEN J. GILBERT has served as a director of Impresse since November 1999.
Mr. Gilbert is also Chairman of the Board of Gilbert Global Equity Partners,
L.P., a private equity fund. Mr. Gilbert is the former Managing Partner of Soros
Capital and founder and former Managing Partner of Chemical Venture Partners
(now Chase Capital Partners). Prior to founding Chemical Venture Partners,
Mr. Gilbert was an investment banker with Morgan Stanley & Co., Inc. and an
attorney at Goodwin Procter & Hoar.
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Mr. Gilbert also serves as a director of several private companies. Mr. Gilbert
holds a Bachelor of Science degree from the Wharton School of Finance at the
University of Pennsylvania, a Juris Doctorate from Harvard Law School and a
Master of Business Administration degree from the Harvard Graduate School of
Business Administration.
PAUL LEVY has served as a director of Impresse since July 1999. In 1981,
Mr. Levy co-founded Rational Software Corporation, an Internet software
infrastructure company, and currently serves as its Chairman of the Board of
Directors. From 1981 to April 1999, Mr. Levy served as Chairman of the Board of
Directors and Chief Executive Officer of Rational Software Corporation.
Mr. Levy also serves as a director of Broadbase Software. Mr. Levy holds a
Bachelor of Science degree from the United States Air Force Academy and a Master
of Science degree in engineering from Stanford University.
RUSSELL SIEGELMAN has served as a director of Impresse since December 1997.
Since 1996, Mr. Siegelman has been a partner of Kleiner Perkins Caufield &
Byers, a venture capital firm. Prior to joining Kleiner Perkins, Mr. Siegelman
served in a variety of positions at Microsoft, most recently as Vice President
of the Microsoft Network, Microsoft's on-line service. Mr. Siegelman also serves
as a director of several private companies. Mr. Siegelman holds a Bachelor of
Science degree in Physics from the Massachusetts Institute of Technology and a
Master of Business Administration degree from the Harvard Graduate School of
Business Administration.
HATIM A. TYABJI has served as a director of Impresse since November 1999.
Mr. Tyabji served as President and Chief Executive Officer of Verifone, Inc.,
now a wholly-owned subsidiary of Hewlett-Packard, from 1986 to 1998 and as its
Chairman of the Board of directors from 1992 to 1998. Prior to joining VeriFone,
Mr. Tyabji served as President of the Information Systems Products and
Technologies Group of Unisys Corporation, formerly known as Sperry Corporation.
Mr. Tyabji also serves as a director of Ariba, Inc. and Deluxe Corporation.
Mr. Tyabji holds a Bachelor of Science degree in electrical engineering from the
College of Engineering in Poona, India and a Master of Science degree in
electrical engineering from the State University of New York, Buffalo. He also
holds a Master of Business Administration degree in International Business from
Syracuse University and is a graduate of the Stanford University Executive
Program.
BOARD OF DIRECTORS
Directors are elected annually at the annual meeting of Impresse
stockholders, and serve for the term for which they are elected and until their
successors are duly elected and qualified. Impresse's Bylaws currently provide
for a Board of Directors comprised of eight directors.
BOARD COMMITTEES
Impresse's Board of Directors has an Audit Committee and a Compensation
Committee. The Audit Committee of the Board of Directors consists of
Messrs. Archambeau, Dunlevie and Tyabji. The Audit Committee reviews Impresse's
financial statements and accounting practices and makes recommendations to the
Board of Directors regarding the selection of independent auditors. The
Compensation Committee of the Board of Directors consists of Messrs. Gilbert,
Levy and Siegelman. The Compensation Committee makes recommendations to the
Board of Directors concerning salaries and incentive compensation for Impresse's
officers and employees and administers Impresse's employee benefit plans.
DIRECTOR COMPENSATION
None of the directors is paid any fee or other compensation for acting as a
director, although directors are reimbursed for reasonable expenses incurred in
attending Board or committee meetings. As of the offering, directors of Impresse
are eligible to participate both in Impresse's 1997 Stock Option Plan and, for
non-employee directors, in Impresse's 2000 Directors' Stock Plan. See "Stock
Plans." In August 1999 and November 1999, respectively, directors Paul Levy and
Hatim Tyabji were each granted 110,000 shares of the company's common stock at a
price of $.50 per share under a vesting schedule of four years.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Compensation Committee of the Board of Directors
is an officer or employee of Impresse. No executive officer of Impresse serves
as a member of the Board of Directors or compensation committee of any entity
that has one or more executive officers serving on Impresse's Compensation
Committee.
EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation earned in
the fiscal year ended December 31, 1999 paid to Impresse's Chief Executive
Officer and Impresse's next most highly compensated executive officers who
earned more than $100,000 during the fiscal year ended December 31, 1999 ("Named
Officers"). All options granted by the Board of Directors prior to the offering
allowed for early exercise. The number of securities underlying options in the
"Long-Term Compensation" column includes securities issued upon the exercise of
options subject to repurchase at cost by Impresse.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------ ------------
NUMBER OF
SECURITIES
UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS
- ------------------------------------------------------ -------- -------- -------- ------------
<S> <C> <C> <C> <C>
Nimish Mehta.......................................... 1999 $200,000 $ -- 1,496,907
President, Chief Executive Officer and Director
Scott J. Yetter (1)................................... 1999 128,472 99,750 300,000
Vice President, North American Sales and Field
Marketing
Robert W. Jones....................................... 1999 120,000 35,000 150,000
Vice President, Customer Services
Siva V. Kumar (2)..................................... 1999 155,000 -- 11,882
Vice President, Marketing and Chairman of the Board
Philip C. Nelson (3).................................. 1999 155,000 -- 8,911
Chief Technology Officer
</TABLE>
- ------------------------
(1) In an offer letter dated January 29, 1999, we agreed to grant a one-time
option to purchase up to an additional 50,000 shares of our common stock to
Mr. Yetter at the fair market value at the time of grant for the
accomplishment of sales goals during the fiscal year ended December 31,
1999. We also agreed to reimburse Mr. Yetter up to $100,000 for relocation
expenses that will be incurred by him during his move to California from
Pennsylvania.
(2) We also sold 1,920,000 shares of common stock to Mr. Kumar in October 1997
and December 1997 in connection with the sale of our common stock to
founders of Impresse. A portion of these shares of common stock remains
subject to our right of repurchase in the event of the cessation of
Mr. Kumar's employment with Impresse. Mr. Kumar holds rights to a total of
1,931,882 shares of our common stock.
(3) We sold 1,440,000 shares of common stock to Mr. Nelson in December 1997 in
connection with the sale of our common stock to founders of Impresse. A
portion of these shares of common stock remains subject to our right of
repurchase in the event of the cessation of Mr. Nelson's employment with
Impresse. Mr. Nelson and his transferees hold rights to a total of 1,448,911
shares of our common stock.
STOCK OPTIONS
The following table sets forth information concerning the grant of stock
options to the Named Officers during the fiscal year ended December 31, 1999.
The individual grants consist of options granted
40
<PAGE>
pursuant to Impresse's 1997 Stock Option Plan. For the purposes of calculating
the percent of total options granted to employees during the last fiscal year,
Impresse granted options to purchase 3,517,500 shares of common stock to
employees and consultants. The exercise price per share of each option was equal
to the fair market value of common stock on the date of grant as determined by
the Board of Directors. In determining the fair market value of the common stock
on each grant date, the Board of Directors considered, among other things,
Impresse's absolute and relative levels of revenues and operating results, the
state of Impresse's technology development, increases in operating expenses, the
absence of a public trading market for Impresse's securities, the competitive
nature of Impresse's market and the appreciation of stock values of generally
comparable companies. The potential realizable value is based on the assumption
that the common stock of Impresse appreciates at the annual rate shown,
compounded annually, from the date of grant until the expiration of the ten-year
term. These numbers are calculated based on Securities and Exchange Commission
requirements and do not reflect Impresse's projections or estimates of future
stock price growth. Potential realizable values are computed by:
- multiplying the number of shares of common stock subject to a given option
by the exercise price;
- assuming that the total stock value derived from that calculation
compounds at the annual 5% or 10% rate shown in the table for the entire
ten-year term of the option; and
- subtracting from that result the total option exercise price.
OPTION GRANTS IN FISCAL YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
----------------------------------------------------- ANNUAL RATES OF
NUMBER OF PERCENT OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
NAME GRANTED FISCAL YEAR PER SHARE DATE 5% 10%
- ---- ---------- ------------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Nimish Mehta .................... 9,207 .26% $.50 7/01/09 $2,900 $ 7,320
President, Chief Executive
Officer and Director
Scott J. Yetter (1) ............. 300,000 8.5 $.45 3/12/09 85,050 214,650
Vice President, North American
Sales and Field Marketing
Robert W. Jones ................. 150,000 4.3 $.45 3/12/09 42,525 107,325
Vice President, Customer
Services
Siva V. Kumar ................... 11,882 .34 $.50 7/01/09 3,743 9,446
Vice President, Marketing and
Chairman of the Board
Philip C. Nelson ................ 8,911 .25 $.50 7/01/09 2,807 7,084
Chief Technology Officer
</TABLE>
- --------------------------
(1) In an offer letter dated January 29, 1999, we agreed to grant a one-time
option to purchase up to an additional 50,000 shares of our common stock to
Mr. Yetter at the fair market value at the time of grant for the
accomplishment of license and service goals during the fiscal year ended
December 31, 1999.
EXERCISE OF OPTIONS
The following table sets forth information concerning the exercise of stock
options during the fiscal year ended December 31, 1999 by the Named Officers and
the fiscal year-end value of unexercised options. Since there was no public
trading market for Impresse's common stock as of December 31, 1999, the values
of unexercised options at December 31, 1999 are based on a fair market value of
common stock of $2.00 per share as determined by the Board of Directors on
December 31, 1999. Therefore, these values are calculated based on the $2.00 per
share value for value at fiscal year-end or the fair market value as
41
<PAGE>
determined by the Board of Directors on the date of exercise for value realized,
less the applicable exercise price per share, multiplied by the number of shares
underlying these options. All options granted by the Board of Directors allowed
for early exercise. The number of securities underlying unexercised options in
the "Unexercisable" column and the related value of these securities at year end
reflects this information as it relates to options that although are
exercisable, would if exercised result in the ownership of common stock subject
to repurchase at cost by Impresse.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT DECEMBER 31, 1999 AT DECEMBER 31, 1999
ACQUIRED ----------------------------- ---------------------------
NAME ON EXERCISE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Nimish Mehta...................... -- 9,207 -- $ 13,811 $ --
President, Chief Executive
Officer and Director
Scott J. Yetter................... 300,000 -- -- -- --
Vice President, North American
Sales and Field Marketing
Robert W. Jones................... 150,000 -- -- -- --
Vice President, Customer
Services
Siva V. Kumar..................... -- 11,882 -- 17,823 --
Vice President, Marketing and
Chairman of the Board
Philip C. Nelson.................. -- 8,911 -- 13,367 --
Chief Technology Officer
</TABLE>
- --------------------------
STOCK PLANS
1997 STOCK OPTION PLAN
GENERAL. Our 1997 Stock Option Plan provides for the granting of stock
options to eligible employees, officers, directors, including non-employee
directors, and consultants of Impresse. Stock options granted under the 1997
Stock Option Plan may be either "incentive stock options" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended, or nonstatutory
stock options, which are options not intended to qualify as incentive stock
options. Incentive stock options may be granted to employees, officers and
employee directors of Impresse and nonstatutory stock options may be granted to
employees, officers, employee and non-employee directors and consultants.
As of December 31, 1999, an aggregate of 6,867,537 shares of common stock
had been reserved for issuance under the 1997 Stock Option Plan. As of
December 31, 1999, 1,768,525 shares of common stock were issuable upon the
exercise of outstanding options granted under the 1997 Stock Option Plan at a
weighted average exercise price of $1.11, 1,683,475 shares of common stock have
been issued upon exercise of options, and 31,837 shares of common stock remained
available for future issuance under the 1997 Stock Option Plan. The 1997 Stock
Option Plan was originally adopted by the Board of Directors in December 1997
and approved by the stockholders in December 1997. The 1997 Stock Option Plan
was amended by our Board of Directors in January, 2000 to increase the total
number of shares reserved for issuance by 4,132,463 shares, plus an automatic
annual increase on the first day of each of our fiscal years beginning in 2001
and ending in 2007 equal to the lesser of 2,500,000 shares, or 6% of our
outstanding common stock on the last day of the preceding fiscal year or a
lesser number determined by our Board of Directors. The amendments to the 1997
Stock Option Plan will be submitted for approval by our stockholders prior to
the completion of this offering. Unless terminated earlier by our Board of
Directors, the 1997 Stock Option Plan will terminate in 2007.
42
<PAGE>
Stock options granted under the 1997 Stock Option Plan may not have a term
of more than ten years and generally remain exercisable for a period of three
months following termination of the optionee's employment or consulting
relationship with Impresse, with longer periods applying in the event this
termination occurs as a result of death or disability. The exercise price of all
incentive stock options must equal at least to the fair market value of the
common stock at the time of grant, except in the case of incentive stock options
granted to persons owning stock that represents more than 10% of the total
combined voting power of all classes of the outstanding capital stock of
Impresse, in which case the exercise price must equal at least 110% of the fair
market value of the common stock at the time of grant. The exercise price of
nonstatutory stock options will be determined by the Administrator, except that
for grants to certain executive officers of Impresse, the exercise price must be
at least 100% of the fair market value if the option is intended to qualify as
performance-based compensation under applicable tax rules. Options granted under
the 1997 Stock Option Plan are generally subject to vesting at a rate of
twenty-five percent at the end of the first year and 1/48th of the original
number of shares subject to the option per month thereafter. The Administrator
has the authority to grant options which are exercisable prior to vesting, in
which case the unvested portion of the exercised shares are subject to a right
of repurchase in favor of Impresse at the optionee's original cost. Options
granted under the 1997 Stock Option Plan are generally not transferable,
although the Administrator has the discretion to allow limited transferability
of nonstatutory stock options. In the event of an acquisition of Impresse or the
sale of all or substantially all of Impresse's assets, each option outstanding
under the 1997 Stock Option Plan shall vest as to an additional number of shares
equal to the lesser of 25% of the number of shares originally granted pursuant
to such option, and the remaining number of shares not yet vested under the
terms of such option. Thereafter, each outstanding option shall be assumed or an
equivalent option shall be substituted by the successor corporation. If the
successor corporation refuses to do an assumption or substitution, each
outstanding option shall terminate 10 days following the closing of the
transaction. In the event that the option is not terminated following the
closing of the transaction, if an optionee is terminated by Impresse without
good cause and other than due to death or disability, or if an optionee resigns
as a result of a constructive termination by Impresse or by any successor
entity, in either case within one year following the closing of the transaction,
then such optionee's option shall vest as to an additional number of shares
equal to the lesser of 25% of the number of shares originally granted, and the
remaining number of shares not yet vested under the terms of such option. In the
event of a proposed dissolution or liquidation of Impresse, each outstanding
option granted under the 1997 Stock Option Plan shall terminate. Outstanding
options will adjust in the event of a stock split, stock dividend or other
similar change in our capital structure. The Administrator has the authority to
amend or terminate the 1997 Stock Option Plan provided that no action that
impairs the rights of any holder of an outstanding option may be taken without
the holders' consent. In addition, stockholder approval will be obtained for any
amendment to the extent required by applicable law.
The 1997 Stock Option Plan may be administered by the Board of Directors or
a committee appointed by the Board of Directors to administer the 1997 Stock
Option Plan. The 1997 Stock Option Plan will be administered by the Compensation
Committee (comprised of Messrs. Siegelman, Levy and Gilbert). The Administrator
has the authority to grant options and to determine the terms of these awards,
provided these grants are not inconsistent with the terms of the 1997 Stock
Option Plan. In no event, however, may an individual receive option grants for
more than 2,000,000 shares under the 1997 Stock Option Plan in any fiscal year.
Decisions of the Administrator are final and binding on all 1997 Stock Option
Plan participants.
2000 DIRECTORS' STOCK PLAN
Our 2000 Directors' Stock Plan was adopted by the Board of Directors in
January 2000 and is expected to be approved by the stockholders prior to the
closing of this offering. A total of 300,000 shares of common stock has been
reserved for issuance under the Directors' Plan. The Directors' Plan provides
for the grant of nonstatutory stock options to nonemployee directors of
Impresse. The Directors' Plan is designed to work automatically without
administration; however, to the extent administration is necessary,
43
<PAGE>
it will be performed by the Board of Directors. To the extent conflicts of
interest arise, it is expected that they will be addressed by abstention of any
interested director from both deliberations and voting regarding matters in
which this director has a personal interest. The Directors' Plan becomes
effective on the date of this offering.
The Directors' Plan provides that each person who becomes a nonemployee
director of Impresse after the effective date of the registration statement will
be granted a nonstatutory stock option to purchase 20,000 shares of common stock
on the date on which the optionee first becomes a nonemployee director of
Impresse (a "First Option"). Thereafter, on the date of Impresse's annual
stockholders meeting each year, each nonemployee director of Impresse, including
a director who did not receive a First Option grant, will be granted an option
to purchase 15,000 shares of common stock if, on that date, he or she has served
on Impresse's Board of Directors for at least six months (the "Annual Option").
The Directors' Plan sets neither a maximum nor a minimum number of shares
for which options may be granted to any one non-employee director, but does
specify the number of shares that may be included in any grant and the method of
making a grant. No option granted under the Directors' Plan is transferable by
the optionee other than by will or the laws of descent or distribution or
pursuant to a qualified domestic relations order, and each option is
exercisable, during the lifetime of the optionee, only by the optionee or a
permitted transferee. The Directors' Plan provides that each First Option
granted under the Directors' Plan shall vest and become exercisable as to 1/48
of the total number of shares subject to the option as of the first day of each
month after the date of grant. The Directors' Plan provides that each Annual
Option granted under the Directors' Plan shall vest and become exercisable as to
1/12 of the total number of shares subject to the option as of the first day of
each month after the date of grant. If a nonemployee director ceases to serve as
a director for any reason other than death or disability, he or she may, but
only within 90 days after the date he or she ceases to be a director of
Impresse, exercise options granted under the Directors' Plan to the extent that
he or she was entitled to exercise those options as of the date of termination.
If he or she does not exercise the option within this 90 day period, this option
shall terminate. The exercise price of all stock options granted under the
Directors' Plan shall be equal to the fair market value of a share of Impresse's
common stock on the date of grant of the option. Options granted under the
Directors' Plan have a term of ten years.
In the event of an acquisition of Impresse or the sale of all or
substantially all of Impresse's assets, each option outstanding shall become
immediately exercisable prior to the closing of the transaction. The Board of
Directors may amend or terminate the Directors' Plan; provided, however, that
these actions may not adversely affect any outstanding option. Outstanding
options will be adjusted in the event of a stock split, stock dividend or other
similar change in our capital structure. We will obtain stockholder approval for
any amendment to the extent required by applicable law. If not terminated
earlier, the Directors' Plan will have a term of ten years.
2000 EMPLOYEE STOCK PURCHASE PLAN
Impresse's 2000 Employee Stock Purchase Plan was adopted by the Board of
Directors in January 2000 and is expected to be approved by the stockholders
prior to the closing of this offering. A total of 500,000 shares of common stock
has been reserved for issuance under the Purchase Plan, as well as an automatic
annual increase on the first day of each of Impresse's fiscal years beginning in
2001 and ending in 2010 equal to the lesser of 500,000 shares, 2% of Impresse's
outstanding common stock on the last day of the immediately preceding fiscal
year or a lesser number of shares determined by the Board of Directors. The
Purchase Plan becomes effective on the date of this offering.
The Purchase Plan, which is intended to qualify under Section 423 of the
Code, will be implemented by a series of overlapping offering periods of
approximately 24 months duration, with new offering periods (other than the
first offering period) commencing on May 1st and November 1st of each year. Each
offering period will generally consist of four consecutive purchase periods of
approximately six months duration, at the end of which an automatic purchase
will be made for the participant. The initial offering
44
<PAGE>
period is expected to begin on the date of this offering and end on April 30,
2002; the initial purchase period is expected to end on October 31, 2000. The
Purchase Plan will be administered by the Board of Directors or by a committee
appointed by the Board of Directors. The Purchase Plan will be administered by
the Compensation Committee (comprised of Messrs. Siegelman, Levy and Gilbert).
Employees (including officers and employee directors) of Impresse, or of any
majority-owned subsidiary designated by the Board of Directors, are eligible to
participate in the Purchase Plan if they are employed by Impresse or any
majority-owned subsidiary for at least 20 hours per week and more than five
months per year. The Purchase Plan permits eligible employees to purchase common
stock through payroll deductions, which may not exceed 20% of an employee's
compensation, at a price equal to the lower of 85% of the fair market value of
Impresse's common stock at the beginning of each offering period or at the end
of each purchase period. Employees may end their participation in the offering
at any time during the offering period, and participation ends automatically on
termination of employment. If not terminated earlier, the Purchase Plan will
have a term of 10 years.
An employee is not eligible to participate in the Purchase Plan if
immediately after the grant of an option to purchase stock under the Purchase
Plan the employee would own stock and/or hold outstanding options to purchase
stock equaling 5% or more of the total voting power or value of all classes of
our stock or stock of our subsidiaries, or if this option would permit an
employee to purchase stock under the Purchase Plan at a rate that exceeds
$25,000 of fair market value of this stock for each calendar year in which the
option is outstanding. In addition, no employee may purchase more than 2000
shares of common stock under the Purchase Plan in any one purchase period. If
the fair market value of the common stock on a purchase date is less than the
fair market value at the beginning of the offering period, each participant in
that offering period shall automatically be withdrawn from the offering period
as of the end of the purchase date and re-enrolled in the new twenty-four month
offering period beginning on the first business day following the purchase date.
In the event of a merger of Impresse with or into another corporation or a
sale of all or substantially all of Impresse's assets, each right to purchase
stock under the Purchase Plan will be assumed or an equivalent right substituted
by the successor corporation. However, the Board of Directors will shorten any
ongoing offering period so that participants' rights to purchase stock under the
Purchase Plan are exercised prior to the transaction in the event the successor
corporation refuses to assume each purchase right or to substitute an equivalent
right of the successor corporation. Outstanding options will be adjusted in the
event of a stock split, stock dividend or other similar change in our capital
structure. The Board of Directors has the power to amend or terminate the
Purchase Plan as long as the action does not adversely affect any outstanding
rights to purchase stock thereunder. However, our Board of Directors may amend
or terminate the Purchase Plan or an offering period even if it would adversely
affect outstanding options in order to avoid our incurring adverse accounting
charges.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
As permitted by the Delaware General Corporation Law, Impresse has included
in its Amended and Restated Certificate of Incorporation a provision to
eliminate the personal liability of its officers and directors for monetary
damages for breach or alleged breach of their fiduciary duties as officers or
directors, respectively, subject to exceptions. In addition, Impresse's Bylaws
provide that Impresse is required to indemnify its officers and directors,
including under circumstances in which indemnification would otherwise be
discretionary, and Impresse is required to advance expenses to its officers and
directors as incurred in connection with proceedings against them for which they
may be indemnified. Impresse has also obtained directors' and officers'
liability insurance. At present, Impresse is not aware of any pending or
threatened litigation or proceeding involving a director, officer, employee or
agent of Impresse in which indemnification would be required or permitted.
Impresse is not aware of any threatened litigation or proceeding that might
result in a claim for indemnification. Impresse believes that its charter
provisions and indemnification agreements are necessary to attract and retain
qualified persons as directors and officers.
45
<PAGE>
RELATED PARTY TRANSACTIONS
EQUITY TRANSACTIONS
Some stock option grants to directors and executive officers of Impresse are
described under the caption "Management--Executive Compensation."
In October 1997, Impresse issued and sold 1,000,000 shares of common stock
at $.01 per share to Rajeev Sehgal and 888,888 shares of common stock at $.01
per share to Siva Kumar, chairman of the board and a vice president of Impresse.
In December 1997, Impresse repurchased 600,000 shares of common stock at $.01
per share from Mr. Sehgal in connection with Mr. Sehgal's disassociation from
Impresse. Mr. Sehgal retains a total of 400,000 shares of common stock of
Impresse.
In December 1997, Impresse issued and sold 1,031,112 shares of common stock
at $.01 per share to Siva Kumar, chairman of the board and a vice president of
Impresse.
In December 1997, Impresse issued and sold 1,440,000 shares of common stock
at $.01 per share to Phil Nelson, a founder and the Chief Technology Officer of
Impresse.
In December 1997, April 1998 and August 1998, Impresse issued and sold
8,530,000 shares of Series A preferred stock at a price of $.50 per share,
including:
- 4,000,000 shares to entities affiliated with Kleiner Perkins Caufield &
Byers, an entity with which Mr. Siegelman, a director of Impresse, is
affiliated;
- 4,000,000 shares to entities affiliated with Benchmark Capital, an entity
with which Mr. Dunlevie, a director of Impresse, is affiliated; and
- other private investors.
In December 1998, February 1999 and May 1999, Impresse issued and sold
3,507,928 shares of Series B preferred stock at price per share of $3.15,
including:
- 793,651 shares to entities affiliated with Kleiner Perkins Caufield &
Byers, an entity with which Mr. Siegelman, a director of Impresse, is
affiliated;
- 793,651 shares to entities affiliated with Benchmark Capital, an entity
with which Mr. Dunlevie, a director of Impresse, is affiliated;
- 1,746,032 shares to entities affiliated with Atlas Venture, an entity with
which Mr. Archambeau, a director of Impresse, is affiliated; and
- other private investors.
In November 1999 and January 2000, Impresse issued and sold 4,399,100 shares
of its Series C Preferred Stock at a price of $12.39 per share, including:
- 80,709 shares to entities affiliated with Kleiner Perkins Caufield &
Byers, an entity with which Mr. Siegelman, a director of Impresse, is
affiliated;
- 80,710 shares to entities affiliated with Benchmark Capital, an entity
with which Mr. Dunlevie, a director of Impresse, is affiliated;
- 1,614,205 shares to entities affiliated with Gilbert Global Equity
Partners, an entity with which Mr. Gilbert, a director of Impresse, is
affiliated;
- 40,354 shares to entities affiliated with Atlas Venture, an entity with
which Mr. Archambeau, a director of Impresse, is affiliated;
- 32,284 shares to Hatim Tyabji, a director of Impresse; and
- other private investors.
46
<PAGE>
OTHER TRANSACTIONS
In December 1997, Rajeev Sehgal and Impresse entered into a Separation and
Mutual General Release dated December 6, 1997 whereby Impresse repurchased
600,000 shares of common stock from Mr. Sehgal.
Since inception, Impresse from time to time has issued and sold shares of
its common stock and granted options to purchase common stock to its employees,
directors and consultants.
The following executive officers have executed full-recourse promissory
notes in the amounts set forth after their names in connection with their
purchases of shares of Impresse's common stock:
<TABLE>
<CAPTION>
OUTSTANDING
BALANCE AS OF
PRINCIPAL INTEREST DECEMBER 31,
NAME(1) DATE OF LOAN AMOUNT RATE 1999
- ------- ------------ --------- -------- -------------
<S> <C> <C> <C> <C>
Sanjai K. Bijawat................................. 8/24/99 $ 75,000 8% $ 77,129
Robert W. Jones................................... 4/20/99 67,500 8 71,205
Nimish Mehta...................................... 11/6/98 74,385 8 81,363
Scott J. Yetter................................... 4/22/99 135,000 8 142,440
</TABLE>
- ------------------------
(1) Jaime Murow, our former Chief Information Officer, early-exercised an option
to purchase 150,000 shares of our common stock on September 7, 1999 through
a promissory note with a principal of $75,000. On January 7, 2000, we
exercised our repurchase right as to 128,125 shares of common stock and
Mr. Murow tendered the outstanding balance at this time.
These notes become due the earlier of five years after the date of issuance,
ninety days after termination or cessation of the officer's employment, one year
after a merger or acquisition of Impresse, or one year after the date of this
offering. They bear interest at the lowest rate allowed under federal tax law to
avoid the imputation of interest, compounded annually.
Impresse has entered into compensation arrangements with some of its
directors and officers. See "Management--Executive Compensation" and "--Stock
Plans."
Impresse believes that the related transactions were on terms that are no
more favorable than those that would have been agreed upon by third parties on
an arm's length basis.
47
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth information known to Impresse with respect to
the beneficial ownership of Impresse's common stock as of December 31, 1999 by
the following individuals or groups:
- each stockholder known by Impresse to be the beneficial owner of more than
5% of Impresse's common stock;
- the "Named Officers";
- each director of Impresse; and
- all executive officers and directors as a group.
Except as otherwise noted, the address of each person listed in the table is
c/o Impresse Corporation, 1309 South Mary Avenue, Sunnyvale, CA 94087. The table
includes all shares of common stock issuable within 60 days of December 31, 1999
upon the exercise of options and other rights beneficially owned by the
indicated stockholders on that date. These shares, however, are not deemed
outstanding for the purposes of computing the percentage of ownership of each
other person. To the knowledge of Impresse, except under applicable community
property laws or as otherwise indicated, the persons named in this table have
sole voting and investment power with respect to all shares of common stock
shown as beneficially owned by them. The applicable percentage of ownership for
each stockholder is based on 25,150,121 shares of common stock outstanding as of
December 31, 1999, together with applicable options for that stockholder. The
table assumes that the underwriters' over-allotment option is not exercised. In
addition, the table assumes that the outstanding shares of preferred stock were
converted into shares of common stock. Percentage ownership figures after the
offering do not include shares that may be purchased by each person in the
offering.
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES
BENEFICIALLY OWNED
NUMBER OF SHARES -------------------
BENEFICIALLY BEFORE AFTER
NAME OF BENEFICIAL OWNER OWNED OFFERING OFFERING
- ------------------------ ---------------- -------- --------
<S> <C> <C> <C>
Entities affiliated with Kleiner Perkins Caufield 4,874,360 19.38% %
&Byers(1) ................................................
2750 Sand Hill Road
Menlo Park, CA 94025
Entities affiliated with Benchmark Capital(2) .............. 4,874,361 19.38
2480 Sand Hill Road, Suite 200
Menlo Park, CA 94025
Entities affiliated with Atlas Venture(3) .................. 1,786,386 7.10
2420 Sand Hill Road, Suite 102
Menlo Park, CA 94025
Entities affiliated with Gilbert Global Equity 1,614,205 6.42
Partners(4) ..............................................
785 Smith Ridge Road
New Canaan, CT 06840
Nimish Mehta................................................ 1,496,907 5.95
Sanjai K. Bijawat........................................... 150,000 *
Robert W. Jones............................................. 150,000 *
Philip C. Nelson............................................ 1,448,911 5.76
Scott J. Yetter............................................. 300,000 1.19
Eric Archambeau(5).......................................... 1,786,386 7.10
Bruce Dunlevie(6)........................................... 4,874,361 19.38
Steven J. Gilbert(7)........................................ 1,614,205 6.42
Siva V. Kumar............................................... 1,931,882 7.68
Paul Levy................................................... 110,000 *
Russell Siegelman(8)........................................ 4,874,360 19.38
Hatim A. Tyabji............................................. 110,000 *
</TABLE>
48
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES
BENEFICIALLY OWNED
NUMBER OF SHARES -------------------
BENEFICIALLY BEFORE AFTER
NAME OF BENEFICIAL OWNER OWNED OFFERING OFFERING
- ------------------------ ---------------- -------- --------
<S> <C> <C> <C>
All executive officers and directors as a group 18,587,713 73.90
(12 persons)..............................................
</TABLE>
- ------------------------
* Less than 1%
(1) Includes:
- 2,190,552 shares held by Kleiner Perkins Caufield & Byers VIII, L.P.
- 126,786 shares held by KPCB VIII Founders Fund, L.P.
- 119,841 shares held by KPCB Information Sciences Zaibatsu Fund II, L.P.
- 2,437,181 shares held by KPCB Java Fund L.P.
The general partner of Kleiner Perkins Caufield & Byers VIII, L.P. and
KPCB VIII Founders Fund, L.P. is KPCB VIII Associates. The general partner
of KPCB Java Fund L.P. is KPCB Java Associates, L.P. The general partner of
KPCB Information Sciences Zaibatsu Fund II is KPCB VII Associates, L.P.
Russell Siegelman, a director of Impresse, is a general partner of Kleiner
Perkins Caufield & Byers. Mr. Siegelman disclaims beneficial ownership of
the shares held by Kleiner Perkins Caufield & Byers VIII, L.P., KPCB VIII
Founders Fund, L.P., KPCB Information Sciences Zaibatsu Fund II, L.P., KPCB
Java Fund L.P., except to the extent of his pecuniary interest therein
arising from his general partnership interest in these funds.
(2) Represents 4,874,361 shares of common stock held by Benchmark Capital
Partners II, L.P. as nominee for Benchmark Capital Partners II, L.P.,
Benchmark Founders Fund II, L.P., Benchmark Founders Fund II-A, L.P. and
Benchmark Members' Fund II, L.P.
Mr. Dunlevie is a managing member of Benchmark Capital Management Co. II,
LLC, the general partner of Benchmark Capital Partners II, L.P., Benchmark
Founders Fund II, L.P., Benchmark Founders Fund II-A, L.P. and Benchmark
Members' Fund II, L.P. Mr. Dunlevie disclaims beneficial ownership of these
shares, except to the extent of his pecuniary interest in the Benchmark
funds.
(3) Includes:
- 1,748,371 shares held by Atlas Venture Fund III, L.P.; and
- 38,015 shares held by Atlas Venture Entrepreneurs Fund, L.P.
The general partner of Atlas Venture Fund III, L.P. and Atlas Venture
Entrepreneurs Fund, L.P. is Atlas Venture. Eric Archambeau, a director of
Impresse, is a general partner of Atlas Venture. Mr. Archambeau disclaims
beneficial ownership of shares held by Atlas Venture Fund III, L.P. and
Atlas Venture Entrepreneurs Fund, L.P., except to the extent of his
pecuniary interest therein arising from his general partnership interest in
these funds.
(4) Includes:
- 1,236,292 shares held by Gilbert Global Equity Partners, L.P.; and
- 377,913 shares held by Gilbert Global Equity Partners (Bermuda), L.P.
The general partner of Gilbert Global Equity Partners, L.P. and Gilbert
Global Equity Partners (Bermuda) L.P. is Steven J. Gilbert, a director of
Impresse. Mr. Gilbert disclaims beneficial ownership of shares held by
Gilbert Global Equity Partners, L.P. and Gilbert Global Equity Partners
(Bermuda) L.P., except to the extent of his pecuniary interest in these
funds. Principal address c/o Conyers Dill & Pearman, Clarendon House, Church
Street, P.O. Box HM666, Hamilton HM CX, Bermuda.
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(5) Includes:
- 1,748,371 shares held by Atlas Venture Fund III, L.P.; and
- 38,015 shares held by Atlas Venture Entrepreneurs Fund, L.P.
Eric Archambeau, a director of Impresse, is a general partner of Atlas
Venture. Mr. Archambeau disclaims beneficial ownership of shares held by
Atlas Venture Fund III, L.P. and Atlas Venture Entrepreneurs Fund, L.P.,
except to the extent of his pecuniary interest therein arising from his
general partnership interest in these funds.
(6) Represents 4,874,361 shares of common stock held by Benchmark Capital
Partners II, L.P. as nominee for Benchmark Capital Partners II, L.P.,
Benchmark Founders Fund II, L.P., Benchmark Founders Fund II-A, L.P. and
Benchmark Members' Fund II, L.P.
Bruce Dunlevie is a managing member of Benchmark Capital Management Co. II,
LLC, the general partner of Benchmark Capital Partners II, L.P., Benchmark
Founders Fund II, L.P., Benchmark Founders Fund II-A, L.P. and Benchmark
Members' Fund II, L.P. Mr. Dunlevie disclaims beneficial ownership of these
shares, except to the extent of his pecuniary interest in the Benchmark
funds.
(7) Includes:
- 1,236,292 shares held by Gilbert Global Equity Partners, L.P.; and
- 377,913 shares held by Gilbert Global Equity Partners (Bermuda), L.P.
Steven J. Gilbert, a director of Impresse, is the general partner of Gilbert
Global Equity Partners, L.P. and Gilbert Global Equity Partners (Bermuda)
L.P. Mr. Gilbert disclaims beneficial ownership of shares held by Gilbert
Global Equity Partners, L.P. and Gilbert Global Equity Partners (Bermuda)
L.P., except to the extent of his pecuniary interest therein arising from
his general partnership interest in these funds. Principal address c/o
Conyers Dill & Pearman, Clarendon House, Church Street, P.O. Box HM666,
Hamilton HM CX, Bermuda.
(8) Includes:
- 2,190,552 shares held by Kleiner Perkins Caufield & Byers VIII, L.P.
- 126,786 shares held by KPCB VIII Founders Fund, L.P.
- 119,841 shares held by KPCB Information Sciences Zaibatsu Fund II, L.P.;
and
- 2,437,181 shares held by KPCB Java Fund L.P.
Russell Siegelman, a director of Impresse, is a general partner of Kleiner
Perkins Caufield & Byers. Mr. Siegelman disclaims beneficial ownership of
the shares held by Kleiner Perkins Caufield & Byers VIII, L.P., KPCB VIII
Founders Fund, L.P., KPCB Information Sciences Zaibatsu Fund II, L.P., KPCB
Java Fund L.P., except to the extent of his pecuniary interest therein
arising from his general partnership interest in these funds.
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DESCRIPTION OF CAPITAL STOCK
Immediately following the consummation of this offering, the authorized
capital stock of Impresse will consist of 150,000,000 shares of common stock,
$.001 par value, and 5,000,000 shares of undesignated preferred stock, $.001 par
value. Upon completion of this offering, there will be outstanding shares
of common stock outstanding, no outstanding shares of preferred stock, options
to purchase shares of common stock and outstanding warrants to
purchase shares of common stock.
COMMON STOCK
As of December 31, 1999, there were 8,902,761 shares of common stock
outstanding that were held of record by approximately 120 stockholders. There
will be shares of common stock outstanding, assuming no exercise of the
underwriters' over-allotment option and assuming no exercise after December 31,
1999 of outstanding options, after giving effect to the sale of the shares of
common stock to the public offered hereby and the conversion of our preferred
stock into common stock at a one-to-one ratio.
Subject to preferences that may apply to shares of preferred stock
outstanding at the time, the holders of outstanding shares of common stock are
entitled to receive dividends out of assets legally available therefor at times
and in amounts as the board of directors may determine. See "Dividend Policy."
Each stockholder is entitled to one vote for each share of common stock held on
all matters submitted to a vote of the stockholders. Cumulative voting is not
provided for in the Impresse's Amended and Restated Certificate of
Incorporation, which means that the majority of the shares voted can elect all
of the directors then standing for election. The common stock is not entitled to
preemptive rights and is not subject to conversion or redemption. Upon the
occurrence of a liquidation, dissolution or winding-up, the holders of shares of
common stock are entitled to share ratably in all assets remaining after payment
of liabilities and satisfaction of preferential rights of any outstanding
preferred stock. There are no sinking fund provisions applicable to the common
stock. The outstanding shares of common stock are, and the shares of common
stock to be issued upon completion of this offering will be, fully paid and
non-assessable.
PREFERRED STOCK
Upon filing our Amended and Restated Certificate of Incorporation after the
closing of this offering, we will authorize 5,000,000 shares of preferred stock.
The Board of Directors has the authority, within the limitations and
restrictions in the Amended and Restated Certificate of Incorporation, to
provide by resolution for the issuance of shares of preferred stock in one or
more series and to fix the rights, preferences, privileges and restrictions
thereof, including dividend rights, dividend rates, conversion rights, voting
rights, terms of redemption, redemption prices, liquidation preferences and the
number of shares constituting any series or the designation of any series,
without further vote or action by the stockholders. The issuance of preferred
stock may have the effect of delaying, deferring or preventing a change in
control of Impresse without further action by the stockholders. The issuance of
preferred stock with voting and conversion rights may adversely affect the
voting power of the holders of common stock, including voting rights, of the
holders of common stock. In some circumstances, this issuance could have the
effect of decreasing the market price of the common stock. As of the closing of
the offering, no shares of preferred stock will be outstanding and Impresse
currently has no plans to issue any shares of preferred stock.
OPTIONS
As of December 31, 1999, options to purchase a total of 1,768,525 shares of
common stock were outstanding, and up to 31,837 shares were available for future
grant under the 1997 Stock Option Plan. See "Management--Stock Plans--1997 Stock
Option Plan."
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WARRANTS
As of December 31, 1999, Impresse had the following outstanding warrants:
- warrant to purchase 50,000 shares of its Series A preferred stock with an
exercise price of $.50 per share issued to Lighthouse Capital Partners in
connection with an equipment lease line obtained from them in June 1998.
- warrants to purchase 171,428 shares of its Series B preferred stock with
an exercise price of $3.15 per share issued to entities affiliated with
Meier Mitchell in connection with a credit facility obtained from them in
June 1999.
- warrant to purchase a total of 240,000 shares of common stock at an
exercise price of $.50 per share issued to Adobe Ventures III in
connection with a co-branding agreement with Adobe Systems Incorporated in
November 1999.
- warrant to purchase 22,000 shares of Series C preferred stock at an
exercise price of $12.39 per share issued to DeAnza Properties in
connection with execution of an office space lease in December 1999.
ANTI-TAKEOVER EFFECTS OF PROVISIONS OF THE CERTIFICATE OF INCORPORATION, BYLAWS
AND DELAWARE LAW
CERTIFICATE OF INCORPORATION AND BYLAWS
Our Amended and Restated Certificate of Incorporation provides that,
effective on the closing of this offering, all stockholder actions must be
effected at a duly called meeting and not by a consent in writing. Further,
provisions of the Bylaws and the Amended and Restated Certificate of
Incorporation provide that the stockholders may amend the Bylaws or provisions
of the Amended and Restated Certificate of Incorporation only with the
affirmative vote of more than 50% of our capital stock. These provisions of the
Amended and Restated Certificate of Incorporation and Bylaws could discourage
potential acquisition proposals and could delay or prevent a change in control
of Impresse. These provisions are intended to enhance the likelihood of
continuity and stability in the composition of the Board of Directors and in the
policies formulated by the Board of Directors and to discourage types of
transactions that may involve an actual or threatened change of control of
Impresse. These provisions are designed to reduce our vulnerability to an
unsolicited acquisition proposal. The provisions also are intended to discourage
tactics that may be used in proxy fights. However, these provisions could have
the effect of discouraging others from making tender offers for our shares and,
as a consequence, they also may inhibit fluctuations in the market price of our
shares that could result from actual or rumored takeover attempts. These
provisions also may have the effect of preventing changes in our management.
Our Amended and Restated Certificate of Incorporation to be effective upon
the closing of this offering also provides, among other things, that our
directors will be elected without the application of cumulative voting. This
Amended and Restated Certificate of Incorporation also provides that after the
closing of the offering contemplated hereby, any action required or permitted to
be taken by our stockholders may be taken only at a duly called annual or
special meeting of the stockholders. Our Bylaws to be effective upon the closing
of this offering also establish procedures, including advance notice procedures
with regard to the nomination, other than by or at the direction of the Board of
Directors, of candidates for election as directors. See "Description of Capital
Stock--Common Stock."
The foregoing provisions could have the effect of making it more difficult
for a third party to effect a change in the control of the Board of Directors.
In addition, these provisions could have the effect of making it more difficult
for a third party to acquire, or of discouraging a third party from attempting
to acquire, a majority of the outstanding voting stock of Impresse.
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DELAWARE TAKEOVER STATUTE
We are subject to Section 203 of the Delaware General Corporation Law, or
DGCL Section 203, which regulates corporate acquisitions. DGCL Section 203
prevents Delaware corporations, including those whose securities are listed for
trading on the Nasdaq National Market, from engaging, in some cases in a
"business combination" with any "interested stockholder" for three years
following the date that the stockholder became an interested stockholder. For
purposes of DGCL Section 203, a "business combination" includes, among other
things, a merger or consolidation involving Impresse and the interested
stockholder and the sale of more than ten percent (10%) of Impresse's assets. In
general, DGCL Section 203 defines an "interested stockholder" as any entity or
person beneficially owning 15% or more the outstanding voting stock of Impresse
and any entity or person affiliated with or controlling or controlled by this
entity or person. A Delaware corporation may "opt out" of DGCL Section 203 with
an express provision in its original certificate of incorporation or an express
provision in its certificate of incorporation or bylaws resulting from
amendments approved by the holders of at least a majority of the corporation's
outstanding voting shares. We have not "opted out" of the provisions of DGCL
Section 203.
REGISTRATION RIGHTS
As of the completion of this offering, the holders of approximately
16,297,360 shares of common stock and common stock issuable upon exercise of a
warrant are entitled to rights with respect to the registration of these shares
under the Securities Act. The holders of registration rights are those investors
that purchased shares of our Series A, Series B and Series C preferred stock, a
holder of a warrant for shares of our Series A preferred stock, as well as some
of our present and former officers. These rights are provided under the terms of
an agreement between Impresse and the holders of the registrable securities.
Pursuant to this Agreement, on the written demand of holders of more than 50% of
the then outstanding registrable securities, Impresse shall use its best efforts
to register these shares and those of any other stockholders who, by prompt
notice, request registration, subject to cutbacks in participation made by the
managing underwriter. Impresse is not required to effect more than one demand
registration on Form S-1 at any time and more than two demand registrations on
Form S-3 in any twelve-month period. These holders are also entitled to
unlimited piggyback registration rights, subject to cutbacks in participation
made by the managing underwriter. All offering expenses in connection with this
registration will be borne by Impresse, excluding underwriting discounts and
commissions.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the common stock is U.S. Stock Transfer
Corporation.
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SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no market for the common stock of
Impresse. Future sales of substantial amounts of common stock in the public
market could adversely affect prevailing market prices. Furthermore, since only
a limited number of shares will be available for sale shortly after this
offering because of contractual and legal restrictions on resale (as described
below), sales of substantial amounts of common stock of Impresse in the public
market after the restrictions lapse could adversely affect the prevailing market
price and the ability of Impresse to raise equity capital in the future.
Upon completion of the offering, Impresse will have outstanding shares
of common stock. Of these shares, the shares sold in the offering (plus
any shares issued upon exercise of the underwriters' over-allotment option) will
be freely tradeable without restriction under the Securities Act, unless
purchased by "affiliates" of Impresse as that term is defined in Rule 144 under
the Securities Act.
The remaining 25,339,789 shares of common stock outstanding are "restricted
securities" within the meaning of Rule 144 under the Securities Act. Restricted
securities may be sold in the public market only if registered or if they
qualify for an exemption from registration under Rules 144, 144(k) or 701
promulgated under the Securities Act, which are summarized below. Sales of the
restricted securities in the public market, or the availability of these shares
for sale, could adversely affect the market price of the common stock.
The stockholders of Impresse have entered into lock-up agreements generally
providing that they will not offer, sell, contract to sell or grant any option
to purchase or otherwise dispose of the shares of common stock of Impresse or
any securities exercisable for or convertible into Impresse's common stock owned
by them for a period of 180 days after the effective date of the registration
statement filed pursuant to this offering without the prior written consent of
Morgan Stanley & Co. Incorporated. As a result of these contractual
restrictions, notwithstanding possible earlier eligibility for sale under the
provisions of Rules 144, 144(k) and 701, shares subject to lock-up agreements
will not be saleable until these agreements expire or are waived by Morgan
Stanley & Co. Incorporated. Taking into account the lock-up agreements, and
assuming Morgan Stanley & Co. Incorporated does not release stockholders from
these agreements, the following shares will be eligible for sale in the public
market at the following times: beginning on the effective date, only the shares
sold in the offering will be immediately available for sale in the public
market; beginning 180 days after the effective date, approximately 5,196,761
shares will be eligible for sale pursuant to Rule 701 and approximately
11,523,801 additional shares will be eligible for sale pursuant to Rule 144, of
which all but 194,067 shares are held by affiliates of Impresse. Shares eligible
to be sold by affiliates pursuant to Rule 144 are subject to volume restrictions
as described below.
In general, under Rule 144 as currently in effect, and beginning after the
expiration of the lock-up agreements (180 days after the effective date of the
offering), a person (or persons whose shares are aggregated) who has
beneficially owned restricted securities for at least one year would be entitled
to sell within any three-month period a number of shares that does not exceed
the greater of:
- one percent of the number of shares of common stock then outstanding
(which will equal approximately shares immediately after the
offering); or
- the average weekly trading volume of the common stock during the four
calendar weeks preceding the sale.
Sales under Rule 144 are also subject to manner of sale provisions and
notice requirements and to the availability of current public information about
Impresse. Under Rule 144(k), a person who is not deemed to have been an
affiliate of Impresse at any time during the three months preceding a sale, and
who has beneficially owned the shares proposed to be sold for at least two
years, is entitled to sell these shares without complying with the manner of
sale, public information, volume limitation or notice provisions of Rule 144.
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Pursuant to the lock-up agreements, all Impresse employees holding common
stock or stock options may not sell shares acquired upon exercise until after
180 days following the effective date. Beginning after 180 days following the
effective date of the registration statement for this offering, any employee,
officer or director of or consultant to Impresse who purchased his or her shares
pursuant to a written compensatory plan or contract may be entitled to rely on
the resale provisions of Rule 701. Rule 701 permits affiliates to sell their
Rule 701 shares under Rule 144 without complying with the holding period
requirements of Rule 144. Rule 701 further provides that non-affiliates may sell
their shares in reliance on Rule 144 without having to comply with the holding
period, public information, volume limitation or notice provisions of Rule 144.
In addition, Impresse intends to file registration statements under the
Securities Act as promptly as possible after the effective date to register
shares to be issued pursuant to Impresse's employee benefit plans. As a result,
any options exercised under the Stock Plan or any other benefit plan after the
effectiveness of this registration statement will also be freely tradeable in
the public market, except that shares held by affiliates will still be subject
to the volume limitation, manner of sale, notice and public information
requirements of Rule 144 unless otherwise resaleable under Rule 701. As of
December 31, 1999, there were outstanding options for the purchase of 1,768,525
shares, of which all shares were exercisable. No shares have been issued to date
under Impresse's Purchase Plan or Directors' Plan. See "Management--Stock Plans"
and "Description of Capital Stock--Registration Rights."
Morgan Stanley & Co. Incorporated may choose to release some or all of the
shares subject to the lockup restrictions described above prior to the
expiration of the 180-day period with or without prior public notice, although
it has no current intention to do so.
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UNDERWRITERS
Under the terms and subject to the conditions contained in an underwriting
agreement dated , 2000, the underwriters named below, for whom
Morgan Stanley & Co. Incorporated, Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Deutsche Bank Securities Inc. are acting as representatives,
have severally agreed to purchase, and Impresse has agreed to sell to them, the
respective number of shares of common stock set forth opposite the names of the
underwriters below:
<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
- ---- -----------
<S> <C>
Morgan Stanley & Co. Incorporated...........................
Merrill Lynch, Pierce, Fenner & Smith Incorporated..........
Deutsche Bank Securities Inc................................
-----------
Total...................................................
===========
</TABLE>
The underwriters are offering the shares of common stock subject to their
acceptance of the shares from Impresse and subject to prior sale. The
underwriting agreement provides that the obligations of the several underwriters
to pay for and accept delivery of the shares of common stock offered hereby are
subject to the approval of legal matters by their counsel and to other
conditions. The underwriters are obligated to take and pay for all of the shares
of common stock offered hereby, other than those covered by the overallotment
option described below, if any shares are taken. Morgan Stanley Dean Witter
Online, an affiliate of Morgan Stanley & Co. Incorporated, is acting as a
selected dealer in connection with the offering and will be the sole distributor
of shares of common stock over the Internet to its eligible account holders.
The underwriters initially propose to offer part of the shares of the common
stock directly to the public at the public offering price set forth on the cover
page hereof and part to dealers at a price that represents a concession not in
excess of $ a share under the public offering price. Any underwriter may
allow, and these dealers may reallow, a concession not in excess of $ a
share to other underwriters or to other dealers. After the initial offering of
the shares of common stock, the offering price and other selling terms may from
time to time be varied by the representatives.
The underwriters have informed Impresse that they do not intend sales to
discretionary accounts to exceed five percent of the total number of shares of
common stock offered by them.
At the request of Impresse, the underwriters have reserved up to
shares of common stock offered hereby for sale at the initial public offering
price to employees of Impresse, friends and families of employees of Impresse,
service providers, employees of customers and others. The number of shares
available for sale to the general public will be reduced to the extent that
these persons purchase reserved shares. Any reserved shares not so purchased
will be offered by the underwriters to the general public on the same basis as
other shares of common stock offered hereby.
Impresse has submitted an application to have its common stock approved for
quotation on the Nasdaq National Market under the symbol "IMPC."
Each of Impresse and the directors, officers and substantially all other
stockholders of Impresse has agreed that, without the prior written consent of
Morgan Stanley & Co. Incorporated on behalf of the
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underwriters, it will not, during the period ending 180 days after the effective
date of the registration statement filed for this offering:
- offer, pledge, sell, contract to sell, engage in any short sale, sell any
option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, or otherwise transfer or
dispose of, directly or indirectly, any shares of common stock or any
securities convertible into or exercisable or exchangeable for common
stock;
- enter into any swap or similar agreement that transfers, in whole or in
part, the economic consequences of ownership of the common stock;
whether any transaction described above is to be settled by delivery of common
stock or other securities, in cash or otherwise.
The restrictions described in the previous paragraph do not apply to some
circumstances, including:
- the sale of the shares to the underwriters;
- the issuance by Impresse of shares of restricted stock awards under
Impresse's existing employee benefit plans or of common stock upon the
exercise of an option or a warrant or the conversion of a security
outstanding on the date of this prospectus subject to a lock up period at
least 180 days after the effective date of the registration statement for
this offering; or
- the grant of options by Impresse to officers, directors, employees or
consultants provided the options are subject to a lock up period at least
180 days after the effective date of the registration statement for this
offering; or
- transactions by any person other than Impresse relating to shares of
common stock or other securities acquired in open market transactions
after the completion of the offering of the shares.
In addition, the stockholders of Impresse have agreed that, without the
prior written consent of Morgan Stanley & Co. Incorporated on behalf of the
underwriters, neither it nor any of its affiliates will, during the period
ending 180 days after the date of this prospectus, make any demand for, or
exercise any right with respect to, the registration of any shares of common
stock or any security convertible into or exercisable or exchangeable for common
stock.
Morgan Stanley & Co. Incorporated may choose to release some or all of the
shares subject to the lock up restrictions described above prior to the
expiration of the 180 day period with or without prior public notice, although
it has no current intention to do so.
Impresse has granted to the underwriters an option, exercisable for 30 days
from the date of this prospectus, to purchase up to additional shares of
common stock at the public offering price set forth on the cover page hereof,
less underwriting discounts and commissions. The underwriters may exercise this
option solely for the purpose of covering over-allotments, if any, made in
connection with the offering of the shares of common stock offered hereby. To
the extent this option is exercised, each underwriter will become obligated,
subject to conditions, to purchase approximately the same percentage of these
additional shares of common stock as the number set forth next to the
underwriter's name in the preceding table bears to the total number of shares of
common stock set forth next to the names of all underwriters in the preceding
table.
In order to facilitate the offering of the common stock, the underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
price of the common stock. Specifically, the underwriters may over-allot in
connection with the offering, creating a short position in the common stock for
their own account. In addition, to cover over-allotments or to stabilize the
price of the common stock, the underwriters may bid for, and purchase, shares of
common stock in the open market. Finally, the underwriting syndicate may reclaim
selling concessions allowed to an underwriter or a dealer for distributing the
common stock in the offering if the syndicate repurchases previously distributed
common
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stock in transactions to cover syndicate short positions, in stabilization
transactions or otherwise. Any of these activities may stabilize or maintain the
market price of the common stock above independent market levels. The
underwriters are not required to engage in these activities, and may end any of
these activities at any time.
Impresse and the underwriters have agreed to indemnify each other against
liabilities, including liabilities under the Securities Act.
Some of the underwriters from time to time perform various investment
banking services for Impresse, for which these underwriters receive customary
compensation.
PRICING OF THE OFFERING
Prior to this offering, there has been no public market for the common
stock. The initial public offering price will be determined by negotiations
between Impresse and the underwriters. The principal factors that will be
considered in determining the initial public offering price include the future
prospects of Impresse and its industry in general, the ability of Impresse's
management, sales, earnings and other financial and operating information of
Impresse in recent periods, the prospects for Impresse's future earnings, and
the price-earnings ratios, price-sales ratios, market prices of securities and
financial and operating information of companies engaged in activities similar
to those of Impresse. The estimated initial public offering price range set
forth on the cover page of this preliminary prospectus is subject to change as a
result of market conditions and other factors.
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for
Impresse by Venture Law Group, a Professional Corporation, Menlo Park,
California. Jon E. Gavenman, a director of Venture Law Group, is the Secretary
of Impresse. Davis Polk & Wardwell, Menlo Park, California is representing the
underwriters in connection with this offering. Employees of Venture Law Group
and an investment partnership affiliated with Venture Law Group own a total of
31,746 shares of Impresse's common stock, including 4,286 shares of common stock
held by Mr. Gavenman.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our financial
statements at December 31, 1998 and 1999, and for the period from October 7,
1997 (inception) through December 31, 1998 and for the year ended December 31,
1999, as set forth in their report. We have included our financial statements in
the prospectus and elsewhere in the registration statement in reliance on
Ernst & Young LLP's report, given on their authority as experts in accounting
and auditing.
ADDITIONAL INFORMATION
Impresse has filed with the Securities and Exchange Commission a
registration statement on Form S-1 under the Securities Act with respect to the
common stock offered under this prospectus. This prospectus does not contain all
of the information set forth in the registration statement and the exhibits. For
further information with respect to Impresse and the common stock offered under
this prospectus, reference is made to the registration statement and the
exhibits. Statements contained in this prospectus regarding the contents of any
contract or any other document to which reference is made are not necessarily
complete. In each instance where a copy of a contract or other document has been
filed as an exhibit to the registration statement, reference is made to the
exhibit for a more complete description of the matter involved. A copy of the
registration statement and the exhibits may be inspected without charge at the
Public Reference Room of the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and copies of all or any part of the
registration statement may be obtained from the Public Reference Section of the
Commission upon the payment of the fees prescribed by the Commission. The
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public may obtain information on the operation of the Public Reference Room by
calling the Commission at 1-800-SEC-0330. The Commission also maintains a Web
site (HTTP://WWW.SEC.GOV) that contains reports, proxy and information
statements and other information regarding registrants, such as Impresse, that
file electronically with the Commission.
Impresse intends to provide its stockholders with annual reports containing
combined financial statements audited by an independent accounting firm and
quarterly reports containing unaudited combined financial data for the first
three quarters of each fiscal year.
59
<PAGE>
IMPRESSE CORPORATION
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Ernst & Young LLP, Independent Auditors........... F-2
Balance Sheet............................................... F-3
Statement of Operations..................................... F-4
Statement of Stockholders' Equity........................... F-5
Statement of Cash Flows..................................... F-7
Notes to Financial Statements............................... F-8
</TABLE>
F-1
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Impresse Corporation
We have audited the accompanying balance sheet of Impresse Corporation as of
December 31, 1998 and 1999, and the related statements of operations,
stockholders' equity, and cash flows for the period from October 7, 1997
(inception) through December 31, 1998 and the year ended December 31, 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 auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. 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 Impresse Corporation at
December 31, 1998 and 1999, and the results of its operations and its cash flows
for the period from October 7, 1997 (inception) through December 31, 1998 and
the year ended December 31, 1999, in conformity with accounting principles
generally accepted in the United States.
<TABLE>
<S> <C>
Palo Alto, California
January 19, 2000 except for note 11,
as to which the date is
March , 2000
</TABLE>
- --------------------------------------------------------------------------------
The foregoing report is in the form that will be signed upon the completion of
the reincorporation and other matters described in Note 11 to the financial
statements.
<TABLE>
<S> <C>
Palo Alto, California /s/ ERNST & YOUNG LLP
January 19, 2000
</TABLE>
F-2
<PAGE>
IMPRESSE CORPORATION
BALANCE SHEET
<TABLE>
<CAPTION>
PRO FORMA
STOCKHOLDERS' EQUITY AT
DECEMBER 31, DECEMBER 31,
------------------------- -----------------------
1998 1999 1999
----------- ----------- -----------------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......................... $11,425,193 $48,077,472
Short-term investment............................. -- 997,020
Accounts receivable, net of allowance for doubtful
accounts of $20,000 in 1999..................... 17,500 222,296
Other current assets.............................. 218,581 790,264
----------- -----------
Total current assets............................ 11,661,274 50,087,052
Property and equipment, net......................... 963,567 3,549,689
Restricted cash..................................... -- 3,000,000
Other assets........................................ 300,000 3,729,963
----------- -----------
$12,924,841 $60,366,704
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.................................. $ 803,562 $ 1,617,427
Accrued compensation.............................. 45,449 496,440
Accrued liabilities............................... 107,613 118,609
Deferred revenue.................................. 17,500 289,885
Current portion of capital lease obligation....... 162,680 167,858
Current portion of long-term debt................. 1,000,000 2,563,015
----------- -----------
Total current liabilities....................... 2,136,804 5,253,234
Capital lease obligation, less current portion...... 285,447 117,589
Long-term debt, less current portion................ -- 4,297,988
Other long-term liabilities......................... -- 1,612,500
Commitments
Stockholders' equity:
Convertible preferred stock, $.001 par value;
17,180,485 shares in 1999 and 5,000,000 shares
pro forma authorized; 11,863,334 shares in 1998,
16,247,360 shares in 1999 and no shares pro
forma issued and outstanding.................... 11,863 16,247 $ --
Common stock, $.001 par value; 27,420,000 shares
in 1999 and 150,000,000 shares pro forma
authorized; 7,378,663 shares in 1998, 8,902,761
shares in 1999 and 25,150,121 shares pro forma
issued and outstanding.......................... 7,379 8,903 25,150
Additional paid-in capital........................ 14,944,263 87,235,234 87,235,234
Deferred stock compensation....................... -- (13,469,802) (13,469,802)
Notes receivable from stockholders................ (91,385) (535,385) (535,385)
Accumulated deficit............................... (4,369,530) (24,169,804) (24,169,804)
----------- ----------- -----------
Total stockholders' equity...................... 10,502,590 49,085,393 $49,085,393
----------- ----------- ===========
$12,924,841 $60,366,704
=========== ===========
</TABLE>
See accompanying notes.
F-3
<PAGE>
IMPRESSE CORPORATION
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
PERIOD FROM
OCTOBER 7,
1997
(INCEPTION)
THROUGH YEAR ENDED
DECEMBER 31, DECEMBER 31,
1998 1999
------------- ------------
<S> <C> <C>
Revenue:
Services.................................................. $ -- $ 3,581
Other license............................................. -- 160,000
----------- ------------
Total revenue........................................... -- 163,581
Cost of revenue............................................. -- 520,352
----------- ------------
Gross loss.............................................. -- (356,771)
----------- ------------
Operating expenses:
Sales and marketing....................................... 1,085,735 7,861,151
Research and development.................................. 2,577,865 6,396,431
General and administrative................................ 774,623 2,051,078
Stock compensation and warrant expense.................... 40,223 3,189,150
----------- ------------
Total operating expenses................................ 4,478,446 19,497,810
----------- ------------
Loss from operations........................................ (4,478,446) (19,854,581)
Interest income, net........................................ 108,916 54,307
----------- ------------
Net loss.................................................... $(4,369,530) $(19,800,274)
=========== ============
Basic and diluted net loss per share........................ $ (3.35) $ (7.36)
=========== ============
Shares used to compute basic and diluted net loss per
share..................................................... 1,306,062 2,690,947
=========== ============
Pro forma basic and diluted net loss per share
(unaudited)............................................... $ (1.30)
============
Shares used to compute pro forma basic and diluted net loss
per share (unaudited)..................................... 15,226,871
============
</TABLE>
See accompanying notes.
F-4
<PAGE>
IMPRESSE CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
CONVERTIBLE PREFERRED NOTES
STOCK COMMON STOCK ADDITIONAL RECEIVABLE
--------------------- -------------------- PAID-IN DEFERRED STOCK FROM
SHARES AMOUNT SHARES AMOUNT CAPITAL COMPENSATION STOCKHOLDERS
---------- -------- --------- -------- ----------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Issuance of common stock to
founders and employees for
services rendered.......... -- $ -- 4,360,000 $4,360 $ 39,240 $ -- $ --
Repurchase of common stock
from a founder............. -- -- (600,000) (600) (5,400) -- --
Issuance of common stock to
consultants for services
rendered................... -- -- 52,463 52 2,571 -- --
Issuance of Series A
convertible preferred
stock...................... 8,530,000 8,530 -- -- 4,247,950 -- --
Issuance of Series B
convertible preferred
stock...................... 3,333,334 3,333 -- -- 10,485,159 -- --
Issuance of common stock to
employees upon exercise of
options for cash and notes
receivable................. -- -- 3,786,700 3,787 185,548 -- (91,385)
Repurchase of common stock... -- -- (220,500) (220) (10,805) -- --
Net loss..................... -- -- -- -- -- -- --
---------- ------- --------- ------ ----------- ------- --------
Balance at December 31,
1998....................... 11,863,334 $11,863 7,378,663 $7,379 $14,944,263 $ -- $(91,385)
<CAPTION>
TOTAL
ACCUMULATED STOCKHOLDERS'
DEFICIT EQUITY
----------- -------------
<S> <C> <C>
Issuance of common stock to
founders and employees for
services rendered.......... $ -- $ 43,600
Repurchase of common stock
from a founder............. -- (6,000)
Issuance of common stock to
consultants for services
rendered................... -- 2,623
Issuance of Series A
convertible preferred
stock...................... -- 4,256,480
Issuance of Series B
convertible preferred
stock...................... -- 10,488,492
Issuance of common stock to
employees upon exercise of
options for cash and notes
receivable................. -- 97,950
Repurchase of common stock... -- (11,025)
Net loss..................... (4,369,530) (4,369,530)
----------- -----------
Balance at December 31,
1998....................... $(4,369,530) $10,502,590
</TABLE>
See accompanying notes.
F-5
<PAGE>
IMPRESSE CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY (CONTINUED)
<TABLE>
<CAPTION>
CONVERTIBLE PREFERRED NOTES
STOCK COMMON STOCK ADDITIONAL RECEIVABLE
--------------------- -------------------- PAID-IN DEFERRED STOCK FROM
SHARES AMOUNT SHARES AMOUNT CAPITAL COMPENSATION STOCKHOLDERS
---------- -------- --------- -------- ----------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1998..... 11,863,334 $11,863 7,378,663 $7,379 $14,944,263 $ -- $ (91,385)
Issuance of common stock to
employees upon exercise of
options for cash and notes
receivable..................... -- -- 1,683,475 1,683 865,148 -- (444,000)
Issuance of common stock to
consultants for services
rendered....................... -- -- 23,123 23 11,870 -- --
Issuance of Series B convertible
preferred stock................ 174,594 175 -- -- 537,325 -- --
Issuance of Series C convertible
preferred stock................ 4,209,432 4,209 -- -- 52,100,406 -- --
Issuance of warrants to purchase
convertible preferred and
common stock................... -- -- -- -- 2,423,213 -- --
Repurchase of common stock....... -- -- (182,500) (182) (13,943) -- --
Deferred compensation related to
stock option grants............ -- -- -- -- 16,366,952 (16,366,952) --
Amortization of stock
compensation................... -- -- -- -- -- 2,897,150 --
Net loss......................... -- -- -- -- -- -- --
---------- ------- --------- ------ ----------- ------------ ---------
Balance at December 31, 1999..... 16,247,360 $16,247 8,902,761 $8,903 $87,235,234 $(13,469,802) $(535,385)
========== ======= ========= ====== =========== ============ =========
<CAPTION>
TOTAL
ACCUMULATED STOCKHOLDERS'
DEFICIT EQUITY
------------ -------------
<S> <C> <C>
Balance at December 31, 1998..... $ (4,369,530) $ 10,502,590
Issuance of common stock to
employees upon exercise of
options for cash and notes
receivable..................... -- 422,831
Issuance of common stock to
consultants for services
rendered....................... -- 11,893
Issuance of Series B convertible
preferred stock................ -- 537,500
Issuance of Series C convertible
preferred stock................ -- 52,104,615
Issuance of warrants to purchase
convertible preferred and
common stock................... -- 2,423,213
Repurchase of common stock....... -- (14,125)
Deferred compensation related to
stock option grants............ -- --
Amortization of stock
compensation................... -- 2,897,150
Net loss......................... (19,800,274) (19,800,274)
------------ ------------
Balance at December 31, 1999..... $(24,169,804) $ 49,085,393
============ ============
</TABLE>
See accompanying notes.
F-6
<PAGE>
IMPRESSE CORPORATION
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM
OCTOBER 7,
1997
(INCEPTION)
THROUGH YEAR ENDED
DECEMBER 31, DECEMBER 31,
1998 1999
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss.................................................... $ (4,369,530) $(19,800,274)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization............................. 101,719 920,138
Stock compensation and warrant expense.................... 40,223 3,189,150
Changes in operating assets and liabilities:
Accounts receivable..................................... (17,500) (204,796)
Other current assets.................................... (218,581) (571,683)
Accounts payable........................................ 803,562 813,865
Accrued compensation.................................... 45,449 450,991
Accrued liabilities..................................... 107,613 10,996
Deferred revenue........................................ 17,500 272,385
------------ ------------
Net cash used in operating activities....................... (3,489,545) (14,919,228)
------------ ------------
INVESTING ACTIVITIES
Purchase of short term investment........................... -- (997,020)
Purchases of property and equipment......................... (566,734) (3,130,617)
Increase in restricted cash................................. -- (3,000,000)
Increase in other assets.................................... (300,000) (1,662,500)
------------ ------------
Net cash used in investing activities....................... (866,734) (8,790,137)
------------ ------------
FINANCING ACTIVITIES
Principal payments under capital lease obligation........... (50,425) (162,680)
Proceeds from issuance of long-term debt.................... 1,000,000 6,000,000
Repayment of long-term debt................................. -- (138,997)
Increase in other long-term liabilities..................... -- 1,612,500
Proceeds from sale of convertible preferred stock........... 14,744,972 52,642,115
Proceeds from sale of common stock, net of repurchases...... 86,925 408,706
------------ ------------
Net cash provided by financing activities................... 15,781,472 60,361,644
------------ ------------
Net increase in cash and cash equivalents................... 11,425,193 36,652,279
Cash and cash equivalents at beginning of period............ -- 11,425,193
------------ ------------
Cash and cash equivalents at end of period.................. $ 11,425,193 $ 48,077,472
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest...................................... $ 12,203 $ 489,167
============ ============
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
Property and equipment acquired under capital lease......... $ 498,552 $ --
============ ============
Common stock issued in exchange for notes receivable from
stockholders.............................................. $ 91,385 $ 444,000
============ ============
Common stock issued to consultants for services rendered.... $ 2,623 $ 11,893
============ ============
Common stock issued to founders and employees for services
rendered, net of repurchases.............................. $ 37,600 $ --
============ ============
Deferred compensation related to stock option grants........ $ -- $ 16,366,952
============ ============
Warrants issued in connection with a strategic co-marketing
agreement, term and equipment loans and a facility
operating lease........................................... $ -- $ 2,423,213
============ ============
</TABLE>
See accompanying notes.
F-7
<PAGE>
IMPRESSE CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
Impresse has created an eHub for the commercial print industry that can
provide corporations and their commercial print suppliers with integrated
procurement and collaboration capabilities, industry-specific business
intelligence, improved price discovery, corporate systems integration and other
complementary services. Its impresse.com eHub also provides the transaction
automation and volume aggregation of an e-commerce marketplace.
Impresse was founded in October 1997 and was a development stage company
from inception through the three months ended September 30, 1999. During this
period Impresse did not have significant sales and its operating activities were
related primarily to the design and development of its e-commerce solutions,
building its corporate infrastructure, establishing relationships with suppliers
and customers and raising capital. Impresse focused its initial development
efforts on an intranet software solution designed to automate the commercial
print procurement processes within large corporations. In mid-1999, however,
Impresse recognized the opportunity to build upon its initial software
development efforts to create a broader, Internet-based business-to-business
e-commerce solution. Accordingly, Impresse shifted its efforts to the
development of its impresse.com service which was launched in August 1999.
The first sale of its impresse.com service occurred during the three months
ended December 31, 1999 and we have recognized services revenue of approximately
$4,000 during that period. In addition, Impresse derived $160,000 of other
license revenue during the three months ended December 31, 1999 from the
licensing of its intranet software solution.
Impresse's operating results for the period from October 7, 1997 (inception)
through December 31, 1997 were insignificant and have been combined with the
results for the year ended December 31, 1998.
Impresse has incurred significant losses since inception and, as of
December 31, 1999, had an accumulated deficit of approximately $24.2 million,
including a loss in the year ended December 31, 1999 of $19.8 million.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements. Actual
results could differ from these estimates.
CASH AND CASH EQUIVALENTS, SHORT-TERM INVESTMENT AND RESTRICTED CASH
Impresse generally invests its excess cash in money market accounts,
certificates of deposits and short-term commercial paper. Impresse considers all
highly liquid investments with a maturity from date of purchase of three months
or less to be cash equivalents. The carrying amount reported in the balance
sheet for cash and cash equivalents approximates its fair value.
Impresse classifies its short-term investment as "available-for-sale." This
investment is recorded at fair value based on quoted market prices with
unrealized gains and losses, which are considered to be temporary, recorded as
other comprehensive income (loss) until realized.
F-8
<PAGE>
IMPRESSE CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
In September 1999, Impresse entered into a term loan with a bank (see
Note 6). Under the terms of this agreement, Impresse is required to maintain at
least $3,000,000 with the bank as a form of security. As of December 31, 1999,
this amount was classified as restricted cash.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost, net of accumulated depreciation
and amortization. Computer equipment and furniture and fixtures are depreciated
on a straight-line basis over their estimated useful lives of three to five
years. Leasehold improvements and equipment acquired under capital lease are
amortized over the shorter of the lease term or the estimated useful lives of
the related assets.
IMPAIRMENT OF LONG-LIVED ASSETS
Impresse continually monitors events and changes in circumstances that could
indicate carrying amounts of long-lived assets, including intangible assets, may
not be recoverable. When such events or changes in circumstances are present,
Impresse assesses the recoverability of long-lived assets by determining whether
the carrying value of such assets will be realized through undiscounted expected
future cash flows. Impresse incurred no impairment losses in 1998 or 1999.
REVENUE RECOGNITION
Services revenue consists of revenue from the use of the impresse.com
service and other related services. The impresse.com service enables
corporations and their commercial print suppliers to automate commercial print
procurement and collaboration over the Internet. Impresse charges a fixed
percentage fee to commercial print suppliers based on the gross dollar value of
print volume procured through its service. Impresse recognizes revenue from the
use of its service upon completion of the print project.
Other license revenue consists of revenue from the license of Impresse's
intranet software solution. Impresse recognized revenue in connection with the
license of its intranet software solution under Statement of Position
(SOP) 97-2, "Software Revenue Recognition," and SOP 98-9, "Modification of
SOP 97-2, Software Revenue Recognition, with Respect to Certain Transactions."
Software license revenue was recognized upon installation and acceptance by the
customer, provided that collection was probable. Impresse no longer intends to
market or license its intranet software solution as a stand-alone product.
Cost of revenue consists primarily of expenses associated with the
maintenance and support of the impresse.com service, including personnel,
facilities overhead, equipment depreciation costs and web hosting fees. Cost of
revenue also included, in connection with the license of Impresse's intranet
software solution, personnel and related overhead expenses associated with
implementation, training services and customer support organizations.
RESEARCH AND DEVELOPMENT
Research and development expenditures are generally charged to operations as
incurred. Statement of Financial Accounting Standards (SFAS) No. 86, "Accounting
for the Costs of Computer Software to Be Sold, Leased or Otherwise Marketed,"
requires the capitalization of certain software development costs subsequent to
the establishment of technological feasibility. Based on Impresse's product
development
F-9
<PAGE>
IMPRESSE CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
process, technological feasibility is established upon the completion of a
working model. Through December 31, 1999, capitalizable costs incurred after
achieving technological feasibility have not been significant for any
development project. Accordingly, Impresse has charged all costs to research and
development expense in the periods they were incurred.
Impresse adopted SOP 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use" during 1999, which requires
capitalization of certain costs incurred during the development of internal use
software. Through December 31, 1999 capitalizable costs incurred have not been
significant for any development project. Accordingly, Impresse has charged all
costs to research and development expense in the periods they were incurred.
ADVERTISING EXPENSES
Advertising expenses are charged to operations as incurred and were
insignificant for all periods presented.
STOCK-BASED COMPENSATION
Impresse accounts for stock-based employee compensation arrangements in
accordance with provisions of Accounting Principles Board (APB) Opinion No. 25,
"Accounting for Stock Issued to Employees," and complies with the disclosure
provisions of SFAS No. 123, "Accounting for Stock-Based Compensation." Under APB
Opinion No. 25, compensation expense is based on the difference between the fair
value of Impresse's stock on the date of grant and the exercise price.
Impresse accounts for stock awards issued to non-employees in accordance
with the provisions of SFAS No. 123 and Emerging Issues Task Force Consensus No.
96-18, (EITF 96-18). Under SFAS No. 123 and EITF 96-18, stock awards issued to
non-employees are accounted for at their fair value using the Black-Scholes
method.
INTEREST INCOME, NET
Interest income, net includes interest income of $123,682 and interest
expense of $14,766 for the period from October 7, 1997 (inception) through
December 31, 1998. The year ended December 31, 1999 interest income, net
includes interest income of $548,007 and interest expense of $493,700.
INCOME TAXES
Impresse accounts for income taxes under the liability method whereby
deferred tax asset or liability account balances are calculated at the balance
sheet date using current tax laws and rates in effect for the year in which the
differences are expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred tax assets to the amounts expected
to be realized.
OTHER COMPREHENSIVE INCOME (LOSS)
Other comprehensive income (loss) includes revenues and expenses and gains
and losses that are not included in net loss, but, rather are recorded directly
in stockholders' equity. To date, Impresse has not had any significant
transactions that are required to be reported in other comprehensive income
(loss).
F-10
<PAGE>
IMPRESSE CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying values of Impresse's cash and cash equivalents, short-term
investments, accounts receivable, accounts payable and accrued liabilities
approximate their fair values due to their short maturities. The fair values of
the equipment capital lease obligation and equipment and term loans are
estimated based on current interest rates available to Impresse for debt
instruments with similar terms, degrees of risk and remaining maturities. The
carrying values of these obligations approximate their respective fair values.
The carrying value of notes receivable from stockholders approximate their fair
value. The estimated fair values may not be representative of actual values of
the financial instruments that could have been realized as of the period end or
that will be realized in the future.
CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject Impresse to significant
concentrations of credit risk consist principally of cash and cash equivalents,
short-term investment and accounts receivable.
Cash and cash equivalents and short-term investment are deposited with
financial institutions that management believes are credit worthy.
Accounts receivable consists of balances due from a limited number of
customers. Impresse believes its concentration of credit risk with respect to
its customer balances is mitigated by the performance of ongoing evaluations of
its customers' financial condition. Impresse generally requires no collateral
from its customers. Impresse maintains an allowance for doubtful accounts based
on the expected collectability of its accounts receivable. To date, Impresse has
not experienced any significant losses with respect to its accounts receivable.
NET LOSS PER SHARE
Basic net loss per share is computed using the weighted-average number of
vested outstanding shares of common stock. Diluted net loss per share is
computed using the weighted-average number of shares of vested common stock
outstanding and, when dilutive, unvested common stock outstanding, potential
common shares from options and warrants to purchase common stock using the
treasury stock method and from convertible securities using the as-if-converted
basis. All potential common shares have been excluded from the computation of
diluted net loss per share for all periods presented because the effect would be
antidilutive.
Pursuant to the Securities and Exchange Commission Staff Accounting Bulletin
No. 98, common stock and convertible preferred stock issued for nominal
consideration, prior to the anticipated effective date of Impresse's proposed
initial public offering (IPO), are included in the calculation of basic and
diluted net loss per share as if they were outstanding for all periods
presented. To date, Impresse has not had any issuances or grants for nominal
consideration.
Basic and diluted pro forma net loss per share have been computed as
described above and also give effect, under Securities and Exchange Commission
guidance, to the automatic conversion of the preferred stock into shares of
common stock effective upon the closing of Impresse's IPO as if their conversion
occurred at the original date of issuance.
F-11
<PAGE>
IMPRESSE CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
The following table presents the calculation of basic and diluted and pro
forma basic and diluted net loss per share.
<TABLE>
<CAPTION>
PERIOD FROM
OCTOBER 7,
1997
(INCEPTION)
THROUGH YEAR ENDED
DECEMBER 31, DECEMBER 31,
1998 1999
------------ -------------
<S> <C> <C>
Net loss.......................................... $(4,369,530) $(19,800,274)
=========== ============
Basic and diluted:
Weighted average common shares outstanding...... 4,627,443 7,901,564
Less weighted-average common shares subject to
repurchase.................................... (3,321,381) (5,210,617)
----------- ------------
Shares used to compute basic and diluted net
loss per share.............................. 1,306,062 2,690,947
=========== ============
Basic and diluted net loss per share.............. $ (3.35) $ (7.36)
=========== ============
Pro forma basic and diluted (unaudited):
Shares used above............................... 2,690,947
Weighted average convertible preferred stock
outstanding, as if converted.................. 12,535,924
------------
Shares used to compute pro forma basic and
diluted net loss per share.................. 15,226,871
============
Pro forma basic and diluted net loss per share.... $ (1.30)
============
</TABLE>
The total number of unvested and potential common shares excluded from the
calculation of diluted net loss per share was 18,237,497 in 1998 and 23,852,093
in 1999. These instruments have been excluded because their effect would be
antidilutive.
RECENT ACCOUNTING PRONOUNCEMENT
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133
establishes methods for derivative financial instruments and hedging activities
related to those instruments, as well as other hedging activities. Because
Impresse does not currently hold any derivative instruments and does not engage
in hedging activities, the adoption of SFAS No. 133 is not expected to have a
significant impact on its financial position, results of operations or cash
flows. Impresse will be required to implement SFAS No. 133, as amended, for the
year ending December 31, 2001.
F-12
<PAGE>
IMPRESSE CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SHORT-TERM INVESTMENT
Short-term investment as of December 31, 1999 is comprised of the following:
<TABLE>
<CAPTION>
AMORTIZED COST
--------------
<S> <C>
Money market funds.......................................... $ 50,983,430
Commercial paper............................................ 997,020
------------
51,980,450
Less amounts classified as:
Restricted cash........................................... (3,000,000)
Cash and cash equivalents................................. (47,983,430)
------------
Short-term investment....................................... $ 997,020
============
</TABLE>
As of December 31, 1999 the contractual maturity of Impresse's investment
portfolio was less than 6 months and its fair value approximated the amortized
cost. Realized and unrealized gains or losses for all periods presented were
insignificant. Impresse had no short term investments as of December 31, 1998.
3. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1998 1999
---------- ----------
<S> <C> <C>
Computer equipment................................... $ 477,817 $3,310,204
Furniture and fixtures............................... 449,458 760,341
Leasehold improvements............................... 138,011 125,358
---------- ----------
1,065,286 4,195,903
Less accumulated depreciation and amortization....... (101,719) (646,214)
---------- ----------
$ 963,567 $3,549,689
========== ==========
</TABLE>
Property and equipment includes assets acquired under a capital lease
financing of $498,552 at December 31, 1998 and 1999. Accumulated amortization
related to leased assets was $86,073 at December 31, 1998 and $238,691 at
December 31, 1999.
4. OTHER ASSETS
Other assets consists of deferred expenses of $2,423,213 related to fully
vested and non-forfeitable warrants issued during 1999 in connection with a
strategic co-marketing agreement, term and equipment loans and a facility
operating lease. The value of these warrants was determined using the
Black-Scholes model and the following assumptions: volatility of 75%, interest
rate of 6%, dividend yield of 0% and life equal to the term of these warrants
(10 years). In 1999, amortization of the value of these warrants of $378,667 was
recorded as interest expense or stock compensation and warrant expense, as
appropriate. See Notes 5, 6 and 7 for further information on these securities.
F-13
<PAGE>
IMPRESSE CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. OTHER ASSETS (CONTINUED)
The balance of other assets includes the cost of intellectual property
acquired in 1999 and long term deposits. In 1999, amortization of the cost of
acquiring intellectual property of $277,083 was recorded as research and
development expense.
The remaining amounts are being amortized over their respective estimated
periods of benefit, ranging from one to seven years.
5. LEASES AND COMMITMENTS
Impresse acquired certain equipment under a capital lease financing. Amounts
due under the capital lease represent the present value of future rental
payments. Impresse also leased office space under operating leases that expire
at various dates through May 2007. Rental expense under these operating leases
was approximately $135,000 in 1998 and $658,000 in 1999.
As of December 31, 1999, future minimum lease payments under a noncancelable
equipment capital lease obligation and noncancelable facility operating leases
were as follows:
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
--------- -----------
<S> <C> <C>
Years ending December 31:
2000............................................... $ 174,343 $ 1,228,105
2001............................................... 119,045 1,762,890
2002............................................... -- 1,865,414
2003............................................... -- 1,961,311
2004............................................... -- 2,077,165
Thereafter........................................... -- 5,508,919
--------- -----------
Total minimum lease and principal payments........... 293,388 $14,403,804
===========
Less amount representing interest.................... (7,941)
---------
Present value of future payments..................... 285,447
Less current portion of capital lease obligation..... (167,858)
---------
Noncurrent portion................................... $ 117,589
=========
</TABLE>
In August 1999, Impresse signed a co-selling and co-marketing agreement with
Hewlett-Packard to enable our impresse.com service to be marketed with
Hewlett-Packard's eServices. The impresse.com service is synergistic with other
Hewlett-Packard's eProcurement initiatives and Impresse plans to undertake joint
marketing and selling activities with Hewlett-Packard to access its customers
and partners. As part of this agreement, Impresse is required to pay Hewlett
Packard a percentage of the services revenue derived from
Hewlett-Packard-sourced customers, subject to guaranteed minimums. Payments in
connection with this agreement will be recorded as sales and marketing expense
as incurred.
In November 1999, Impresse concluded an agreement with Adobe Systems for its
impresse.com service to serve as the exclusive print procurement solution for
adobe.com. The agreement includes technology cooperation to integrate certain
technologies, such as PDF workflows, with its impresse.com service. As part of
this agreement, Impresse is required to pay Adobe referral fees based on a
percentage of the services revenue from Adobe-sourced customers, subject to
guaranteed minimums. The agreement has an initial term of one year and may be
renewed upon mutual consent. These payments will be recorded
F-14
<PAGE>
IMPRESSE CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. LEASES AND COMMITMENTS (CONTINUED)
as sales and marketing expense as incurred. In connection with this agreement,
Adobe purchased 242,130 shares of Series C convertible preferred stock at $12.39
per share during the preferred stock financing in November 1999. Also, in
connection with this agreement, Impresse issued a fully vested and non-
forfeitable warrant to Adobe to purchase 240,000 shares of its common stock at
$.50 per share. This warrant expires on November 15, 2009. See Notes 4 and 7 for
further information on this security.
In December 1999, Impresse entered into a lease agreement for additional
office space commencing in June 2000. Future payments under this noncancelable
operating lease are included in the above table. In connection with this
agreement Impresse issued a fully vested and non-forfeitable warrant to purchase
22,000 shares of Series C convertible preferred stock at $12.39 per share. This
warrant expires on December 2009. See Notes 4 and 7 for further information on
this security.
6. LONG-TERM DEBT
At December 31, 1998, Impresse had borrowed $1,000,000 under a working
capital line of credit with a bank. In September 1999, this facility was
converted to a term loan that bears interest at the lender's prime rate plus
.25% per annum (8% at December 31, 1999). Under this agreement, Impresse is
obligated to make 36 equal monthly interest and principal payments through
September 2002. The term loan agreement contains restrictive covenants,
including a limitation on incurring additional indebtedness, paying dividends
and requires Impresse to maintain certain minimum balance requirements. Impresse
has pledged substantially all of its tangible assets as collateral for this term
loan.
In June 1999, Impresse obtained a subordinated term loan totaling $5,000,000
from two financial institutions. The term loan is subordinated to all other
outstanding debt and bears interest at the U.S. treasury note rate plus 7.5% per
annum (13.2% at December 31, 1999). Impresse is obligated to make monthly
payments of interest only through January 2000. Beginning in February 2000,
Impresse will make 30 equal monthly principal and interest payments through
July 2002. The term loan agreement contains restrictive covenants, including a
limitation on incurring additional indebtedness and paying dividends. Impresse
has pledged substantially all of its tangible assets as collateral for this
subordinated term loan.
Also, in June 1999, Impresse obtained an equipment loan totaling $1,000,000
from the same two financial institutions. This equipment loan bears interest at
the U.S. treasury note rate plus 2.5% per annum (8.4% at December 31, 1999) and
is due and payable in 36 equal monthly principal and interest payments through
July 2002.
In connection with the subordinated term loan and equipment loan, Impresse
issued fully vested and non-forfeitable warrants to purchase 171,428 shares of
Series B preferred stock at $3.15 per share. These warrants expire on June 2009.
See Notes 4 and 7 for further information on these securities.
F-15
<PAGE>
IMPRESSE CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. STOCKHOLDERS' EQUITY
PREFERRED STOCK
A summary of convertible preferred stock is as follows:
<TABLE>
<CAPTION>
AUTHORIZED AND ISSUED AND LIQUIDATION
DESIGNATED OUTSTANDING PREFERENCE
-------------- ----------- -----------
<S> <C> <C> <C>
Series A............................... 8,580,000 8,530,000 $ 4,265,000
Series B............................... 4,000,000 3,507,928 11,049,973
Series C............................... 4,600,485 4,209,432 52,154,862
---------- ---------- -----------
Total.................................. 17,180,485 16,247,360 $67,469,835
========== ========== ===========
</TABLE>
Each share of Series A, B and C preferred stock is convertible into common stock
on a one-for-one basis, subject to appropriate adjustment for common stock
splits, stock dividends and similar transactions. Conversion is automatic upon
the closing of an initial public offering of common stock in which the aggregate
gross proceeds to Impresse are at least $25,000,000 with a minimum offering
price of at least 1.3 times the Series C price per share.
Each holder of Series A, B and C preferred stock is entitled to the number
of votes equal to the number of shares of common stock into which the preferred
stock is convertible.
Each holder of preferred stock is entitled to receive, when and as declared
by the board of directors, noncumulative dividends at the annual rate of $.05
per share for Series A, $.315 per share for Series B and $1.239 per share for
Series C preferred stock payable in preference and priority to any payment of
any dividend on common stock.
In the event of liquidation, in addition to the amounts set forth in the
table above, the holders of preferred stock are entitled to all declared but
unpaid dividends for each outstanding share of Series A, B and C preferred
stock. Any remaining assets will be distributed with equal priority on a pro
rata basis among the holders of Impresse's Series B preferred and common stock
provided that once each holder of Series B preferred stock has received an
aggregate of $6.30 per share, the holder will not be entitled to any further
distribution. Any remaining assets will be distributed on a pro rata basis among
the holders of the common stock.
As described in Notes 4, 5 and 6, Impresse has issued warrants to purchase
convertible preferred stock in connection with obtaining equipment and term
loans and a facility operating lease. In addition, in June 1998, Impresse issued
a warrant to purchase 50,000 shares of Series A convertible preferred stock at
an exercise price of $.50 per share in connection with an equipment capital
lease financing. This warrant expires on June 30, 2004. The fair value of the
warrant at the date of issuance was insignificant and, accordingly, no value was
recorded. At December 31, 1999, warrants to purchase 50,000 shares of Series A
convertible preferred stock at $.50 per share, 171,428 shares of Series B
convertible preferred stock at $3.15 per share and 22,000 shares of Series C
convertible preferred stock at $12.39 per share were outstanding and
exercisable.
F-16
<PAGE>
IMPRESSE CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. STOCKHOLDERS' EQUITY (CONTINUED)
COMMON STOCK
In 1997, 3,760,000 shares of common stock, net of repurchases, were issued
to Impresse's founders and employees at $.01 per share in exchange for services
rendered. The outstanding shares are subject to certain transfer restrictions.
These shares are also subject to repurchase at the issuance price upon the
occurrence of certain events, including termination of employment. Impresse's
right of repurchase expires ratably over four years. At December 31, 1999,
1,642,963 shares were subject to repurchase.
As described in Notes 4 and 5, Impresse issued a warrant to purchase common
stock in connection with a strategic co-marketing agreement. At December 31,
1999 the warrant to purchase 240,000 shares of common stock at $.50 per share
was outstanding and exercisable.
At December 31, 1999, an aggregate of 18,531,150 shares of common stock were
reserved for issuance upon the exercise of the warrants, conversion of preferred
stock, exercise of outstanding stock options and future issuance of stock
options.
8. EMPLOYEE STOCK PLANS
1997 STOCK OPTION PLAN
During 1997, Impresse adopted the 1997 Stock Option Plan (the Plan). Under
the Plan, up to 6,867,537 shares of Impresse's common stock may be granted as
options or sold to eligible participants. Under the Plan, options to purchase
common stock may be granted at no less than 85% of the fair value on the date of
the grant (110% of fair value in certain instances), as determined by the board
of directors. Options generally vest over a four-year period and have a maximum
term of ten years. Options under the Plan are exercisable immediately, subject
to repurchase rights held by Impresse, which lapse over the vesting period. As
of December 31, 1999, 31,837 shares were available for future grant under the
Plan.
The following table summarizes information with respect to stock option
activity.
<TABLE>
<CAPTION>
PERIOD FROM OCTOBER 7,
1997 (INCEPTION) THROUGH YEAR ENDED
DECEMBER 31, 1998 DECEMBER 31, 1999
------------------------- ---------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
NUMBER OF EXERCISE NUMBER OF EXERCISE
SHARES PRICE SHARES PRICE
------------ ---------- ---------- --------
<S> <C> <C> <C> <C>
Balance, beginning of year.......................... -- $-- 1,000 $ .05
Options granted..................................... 3,894,700 .05 3,517,500 .81
Options exercised................................... (3,786,700) .05 (1,683,475) .51
Options canceled.................................... (107,000) .05 (66,500) .49
---------- ----------
Balance, end of year................................ 1,000 $ .05 1,768,525 $1.11
========== ==========
</TABLE>
As of December 31, 1999, 3,709,817 exercised shares were not vested and are
therefore subject to repurchase.
F-17
<PAGE>
IMPRESSE CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. EMPLOYEE STOCK PLANS (CONTINUED)
The following table summarizes information regarding options outstanding and
exercisable at December 31, 1999.
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING AND EXERCISABLE
-----------------------------------------------
WEIGHTED AVERAGE
NUMBER OF WEIGHTED AVERAGE REMAINING
EXERCISE PRICE SHARES EXERCISE PRICE CONTRACTUAL LIFE
- -------------- --------- ---------------- ----------------
<C> <C> <C> <S>
.05.$..... 1,000 $ .05 8.47 years
.35...... 13,750 .35 9.07
.45...... 20,125 .45 9.19
.50...... 1,014,650 .50 9.65
2.00..... 719,000 2.00 9.99
---------
1,768,525 $1.11 9.78 years
=========
</TABLE>
The fair value of each option was estimated at the date of grant using the
minimum value method and the following weighted average assumptions:
<TABLE>
<CAPTION>
PERIOD FROM
OCTOBER 7,
1997
(INCEPTION) YEAR
THROUGH ENDED
DECEMBER 31, DECEMBER 31,
1998 1999
------------ ------------
<S> <C> <C>
Weighted average risk-free interest rate.................... 5.33% 5.71%
Expected life............................................... 3.5 years 3.5 years
Expected dividend yield..................................... --% --%
</TABLE>
Weighted-average fair value of options granted during 1998 and 1999 was $.01
and $.15, respectively.
Had compensation cost been determined in accordance with SFAS No. 123, net
loss and net loss per share would have been changed to the amounts indicated
below:
<TABLE>
<CAPTION>
PERIOD FROM
OCTOBER 7,
1997
(INCEPTION)
THROUGH YEAR ENDED
DECEMBER 31, DECEMBER 31,
1998 1999
------------ ------------
<S> <C> <C>
Net loss:
As reported............................................... $(4,369,530) $(19,800,274)
Pro forma................................................. $(4,373,728) $(19,833,978)
Basic and diluted net loss per share:
As reported............................................... $ (3.35) $ (7.36)
Pro forma................................................. $ (3.35) $ (7.37)
</TABLE>
DEFERRED STOCK COMPENSATION
In connection with certain stock option grants in the year ended
December 31, 1999 Impresse recorded deferred stock compensation of $16,366,952.
This amount represents the difference between the
F-18
<PAGE>
IMPRESSE CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. EMPLOYEE STOCK PLANS (CONTINUED)
exercise price and the deemed fair value of Impresse's common stock on the date
the stock options were granted. Deferred stock compensation is being amortized
using the graded vesting method, in accordance with FASB Interpretation No. 28,
over the vesting period of each respective option, generally four years.
NOTES RECEIVABLE FROM STOCKHOLDERS
As of December 31, 1999, Impresse held full recourse notes receivable from
stockholders for the purchase of common stock upon exercise of stock options.
Interest accrues on the notes at the rate of 8% per annum. The entire principal
balances, together with all accrued interest, become due and payable at various
dates between April 2003 and December 2004.
401(k) PLAN
Impresse has a 401(k) Plan that allows all full-time employees to elect to
contribute up to 15% of their salary, subject to some limitations, on a pretax
basis. Under the terms of the 401(k) Plan, Impresse may make matching
contributions at its discretion. No matching contributions were made in 1998 or
1999.
9. INCOME TAXES
As of December 31, 1999, Impresse had net operating loss carryforwards for
both federal and state purposes of approximately $20,000,000. Impresse also had
research and development tax credit carryforwards of approximately $300,000
each, for both federal and state purposes. The net operating loss carryforwards
and tax credit carryforwards will expire at various dates beginning in 2005
through 2019, if not utilized. The net operating loss carryforwards differ from
the accumulated deficit primarily as a result of certain reserves and accruals
not currently deductible for tax purposes.
Utilization of the net operating losses may be subject to a substantial
annual limitation due to the ownership change limitations provided by the
Internal Revenue Code of 1986, as amended, and similar state provisions. The
annual limitation may result in the expiration of net operating losses before
utilization.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
Impresse's deferred tax assets were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1998 1999
----------- ------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards.......................... $ 1,700,000 $ 9,100,000
Research credit carryforwards............................. 150,000 500,000
Non-deductible amortization............................... -- 1,100,000
----------- ------------
Total deferred tax assets............................... 1,850,000 10,700,000
Valuation allowance......................................... (1,850,000) (10,700,000)
----------- ------------
Net deferred tax assets..................................... $ -- $ --
=========== ============
</TABLE>
Under SFAS No. 109, "Accounting for Income Taxes," deferred tax assets and
liabilities are determined based on differences between financial reporting and
tax bases of assets and liabilities and are measured using the enacted tax rates
and laws that will be in effect when the differences are expected to
F-19
<PAGE>
IMPRESSE CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
9. INCOME TAXES (CONTINUED)
reverse. Based upon the weight of available evidence, which includes Impresse's
historical operating performance, the reported net losses for the period from
October 7, 1997 (inception) through December 31, 1998 and for the year ended
December 31, 1999, and the uncertainties regarding Impresse's future results of
operations, a full valuation allowance has been provided against its net
deferred tax assets. It is more likely than not that the deferred tax assets
will not be realized. The valuation allowance increased by $1,850,000 during the
period from October 7, 1997 (inception) through December 31, 1998.
10. SEGMENT INFORMATION
Impresse has organized its business in a single operating segment, the sale
of business-to-business e-commerce solutions to the commercial printing market.
Impresse operates solely within the United States and to date has derived
all of its revenue from within the United States. All of its assets are also
located within the United States.
In 1999, two customers accounted for 76% and 22% of total revenue.
11. SUBSEQUENT EVENTS (UNAUDITED)
UNAUDITED PRO FORMA STOCKHOLDERS' EQUITY
In January 2000, Impresse's board of directors authorized the filing of a
registration statement with the Securities and Exchange Commission to register
shares of its common stock in connection with the proposed initial public
offering (IPO). If the IPO is consummated under the terms presently anticipated,
all of the currently outstanding shares of convertible preferred stock will be
converted into shares of common stock upon the closing of the IPO. The effect of
this conversion has been reflected in unaudited pro forma stockholders' equity
in the accompanying balance sheet as of December 31, 1999.
REINCORPORATION IN DELAWARE
Prior to the completion of this offering, the Board of Directors will
approve the reincorporation of Impresse in the State of Delaware. The
reincorporation is expected to be approved by the stockholders prior to the
closing date of Impresse's initial public offering.
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
Prior to the completion of this offering, Impresse will amend and restate
its Certificate of Incorporation to provide for authorized capital stock of
150,000,000 shares of common stock and 5,000,000 shares of undesignated
preferred stock.
STOCK PLANS
In January 2000, the Board of Directors approved an increase in the number
of shares reserved for issuance under the 1997 Stock Plan by 4,132,463 shares.
In addition the Board approved an automatic increase in the number of shares
reserved under the Plan on the first day of each fiscal year beginning in 2001
and ending in 2007 equal to the lesser of 2,500,000 shares or 6% of Impress's
outstanding common stock on the last day of the preceding fiscal year or a
lesser number of shares determined by the Board of Directors.
F-20
<PAGE>
IMPRESSE CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
11. SUBSEQUENT EVENTS (UNAUDITED) (CONTINUED)
In January 2000, the Board of Directors approved the 2000 Directors' Stock
Plan (the Directors' Plan). A total of 300,000 shares of common stock have been
reserved for issuance under the Directors' Plan. The Directors' Plan provides
for the grant of nonstatutory options to Impresse's non-employee directors. The
Directors' Plan provides that each person who becomes a nonemployee director of
Impresse after the effective date of the registration statement will be granted
a nonstatutory stock option to purchase 20,000 shares of common stock on the
date on which the optionee first became a nonemployee director of Impresse.
Thereafter, on the date of Impresse's Annual Stockholders Meeting each year,
each non-employee director will be granted an additional option to purchases
15,000 shares of common stock if, on that date, he or she had served on
Impresse's Board of Directors for at least six months.
In January 2000, the Board of Directors approved the 2000 Employee Stock
Purchase Plan (the Purchase Plan). A total of 500,000 shares of common stock has
been reserved for issuance under the Purchase Plan, as well as an automatic
annual increase on the first day of each of Impresse's fiscal years beginning in
2001 and ending in 2010 equal to the lesser of 500,000 shares or 2% of
Impresse's outstanding common stock on the last day of the immediately preceding
fiscal year or a lesser number of shares determined by the Board. The Purchase
Plan, which is intended to qualify under Section 423 of the Internal Revenue
Code, will be implemented in a series of overlapping offering periods of
approximately 24 months duration, with new offering periods, other than the
first offering period, commencing on May 1 and November 1 of each year. Each
offering period will generally consist of four consecutive purchase periods of
six months duration, at the end of which an automatic purchase will be made by
the participant. The initial offering and purchase periods are expected to begin
on the effective date of Impresse's initial public offering. Eligible employees
will be able to purchase common stock through payroll deductions, which may not
exceed 20% of an employee's compensation, at a price equal to the lower of 85%
of the fair market value of Impresse's common stock at the beginning of each
offering period or the end of each purchase period. Under the plan employees are
not allowed to purchase more than $25,000 of stock in each calendar year and no
employee may purchase more than 2,000 shares in any one purchase period.
All of the above Board actions are expected to be approved by the
stockholders prior to the completion of Impresse's initial public offering.
STOCK OPTION GRANTS
Subsequent to December 31, 1999, Impresse approved grants to employees for
options to purchase 156,250 shares of common stock at $5 per share. Impresse
estimates that it will record additional deferred stock compensation of
approximately $1.1 million with regard to these grants.
SERIES C CONVERTIBLE PREFERRED STOCK
In January 2000, Impresse executed a second closing of its Series C
convertible preferred stock financing. Impresse raised approximately $2,400,000
by issuing 189,668 shares in connection with this closing. The rights,
preferences and privileges of the holders of this stock are similar to those of
the holders of Series C convertible preferred stock issued in 1999.
EQUIPMENT LEASE FINANCING
In January 2000, Impresse obtained a subordinated loan totaling $7,000,000
from a financial institution. This loan is subordinated to all other outstanding
debt and bears interest at 13.5%. Impresse is obligated to make monthly payments
of principal and interest through January 2003. This loan agreement
F-21
<PAGE>
IMPRESSE CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
11. SUBSEQUENT EVENTS (UNAUDITED) (CONTINUED)
contains restrictive covenants including a limitation on incurring additional
indebtedness and paying dividends.
Also in January 2000, Impresse obtained an equipment lease line of credit
totaling $3,000,000 from the same financial institution with a lease term of
36 months.
This financial institution purchased 242,131 shares of Series C convertible
preferred stock at $12.39 per share during the previous round of Series C
convertible preferred stock financing in November 1999. Also, in connection with
the loan and equipment lease, Impresse issued fully vested and nonforfeitable
warrants to purchase 80,308 shares of Series C convertible preferred stock at
$12.39 per share. These warrants expire in January 2010. The value of the
warrants of $823,157 determined using the Black-Scholes model and the following
assumptions: volatility of 75%, interest rate of 6%, dividend yield of 0% and a
life of ten years will be amortized to interest expense over the 36 month term
of the loan and equipment lease.
F-22
<PAGE>
[IMPRESSE LOGO]
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by Impresse Corporation in
connection with the sale of common stock being registered. All amounts are
estimates except the SEC registration fee and the NASD filing fee and the Nasdaq
National Market listing fee.
<TABLE>
<CAPTION>
AMOUNT TO
BE PAID
----------
<S> <C>
SEC registration fee........................................ $ 17,160
NASD filing fee............................................. 7,000
Nasdaq National Market listing fee.......................... 1,000
Printing and engraving expenses............................. 300,000
Legal fees and expenses..................................... 400,000
Accounting fees and expenses................................ 250,000
Blue Sky qualification fees and expenses.................... 5,000
Transfer Agent and Registrar fees........................... 15,000
Miscellaneous fees and expenses............................. 14,840
----------
Total................................................... $1,010,000
==========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law (the "Delaware Law")
authorizes a court to award, or a corporation's Board of Directors to grant,
indemnity to directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933,
as amended (the "Securities Act"). Article Four of Impresse's Certificate of
Incorporation (Exhibit 3.2 hereto) and Article V of Impresse's Bylaws
(Exhibit 3.4 hereto) provide for indemnification of Impresse's directors,
officers, employees and other agents to the maximum extent permitted by Delaware
Law. In addition, prior to the closing of the offering, Impresse will enter into
Indemnification Agreements (Exhibit 10.3 hereto) with its officers and
directors. The Underwriting Agreement (Exhibit 1.1 hereto) also provides for
cross-indemnification among Impresse, and the underwriters with respect to
certain matters, including matters arising under the Securities Act.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Since inception in October 1997, Impresse has issued and sold the following
unregistered securities:
1. Since inception Impresse has issued 6,835,700 options net of repurchases
and cancellations to purchase common stock of Impresse with a weighted average
exercise price of $.44 per share to a number of employees and directors of and
consultants to Impresse.
2. In October and December 1997, Impresse issued and sold 3,760,000 shares
of its common stock, net of repurchases, to its founders and employees.
3. In December 1997, April 1998 and August 1998, Impresse issued and sold
8,530,000 shares of its Series A preferred stock to investors for a total cash
consideration of $4,265,480. In December 1998, February 1999 and May 1999,
Impresse issued and sold 3,507,928 shares of its Series B preferred stock to
investors for a total cash consideration of $11,049,973. In November 1999 and
January 2000, Impresse issued and sold 4,399,100 shares of its Series C
preferred stock for a total cash consideration of $54,504,849.
II-1
<PAGE>
4. In June 1998, Impresse issued a warrant to purchase 50,000 shares of its
Series A preferred stock with an exercise price of $.50 per share to Lighthouse
Capital Partners in connection with the attainment of an equipment lease line.
In June 1999, Impresse issued warrants to purchase 171,428 shares of its
Series B preferred stock with an exercise price of $3.15 per share to entities
affiliated with Meier Mitchell in connection with the attainment of a credit
facility. In November 1999, Impresse issued a warrant to purchase 240,000 shares
of common stock at an exercise price of $.50 per share to Adobe Ventures III in
connection with a co-branding agreement with Adobe Systems Incorporated in
November 1999. In December 1999, Impresse, in connection with the execution of a
lease, issued a warrant to De Anza Properties to purchase 22,000 shares of
Impresse's Series C preferred stock at a price of $12.39 per share.
The issuances of the above securities were deemed to be exempt from
registration under the Securities Act in reliance on Section 4(2) of such
Securities Act as transactions by an issuer not involving any public offering.
In addition, certain issuances described in Item 2 were deemed exempt from
registration under the Securities Act in reliance upon Rule 701 promulgated
under the Securities Act. The recipients of securities in each such transaction
represented their intentions to acquire the securities for investment only and
not with a view to or for sale in connection with any distribution thereof and
appropriate legends were affixed to the share certificates and warrants issued
in such transactions. All recipients had adequate access, through their
relationships with Impresse, to information about Impresse.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- ------ -----------
<C> <S>
1.1* Form of Underwriting Agreement (subject to negotiation).
3.1* Certificate of Incorporation of Impresse.
3.2 First Amended and Restated Certificate of Incorporation of
Impresse (proposed).
3.3* Bylaws of Impresse.
3.4 Amended and Restated Bylaws of Impresse (proposed).
4.1* Specimen Stock Certificate.
5.1 Opinion of Venture Law Group regarding the legality of the
common stock being registered.
10.1*+ Alliance Agreement dated November 15, 1999 between Impresse
and Adobe Systems Incorporated.
10.2*+ Strategic Supply, Services and Promotion Agreement dated
August 29, 1999 between Impresse and Hewlett-Packard
Company.
10.3 Form of Indemnification Agreement between Impresse and each
of its Officers and Directors.
10.4 1997 Stock Option Plan (as amended).
10.5 2000 Employee Stock Purchase Plan.
10.6 2000 Directors' Stock Option Plan.
10.7* Standard Office Lease dated May 15, 1998 and amendments.
10.8 Offer Letter dated June 24, 1999 with Sanjai Bijawat.
10.9 Offer Letter dated January 29, 1999 with Scott Yetter.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Counsel (see Exhibit 5.1).
24.1 Power of Attorney (see page II-4).
27.1 Financial Data Schedule (EDGAR-filed version only).
</TABLE>
- ------------------------
* To be supplied by amendment.
+ Confidential treatment requested as to certain portions of this Exhibit.
(b) Financial Statement Schedules
II-2
<PAGE>
Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreements certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act, and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer, or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial BONA FIDE offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Sunnyvale, State of
California on February 1, 2000.
IMPRESSE CORPORATION
By: /s/ NIMISH MEHTA
--------------------------------------
Nimish Mehta
PRESIDENT, CHIEF EXECUTIVE OFFICER
AND DIRECTOR
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints, jointly and severally, Nimish Mehta and
Sanjai Bijawat, and each of them, as his attorney-in-fact, with full power of
substitution, for him in any and all capacities, to sign any and all amendments
to this Registration Statement (including post-effective amendments), and any
and all Registration Statements filed pursuant to Rule 462 under the Securities
Act, as amended, in connection with or related to the offering contemplated by
this Registration Statement and its amendments, if any, and to file the same,
with exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming our
signatures as they may be signed by our said attorney to any and all amendments
to said Registration Statement.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ NIMISH MEHTA
---------------------------- President, Chief Executive Officer and February 1, 2000
Nimish Mehta Director (Principal Executive Officer)
/s/ SANJAI BIJAWAT
---------------------------- Chief Financial Officer (Principal February 1, 2000
Sanjai Bijawat Financial and Accounting Officer)
/s/ SIVA KUMAR
---------------------------- Vice President, Marketing and Chairman February 1, 2000
Siva Kumar of the Board
/s/ ERIC ARCHAMBEAU
---------------------------- Director February 1, 2000
Eric Archambeau
/s/ BRUCE DUNLEVIE
---------------------------- Director February 1, 2000
Bruce Dunlevie
/s/ STEVEN J. GILBERT
---------------------------- Director February 1, 2000
Steven J. Gilbert
/s/ PAUL LEVY
---------------------------- Director February 1, 2000
Paul Levy
/s/ RUSSELL SIEGELMAN
---------------------------- Director February 1, 2000
Russell Siegelman
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- ------ -----------
<C> <S>
1.1* Form of Underwriting Agreement (subject to negotiation).
3.1* Certificate of Incorporation of Impresse.
3.2 First Amended and Restated Certificate of Incorporation of
Impresse (proposed).
3.3* Bylaws of Impresse.
3.4 Amended and Restated Bylaws of Impresse (proposed).
4.1* Specimen Stock Certificate.
5.1 Opinion of Venture Law Group regarding the legality of the
common stock being registered.
10.1*+ Alliance Agreement dated November 15, 1999 between Impresse
and Adobe Systems Incorporated.
10.2*+ Strategic Supply, Services and Promotion Agreement dated
August 29, 1999 between Impresse and Hewlett-Packard
Company.
10.3 Form of Indemnification Agreement between Impresse and each
of its Officers and Directors.
10.4 1997 Stock Option Plan (as amended).
10.5 2000 Employee Stock Purchase Plan.
10.6 2000 Directors' Stock Option Plan.
10.7* Standard Office Lease dated May 15, 1998 and amendments.
10.8 Offer Letter dated June 24, 1999 with Sanjai Bijawat.
10.9 Offer Letter dated January 29, 1999 with Scott Yetter.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Counsel (see Exhibit 5.1).
24.1 Power of Attorney (see page II-4).
27.1 Financial Data Schedule (EDGAR-filed version only).
</TABLE>
- ------------------------
* To be supplied by amendment.
+ Confidential treatment requested as to certain portions of this Exhibit.
<PAGE>
EXHIBIT 3.2
FIRST AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
IMPRESSE CORPORATION
The undersigned, Nimish Mehta and Jon Gavenman, hereby certify that:
1. They are the duly elected and acting Chief Executive Officer
and Secretary, respectively, of Impresse Corporation, a Delaware corporation.
2. The Certificate of Incorporation of this corporation was
originally filed with the Secretary of State of Delaware on January __, 2000.
3. The Certificate of Incorporation of this corporation shall be
amended and restated to read in full as follows:
"ARTICLE I
The name of this corporation is Impresse Corporation (the "Corporation").
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street, Wilmington, County of New Castle. The name
of its registered agent at such address is The Corporation Trust Company.
ARTICLE III
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 Delaware.
ARTICLE IV
Upon the effective date of the filing of this Certificate of
Incorporation, each ____ share of the Corporation's outstanding capital stock
shall be converted and reconstituted into ____ shares of capital stock (the
"Stock Split"). No further adjustment of any preference or price set forth
in this Article IV shall be made as a result of the Stock Split, as all share
amounts per share and per share numbers set forth in this Certificate of
Incorporation have been appropriately adjusted to reflect the Stock Split.
(A) The Corporation is authorized to issue two classes of stock to
be designated, respectively, "Common Stock" and "Preferred Stock." The total
number of shares which the Corporation is authorized to issue is One Hundred
Fifty-Five Million (155,000,000) shares, each with a par value of $0.001 per
share. One Hundred Fifty Million (150,000,000) shares shall be Common Stock
and Five Million (5,000,000) shares shall be Preferred Stock.
-1-
<PAGE>
(B) The Preferred Stock may be issued from time to time in one or
more series. The Board of Directors is hereby authorized, by filing a
certificate pursuant to the applicable law of the state of Delaware and
within the limitations and restrictions stated in this Certificate of
Incorporation, to determine or alter the rights, preferences, privileges and
restrictions granted to or imposed upon any wholly unissued series of
Preferred Stock and the number of shares constituting any such series and the
designation thereof, or any of them; and to increase or decrease the number
of shares of any series subsequent to the issuance of shares of that series,
but not below the number of shares of such series then outstanding. In case
the number of shares of any series shall be so decreased, the shares
constituting such decrease shall resume the status which they had prior to
the adoption of the resolution originally fixing the number of shares of such
series.
ARTICLE V
The number of directors of the Corporation shall be fixed from time to
time by a bylaw or amendment thereof duly adopted by the Board of Directors.
ARTICLE VI
All directors shall be elected at each annual meeting of stockholders
to hold office until the next annual meeting. Notwithstanding the foregoing
provision of this Article VI, each director shall serve until his or her
successor is duly elected and qualified or until his or her death,
resignation, or removal. No decrease in the number of directors constituting
the Board of Directors shall shorten the term of any incumbent director.
Any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal, or other causes shall be filled by
either (i) the affirmative vote of the holders of a majority of the voting
power of the then-outstanding shares of voting stock of the corporation
entitled to vote generally in the election of directors (the "Voting Stock")
voting together as a single class; or (ii) by the affirmative vote of a
majority of the remaining directors then in office, even though less than a
quorum of the Board of Directors. Subject to the rights of any series of
Preferred Stock then outstanding, newly created directorships resulting from
any increase in the number of directors shall, unless the Board of Directors
determines by resolution that any such newly created directorship shall be
filled by the stockholders, be filled only by the affirmative vote of the
directors then in office, even though less than a quorum of the Board of
Directors, or by a sole remaining director. Any director elected in
accordance with the preceding sentence shall hold office for the remainder of
the full term of the class of directors in which the new directorship was
created or the vacancy occurred and until such director's successor shall
have been elected and qualified. Any director, or the entire Board of
Directors, may be removed from office, with or without cause, by the holders
of a majority of the Voting Stock.
ARTICLE VII
In the election of directors, each holder of shares of any class or
series of capital stock of the Corporation shall be entitled to one vote for
each share held. Commencing on the date that
-2-
<PAGE>
the Corporation qualifies for an exemption from Section 2115 of the
California General Corporation Law, no stockholder will be permitted to
cumulate votes at any election of directors.
ARTICLE VIII
No action shall be taken by the stockholders of the Corporation other
than at an annual or special meeting of the stockholders, upon due notice and
in accordance with the provisions of the Bylaws of the Corporation (the
"Bylaws"), and no action shall be taken by the stockholders by written
consent.
ARTICLE IX
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner
now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
ARTICLE X
(A) Except as otherwise provided in the Bylaws, the Bylaws may be
altered or amended or new Bylaws adopted by the affirmative vote of at least
sixty-six and two-thirds percent (66 2/3%) of the voting power of all of the
then-outstanding shares of the voting stock of the Corporation entitled to
vote. The Board of Directors of the Corporation is expressly authorized to
adopt, amend or repeal Bylaws.
(B) The directors of the Corporation need not be elected by written
ballot unless the Bylaws so provide.
(C) Advance notice of stockholder nominations for the election of
directors or of business to be brought by the stockholders before any meeting
of the stockholders of the corporation shall be given in the manner provided
in the Bylaws.
ARTICLE XI
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the Corporation may be
kept (subject to any provision contained in the statutes) outside the State
of Delaware at such place or places as may be designated from time to time by
the Board of Directors or in the bylaws of the Corporation.
ARTICLE XII
The Corporation shall have perpetual existence.
ARTICLE XIII
(A) To the fullest extent permitted by the General Corporation Law of
Delaware, as the same may be amended from time to time, a director of the
Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as
-3-
<PAGE>
a director. If the General Corporation Law of Delaware is hereafter amended
to authorize, with the approval of a corporation's stockholders, further
reductions in the liability of a corporation's directors for breach of
fiduciary duty, then a director of the Corporation shall not be liable for
any such breach to the fullest extent permitted by the General Corporation
Law of Delaware, as so amended.
(B) Any repeal or modification of the foregoing provisions of this
Article XIII shall not adversely affect any right or protection of a director
of the Corporation with respect to any acts or omissions of such director
occurring prior to such repeal or modification.
ARTICLE XIV
(A) To the fullest extent permitted by applicable law, the
Corporation is also authorized to provide indemnification of (and advancement
of expenses to) such agents (and any other persons to which Delaware law
permits the Corporation to provide indemnification) through Bylaw provisions,
agreements with such agents or other persons, vote of stockholders or
disinterested directors or otherwise, in excess of the indemnification and
advancement otherwise permitted by Section 145 of the General Corporation Law
of Delaware, subject only to limits created by applicable Delaware law
(statutory or non-statutory), with respect to actions for breach of duty to a
corporation, its stockholders, and others.
(B) Any repeal or modification of any of the foregoing provisions
of this Article XIV shall not adversely affect any right or protection of a
director, officer, agent or other person existing at the time of, or increase
the liability of any director of the Corporation with respect to any acts or
omissions of such director, officer or agent occurring prior to such repeal
or modification."
* * *
-4-
<PAGE>
The foregoing Amended and Restated Certificate of Incorporation has
been duly adopted by this Corporation's Board of Directors and stockholders
in accordance with the applicable provisions of Section 228, 242 and 245 of
the General Corporation Law of the State of Delaware.
Executed at ____________________, on the ____ day of ___________, 2000.
________________________________
_____________________, President
_________________________________
Jon Gavenman, Secretary
-5-
<PAGE>
EXHIBIT 3.4
BYLAWS
OF
IMPRESSE CORPORATION
A DELAWARE PUBLIC COMPANY
(AS AMENDED AND RESTATED EFFECTIVE __________ __, ____)
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I - CORPORATE OFFICES. . . . . . . . . . . . . . . . . . . . . . .1
1.1 REGISTERED OFFICE.. . . . . . . . . . . . . . . . . . . . . . 1
1.2 OTHER OFFICES. . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE II - MEETINGS OF STOCKHOLDERS. . . . . . . . . . . . . . . . . . .1
2.1 PLACE OF MEETINGS. . . . . . . . . . . . . . . . . . . . . . .1
2.2 ANNUAL MEETING . . . . . . . . . . . . . . . . . . . . . . . .1
2.3 SPECIAL MEETING. . . . . . . . . . . . . . . . . . . . . . . .2
2.4 NOTICE OF STOCKHOLDER'S MEETINGS; AFFIDAVIT OF NOTICE. . . . .2
2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND OTHER STOCKHOLDER
PROPOSALS. . . . . . . . . . . . . . . . . . . . . . . . . .3
2.6 QUORUM . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
2.7 ADJOURNED MEETING; NOTICE. . . . . . . . . . . . . . . . . . .4
2.8 CONDUCT OF BUSINESS. . . . . . . . . . . . . . . . . . . . . .4
2.9 VOTING . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
2.10 WAIVER OF NOTICE . . . . . . . . . . . . . . . . . . . . . . .5
2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING . . . . . . . . . .5
2.12 PROXIES. . . . . . . . . . . . . . . . . . . . . . . . . . . .5
ARTICLE III - DIRECTORS. . . . . . . . . . . . . . . . . . . . . . . . . .6
3.1 POWERS . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
3.2 NUMBER OF DIRECTORS. . . . . . . . . . . . . . . . . . . . . .6
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS. . . .6
3.4 RESIGNATION AND VACANCIES. . . . . . . . . . . . . . . . . . .7
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE . . . . . . . . . . .8
3.6 REGULAR MEETINGS . . . . . . . . . . . . . . . . . . . . . . .8
3.7 SPECIAL MEETINGS; NOTICE . . . . . . . . . . . . . . . . . . .8
3.8 QUORUM . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
3.9 WAIVER OF NOTICE . . . . . . . . . . . . . . . . . . . . . . .9
3.10 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING. . . . . . .9
3.11 FEES AND COMPENSATION OF DIRECTORS . . . . . . . . . . . . . .9
3.12 APPROVAL OF LOANS TO OFFICERS. . . . . . . . . . . . . . . . 10
3.13 REMOVAL OF DIRECTORS . . . . . . . . . . . . . . . . . . . . 10
3.14 CHAIRMAN OF THE BOARD OF DIRECTORS . . . . . . . . . . . . . 10
ARTICLE IV - COMMITTEES. . . . . . . . . . . . . . . . . . . . . . . . . 10
4.1 COMMITTEES OF DIRECTORS. . . . . . . . . . . . . . . . . . . 10
4.2 COMMITTEE MINUTES. . . . . . . . . . . . . . . . . . . . . . 11
4.3 MEETINGS AND ACTION OF COMMITTEES. . . . . . . . . . . . . . 11
-i-
<PAGE>
ARTICLE V - OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.1 OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.2 APPOINTMENT OF OFFICERS . . . . . . . . . . . . . . . . . . . 12
5.3 SUBORDINATE OFFICERS. . . . . . . . . . . . . . . . . . . . . 12
5.4 REMOVAL AND RESIGNATION OF OFFICERS . . . . . . . . . . . . . 12
5.5 VACANCIES IN OFFICES. . . . . . . . . . . . . . . . . . . . . 13
5.6 CHIEF EXECUTIVE OFFICER . . . . . . . . . . . . . . . . . . . 13
5.7 PRESIDENT . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.8 VICE PRESIDENTS . . . . . . . . . . . . . . . . . . . . . . . 13
5.9 SECRETARY . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.10 CHIEF FINANCIAL OFFICER . . . . . . . . . . . . . . . . . . . 14
5.11 REPRESENTATION OF SHARES OF OTHER CORPORATIONS. . . . . . . . 14
5.12 AUTHORITY AND DUTIES OF OFFICERS. . . . . . . . . . . . . . . 15
ARTICLE VI - INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES, AND
OTHER AGENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS . . . . . . . . . . 15
6.2 INDEMNIFICATION OF OTHERS . . . . . . . . . . . . . . . . . . 15
6.3 PAYMENT OF EXPENSES IN ADVANCE. . . . . . . . . . . . . . . . 16
6.4 INDEMNITY NOT EXCLUSIVE . . . . . . . . . . . . . . . . . . . 16
6.5 INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.6 CONFLICTS . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VII - RECORDS AND REPORTS. . . . . . . . . . . . . . . . . . . . 17
7.1 MAINTENANCE AND INSPECTION OF RECORDS . . . . . . . . . . . . 17
7.2 INSPECTION BY DIRECTORS . . . . . . . . . . . . . . . . . . . 17
7.3 ANNUAL STATEMENT TO STOCKHOLDERS. . . . . . . . . . . . . . . 17
ARTICLE VIII - GENERAL MATTERS . . . . . . . . . . . . . . . . . . . . . 18
8.1 CHECKS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS. . . . . . . 18
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES. . . . . . . . . . . . 18
8.4 SPECIAL DESIGNATION ON CERTIFICATES . . . . . . . . . . . . . 19
8.5 LOST CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . 19
8.6 CONSTRUCTION; DEFINITIONS . . . . . . . . . . . . . . . . . . 19
8.7 DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.8 FISCAL YEAR . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.9 SEAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.10 TRANSFER OF STOCK . . . . . . . . . . . . . . . . . . . . . . 20
8.11 STOCK TRANSFER AGREEMENTS . . . . . . . . . . . . . . . . . . 20
8.12 REGISTERED STOCKHOLDERS . . . . . . . . . . . . . . . . . . . 20
ARTICLE IX - AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
-ii-
<PAGE>
BYLAWS
OF
IMPRESSE CORPORATION
ARTICLE I
CORPORATE OFFICES
1.1 REGISTERED OFFICE.
The address of the Corporation's registered office in the State
of Delaware is 1209 Orange Street, Wilmington, County of New Castle. The
name of its registered agent at such address is The Corporation Trust Company.
1.2 OTHER OFFICES.
The Board of Directors may at any time establish other offices at
any place or places where the Corporation is qualified to do business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 PLACE OF MEETINGS.
Meetings of stockholders shall be held at any place, within or
outside the State of Delaware, designated by the Board of Directors. In the
absence of any such designation, stockholders' meetings shall be held at the
registered office of the Corporation.
2.2 ANNUAL MEETING.
(a) The annual meeting of stockholders shall be held each
year on a date and at a time designated by resolution of the Board of
Directors. At the meeting, directors shall be elected and any other proper
business may be transacted.
(b) Nominations of persons for election to the Board of
Directors of the Corporation and the proposal of business to be transacted by
the stockholders may be made at an annual meeting of stockholders (i)
pursuant to the Corporation's notice with respect to such meeting, (ii) by or
at the direction of the Board of Directors or (iii) by any stockholder of the
Corporation who was a stockholder of record at the time of giving of the
notice provided for in this Section 2.2, who is entitled to vote at the
meeting and who has complied with the notice procedures set forth in this
Section 2.2.
(c) For nominations or other business to be properly brought
before an annual meeting by a stockholder pursuant to clause (iii) of paragraph
(b) of this Section 2.2, the
<PAGE>
stockholder must have given timely notice thereof in writing to the secretary
of the Corporation, as provided in Section 2.5, and such business must be a
proper matter for stockholder action under the General Corporation Law of
Delaware.
(d) Only such business shall be conducted at an annual
meeting of stockholders as shall have been brought before the meeting in
accordance with the procedures set forth in these Bylaws. The chairman of
the meeting shall determine whether a nomination or any business proposed to
be transacted by the stockholders has been properly brought before the
meeting and, if any proposed nomination or business has not been properly
brought before the meeting, the chairman shall declare that such proposed
business or nomination shall not be presented for stockholder action at the
meeting.
(e) For purposes of this Section 2.2, "public announcement"
shall mean disclosure in a press release reported by the Dow Jones News
Service, Associated Press or a comparable national news service.
(f) Nothing in this Section 2.2 shall be deemed to affect
any rights of stockholders to request inclusion of proposals in the
Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act.
2.3 SPECIAL MEETING.
(a) A special meeting of the stockholders may be called at
any time by the Board of Directors, or by the chairman of the board, or by
the president or Chief Executive Officer.
(b) Nominations of persons for election to the Board of
Directors may be made at a special meeting of stockholders at which directors
are to be elected pursuant to such notice of meeting (i) by or at the
direction of the Board of Directors or (ii) by any stockholder of the
Corporation who is a stockholder of record at the time of giving of notice
provided for in Section 2.5, who shall be entitled to vote at the meeting and
who complies with the notice procedures set forth in Section 2.5.
2.4 NOTICE OF STOCKHOLDER'S MEETINGS; AFFIDAVIT OF NOTICE.
All notices of meetings of stockholders shall be in writing and
shall be sent or otherwise given in accordance with this Section 2.4 of these
Bylaws not less than 10 nor more than 60 days before the date of the meeting
to each stockholder entitled to vote at such meeting (or such longer or
shorter time as is required by Section 2.5 of these Bylaws, if applicable).
The notice shall specify the place, date, and hour of the meeting, and, in
the case of a special meeting, the purpose or purposes for which the meeting
is called. Written notice of any meeting of stockholders, if mailed, is given
when deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the Corporation.
An affidavit of the secretary or an assistant secretary or of the transfer
agent of the Corporation that the notice has been given shall, in the absence
of fraud, be prima facie evidence of the facts stated therein.
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2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND OTHER STOCKHOLDER
PROPOSALS.
Only persons who are nominated in accordance with the procedures set
forth in this Section 2.5 shall be eligible for election as directors.
Nominations of persons for election to the Board of Directors of the
Corporation may be made at a meeting of stockholders by or at the direction
of the Board of Directors or by any stockholder of the Corporation entitled
to vote for the election of directors at the meeting who complies with the
notice procedures set forth in this Section 2.5. Such nominations, other
than those made by or at the direction of the Board of Directors, shall be
made pursuant to timely notice in writing to the secretary of the
Corporation. Stockholders may bring other business before the annual
meeting, provided that timely notice is provided to the secretary of the
Corporation in accordance with this section, and provided further that such
business is a proper matter for stockholder action under the General
Corporation Law of Delaware. To be timely, a stockholder's notice shall be
delivered to or mailed and received at the principal executive offices of the
Corporation not less than 90 days nor more than 120 days prior to the
anniversary date of the prior year's meeting; provided, however, that in the
event that (i) the date of the annual meeting is more than 30 days prior to
or more than 60 days after such anniversary date, and (ii) less than 60 days
notice or prior public disclosure of the date of the meeting is given or made
to stockholders, notice by the stockholder to be timely must be so received
not later than the close of business on the 10th day following the day on
which such notice of the date of the meeting was mailed or such public
disclosure was made. Such stockholder's notice shall set forth (a) as to each
person whom the stockholder proposes to nominate for election or re-election
as a directors, (i) the name, age, business address and residence address of
such person, (ii) the principal occupation or employment of such person,
(iii) the class and number of shares of the Corporation which are
beneficially owned by such person and (iv) any other information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934 (including, without
limitation, such person's written consent to being name in the proxy
statement as a nominee and to serving as a director if elected); (b) as to
any other business that the stockholder proposes to bring before the meeting,
a brief description of such business, the reasons for conducting such
business at the meeting and any material interest in such business of such
stockholder and the beneficial owner, if any, on whose behalf the proposal is
made; and (c) as to the stockholder giving the notice and the beneficial
owner, if any, on whose behalf the proposal is made (i) the name and address
of the stockholder, as they appear on the Corporation's books, and of such
beneficial owner and (ii) the class and number of shares of the Corporation
which are owned of record by such stockholder and beneficially by such
beneficial owner. At the request of the Board of Directors any person
nominated by the Board of Directors for election as a director shall furnish
to the secretary of the Corporation that information required to be set forth
in a stockholder's notice of nomination which pertains to the nominee. No
person shall be eligible for election as a director of the Corporation unless
nominated in accordance with the procedures set forth in this Section 2.5.
The chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
procedures prescribed by the Bylaws, and if he or she should so determine, he
or she shall so declare to the meeting and the defective nomination shall be
disregarded.
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2.6 QUORUM.
The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy,
shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
Certificate of Incorporation. If, however, such quorum is not present or
represented at any meeting of the stockholders, then either (a) the chairman
of the meeting or (b) the stockholders entitled to vote thereat, present in
person or represented by proxy, shall have power to adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum is present or represented. At such adjourned meeting at which a
quorum is present or represented, any business may be transacted that might
have been transacted at the meeting as originally noticed.
2.7 ADJOURNED MEETING; NOTICE.
When a meeting is adjourned to another time or place, unless
these Bylaws otherwise require, notice need not be given of the adjourned
meeting if the time and place thereof are announced at the meeting at which
the adjournment is taken. At the adjourned meeting the Corporation may
transact any business that might have been transacted at the original
meeting. If the adjournment is for more than 30 days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled
to vote at the meeting.
2.8 CONDUCT OF BUSINESS.
The chairman of any meeting of stockholders shall determine the
order of business and the procedure at the meeting, including the manner of
voting and the conduct of business.
2.9 VOTING.
(a) The stockholders entitled to vote at any meeting of
stockholders shall be determined in accordance with the provisions of Section
2.11 of these Bylaws, subject to the provisions of Sections 217 and 218 of
the General Corporation Law of Delaware (relating to voting rights of
fiduciaries, pledgors and joint owners of stock and to voting trusts and
other voting agreements).
(b) Except as may be otherwise provided in the Certificate
of Incorporation, each stockholder shall be entitled to one vote for each
share of capital stock held by such stockholder.
2.10 WAIVER OF NOTICE.
Whenever notice is required to be given under any provision of the
General Corporation Law of Delaware or of the Certificate of Incorporation or
these Bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated
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therein, shall be deemed equivalent to notice. Attendance of a person at a
meeting shall constitute a waiver of notice of such meeting, except when the
person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
stockholders need be specified in any written waiver of notice unless so
required by the Certificate of Incorporation or these Bylaws.
2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING.
In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights
in respect of any change, conversion or exchange of stock or for the purpose
of any other lawful action, the Board of Directors may fix, in advance, a
record date, which shall not be more than 60 nor less than 10 days before the
date of such meeting, nor more than 60 days prior to any other action. 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 day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day
on which the meeting is held.
(b) The record date for determining stockholders for any
other purpose shall be at the close of business on the day on which the Board
of Directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of
or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
2.12 PROXIES.
Each stockholder entitled to vote at a meeting of stockholders
may authorize another person or persons to act for such stockholder by a
written proxy, signed by the stockholder and filed with the secretary of the
Corporation, but no such proxy shall be voted or acted upon after three years
from its date, unless the proxy provides for a longer period. A proxy shall
be deemed signed if the stockholder's name is placed on the proxy (whether by
manual signature, typewriting, electronic or telegraphic transmission or
otherwise) by the stockholder or the stockholder's attorney-in-fact. The
revocability of a proxy that states on its face that it is irrevocable shall
be governed by the provisions of Section 212(e) of the General Corporation
Law of Delaware.
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ARTICLE III
DIRECTORS
3.1 POWERS.
Subject to the provisions of the General Corporation Law of Delaware
and any limitations in the Certificate of Incorporation or these Bylaws
relating to action required to be approved by the stockholders or by the
outstanding shares, the business and affairs of the Corporation shall be
managed and all corporate powers shall be exercised by or under the direction
of the Board of Directors.
3.2 NUMBER OF DIRECTORS.
The number of directors constituting the entire Board of
Directors shall be [eight (8)].
Thereafter, this number may be changed by a resolution of the
Board of Directors or of the stockholders, subject to Section 3.4 of these
Bylaws. No reduction of the authorized number of directors shall have the
effect of removing any director before such director's term of office expires.
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS.
Except as provided in Section 3.4 of these Bylaws and as set
forth below, directors shall be elected at each annual meeting of
stockholders to hold office until the next annual meeting. Directors need
not be stockholders unless so required by the Certificate of Incorporation or
these Bylaws, wherein other qualifications for directors may be prescribed.
Each director, including a director elected to fill a vacancy, shall hold
office until his or her successor is elected and qualified or until his or
her earlier resignation or removal.
On and after the date that this Corporation qualifies for an
exemption from Section 2115 or Section 301.5 (as applicable) of the
California Corporations Code, the Board of Directors of the Corporation shall
be divided into two classes, as nearly equal in number as reasonably
possible, with the term of office of the first class to expire at the first
annual meeting of stockholders following the date these Bylaws become
effective (the "Effective Date") or any special meeting in lieu thereof and
the term of office of the second class to expire at the second annual meeting
of stockholders after the Effective Date or any special meeting in lieu
thereof. At each annual meeting of stockholders or special meeting in lieu
thereof following such initial classification, directors elected to succeed
those directors whose terms expire shall be elected for a term of office to
expire at the second succeeding annual meeting os stockholders or special
meeting in lieu thereof after their election and until their successors are
duly elected and qualified.
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3.4 RESIGNATION AND VACANCIES.
Any director may resign at any time upon written notice to the
attention of the secretary of the Corporation. When one or more directors so
resigns and the resignation is effective at a future date, a majority of the
directors then in office, including those who have so resigned, shall have
power to fill such vacancy or vacancies, the vote thereon to take effect when
such resignation or resignations shall become effective, and each director so
chosen shall hold office as provided in this section in the filling of other
vacancies. A vacancy created by the removal of a director by the vote of the
stockholders or by court order may be filled only by the affirmative vote of
a majority of the shares represented and voting at a duly held meeting at
which a quorum is present (which shares voting affirmatively also constitute
a majority of the quorum. Each director so elected shall hold office until
the next annual meeting of the stockholders and until a successor has been
elected and qualified.
Unless otherwise provided in the Certificate of Incorporation
or these Bylaws:
(a) Vacancies and newly created directorships resulting from
any increase in the authorized number of directors elected by all of the
stockholders having the right to vote as a single class may be filled by a
majority of the directors then in office, although less than a quorum, or by
a sole remaining director.
(b) Whenever the holders of any class or classes of stock or
series thereof are entitled to elect one or more directors by the provisions
of the Certificate of Incorporation, vacancies and newly created
directorships of such class or classes or series may be filled by a majority
of the directors elected by such class or classes or series thereof then in
office, or by a sole remaining director so elected.
If at any time, by reason of death or resignation or other
cause, the Corporation should have no directors in office, then any officer
or any stockholder or an executor, administrator, trustee or guardian of a
stockholder, or other fiduciary entrusted with like responsibility for the
person or estate of a stockholder, may call a special meeting of stockholders
in accordance with the provisions of the Certificate of Incorporation or
these Bylaws, or may apply to the Court of Chancery for a decree summarily
ordering an election as provided in Section 211 of the General Corporation
Law of Delaware.
If, at the time of filling any vacancy or any newly created
directorship, the directors then in office constitute less than a majority of
the whole Board of Directors (as constituted immediately prior to any such
increase), then the Court of Chancery may, upon application of any
stockholder or stockholders holding at least 10% of the total number of the
shares at the time outstanding having the right to vote for such directors,
summarily order an election to be held to fill any such vacancies or newly
created directorships, or to replace the directors chosen by the directors
then in office as aforesaid, which election shall be governed by the
provisions of Section 211 of the General Corporation Law of Delaware as far
as applicable.
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3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE.
The Board of Directors of the Corporation may hold meetings,
both regular and special, either within or outside the State of Delaware.
Unless otherwise restricted by the Certificate of Incorporation or these
Bylaws, members of the Board of Directors, or any committee designated by the
Board of Directors, may participate in a meeting of the Board of Directors,
or any committee, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at the meeting.
3.6 REGULAR MEETINGS.
Regular meetings of the Board of Directors may be held without
notice at such time and at such place as shall from time to time be
determined by the Board of Directors.
3.7 SPECIAL MEETINGS; NOTICE.
Special meetings of the board of directors for any purpose or purposes
may be called at any time by the chairman of the board, the president, any
vice president, the secretary or any two (2) directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's
address as it is shown on the records of the Corporation. If the notice is
mailed, it shall be deposited in the United States mail at least four (4)
days before the time of the holding of the meeting. If the notice is
delivered personally or by telephone, telecopy, telegram, telex or other
similar means of communication, it shall be delivered at least twenty-four
(24) hours before the time of the holding of the meeting, or on such shorter
notice as the person or persons calling such meeting may deem necessary and
appropriate in the circumstances. Any oral notice given personally or by
telephone may be communicated either to the director or to a person at the
office of the director who the person giving the notice has reason to believe
will promptly communicate it to the director. The notice need not specify the
purpose of the place of the meeting, if the meeting is to be held at the
principal executive office of the Corporation.
3.8 QUORUM.
At all meetings of the Board of Directors, a majority of the
authorized number of directors shall constitute a quorum for the transaction
of business and the act of a majority of the directors present at any meeting
at which there is a quorum shall be the act of the Board of Directors, except
as may be otherwise specifically provided by statute or by the Certificate of
Incorporation. If a quorum is not present at any meeting of the Board of
Directors, then the directors present thereat may adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum is present.
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A meeting at which a quorum is initially present may continue
to transact business notwithstanding the withdrawal of directors, if any
action taken is approved by at least a majority of the required quorum for
that meeting.
3.9 WAIVER OF NOTICE.
Whenever notice is required to be given under any provision of
the General Corporation Law of Delaware or of the Certificate of
Incorporation or these Bylaws, a written waiver thereof, signed by the person
entitled to notice, whether before or after the time stated therein, shall be
deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends
a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted at, nor
the purpose of, any regular or special meeting of the directors, or members
of a committee of directors, need be specified in any written waiver of
notice unless so required by the Certificate of Incorporation or these Bylaws.
3.10 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING.
Unless otherwise restricted by the Certificate of Incorporation
or these Bylaws, any action required or permitted to be taken at any meeting
of the Board of Directors, or of any committee thereof, may be taken without
a meeting if all members of the Board of Directors or committee, as the case
may be, consent thereto in writing and the writing or writings are filed with
the minutes of proceedings of the Board of Directors or committee. Written
consents representing actions taken by the board or committee may be executed
by telex, telecopy or other facsimile transmission, and such facsimile shall
be valid and binding to the same extent as if it were an original.
3.11 FEES AND COMPENSATION OF DIRECTORS.
Unless otherwise restricted by the Certificate of Incorporation
or these Bylaws, the Board of Directors shall have the authority to fix the
compensation of directors. No such compensation shall preclude any director
from serving the Corporation in any other capacity and receiving compensation
therefor.
3.12 APPROVAL OF LOANS TO OFFICERS.
The Corporation may lend money to, or guarantee any obligation
of, or otherwise assist any officer or other employee of the Corporation or
of its subsidiary, including any officer or employee who is a director of the
Corporation or its subsidiary, whenever, in the judgment of the directors,
such loan, guaranty or assistance may reasonably be expected to benefit the
Corporation. The loan, guaranty or other assistance may be with or without
interest and may be unsecured, or secured in such manner as the Board of
Directors shall approve, including, without limitation, a pledge of shares of
stock of the Corporation. Nothing in this Section 3.2 contained shall be
deemed to deny, limit or restrict the powers of guaranty or warranty of the
Corporation at common law or under any statute.
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3.13 REMOVAL OF DIRECTORS.
Unless otherwise restricted by statute, by the Certificate of
Incorporation or by these Bylaws, any director or the entire Board of
Directors may be removed, with [OR WITHOUT] cause, by the holders of a
majority of the shares then entitled to vote at an election of directors;
provided, however, that if the stockholders of the Corporation are entitled
to cumulative voting, if less than the entire Board of Directors is to be
removed, no director may be removed without cause if the votes cast against
his removal would be sufficient to elect him if then cumulatively voted at an
election of the entire Board of Directors.
No reduction of the authorized number of directors shall have
the effect of removing any director prior to the expiration of such
director's term of office.
3.14 CHAIRMAN OF THE BOARD OF DIRECTORS.
The Corporation may also have, at the discretion of the Board
of Directors, a Chairman of the Board of Directors who shall not be
considered an officer of the Corporation.
ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS.
The Board of Directors may, by resolution passed by a majority of the
whole Board of Directors, designate one or more committees, with each
committee to consist of one or more of the directors of the Corporation. The
Board of Directors may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. In the absence or disqualification of a member of
a committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the Board of Directors to
act at the meeting in the place of any such absent or disqualified member.
Any such committee, to the extent provided in the resolution of the Board of
Directors or in the Bylaws of the Corporation, shall have and may exercise
all the powers and authority of the Board of Directors in the management of
the business and affairs of the Corporation, and may authorize the seal of
the Corporation to be affixed to all papers that may require it; but no such
committee shall have the power or authority to (a) amend the Certificate of
Incorporation (except that a committee may, to the extent authorized in the
resolution or resolutions providing for the issuance of shares of stock
adopted by the Board of Directors as provided in Section 151(a) of the
General Corporation Law of Delaware, fix the designations and any of the
preferences or rights of such shares relating to dividends, redemption,
dissolution, any distribution of assets of the Corporation or the conversion
into, or the exchange of such shares for, shares of any other class or
classes or any other series of the same or any other class or classes of
stock of the Corporation or fix the number of shares of any series of stock
or authorize the increase or decrease of the shares of any series),(b) adopt
an agreement of merger or consolidation under Sections 251 or 252 of the
General Corporation Law of Delawre, (c)
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recommend to the stockholders the sale, lease or exchange of all or
substantially all of the Corporation's property and assets, (d) recommend to
the stockholders a dissolution of the Corporation or a revocation of a
dissolution, or (e) amend the Bylaws of the Corporation; and, unless the
board resolution establishing the committee, the Bylaws or the Certificate of
Incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend, to authorize the issuance of stock, or to
adopt a certificate of ownership and merger pursuant to Section 253 of the
General Corporation Law of Delaware.
4.2 COMMITTEE MINUTES.
Each committee shall keep regular minutes of its meetings and
report the same to the Board of Directors when required.
4.3 MEETINGS AND ACTION OF COMMITTEES.
Meetings and actions of committees shall be governed by, and
held and taken in accordance with, the provisions of Section 3.5 (place of
meetings and meetings by telephone), Section 3.6 (regular meetings), Section
3.7 (special meetings and notice), Section 3.8 (quorum), Section 3.9 (waiver
of notice), and Section 3.10 (action without a meeting) of these Bylaws, with
such changes in the context of such provisions as are necessary to substitute
the committee and its members for the Board of Directors and its members;
provided, however, that the time of regular meetings of committees may be
determined either by resolution of the Board of Directors or by resolution of
the committee, that special meetings of committees may also be called by
resolution of the Board of Directors and that notice of special meetings of
committees shall also be given to all alternate members, who shall have the
right to attend all meetings of the committee. The Board of Directors may
adopt rules for the government of any committee not inconsistent with the
provisions of these Bylaws.
ARTICLE V
OFFICERS
5.1 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, one
or more vice presidents, one or more assistant secretaries, one or more
assistant treasurers, and any such other officers as may be appointed in
accordance with the provisions of Section 5.3 of these Bylaws. Any number of
offices may be held by the same person.
5.2 APPOINTMENT OF OFFICERS.
The officers of the Corporation, except such officers as may be
appointed in accordance with the provisions of Sections 5.3 or 5.5 of these
Bylaws, shall be appointed by the Board of Directors, subject to the rights,
if any, of an officer under any contract of employment.
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5.3 SUBORDINATE OFFICERS.
The Board of Directors may appoint, or empower the chief
executive officer or the president to appoint, such other officers and agents
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.
5.4 REMOVAL AND RESIGNATION OF OFFICERS.
Subject to the rights, if any, of an officer under any contract
of employment, any officer may be removed, either with or without cause, by
an affirmative vote of the majority of the Board of Directors at any regular
or special meeting of the Board of Directors or, except in the case of an
officer chosen by the Board of Directors, by any officer upon whom such power
of removal may be conferred by the Board of Directors.
Any officer may resign at any time by giving written notice to
the attention of the secretary of the Corporation. Any resignation shall
take effect at the date of the receipt of that notice or at any later time
specified in that notice; and, unless otherwise specified in that notice, the
acceptance of the resignation shall not be necessary to make it effective.
Any resignation is without prejudice to the rights, if any, of the
Corporation under any contract to which the officer is a party.
5.5 VACANCIES IN OFFICES.
Any vacancy occurring in any office of the Corporation shall be
filled by the Board of Directors.
5.6 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 any, the chief
executive officer of the Corporation shall, subject to the control of the
Board of Directors, have general supervision, direction, and control of the
business and the officers of the Corporation. He or she shall preside at all
meetings of the stockholders and, in the absence or nonexistence of a
chairman of the board, at all meetings of the Board of Directors and shall
have the general powers and duties of management usually vested in the office
of chief executive officer of a corporation and shall have such other powers
and duties as may be prescribed by the Board of Directors or these Bylaws.
5.7 PRESIDENT.
Subject to such supervisory powers, if any, as may be given by the
Board of Directors to the chairman of the board (if any) or the chief executive
officer, the president shall have general supervision, direction, and control of
the business and other officers of the Corporation. He or she shall have the
general powers and duties of management usually vested
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in the office of president of a corporation and such other powers and duties
as may be prescribed by the Board of Directors or these Bylaws.
5.8 VICE PRESIDENTS.
In the absence or disability of the chief executive officer and
president, the vice presidents, if any, in order of their rank as fixed by
the Board of Directors or, if not ranked, a vice president designated by the
Board of Directors, shall perform all the duties of the president and when so
acting shall have all the powers of, and be subject to all the restrictions
upon, the president. The vice presidents shall have such other powers and
perform such other duties as from time to time may be prescribed for them
respectively by the Board of Directors, these Bylaws, the president or the
chairman of the board.
5.9 SECRETARY.
The secretary shall keep or cause to be kept, at the principal
executive office of the Corporation or such other place as the Board of
Directors may direct, a book of minutes of all meetings and actions of
directors, committees of directors, and stockholders. The minutes shall show
the time and place of each meeting, the names of those present at directors'
meetings or committee meetings, the number of shares present or represented
at stockholders' meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office of the Corporation or at the office of the Corporation's
transfer agent or registrar, as determined by resolution of the Board Of
Directors, a share register, or a duplicate share register, showing the names
of all stockholders and their addresses, the number and classes of shares
held by each, the number and date of certificates evidencing such shares, and
the number and date of cancellation of every certificate surrendered for
cancellation.
The secretary shall give, or cause to be given, notice of all
meetings of the stockholders and of the Board of Directors required to be
given by law or by these Bylaws. He or she shall keep the seal of the
Corporation, if one be adopted, in safe custody and shall have such other
powers and perform such other duties as may be prescribed by the Board of
Directors or by these Bylaws.
5.10 CHIEF FINANCIAL OFFICER.
The chief financial officer shall keep and maintain, or cause
to be kept and maintained, adequate and correct books and records of accounts
of the properties and business transactions of the Corporation, including
accounts of its assets, liabilities, receipts, disbursements, gains, losses,
capital retained earnings, and shares. The books of account shall at all
reasonable times be open to inspection by any director.
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 or she shall
disburse the funds of the Corporation as may be ordered by
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the Board of Directors, shall render to the president, the chief executive
officer, or the directors, upon request, an account of all his or her
transactions as chief financial officer and of the financial condition of the
Corporation, and shall have other powers and perform such other duties as may
be prescribed by the Board of Directors or the Bylaws.
5.11 REPRESENTATION OF SHARES OF OTHER CORPORATIONS.
The chairman of the board, the chief executive officer, the
president, any vice president, the chief financial officer, the secretary or
assistant secretary of this Corporation, or any other person authorized by
the Board of Directors or the chief executive officer or the president or a
vice president, is authorized to vote, represent, and exercise on behalf of
this Corporation all rights incident to any and all shares of any other
corporation or corporations standing in the name of this Corporation. The
authority granted herein may be exercised either by such person directly or
by any other person authorized to do so by proxy or power of attorney duly
executed by the person having such authority.
5.12 AUTHORITY AND DUTIES OF OFFICERS.
In addition to the foregoing authority and duties, all officers
of the Corporation shall respectively have such authority and perform such
duties in the management of the business of the Corporation as may be
designated from time to time by the Board of Directors or the stockholders.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES, AND OTHER AGENTS
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Corporation shall, to the maximum extent and in the manner
permitted by the General Corporation Law of Delaware, indemnify each of its
directors and officers against expenses (including attorneys' fees),
judgments, fines, settlements and other amounts actually and reasonably
incurred in connection with any proceeding, arising by reason of the fact
that such person is or was an agent of the Corporation. For purposes of this
Section 6.1, a "director" or "officer" of the Corporation includes any person
(a) who is or was a director or officer of the Corporation, (b) who is or was
serving at the request of the Corporation as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise, or (c)
who was a director or officer of a Corporation which was a predecessor
corporation of the Corporation or of another enterprise at the request of
such predecessor corporation.
6.2 INDEMNIFICATION OF OTHERS.
The Corporation shall have the power, to the maximum extent and in
the manner permitted by the General Corporation Law of Delaware, to indemnify
each of its employees and agents (other than directors and officers) against
expenses (including attorneys' fees), judgments, fines, settlements and other
amounts actually and reasonably incurred in connection with any
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proceeding, arising by reason of the fact that such person is or was an agent
of the Corporation. For purposes of this Section 6.2, an "employee" or
"agent" of the Corporation (other than a director or officer) includes any
person (a) who is or was an employee or agent of the Corporation, (b) who is
or was serving at the request of the Corporation as an employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
or (c) who was an employee or agent of a corporation which was a predecessor
corporation of the Corporation or of another enterprise at the request of
such predecessor corporation.
6.3 PAYMENT OF EXPENSES IN ADVANCE.
Expenses incurred in defending any action or proceeding for
which indemnification is required pursuant to Section 6.1 or for which
indemnification is permitted pursuant to Section 6.2 following authorization
thereof by the Board of Directors shall be paid by the Corporation in advance
of the final disposition of such action or proceeding upon receipt of an
undertaking by or on behalf of the indemnified party to repay such amount if
it shall ultimately be determined that the indemnified party is not entitled
to be indemnified as authorized in this Article VI.
6.4 INDEMNITY NOT EXCLUSIVE.
The indemnification provided by this Article VI shall not be
deemed exclusive of any other rights to which those seeking indemnification
may been titled under any Bylaw, agreement, vote of shareholders or
disinterested directors or otherwise, both as to action in an official
capacity and as to action in another capacity while holding such office, to
the extent that such additional rights to indemnification are authorized in
the Certificate of Incorporation.
6.5 INSURANCE.
The Corporation may purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted
against him or her and incurred by him or her in any such capacity, or
arising out of his or her status as such, whether or not the Corporation
would have the power to indemnify him or her against such liability under the
provisions of the General Corporation Law of Delaware.
6.6 CONFLICTS.
No indemnification or advance shall be made under this Article
VI, except where such indemnification or advance is mandated by law or the
order, judgment or decree of any court of competent jurisdiction, in any
circumstance where it appears:
(a) That it would be inconsistent with a provision of the
Certificate of Incorporation, these Bylaws, a resolution of the stockholders
or an agreement in effect at the time of the accrual of the alleged cause of
the action asserted in the proceeding in which the expenses
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were incurred or other amounts were paid, which prohibits or otherwise limits
indemnification; or
(b) That it would be inconsistent with any condition expressly
imposed by a court in approving a settlement.
ARTICLE VII
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF RECORDS.
The Corporation shall, either at its principal executive
offices or at such place or places as designated by the Board of Directors,
keep a record of its stockholders listing their names and addresses and the
number and class of shares held by each stockholder, a copy of these Bylaws
as amended to date, accounting books, and other records.
Any stockholder of record, in person or by attorney or other
agent, shall, upon written demand under oath stating the purpose thereof,
have the right during the usual hours for business to inspect for any proper
purpose the Corporation's stock ledger, a list of its stockholders, and its
other books and records and to make copies or extracts therefrom. A proper
purpose shall mean a purpose reasonably related to such person's interest as
a stockholder. In every instance where an attorney or other agent is the
person who seeks the right to inspection, the demand under oath shall be
accompanied by a power of attorney or such other writing that authorizes the
attorney or other agent to so act on behalf of the stockholder. The demand
under oath shall be directed to the Corporation at its registered office in
Delaware or at its principal place of business.
7.2 INSPECTION BY DIRECTORS.
Any director shall have the right to examine the Corporation's
stockledger, a list of its stockholders, and its other books and records for
a purpose reasonably related to his or her position as a director. The Court
of Chancery is hereby vested with the exclusive jurisdiction to determine
whether a director is entitled to the inspection sought. The Court may
summarily order the Corporation to permit the director to inspect any and all
books and records, the stock ledger, and the stock list and to make copies or
extracts therefrom. The Court may, in its discretion, prescribe any
limitations or conditions with reference to the inspection, or award such
other and further relief as the Court may deem just and proper.
7.3 ANNUAL STATEMENT TO STOCKHOLDERS.
The Board of Directors shall present at each annual meeting,
and at any special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
Corporation.
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ARTICLE VIII
GENERAL MATTERS
8.1 CHECKS.
From time to time, the Board of Directors shall determine by
resolution which person or persons may sign or endorse all checks, drafts,
other orders for payment of money, notes or other evidences of indebtedness
that are issued in the name of or payable to the Corporation, and only the
persons so authorized shall sign or endorse those instruments.
8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS.
The Board of Directors, except as otherwise provided in these
Bylaws, may authorize any officer or officers, or agent or agents, to enter
into any contract or execute any instrument in the name of and on behalf of
the Corporation; such authority may be general or confined to specific
instances. Unless so authorized or ratified by the Board of Directors or
within the agency power of an officer, no officer, agent or employee shall
have any power or authority to bind the Corporation by any contract or
engagement or to pledge its credit or to render it liable for any purpose or
for any amount.
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES.
The shares of the Corporation shall be represented by
certificates, provided that the Board of Directors of the Corporation may
provide by resolution or resolutions that some or all of any or all classes
or series of its stock shall be uncertificated shares. Any such resolution
shall not apply to shares represented by a certificate until such certificate
is surrendered to the Corporation. Notwithstanding the adoption of such a
resolution by the Board of Directors, every holder of stock represented by
certificates and upon request every holder of uncertificated shares shall be
entitled to have a certificate signed by, or in the name of the Corporation
by the chairman or vice-chairman of the Board of Directors, or the chief
executive officer or the president or vice-president, and by the chief
financial officer or an assistant treasurer, or the secretary or an assistant
secretary of the Corporation representing the number of shares registered in
certificate form. Any or all of the signatures on the certificate may be a
facsimile. In case any officer, transfer agent or registrar who has signed
or whose facsimile signature has been placed upon a certificate has ceased to
be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if he or
she were such officer, transfer agent or registrar at the date of issue.
The Corporation may issue the whole or any part of its shares
as partly paid and subject to call for the remainder of the consideration to
be paid therefor. Upon the face or back of each stock certificate issued to
represent any such partly paid shares, upon the books and records of the
Corporation in the case of uncertificated partly paid shares, the total
amount of the consideration to be paid therefor and the amount paid thereon
shall be stated. Upon the declaration of any dividend on fully paid shares,
the Corporation shall declare a dividend upon
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partly paid shares of the same class, but only upon the basis of the
percentage of the consideration actually paid thereon.
8.4 SPECIAL DESIGNATION ON CERTIFICATES.
If the Corporation is authorized to issue more than one class
of stock or more than one series of any class, then the powers, the
designations, the preferences, and the relative, participating, optional or
other special rights of each class of stock or series thereof and the
qualifications, limitations or restrictions of such preferences and/or rights
shall be set forth in full or summarized on the face or back of the
certificate that the Corporation shall issue to represent such class or
series of stock; provided, however, that, except as otherwise provided in
Section 202 of the General Corporation Law of Delaware, in lieu of the
foregoing requirements there may be set forth on the face or back of the
certificate that the Corporation shall issue to represent such class or
series of stock a statement that the Corporation will furnish without charge
to each stockholder who so requests the powers, the designations, the
preferences, and the relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
8.5 LOST CERTIFICATES.
Except as provided in this Section 8.5, no new certificates for
shares shall be issued to replace a previously issued certificate unless the
latter is surrendered to the Corporation and canceled at the same time. The
Corporation may issue a new certificate of stock or uncertificated shares in
the place of any certificate previously issued by it, alleged to have been
lost, stolen or destroyed, and the Corporation may require the owner of the
lost, stolen or destroyed certificate, or the owner's legal representative,
to give the Corporation a bond sufficient to indemnify it against any claim
that may be made against it on account of the alleged loss, theft or
destruction of any such certificate or the issuance of such new certificate
or uncertificated shares.
8.6 CONSTRUCTION; DEFINITIONS.
Unless the context requires otherwise, the general provisions,
rules of construction, and definitions in the Delaware General Corporation
Law shall govern the construction of these Bylaws. Without limiting the
generality of this provision, the singular number includes the plural, the
plural number includes the singular, and the term "person" includes both a
corporation and a natural person.
8.7 DIVIDENDS.
The directors of the Corporation, subject to any restrictions
contained in (a) the General Corporation Law of Delaware or (b) the
Certificate of Incorporation, may declare and pay dividends upon the shares
of its capital stock. Dividends may be paid in cash, in property, or in
shares of the Corporation's capital stock.
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The directors of the Corporation may set apart out of any of
the funds of the Corporation available for dividends a reserve or reserves
for any proper purpose and may abolish any such reserve. Such purposes shall
include but not be limited to equalizing dividends, repairing or maintaining
any property of the Corporation, and meeting contingencies.
8.8 FISCAL YEAR.
The fiscal year of the Corporation shall be fixed by resolution
of the Board of Directors and may be changed by the Board of Directors.
8.9 SEAL.
The Corporation may adopt a corporate seal, which may be
altered at pleasure, and may use the same by causing it or a facsimile
thereof, to be impressed or affixed or in any other manner reproduced.
8.10 TRANSFER OF STOCK.
Upon surrender to the Corporation or the transfer agent of the
Corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignation or authority to transfer, it shall
be the duty of the Corporation to issue a new certificate to the person
entitled thereto, cancel the old certificate, and record the transaction in
its books.
8.11 STOCK TRANSFER AGREEMENTS.
The Corporation shall have power to enter into and perform any
agreement with any number of stockholders of any one or more classes of stock
of the Corporation to restrict the transfer of shares of stock of the
Corporation of any one or more classes owned by such stockholders in any
manner not prohibited by the General Corporation Law of Delaware.
8.12 REGISTERED STOCKHOLDERS.
The Corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends and to vote as such owner, shall be entitled to hold liable for
calls and assessments the person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of another person, whether or
not it shall have express or other notice thereof, except as otherwise
provided by the laws of Delaware.
ARTICLE IX
AMENDMENTS
The Bylaws of the Corporation may be adopted, amended or repealed
by the stockholders entitled to vote; provided, however, that the Corporation
may, in its Certificate of Incorporation, confer the power to adopt, amend or
repeal Bylaws upon the directors. The fact
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that such power has been so conferred upon the directors shall not divest the
stockholders of the power, nor limit their power to adopt, amend or repeal
Bylaws.
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EXHIBIT 5.1
February 1, 2000
Impresse Corporation
1309 South Mary Avenue
Sunnyvale, CA 94087
REGISTRATION STATEMENT ON FORM S-1
Ladies and Gentlemen:
We have examined the amended Registration Statement on Form S-1 (the
"REGISTRATION STATEMENT") to be filed by you with the Securities and Exchange
Commission on or about February 1, 2000, in connection with the registration
under the Securities Act of 1933 of shares of your Common Stock (the
"SHARES"). As your legal counsel in connection with this transaction, we have
examined the proceedings taken and we are familiar with the proceedings
proposed to be taken by you in connection with the sale and issuance of the
Shares.
It is our opinion that upon completion of the proceedings being
taken in order to permit such transactions to be carried out in accordance
with the securities laws of the various states where required, the Shares,
when issued and sold in the manner described in the Registration Statement,
will be legally and validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the
Registration Statement and further consent to the use of our name wherever it
appears in the Registration Statement and in any amendment to it.
Sincerely,
VENTURE LAW GROUP
A Professional Corporation
/s/ VENTURE LAW GROUP
JEG
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INDEMNIFICATION AGREEMENT EXHIBIT 10.3
This Indemnification Agreement ("Agreement") is made as of < < Date > >,
by and between Impresse Corporation, a Delaware corporation (the "Company"),
and < < Name > > ("Indemnitee").
WHEREAS, the Company and Indemnitee recognize the increasing difficulty
in obtaining directors' and officers' liability insurance, the increases in the
cost of such insurance and the general reductions in the coverage of such
insurance;
WHEREAS, the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting officers and directors
to expensive litigation risks at the same time as the availability and coverage
of liability insurance has been severely limited;
WHEREAS, Indemnitee does not regard the current protection available as
adequate under the present circumstances, and Indemnitee and other officers and
directors of the Company may not be willing to continue to serve as officers and
directors without additional protection; and
WHEREAS, the Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve as officers and directors of
the Company and to indemnify its officers and directors so as to provide them
with the maximum protection permitted by law.
NOW, THEREFORE, the Company and Indemnitee hereby agree as follows:
1. INDEMNIFICATION.
(a) THIRD PARTY PROCEEDINGS. The Company shall indemnify
Indemnitee if Indemnitee is or was a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an
action by or in the right of the Company) by reason of the fact that
Indemnitee is or was a director, officer, employee or agent of the Company,
or any subsidiary of the Company, by reason of any action or inaction on the
part of Indemnitee while an officer or director or by reason of the fact that
Indemnitee is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement (if such settlement is
approved in advance by the Company, which approval shall not be unreasonably
withheld) actually and reasonably incurred by Indemnitee in connection with
such action, suit or proceeding if Indemnitee acted in good faith and in a
manner Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe Indemnitee's conduct was
unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that Indemnitee did
not act in good faith and in a manner which Indemnitee reasonably believed to
be in or not opposed to the best interests of the Company, and, with
<PAGE>
respect to any criminal action or proceeding, had reasonable cause to believe
that Indemnitee's conduct was unlawful.
(b) PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. The Company
shall indemnify Indemnitee if Indemnitee was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Company or any subsidiary of the Company to procure a judgment
in its favor by reason of the fact that Indemnitee is or was a director,
officer, employee or agent of the Company, or any subsidiary of the Company, by
reason of any action or inaction on the part of Indemnitee while an officer or
director or by reason of the fact that Indemnitee is or was serving at the
request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees) and, to the fullest extent permitted by
law, amounts paid in settlement, in each case to the extent actually and
reasonably incurred by Indemnitee in connection with the defense or settlement
of such action or suit if Indemnitee acted in good faith and in a manner
Indemnitee reasonably believed to be in or not opposed to the best interests of
the Company and its shareholders, except that no indemnification shall be made
in respect of any claim, issue or matter as to which Indemnitee shall have been
adjudged to be liable to the Company in the performance of Indemnitee's duty to
the Company and its shareholders unless and only to the extent that the court in
which such action or suit is or was pending shall determine upon application
that, in view of all the circumstances of the case, Indemnitee is fairly and
reasonably entitled to indemnity for expenses and then only to the extent that
the court shall determine.
(c) MANDATORY PAYMENT OF EXPENSES. To the extent that
Indemnitee has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Subsections (a) and (b) of this
Section 1 or the defense of any claim, issue or matter therein, Indemnitee shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by Indemnitee in connection therewith.
2. NO EMPLOYMENT RIGHTS. Nothing contained in this Agreement is
intended to create in Indemnitee any right to continued employment.
3. EXPENSES; INDEMNIFICATION PROCEDURE.
(a) ADVANCEMENT OF EXPENSES. Subject to the terms and
conditions of this Agreement, the Company shall advance all expenses incurred by
Indemnitee in connection with the investigation, defense, settlement or appeal
of any civil or criminal action, suit or proceeding referenced in Section l(a)
or (b) hereof (including amounts actually paid in settlement of any such action,
suit or proceeding). Indemnitee hereby undertakes to repay such amounts
advanced only if, and to the extent that, it shall ultimately be determined that
Indemnitee is not entitled to be indemnified by the Company as authorized
hereby. Any advances made hereunder shall be paid by the Company to Indemnitee
within twenty (20) days following delivery of a written request therefor by
Indemnitee to the Company.
(b) NOTICE/COOPERATION BY INDEMNITEE. Indemnitee shall, as a
condition precedent to his right to be indemnified under this Agreement, give
the Company notice in
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writing as soon as practicable of any claim made against Indemnitee for which
indemnification will or could be sought under this Agreement. Notice to the
Company shall be directed to the Chief Executive Officer of the Company at
the address shown on the signature page of this Agreement (or such other
address as the Company shall designate in writing to Indemnitee). Notice
shall be deemed received three business days after the date postmarked if
sent by domestic certified or registered mail, properly addressed, otherwise
notice shall be deemed received when such notice shall actually be received
by the Company. In addition, Indemnitee shall give the Company such
information and cooperation as it may reasonably require and as shall be
within Indemnitee's power.
(c) PROCEDURE. Any indemnification and advances provided for
in Section 1 shall be made no later than forty-five (45) days after receipt of
the written request of Indemnitee. If a claim under this Agreement, under any
statute, or under any provision of the Company's Articles of Incorporation or
Bylaws providing for indemnification, is not paid in full by the Company within
forty-five (45) days after a written request for payment thereof has first been
received by the Company, Indemnitee may, but need not, at any time thereafter
bring an action against the Company to recover the unpaid amount of the claim
and, subject to Section 13 of this Agreement, Indemnitee shall also be entitled
to be paid for the expenses (including attorneys' fees and interest, at the Bank
of America prime rate in effect on the date of Indemnitee's written request, on
the unpaid amount of the claim) of bringing such action. It shall be a defense
to any such action (other than an action brought to enforce a claim for expenses
incurred in connection with any action, suit or proceeding in advance of its
final disposition) that Indemnitee has not met the standards of conduct which
make it permissible under applicable law for the Company to indemnify Indemnitee
for the amount claimed. Indemnitee shall be entitled to receive interim
payments of expenses pursuant to Subsection 3(a) unless and until such defense
may be finally adjudicated by court order or judgment from which no further
right of appeal exists. It is the parties' intention that if the Company
contests Indemnitee's right to indemnification, the question of Indemnitee's
right to indemnification shall be for the court to decide, and neither the
failure of the Company (including its Board of Directors, any committee or
subgroup of the Board of Directors, independent legal counsel, or its
stockholders) to have made a determination that indemnification of Indemnitee is
proper in the circumstances because Indemnitee has met the applicable standard
of conduct required by applicable law, nor an actual determination by the
Company (including its Board of Directors, any committee or subgroup of the
Board of Directors, independent legal counsel, or its stockholders) that
Indemnitee has not met such applicable standard of conduct, shall create a
presumption that Indemnitee has or has not met the applicable standard of
conduct.
(d) NOTICE TO INSURERS. If, at the time of the receipt of a
notice of a claim pursuant to Section 3(b) hereof, the Company has director and
officer liability insurance in effect, the Company shall give prompt notice of
the commencement of such proceeding to the insurers in accordance with the
procedures set forth in the respective policies. The Company shall thereafter
take all necessary or desirable action to cause such insurers to pay, on behalf
of the Indemnitee, all amounts payable as a result of such proceeding in
accordance with the terms of such policies.
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(e) SELECTION OF COUNSEL. In the event the Company shall be
obligated under Section 3(a) hereof to pay the expenses of any proceeding
against Indemnitee, the Company, if appropriate, shall be entitled to assume the
defense of such proceeding, with counsel approved by Indemnitee, upon the
delivery to Indemnitee of written notice of its election so to do. After
delivery of such notice, approval of such counsel by Indemnitee and the
retention of such counsel by the Company, the Company will not be liable to
Indemnitee under this Agreement for any fees of counsel subsequently incurred by
Indemnitee with respect to the same proceeding, provided that (i) Indemnitee
shall have the right to employ his counsel in any such proceeding at
Indemnitee's expense; and (ii) if (A) the employment of counsel by Indemnitee
has been previously authorized by the Company, (B) Indemnitee shall have
reasonably concluded that there may be a conflict of interest between the
Company and Indemnitee in the conduct of any such defense, or (C) the Company
shall not, in fact, have employed counsel to assume the defense of such
proceeding, then the fees and expenses of Indemnitee's counsel shall be at the
expense of the Company.
4. ADDITIONAL INDEMNIFICATION RIGHTS; NONEXCLUSIVITY.
(a) SCOPE. Notwithstanding any other provision of this
Agreement, the Company hereby agrees to indemnify the Indemnitee to the fullest
extent permitted by law, notwithstanding that such indemnification is not
specifically authorized by the other provisions of this Agreement, the Company's
Articles of Incorporation, the Company's Bylaws or by statute. In the event of
any change in any applicable law, statute or rule which narrows the right of a
California corporation to indemnify a member of its board of directors or an
officer, such changes, to the extent not otherwise required by such law, statute
or rule to be applied to this Agreement shall have no effect on this Agreement
or the parties' rights and obligations hereunder.
(b) NONEXCLUSIVITY. The indemnification provided by this
Agreement shall not be deemed exclusive of any rights to which Indemnitee may be
entitled under the Company's Articles of Incorporation, its Bylaws, any
agreement, any vote of shareholders or disinterested Directors, the Corporation
Law of the State of California, or otherwise, both as to action in Indemnitee's
official capacity and as to action in another capacity while holding such
office. The indemnification provided under this Agreement shall continue as to
Indemnitee for any action taken or not taken while serving in an indemnified
capacity even though he may have ceased to serve in such capacity at the time of
any action, suit or other covered proceeding.
5. PARTIAL INDEMNIFICATION. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses, judgments, fines or penalties actually or reasonably
incurred by him in the investigation, defense, appeal or settlement of any civil
or criminal action, suit or proceeding, but not, however, for the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for the portion of
such expenses, judgments, fines or penalties to which Indemnitee is entitled.
6. MUTUAL ACKNOWLEDGMENT. Both the Company and Indemnitee
acknowledge that in certain instances, Federal law or applicable public policy
may prohibit the Company from
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indemnifying its directors and officers under this Agreement or otherwise.
Indemnitee understands and acknowledges that the Company has undertaken or
may be required in the future to undertake with the Securities and Exchange
Commission to submit the question of indemnification to a court in certain
circumstances for a determination of the Company's right under public policy
to indemnify Indemnitee.
7. OFFICER AND DIRECTOR LIABILITY INSURANCE. The Company shall, from
time to time, make the good faith determination whether or not it is practicable
for the Company to obtain and maintain a policy or policies of insurance with
reputable insurance companies providing the officers and directors of the
Company with coverage for losses from wrongful acts, or to ensure the Company's
performance of its indemnification obligations under this Agreement. Among other
considerations, the Company will weigh the costs of obtaining such insurance
coverage against the protection afforded by such coverage. Notwithstanding the
foregoing, the Company shall have no obligation to obtain or maintain such
insurance if the Company determines in good faith that such insurance is not
necessary or is not reasonably available, if the premium costs for such
insurance are disproportionate to the amount of coverage provided, if the
coverage provided by such insurance is limited by exclusions so as to provide an
insufficient benefit, or if Indemnitee is covered by similar insurance
maintained by a subsidiary or parent of the Company. However, the Company's
decision whether or not to adopt and maintain such insurance shall not affect in
any way its obligations to indemnify its officers and directors under this
Agreement or otherwise. In all policies of director and officer liability
insurance, Indemnitee shall be named as an insured in such a manner as to
provide Indemnitee the same rights and benefits as are accorded to the most
favorably insured of the Company's directors, if Indemnitee is a director; or of
the Company's officers, if Indemnitee is not a director of the Company, but is
an officer; or of the Company's key employees, if Indemnitee is not an officer
or director, but is a key employee.
8. SEVERABILITY. Nothing in this Agreement is intended to require or
shall be construed as requiring the Company to do or fail to do any act in
violation of applicable law. The Company's inability, pursuant to court order,
to perform its obligations under this Agreement shall not constitute a breach of
this Agreement. The provisions of this Agreement shall be severable as provided
in this Section 8. If this Agreement or any portion hereof shall be invalidated
on any ground by any court of competent jurisdiction, then the Company shall
nevertheless indemnify Indemnitee to the full extent permitted by any applicable
portion of this Agreement that shall not have been invalidated, and the balance
of this Agreement not so invalidated shall be enforceable in accordance with its
terms.
9. EXCEPTIONS. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:
(a) CLAIMS INITIATED BY INDEMNITEE. To indemnify or advance
expenses to Indemnitee with respect to proceedings or claims initiated or
brought voluntarily by Indemnitee and not by way of defense, except with respect
to proceedings brought to establish or enforce a right to indemnification under
this Agreement or any other statute or law or otherwise as required under
Section 317 of the California Corporation Law, but such indemnification or
advancement
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of expenses may be provided by the Company in specific cases if the Board of
Directors has approved the initiation or bringing of such suit.
(b) LACK OF GOOD FAITH. To indemnify Indemnitee for any
expenses incurred by the Indemnitee with respect to any proceeding instituted by
Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by the
Indemnitee in such proceeding was not made in good faith or was frivolous.
(c) INSURED CLAIMS. To indemnify Indemnitee for expenses or
liabilities of any type whatsoever (including, but not limited to, judgments,
fines, ERISA excise taxes or penalties, and amounts paid in settlement) to the
extent such expenses or liabilities have been paid directly to Indemnitee by an
insurance carrier under a policy of officers' and directors' liability insurance
maintained by the Company.
(d) CLAIMS UNDER SECTION 16(b). To indemnify Indemnitee for
expenses and the payment of profits arising from the purchase and sale by
Indemnitee of securities in violation of Section 16(b) of the Securities
Exchange Act of 1934, as amended, or any similar successor statute.
10. CONSTRUCTION OF CERTAIN PHRASES.
(a) For purposes of this Agreement, references to the "Company"
shall include any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that if Indemnitee is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, Indemnitee shall stand in the same position under the
provisions of this Agreement with respect to the resulting or surviving
corporation as Indemnitee would have with respect to such constituent
corporation if its separate existence had continued.
(b) For purposes of this Agreement, references to "other
enterprises", shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on Indemnitee with respect to an employee
benefit plan; and references to "serving at the request of the Company" shall
include any service as a director, officer, employee or agent of the Company
which imposes duties on, or involves services by, such director, officer,
employee or agent with respect to an employee benefit plan, its participants, or
beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan, Indemnitee shall be deemed to have acted in a
manner "not opposed to the best interests of the Company" as referred to in this
Agreement.
11. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
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12. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Company and its successors and assigns, and shall inure to the benefit of
Indemnitee and Indemnitee's estate, heirs, legal representatives and assigns.
13. ATTORNEYS, FEES. In the event that any action is instituted by
Indemnitee under this Agreement to enforce or interpret any of the terms hereof,
Indemnitee shall be entitled to be paid all court costs and expenses, including
reasonable attorneys, fees, incurred by Indemnitee with respect to such action,
unless as a part of such action, the court of competent jurisdiction determines
that each of the material assertions made by Indemnitee as a basis for such
action were not made in good faith or were frivolous. In the event of an action
instituted by or in the name of the Company under this Agreement or to enforce
or interpret any of the terms of this Agreement, Indemnitee shall be entitled to
be paid all court costs and expenses, including attorneys' fees, incurred by
Indemnitee in defense of such action (including with respect to Indemnitee's
counterclaims and cross-claims made in such action), unless as a part of such
action the court determines that each of Indemnitee's material defenses to such
action were made in bad faith or were frivolous.
14. NOTICE. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and receipted for by the party addressee, on the date of such
receipt, or (ii) if mailed by domestic certified or registered mail with postage
prepaid, on the third business day after the date postmarked. Addresses for
notice to either party are as shown on the signature page of this Agreement, or
as subsequently modified by written notice.
15. CONSENT TO JURISDICTION. The Company and Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the State of California
for all purposes in connection with any action or proceeding which arises out of
or relates to this Agreement and agree that any action instituted under this
Agreement shall be brought only in the state courts of the State of California.
16. CHOICE OF LAW. This Agreement shall be governed by and its
provisions construed in accordance with the laws of the State of California, as
applied to contracts between California residents entered into and to be
performed entirely within California.
17. MODIFICATION. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof. All prior
negotiations, agreements and understandings between the parties with respect
thereto are superseded hereby. This Agreement may not be modified or amended
except by an instrument in writing signed by or on behalf of the parties hereto.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
IMPRESSE CORPORATION
By:
-----------------------------
Title
---------------------------
AGREED TO AND ACCEPTED:
INDEMNITEE:
____________________________________
< < Name > >
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IMPRESSE CORPORATION EXHIBIT 10.4
1997 STOCK OPTION PLAN
(AS AMENDED)
1. PURPOSES OF THE PLAN. The purposes of this 1997 Stock Option Plan
are to attract and retain the best available personnel for positions of
substantial responsibility, to provide additional incentive to Employees and
Consultants of the Company and its Subsidiaries and to promote the success of
the Company's business. Options granted under the Plan may be Incentive Stock
Options or Nonstatutory Stock Options, as determined by the Administrator at the
time of grant of an Option and subject to the applicable provisions of Section
422 of the Code and the regulations promulgated thereunder.
2. DEFINITIONS. As used herein, the following definitions shall
apply:
(a) "ADMINISTRATOR" means the Board or any of its Committees
appointed pursuant to Section 4 of the Plan.
(b) "APPLICABLE LAWS" means the legal requirements relating to
the administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code and the applicable laws of any
foreign country or jurisdiction where Options are, or will be, granted under the
Plan.
(c) "BOARD" means the Board of Directors of the Company.
(d) "CHANGE OF CONTROL" means (A) the acquisition of the
Company by another entity by means of any transaction or series of related
transactions (including, without limitation, any reorganization, merger or
consolidation but excluding any merger effected exclusively for the purpose of
changing the domicile of the Company); or (B) a sale of all or substantially all
of the assets of the Company.
(e) "CODE" means the Internal Revenue Code of 1986, as amended.
(f) "COMMITTEE" means a Committee appointed by the Board of
Directors in accordance with Section 4 of the Plan.
(g) "COMMON STOCK" means the Common Stock of the Company.
(h) "COMPANY" means Impresse Corporation, a California
corporation.
(i) "CONSTRUCTIVELY TERMINATED" means: (A) the termination of
Optionee's employment or engagement to render services to the Company without
good cause and other than due to death or disability of Optionee; or (B)
Optionee's resignation from the Company as a result of (i) a reduction in
Optionee's responsibilities with respect to the business of the Company such
that Optionee's reduced responsibilities are not substantially similar to
Optionee's responsibilities immediately prior to the Change of Control; (ii) a
requirement that, in
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order to preserve Optionee's employment or engagement by the Company,
Optionee perform his or her customary services at a location more than forty
(40) miles from the Company's principal place of business immediately prior
to the closing of the Change of Control; or (iii) a reduction in Optionee's
compensation such that Optionee's reduced compensation is not substantially
similar to Optionee's compensation immediately prior to the Change of Control.
(j) "CONSULTANT" means any person who is engaged by the
Company or any Parent or Subsidiary to render consulting or advisory services
and is compensated for such services, and any Director of the Company whether
compensated for such services or not.
(k) "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" means
that the employment or consulting relationship with the Company, any Parent
or Subsidiary is not interrupted or terminated. Continuous Status as an
Employee or Consultant shall not be considered interrupted in the case of (i)
any leave of absence approved by the Company or (ii) transfers between
locations of the Company or between the Company, its Parent, any Subsidiary,
or any successor. A leave of absence approved by the Company shall include
sick leave, military leave, or any other personal leave approved by an
authorized representative of the Company. For purposes of Incentive Stock
Options, no such leave may exceed 90 days, unless reemployment upon
expiration of such leave is guaranteed by statute or contract, including
Company policies. If reemployment upon expiration of a leave of absence
approved by the Company is not so guaranteed, on the 91st day of such leave
any Incentive Stock Option held by the Optionee shall cease to be treated as
an Incentive Stock Option and shall be treated for tax purposes as a
Nonstatutory Stock Option.
(l) "DIRECTOR" means a member of the Board of Directors of
the Company.
(m) "EMPLOYEE" means any person, including Officers and
Directors, employed by the Company or any Parent or Subsidiary of the
Company. The payment of a Director's fee by the Company shall not be
sufficient to constitute "employment" by the Company.
(n) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
(o) "FAIR MARKET VALUE" means, as of any date, the value of
Common Stock determined as follows:
(i) If the Common Stock is listed on any established
stock exchange or a national market system, including without limitation The
Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock
Market, its Fair Market Value shall be the closing sales price for such stock
(or the closing bid, if no sales were reported) as quoted on such exchange or
system for the last market trading day prior to the time of determination, as
reported in THE WALL STREET JOURNAL or such other source as the Administrator
deems reliable;
(ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean between the
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high bid and low asked prices for the Common Stock on the last market trading
day prior to the day of determination; or
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith
by the Administrator.
(p) "INCENTIVE STOCK OPTION" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.
(q) "LISTED SECURITY" means any security of the Company that
is listed or approved for listing on a national securities exchange or
designated or approved for designation as a national market system security
on an interdealer quotation system by the National Association of Securities
Dealers, Inc.
(r) "NAMED EXECUTIVE" means any individual who, on the last
day of the Company's fiscal year, is the chief executive officer of the
Company (or is acting in such capacity) or among the four highest compensated
officers of the Company (other than the chief executive officer). Such
officer status shall be determined pursuant to the executive compensation
disclosure rules under the Exchange Act.
(s) "NONSTATUTORY STOCK OPTION" means an Option not intended
to qualify as an Incentive Stock Option.
(t) "OFFICER" means a person who is an officer of the
Company within the meaning of Section 16 of the Exchange Act and the rules
and regulations promulgated thereunder.
(u) "OPTION" means a stock option granted pursuant to the
Plan.
(v) "OPTIONED STOCK" means the Common Stock subject to an
Option.
(w) "OPTIONEE" means an Employee or Consultant who receives
an Option.
(x) "PARENT" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(y) "PLAN" means this 1997 Stock Option Plan.
(z) "SECTION 16(b)" means Section 16(b) of the Securities
Exchange Act of 1934, as amended.
(aa) "SHARE" means a share of the Common Stock, as adjusted
in accordance with Section 12 below.
(bb) "SUBSIDIARY" means a "subsidiary corporation," whether
now or hereafter existing, as defined in Section 424(f) of the Code.
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3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of
Section 12 of the Plan, the maximum aggregate number of Shares that may be
subject to option and sold under the Plan is 11,000,000 Shares, plus an
automatic annual increase on the first day of each of the Company's fiscal
years beginning in 2001 and ending in 2007 equal to the lesser of : (i)
2,500,000 Shares; (ii) six percent (6%) of the Shares outstanding on the last
day of the immediately preceding fiscal year; or (iii) such lesser number of
shares as is determined by the Board of Directors. The Shares may be
authorized but unissued, or reacquired Common Stock.
If an Option expires or becomes unexercisable without having
been exercised in full, or is surrendered pursuant to an option exchange
program, the unpurchased Shares that were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated). However, Shares that have actually been issued under the Plan,
upon exercise of an Option, shall not be returned to the Plan and shall not
become available for future distribution under the Plan, except that if
Shares are repurchased by the Company at their original purchase price, and
the original purchaser of such Shares did not receive any benefits of
ownership of such Shares, such Shares shall become available for future grant
under the Plan. For purposes of the preceding sentence, voting rights shall
not be considered a benefit of Share ownership.
4. ADMINISTRATION OF THE PLAN.
(a) INITIAL PLAN PROCEDURE. Prior to the date, if any, upon
which the Company becomes subject to the Exchange Act, the Plan shall be
administered by the Board or a Committee appointed by the Board.
(b) PLAN PROCEDURE AFTER THE DATE IF ANY, UPON WHICH THE
COMPANY BECOMES SUBJECT TO THE EXCHANGE ACT.
(i) MULTIPLE ADMINISTRATIVE BODIES. If permitted by
Rule 16b-3, the Plan may be administered by different bodies with respect to
Directors, Officers and Employees who are neither Directors nor Officers.
(ii) ADMINISTRATION WITH RESPECT TO DIRECTORS AND
OFFICERS. With respect to grants of Options to Employees who are also
Officers or Directors of the Company, the Plan shall be administered by (A)
the Board if the Board may administer the Plan in compliance with the rules
under Rule 16b-3 promulgated under the Exchange Act or any successor thereto
("RULE 16b-3") relating to the disinterested administration of employee
benefit plans under which Section 16(b) exempt discretionary grants and
awards of equity securities are to be made, or (B) a Committee designated by
the Board to administer the Plan, which Committee shall be constituted to
comply with the rules under Rule 16b-3 relating to the disinterested
administration of employee benefit plans under which Section 16(b) exempt
discretionary grants and awards of equity securities are to be made. Once
appointed, such Committee shall continue to serve in its designated capacity
until otherwise directed by the Board. From time to time the Board may
increase the size of the Committee and appoint additional members thereof,
remove members (with or without cause) and appoint new members in
substitution therefor, fill vacancies, however caused, and remove all members
of the
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Committee and thereafter directly administer the Plan, all to the extent
permitted by the rules under Rule 16b-3 relating to the disinterested
administration of employee benefit plans under which Section 16(b) exempt
discretionary grants and awards of equity securities are to be made.
(iii) ADMINISTRATION WITH RESPECT TO OTHER EMPLOYEES
AND CONSULTANTS. With respect to grants of Options and to Employees or
Consultants who are neither Directors nor Officers of the Company, the Plan
shall be administered by (A) the Board or (B) a Committee designated by the
Board, which committee shall be constituted in such a manner as to satisfy
Applicable Laws. Once appointed, such Committee shall continue to serve in
its designated capacity until otherwise directed by the Board. From time to
time the Board may increase the size of the Committee and appoint additional
members thereof, remove members (with or without cause) and appoint new
members in substitution therefor, fill vacancies, however caused, and remove
all members of the Committee and thereafter directly administer the Plan, all
to the extent permitted by the Applicable Laws.
(c) POWERS OF THE ADMINISTRATOR. Subject to the provisions
of the Plan and, in the case of a Committee, the specific duties delegated by
the Board to such Committee, and subject to the approval of any relevant
authorities, including the approval, if required, of any stock exchange upon
which the Common Stock is listed, the Administrator shall have the authority
in its discretion:
(i) to determine the Fair Market Value of the Common
Stock, in accordance with Section 2(o) of the Plan;
(ii) to select the Consultants and Employees to whom
Options may from time to time be granted hereunder;
(iii) to determine whether and to what extent Options
are granted hereunder;
(iv) to determine the number of Shares to be covered
by each such award granted hereunder;
(v) to approve forms of agreement for use under the
Plan;
(vi) to determine the terms and conditions of any
award granted hereunder;
(vii) to determine whether and under what circumstances
an Option may be settled in cash under subsection 9(f) instead of Common
Stock;
(viii) to reduce the exercise price of any Option to the
then current Fair Market Value if the Fair Market Value of the Common Stock
covered by such Option has declined since the date the Option was granted;
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(ix) to provide for the early exercise of Options for
the purchase of unvested shares subject to such terms and conditions as the
Administrator may determine; and
(x) to construe and interpret the terms of the Plan
and awards granted pursuant to the Plan.
(d) EFFECT OF ADMINISTRATOR'S DECISION. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees and any other holders of any Options.
5. ELIGIBILITY.
(a) Nonstatutory Stock Options may be granted to Employees
and Consultants. Incentive Stock Options may be granted only to Employees.
An Employee or Consultant who has been granted an Option may, if otherwise
eligible, be granted additional Options.
(b) Each Option shall be designated in the written option
agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.
However, notwithstanding such designation, to the extent that the aggregate
Fair Market Value of the Shares with respect to which Incentive Stock Options
are exercisable for the first time by the Optionee during any calendar year
(under all plans of the Company and any Parent or Subsidiary) exceeds
$100,000, such Options shall be treated as Nonstatutory Stock Options. For
purposes of this Section 5(b), Incentive Stock Options shall be taken into
account in the order in which they were granted. The Fair Market Value of
the Shares shall be determined as of the time the Option with respect to such
Shares is granted.
(c) Neither the Plan nor any Option shall confer upon any
Optionee any right with respect to continuation of his or her employment or
consulting relationship with the Company, nor shall it interfere in any way
with his or her right or the Company's right to terminate his or her
employment or consulting relationship at any time, with or without cause.
(d) Upon the Company or a successor corporation issuing any
class of common equity securities required to be registered under Section 12
of the Exchange Act or upon the Plan being assumed by a corporation having a
class of common equity securities required to be registered under Section 12
of the Exchange Act, the following limitations shall apply to grants of
Options:
(i) The maximum number of Shares which may be subject
to Options granted to any one Employee under this Plan for any fiscal year of
the Company shall be 2,000,000. The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization
as described in Section 12.
(ii) If an Option is cancelled in the same fiscal year of
the Company in which it was granted (other than in connection with a transaction
described in Section 12), the
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cancelled Option shall be counted against the limit set forth in subsection
(i) above. For this purpose, if the exercise price of an Option is reduced,
such reduction will be treated as a cancellation of the Option and the grant
of a new Option.
6. TERM OF PLAN. The Plan shall become effective upon the earlier
to occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company, as described in Section 18 of the Plan. It
shall continue in effect for a term of ten (10) years unless sooner
terminated under Section 14 of the Plan.
7. TERM OF OPTION. The term of each Option shall be the term
stated in the Option Agreement; provided, however, that the term shall be no
more than ten (10) years from the date of grant thereof. In the case of an
Incentive Stock Option granted to an Optionee who, at the time the Option is
granted, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any Parent or Subsidiary, the
term of the Option shall be five (5) years from the date of grant thereof or
such shorter term as may be provided in the Option Agreement.
8. OPTION EXERCISE PRICE AND CONSIDERATION.
(a) The per share exercise price for the Shares to be issued
upon exercise of an Option shall be such price as is determined by the
Administrator, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of
grant of such Option, owns stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the
Fair Market Value per Share on the date of grant.
(B) granted to any other Employee, the per
Share exercise price shall be no less than 100% of the Fair Market Value per
Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option
(A) granted prior to the date, if any, on
which the Common Stock becomes a Listed Security to a person who, at the time
of grant of such Option, owns stock representing more than ten percent (10%)
of the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the
Fair Market Value per Share on the date of the grant.
(B) granted prior to the date, if any, on
which the Common Stock becomes a Listed Security to any other person, the per
Share exercise price shall be no less than 85% of the Fair Market Value per
Share on the date of grant.
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(C) granted on or after the date, if any, on
which the Common Stock becomes a Listed Security to any eligible person, the
per share Exercise Price shall be such price as determined by the
Administrator; provided, however, that if such eligible person is, at the
time of the grant of such Option, a Named Executive of the Company, the per
share Exercise Price shall be no less than 100% of the Fair Market Value on
the date of grant if such Option is intended to qualify as performance-based
compensation under Section 162(m) of the Code.
(iii) Notwithstanding the foregoing, Options may be
granted with a per Share exercise price other than as required above pursuant
to a merger or other corporate transaction.
(b) The consideration to be paid for the Shares to be issued
upon exercise of an Option, including the method of payment, shall be
determined by the Administrator (and, in the case of an Incentive Stock
Option, shall be determined at the time of grant). Such consideration may
consist of (1) cash, (2) check, (3) promissory note, (4) other Shares that
(x) in the case of Shares acquired upon exercise of an Option, have been
owned by the Optionee for more than six months on the date of surrender, and
(y) have a Fair Market Value on the date of surrender equal to the aggregate
exercise price of the Shares as to which such Option shall be exercised, (5)
delivery of a properly executed exercise notice together with such other
documentation as the Administrator and a broker, if applicable, shall require
to effect an exercise of the Option and delivery to the Company of the sale
or loan proceeds required to pay the exercise price, or (6) any combination
of the foregoing methods of payment. In making its determination as to the
type of consideration to accept, the Administrator shall consider if
acceptance of such consideration may be reasonably expected to benefit the
Company.
9. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any
Option granted hereunder shall be exercisable at such times and under such
conditions as determined by the Administrator, including performance criteria
with respect to the Company and/or the Optionee, and as shall be permissible
under the terms of the Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under Section 8(b) hereof. Until
the issuance (as evidenced by the appropriate entry on the books of the Company
or of a duly authorized transfer agent of the Company) of the stock certificate
evidencing such Shares, no right to vote, receive dividends or any other rights
as a shareholder shall exist with respect to the Optioned Stock, notwithstanding
the exercise of the Option. The Company shall issue (or cause to be issued)
such stock certificate promptly upon exercise of the Option. No
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adjustment shall be made for a dividend or other right for which the record
date is prior to the date the stock certificate is issued, except as provided
in Section 12 hereof.
Exercise of an Option in any manner shall result in a decrease
in the number of Shares that thereafter may be available, both for purposes
of the Plan and for sale under the Option, by the number of Shares as to
which the Option is exercised.
(b) TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP.
In the event of termination of an Optionee's Continuous Status as an Employee
or Consultant (but not in the event of an Optionee's change of status from
Employee to Consultant (in which case an Employee's Incentive Stock Option
shall automatically convert to a Nonstatutory Stock Option on the date three
(3) months and one day following such change of status) or from Consultant to
Employee), such Optionee may, but only within such period of time as is
determined by the Administrator, of at least thirty (30) days, with such
determination in the case of an Incentive Stock Option not exceeding three
(3) months after the date of such termination (but in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), exercise his or her Option to the extent that the Optionee was
entitled to exercise it at the date of such termination. To the extent that
the Optionee was not entitled to exercise the Option at the date of such
termination, or if the Optionee does not exercise such Option to the extent
so entitled within the time specified herein, the Option shall terminate.
(c) DISABILITY OF OPTIONEE. In the event of termination of
an Optionee's Continuous Status as an Employee or Consultant as a result of
his or her disability, the Optionee may, but only within twelve (12) months
from the date of such termination (and in no event later than the expiration
date of the term of such Option as set forth in the Option Agreement),
exercise the Option to the extent otherwise entitled to exercise it at the
date of such termination. If such disability is not a "disability" as such
term is defined in Section 22(e)(3) of the Code, in the case of an Incentive
Stock Option such Incentive Stock Option shall automatically cease to be
treated as an Incentive Stock Option and shall be treated for tax purposes as
a Nonstatutory Stock Option on the day three months and one day following
such termination. To the extent that the Optionee was not entitled to
exercise the Option at the date of termination, or if the Optionee does not
exercise such Option to the extent so entitled within the time specified
herein, the Option shall terminate, and the Shares covered by such Option
shall revert to the Plan.
(d) DEATH OF OPTIONEE. In the event of the death of an
Optionee, the Option may be exercised at any time within twelve (12) months
following the date of death (but in no event later than the expiration of the
term of such Option as set forth in the Notice of Grant) by the Optionee's
estate or by a person who acquired the right to exercise the Option by
bequest or inheritance, but only to the extent that the Optionee was entitled
to exercise the Option on the date of death. If, at the time of death, the
Optionee was not entitled to exercise his or her entire Option, the Shares
covered by the unexercisable portion of the Option shall immediately revert
to the Plan. If, after the Optionee's death, the Optionee's estate or a
person who acquires the right to exercise the Option by bequest or
inheritance does not exercise the Option within the time
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specified herein, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.
(e) RULE 16b-3. Options granted to persons subject to
Section 16(b) of the Exchange Act must comply with Rule 16b-3 and shall
contain such additional conditions or restrictions as may be required
thereunder to qualify for the maximum exemption from Section 16 of the
Exchange Act with respect to Plan transactions.
(f) BUYOUT PROVISIONS. The Administrator may at any time
offer to buy out for a payment in cash or Shares, an Option previously
granted, based on such terms and conditions as the Administrator shall
establish and communicate to the Optionee at the time that such offer is made.
10. NON-TRANSFERABILITY OF OPTIONS. Options may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee,
provided that, after the date, if any, upon which the Common Stock becomes a
Listed Security, the Administrator may in its discretion grant transferable
Nonstatutory Stock Options pursuant to Option Agreements specifying (i) the
manner in which such Nonstatutory Stock Options are transferable and (ii)
that any such transfer shall be subject to the Applicable Laws. The
designation of a beneficiary by an Optionee will not constitute a transfer.
An Option may be exercised, during the lifetime of the holder of Option, only
by such holder or a transferee permitted by this Section 10.
11. TAXES.
(a) As a condition of the exercise of an Option granted
under the Plan, the Optionee (or in the case of the Optionee's death, the
person exercising the Option) shall make such arrangements as the
Administrator may require for the satisfaction of any applicable federal,
state, local or foreign withholding tax obligations that may arise in
connection with the exercise of Option and the issuance of Shares. The
Company shall not be required to issue any Shares under the Plan until such
obligations are satisfied.
(b) In the case of an Employee and in the absence of any
other arrangement, the Employee shall be deemed to have directed the Company
to withhold or collect from his or her compensation an amount sufficient to
satisfy such tax obligations from the next payroll payment otherwise payable
after the date of an exercise of the Option.
(c) This Section 11(c) shall apply only after the date, if any,
upon which the Common Stock becomes a Listed Security. In the case of an
Optionee other than an Employee (or in the case of an Employee where the next
payroll payment is not sufficient to satisfy such tax obligations, with respect
to any remaining tax obligations), in the absence of any other arrangement and
to the extent permitted under the Applicable Laws, the Optionee shall be deemed
to have elected to have the Company withhold from the Shares to be issued upon
exercise of the Option that number of Shares having a Fair Market Value
determined as of the
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applicable Tax Date (as defined below) equal to the minimum statutory
withholding rates for federal and state tax purposes, including payroll
taxes, applicable to the exercise. For purposes of this Section 11, the Fair
Market Value of the Shares to be withheld shall be determined on the date
that the amount of tax to be withheld is to be determined under the
Applicable Laws (the "TAX DATE").
(d) If permitted by the Administrator, in its discretion, an
Optionee may satisfy his or her tax withholding obligations upon exercise of
an Option by surrendering to the Company Shares that (i) in the case of
Shares previously acquired from the Company, have been owned by the Optionee
for more than six (6) months on the date of surrender, and (ii) have a Fair
Market Value determined as of the applicable Tax Date equal to the minimum
statutory withholding rates for federal and state tax purposes, including
payroll taxes, applicable to the exercise.
(e) Any election or deemed election by a Optionee to have
Shares withheld to satisfy tax withholding obligations under Section 11 (c)
or (d) above shall be irrevocable as to the particular Shares as to which the
election is made and shall be subject to the consent or disapproval of the
Administrator. Any election by an Optionee under Section 11(d) above must be
made on or prior to the applicable Tax Date.
(f) In the event an election to have Shares withheld is made
by an Optionee and the Tax Date is deferred under Section 83 of the Code
because no election is filed under Section 83(b) of the Code, the Optionee
shall receive the full number of Shares with respect to which the Option is
exercised but such Optionee shall be unconditionally obligated to tender back
to the Company the proper number of Shares on the applicable Tax Date.
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
(a) CHANGES IN CAPITALIZATION. Subject to any required
action by the shareholders of the Company, the number of shares of Common
Stock covered by each outstanding Option, and the number of shares of Common
Stock that have been authorized for issuance under the Plan but as to which
no Option has yet been granted or that has been returned to the Plan upon
cancellation or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding Option, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of the Common Stock, or any
other increase or decrease in the number of issued shares of Common Stock
effected without receipt of consideration by the Company. The conversion of
any convertible securities of the Company shall not be deemed to have been
"effected without receipt of consideration." Such adjustment shall be made by
the Board, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company
of shares of stock of any class, or securities convertible into shares of
stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock
subject to an Option.
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(b) DISSOLUTION OR LIQUIDATION. In the event of the
proposed dissolution or liquidation of the Company, the Administrator shall
notify the Optionee at least fifteen (15) days prior to such proposed action.
To the extent it has not been previously exercised, the Option shall
terminate immediately prior to the consummation of such proposed action.
(c) CHANGE OF CONTROL.
(i) Immediately upon the closing of a Change of
Control, each Option outstanding under the Plan shall become vested with
respect to an additional number of shares equal to the lesser of: (i)
twenty-five percent (25%) of the number of shares originally granted pursuant
to such Option, and (ii) the remaining number of shares not yet vested under
the terms of such Option.
(ii) Thereafter, each outstanding Option may be
assumed or an equivalent option or right may be substituted by such successor
corporation or a parent or subsidiary of such successor corporation. If, in
such event, an Option is not assumed or substituted, the Option shall
terminate as of the day ten (10) days following the date of the closing of
the Change of Control. For the purposes of this paragraph, the Option shall
be considered assumed if, following the Change of Control, the Option confers
the right to purchase or receive, for each Share of Optioned Stock subject to
the Option immediately prior to the Change of Control, the consideration
(whether stock, cash, or other securities or property) received in the Change
of Control by holders of Common Stock for each Share held on the effective
date of the transaction (and if the holders are offered a choice of
consideration, the type of consideration chosen by the holders of a majority
of the outstanding Shares). If such consideration received in the Change of
Control is not solely common stock of the successor corporation or its
Parent, the Administrator may, with the consent of the successor corporation,
provide for the consideration to be received upon the exercise of the Option,
for each Share of Optioned Stock subject to the Option, to be solely common
stock of the successor corporation or its Parent equal in fair market value
to the per share consideration received by holders of Common Stock in the
Change of Control.
(iii) In the event that the Option is not terminated
following the closing of the Change of Control, if an Optionee is
Constructively Terminated by the Company or by any successor entity within
one year following the closing of the Change of Control, then such Optionee's
Option shall vest an additional number of shares equal to the lesser of: (i)
twenty-five percent (25%) of the number of shares originally granted, and
(ii) the remaining number of shares not yet vested under the terms of such
Option.
13. TIME OF GRANTING OPTIONS. The date of grant of an Option
shall, for all purposes, be the date on which the Administrator makes the
determination granting such Option, or such other date as is determined by
the Administrator. Notice of the determination shall be given to each
Employee or Consultant to whom an Option is so granted within a reasonable
time after the date of such grant.
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14. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may at any time
amend, alter, suspend or discontinue the Plan, but no amendment, alteration,
suspension or discontinuation shall be made that would impair the rights of
any Optionee under any grant theretofore made, without his or her consent.
In addition, to the extent necessary and desirable to comply with Rule 16b-3
under the Exchange Act or with Section 422 of the Code (or any other
applicable law or regulation, including the requirements of the NASD or an
established stock exchange), the Company shall obtain shareholder approval of
any Plan amendment in such a manner and to such a degree as required.
(b) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment
or termination of the Plan shall not affect Options already granted, and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee
and the Administrator, which agreement must be in writing and signed by the
Optionee and the Company.
15. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and
the issuance and delivery of such Shares pursuant thereto shall comply with
all relevant provisions of law, including, without limitation, the Securities
Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, and the requirements of any stock exchange upon which
the Shares may then be listed, and shall be further subject to the approval
of counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant at the
time of any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation
is required by any of the aforementioned relevant provisions of law.
16. RESERVATION OF SHARES. The Company, during the term of this
Plan, shall at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.
The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the
Company's counsel to be necessary to the lawful issuance and sale of any
Shares hereunder, shall relieve the Company of any liability in respect of
the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.
17. AGREEMENTS. Options shall be evidenced by written agreements
in such form as the Administrator shall approve from time to time.
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18. SHAREHOLDER APPROVAL. Continuance of the Plan shall be subject
to approval by the shareholders of the Company within twelve (12) months
before or after the date the Plan is adopted. Such shareholder approval
shall be obtained in the degree and manner required under Applicable Laws and
the rules of any stock exchange upon which the Common Stock is listed.
19. INFORMATION TO OPTIONEES AND PURCHASERS. The Company shall
provide to each Optionee and to each individual who acquires Shares pursuant
to the Plan, not less frequently than annually during the period such
Optionee or purchaser has one or more Options outstanding, and, in the case
of an individual who acquires Shares pursuant to the Plan, during the period
such individual owns such Shares, copies of annual financial statements. The
Company shall not be required to provide such statements to key employees
whose duties in connection with the Company assure their access to equivalent
information.
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IMPRESSE CORPORATION
2000 EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the 2000 Employee Stock
Purchase Plan of Impresse Corporation:
1. PURPOSE. The purpose of the Plan is to provide employees of
the Company and its Designated Subsidiaries with an opportunity to purchase
Common Stock of the Company. It is the intention of the Company to have the
Plan qualify as an "Employee Stock Purchase Plan" under Section 423 of the
Code. The provisions of the Plan shall, accordingly, be construed so as to
extend and limit participation in a manner consistent with the requirements
of that section of the Code.
2. DEFINITIONS.
(a) "BOARD" means the Board of Directors of the Company.
(b) "CODE" means the Internal Revenue Code of 1986, as amended.
(c) "COMMON STOCK" means the Common Stock of the Company.
(d) "COMPANY" means Impresse Corporation, a [Delaware]
corporation.
(e) "COMPENSATION" means total cash compensation received by
an Employee from the Company or a Designated Subsidiary. By way of
illustration, but not limitation, Compensation includes regular compensation
such as salary, wages, overtime, shift differentials, bonuses, commissions
and incentive compensation, but excludes relocation, expense reimbursements,
tuition or other reimbursements and income realized as a result of
participation in any stock option, stock purchase, or similar plan of the
Company or any Designated Subsidiary.
(f) "CONTINUOUS STATUS AS AN EMPLOYEE" means the absence of
any interruption or termination of service as an Employee. Continuous Status
as an Employee shall not be considered interrupted in the case of (i) sick
leave; (ii) military leave; (iii) any other leave of absence approved by the
Administrator, provided that such leave is for a period of not more than 90
days, unless reemployment upon the expiration of such leave is guaranteed by
contract or statute, or unless provided otherwise pursuant to Company policy
adopted from time to time; or (iv) in the case of transfers between locations
of the Company or between the Company and its Designated Subsidiaries.
(g) "CONTRIBUTIONS" means all amounts credited to the
account of a participant pursuant to the Plan.
(h) "CORPORATE TRANSACTION" means a sale of all or
substantially all of the Company's assets, or a merger, consolidation or
other capital reorganization of the Company with or into another corporation,
or any other transaction or series of related transactions in
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which the Company's stockholders immediately prior thereto own less than 50%
of the voting stock of the Company (or its successor or parent) immediately
thereafter.
(i) "DESIGNATED SUBSIDIARIES" means the Subsidiaries that
have been designated by the Board from time to time in its sole discretion as
eligible to participate in the Plan; provided however that the Board shall
only have the discretion to designate Subsidiaries if the issuance of options
to such Subsidiary's Employees pursuant to the Plan would not cause the
Company to incur adverse accounting charges.
(j) "EMPLOYEE" means any person, including an Officer, who
is an employee for income and payroll tax purposes and who is customarily
employed for at least twenty (20) hours per week and more than five (5)
months in a calendar year by the Company or one of its Designated
Subsidiaries.
(k) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
(l) "OFFERING DATE" means the first business day of each
Offering Period of the Plan.
(m) "OFFERING PERIOD" means a period of twenty-four (24)
months commencing on May 1and November 1 of each year, except for the first
Offering Period as set forth in Section 4(a).
(n) "OFFICER" means a person who is an officer of the
Company within the meaning of Section 16 of the Exchange Act and the rules
and regulations promulgated thereunder.
(o) "PLAN" means this Employee Stock Purchase Plan.
(p) "PURCHASE DATE" means the last day of each Purchase
Period of the Plan.
(q) "PURCHASE PERIOD" means a period of six (6) months
within an Offering Period, except as set forth in Section 4(b).
(r) "PURCHASE PRICE" means with respect to a Purchase Period
an amount equal to 85% of the Fair Market Value (as defined in Section 7(b)
below) of a Share of Common Stock on the Offering Date or on the Purchase
Date, whichever is lower; provided, however, that in the event (i) of any
increase in the number of Shares available for issuance under the Plan as a
result of a stockholder-approved amendment to the Plan, and (ii) all or a
portion of such additional Shares are to be issued with respect to one or
more Offering Periods that are underway at the time of such increase
("ADDITIONAL SHARES"), and (iii) the Fair Market Value of a Share of Common
Stock on the date of such increase (the "APPROVAL DATE FAIR MARKET VALUE") is
higher than the Fair Market Value on the Offering Date for any such Offering
Period, then in such instance the Purchase Price with respect to Additional
Shares shall be 85% of the Approval Date Fair Market Value or the Fair Market
Value of a Share of Common Stock on the Purchase Date, whichever is lower.
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(s) "SHARE" means a share of Common Stock, as adjusted in
accordance with Section 19 of the Plan.
(t) "SUBSIDIARY" means a corporation, domestic or foreign,
of which not less than 50% of the voting shares are held by the Company or a
Subsidiary, whether or not such corporation now exists or is hereafter
organized or acquired by the Company or a Subsidiary.
3. ELIGIBILITY.
(a) Any person who is an Employee as of the Offering Date of
a given Offering Period shall be eligible to participate in such Offering
Period under the Plan, subject to the requirements of Section 6(a) and the
limitations imposed by Section 423(b) of the Code; provided however that
eligible Employees may not participate in more than one Offering Period at a
time.
(b) Any provisions of the Plan to the contrary
notwithstanding, no Employee shall be granted an option under the Plan (i)
if, immediately after the grant, such Employee (or any other person whose
stock would be attributed to such Employee pursuant to Section 424(d) of the
Code) would own capital stock of the Company and/or hold outstanding options
to purchase stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of stock of the Company or of any
subsidiary of the Company, or (ii) if such option would permit his or her
rights to purchase stock under all employee stock purchase plans (described
in Section 423 of the Code) of the Company and its Subsidiaries to accrue at
a rate that exceeds Twenty-Five Thousand Dollars ($25,000) of the Fair Market
Value (as defined in Section 7(b) below) of such stock (determined at the
time such option is granted) for each calendar year in which such option is
outstanding at any time.
4. OFFERING PERIODS AND PURCHASE PERIODS.
(a) OFFERING PERIODS. The Plan shall be generally
implemented by a series of Offering Periods of twenty-four (24) months'
duration, with new Offering Periods (other than the first Offering Period)
commencing on or about May 1 and November 1 of each year (or at such other
time or times as may be determined by the Board of Directors). The first
Offering Period shall commence on the beginning of the effective date of the
Registration Statement on Form S-1 for the initial public offering of the
Company's Common Stock (the "IPO DATE") and continue until April 30, 2002.
The Plan shall continue until terminated in accordance with Section 20
hereof. The Board of Directors of the Company shall have the power to change
the duration and/or the frequency of Offering Periods with respect to future
offerings without stockholder approval if such change is announced at least
five (5) days prior to the scheduled beginning of the first Offering Period
to be affected.
(b) PURCHASE PERIODS. Each Offering Period shall generally
consist of four (4) consecutive purchase periods of six (6) months' duration.
The last day of each Purchase Period shall be the "PURCHASE DATE" for such
Purchase Period. A Purchase Period commencing on May 1 shall end on the next
October 31. A Purchase Period commencing on November 1 shall end on the
next April 30. The first Purchase Period of the first Offering Period shall
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commence on the IPO Date and shall end on October 31, 2000. The Board of
Directors of the Company shall have the power to change the duration and/or
frequency of Purchase Periods with respect to future purchases without
stockholder approval if such change is announced at least five (5) days prior
to the scheduled beginning of the first Purchase Period to be affected.
5. PARTICIPATION.
(a) An eligible Employee may become a participant in the
Plan by completing a subscription agreement on the form provided by the
Company and filing it with the Company's payroll office or the stock
brokerage or other financial services firm designated by the Company (the
"Designated Broker") prior to the applicable Offering Date, unless a later
time for filing the subscription agreement is set by the Board for all
eligible Employees with respect to a given Offering Period. The subscription
agreement shall set forth the percentage of the participant's Compensation
(subject to Section 6(a) below) to be paid as Contributions pursuant to the
Plan.
(b) Payroll deductions shall commence on the first full
payroll following the Offering Date and shall end on the last payroll paid on
or prior to the last Purchase Period of the Offering Period to which the
subscription agreement is applicable, unless sooner terminated by the
participant as provided in Section 10.
6. METHOD OF PAYMENT OF CONTRIBUTIONS.
(a) A participant shall elect to have payroll deductions
made on each payday during the Offering Period in an amount not less than one
percent (1%) and not more than twenty percent (20%) (or such other percentage
as the Board may establish from time to time before an Offering Date) of such
participant's Compensation on each payday during the Offering Period. All
payroll deductions made by a participant shall be credited to his or her
account under the Plan. A participant may not make any additional payments
into such account.
(b) A participant may discontinue his or her participation
in the Plan as provided in Section 10, or on one occasion only during a
Purchase Period may increase and on one occasion only during a Purchase
Period decrease the rate of his or her Contributions by completing and filing
with the Company or its Designated Broker a new subscription agreement
authorizing a change in the payroll deduction rate. The change in rate shall
be effective with the first full payroll following five (5) business days
after the Company's receipt of the new subscription agreement, unless the
Company elects to process a given rate change more quickly. A participant's
subscription agreement shall remain in effect for successive Offering Periods
unless terminated as provided in Section 10.
(c) Notwithstanding the foregoing, to the extent necessary
to comply with Section 423(b)(8) of the Code and Section 3(b), a
participant's payroll deductions may be decreased by the Company to 0% at any
time during a Purchase Period. Payroll deductions shall re-commence at the
rate provided in such participant's subscription agreement at the beginning
of the first Purchase Period which is scheduled to end in the following
calendar year, unless terminated by the participant as provided in Section
10. In addition, a participant's payroll deductions may be decreased by the
Company to 0% at any time during a Purchase Period in
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order to avoid unnecessary payroll contributions as a result of application
of the maximum share limit set forth in Section 7(a), in which case payroll
deductions shall re-commence at the rate provided in such participant's
subscription agreement at the beginning of the next Purchase Period, unless
terminated by the participant as provided in Section 10.
7. GRANT OF OPTION.
(a) On the Offering Date of each Offering Period, each
eligible Employee participating in such Offering Period shall be granted an
option to purchase on each Purchase Date a number of Shares of the Company's
Common Stock determined by dividing such Employee's Contributions accumulated
prior to such Purchase Date and retained in the participant's account as of
the Purchase Date by the applicable Purchase Price; provided however that the
maximum number of Shares an Employee may purchase during each Purchase Period
shall be 2,000 Shares (subject to any adjustment pursuant to Section 19
below), and provided further that such purchase shall be subject to the
limitations set forth in Sections 3(b) and 13.
(b) The fair market value of the Company's Common Stock on a
given date (the "FAIR MARKET VALUE") shall be determined by the Board in its
discretion based on the closing sales price of the Common Stock for such date
(or, in the event that the Common Stock is not traded on such date, on the
immediately preceding trading date), as reported by the National Association
of Securities Dealers Automated Quotation (Nasdaq) National Market or, if
such price is not reported, the mean of the bid and asked prices per share of
the Common Stock as reported by Nasdaq or, in the event the Common Stock is
listed on a stock exchange, the Fair Market Value per share shall be the
closing sales price on such exchange on such date (or, in the event that the
Common Stock is not traded on such date, on the immediately preceding trading
date), as reported in THE WALL STREET JOURNAL. For purposes of the Offering
Date under the first Offering Period under the Plan, the Fair Market Value of
a share of the Common Stock of the Company shall be the Price to Public as
set forth in the final prospectus filed with the Securities and Exchange
Commission pursuant to Rule 424 under the Securities Act of 1933, as amended.
8. EXERCISE OF OPTION. Unless a participant withdraws from the
Plan as provided in Section 10, his or her option for the purchase of Shares
will be exercised automatically on each Purchase Date of an Offering Period,
and the maximum number of full Shares subject to the option will be purchased
at the applicable Purchase Price with the accumulated Contributions in his or
her account. No fractional Shares shall be issued; any payroll deductions
accumulated in a participant's account that are not sufficient to purchase a
full Share shall be retained in the participant's account for the subsequent
Purchase Period or Offering Period, subject to earlier withdrawal by the
participant as provided in Section 10 below. Any other amounts left over in
a participant's account after a Purchase Date shall be returned to the
participant. During his or her lifetime, a participant's option to purchase
Shares hereunder is exercisable only by him or her.
9. DELIVERY. As promptly as practicable after each Purchase Date
of each Offering Period, the number of Shares purchased by each participant
upon exercise of his or her option shall be deposited into an account
established in the participant's name with the Designated Broker.
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10. VOLUNTARY WITHDRAWAL; TERMINATION OF EMPLOYMENT.
(a) A participant may withdraw all but not less than all the
Contributions credited to his or her account under the Plan at any time prior
to each Purchase Date by giving written notice to the Company or the
Designated Broker, as directed by the Company. All of the participant's
Contributions credited to his or her account will be paid to him or her
promptly after receipt of his or her notice of withdrawal and his or her
option for the current period will be automatically terminated, and no
further Contributions for the purchase of Shares will be made during the
Offering Period.
(b) Upon termination of the participant's Continuous Status
as an Employee prior to the Purchase Date of an Offering Period for any
reason, including retirement or death, the Contributions credited to his or
her account will be returned to him or her or, in the case of his or her
death, to the person or persons entitled thereto under Section 14, and his or
her option will be automatically terminated.
(c) In the event an Employee fails to remain in Continuous
Status as an Employee of the Company for at least twenty (20) hours per week
during the Offering Period in which the employee is a participant, he or she
will be deemed to have elected to withdraw from the Plan and the Contributions
credited to his or her account will be returned to him or her and his or her
option terminated.
(d) A participant's withdrawal from an offering will not
have any effect upon his or her eligibility to participate in a succeeding
offering or in any similar plan that may hereafter be adopted by the Company.
11. AUTOMATIC WITHDRAWAL. If the Fair Market Value of the Shares
on any Purchase Date of an Offering Period is less than the Fair Market Value
of the Shares on the Offering Date for such Offering Period, then every
participant shall automatically (i) be withdrawn from such Offering Period at
the close of such Purchase Date and after the acquisition of Shares for such
Purchase Period, and (ii) be enrolled in the Offering Period commencing on
the first business day subsequent to such Purchase Period. Participants
shall automatically be withdrawn as of October 31, 2000 from the Offering
Period beginning on the IPO Date and re-enrolled in the Offering Period
beginning on November 1, 2000 if the Fair Market Value of the Shares on the
IPO Date is greater than the Fair Market Value of the Shares on October 31,
2000, unless a participant notifies the Administrator prior to October 31,
2000 that he or she does not wish to be withdrawn and re-enrolled.
12. INTEREST. No interest shall accrue on the Contributions of a
participant in the Plan.
13. STOCK.
(a) Subject to adjustment as provided in Section 19, the
maximum number of Shares which shall be made available for sale under the
Plan shall be 500,000 Shares, plus an automatic annual increase on the first
day of each of the Company's fiscal years beginning in
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2001 continuing through 2010 equal to the lesser of (i) 500,000 Shares, (ii)
two (2%) percent of the Shares outstanding on the last day of the immediately
preceding fiscal year or (iii) a lesser amount determined by the Board. If
the Board determines that, on a given Purchase Date, the number of shares
with respect to which options are to be exercised may exceed (i) the number
of shares of Common Stock that were available for sale under the Plan on the
Offering Date of the applicable Offering Period, or (ii) the number of shares
available for sale under the Plan on such Purchase Date, the Board may in its
sole discretion provide (x) that the Company shall make a pro rata allocation
of the Shares of Common Stock available for purchase on such Offering Date or
Purchase Date, as applicable, in as uniform a manner as shall be practicable
and as it shall determine in its sole discretion to be equitable among all
participants exercising options to purchase Common Stock on such Purchase
Date, and continue all Offering Periods then in effect, or (y) that the
Company shall make a pro rata allocation of the shares available for purchase
on such Offering Date or Purchase Date, as applicable, in as uniform a manner
as shall be practicable and as it shall determine in its sole discretion to
be equitable among all participants exercising options to purchase Common
Stock on such Purchase Date, and terminate any or all Offering Periods then
in effect pursuant to Section 20 below. The Company may make pro rata
allocation of the Shares available on the Offering Date of any applicable
Offering Period pursuant to the preceding sentence, notwithstanding any
authorization of additional Shares for issuance under the Plan by the
Company's stockholders subsequent to such Offering Date.
(b) The participant shall have no interest or voting right
in Shares covered by his or her option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan
will be registered in the name of the participant or in the name of the
participant and his or her spouse.
14. ADMINISTRATION. The Board, or a committee named by the Board,
shall supervise and administer the Plan and shall have full power to adopt,
amend and rescind any rules deemed desirable and appropriate for the
administration of the Plan and not inconsistent with the Plan, to construe
and interpret the Plan, and to make all other determinations necessary or
advisable for the administration of the Plan.
15. DESIGNATION OF BENEFICIARY.
(a) A participant may file a written designation of a
beneficiary who is to receive any Shares and cash, if any, from the
participant's account under the Plan in the event of such participant's death
subsequent to the end of a Purchase Period but prior to delivery to him or
her of such Shares and cash. In addition, a participant may file a written
designation of a beneficiary who is to receive any cash from the
participant's account under the Plan in the event of such participant's death
prior to the Purchase Date of an Offering Period. If a participant is
married and the designated beneficiary is not the spouse, spousal consent
shall be required for such designation to be effective.
(b) Such designation of beneficiary may be changed by the
participant (and his or her spouse, if any) at any time by written notice.
In the event of the death of a participant and in the absence of a
beneficiary validly designated under the Plan who is living at the time of
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such participant's death, the Company shall deliver such Shares and/or cash
to the executor or administrator of the estate of the participant, or if no
such executor or administrator has been appointed (to the knowledge of the
Company), the Company, in its discretion, may deliver such Shares and/or cash
to the spouse or to any one or more dependents or relatives of the
participant, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.
16. TRANSFERABILITY. Neither Contributions credited to a
participant's account nor any rights with regard to the exercise of an option
or to receive Shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution, or as provided in Section 15) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds in accordance with Section 10.
17. USE OF FUNDS. All Contributions received or held by the
Company under the Plan may be used by the Company for any corporate purpose,
and the Company shall not be obligated to segregate such Contributions.
18. REPORTS. Individual accounts will be maintained for each
participant in the Plan. Statements of account will be given to
participating Employees at least annually, which statements will set forth
the amounts of Contributions, the per Share Purchase Price, the number of
Shares purchased and the remaining cash balance, if any.
19. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; CORPORATE
TRANSACTIONS.
(a) ADJUSTMENT. Subject to any required action by the
stockholders of the Company, the number of Shares covered by each option
under the Plan that has not yet been exercised and the number of Shares that
have been authorized for issuance under the Plan but have not yet been placed
under option (collectively, the "RESERVES"), as well as the maximum number of
shares of Common Stock that may be purchased by a participant in a Purchase
Period, the number of shares of Common Stock set forth in Section 13(a)
above, and the price per Share of Common Stock covered by each option under
the Plan that has not yet been exercised, shall be proportionately adjusted
for any increase or decrease in the number of issued Shares resulting from a
stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock (including any such change in the number
of Shares of Common Stock effected in connection with a change in domicile of
the Company), or any other increase or decrease in the number of Shares
effected without receipt of consideration by the Company; provided however
that conversion of any convertible securities of the Company shall not be
deemed to have been "effected without receipt of consideration." Such
adjustment shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. Except as expressly provided herein,
no issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or
price of Shares subject to an option.
(b) CORPORATE TRANSACTIONS. In the event of a dissolution
or liquidation of the Company, any Purchase Period and Offering Period then
in progress will terminate
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immediately prior to the consummation of such action, unless otherwise
provided by the Board. In the event of a Corporate Transaction, each option
outstanding under the Plan shall be assumed or an equivalent option shall be
substituted by the successor corporation or a parent or Subsidiary of such
successor corporation. In the event that the successor corporation refuses
to assume or substitute for outstanding options, each Purchase Period and
Offering Period then in progress shall be shortened and a new Purchase Date
shall be set (the "NEW PURCHASE DATE"), as of which date any Purchase Period
and Offering Period then in progress will terminate. The New Purchase Date
shall be on or before the date of consummation of the transaction and the
Board shall notify each participant in writing, at least ten (10) days prior
to the New Purchase Date, that the Purchase Date for his or her option has
been changed to the New Purchase Date and that his or her option will be
exercised automatically on the New Purchase Date, unless prior to such date
he or she has withdrawn from the Offering Period as provided in Section 10.
For purposes of this Section 19, an option granted under the Plan shall be
deemed to be assumed, without limitation, if, at the time of issuance of the
stock or other consideration upon a Corporate Transaction, each holder of an
option under the Plan would be entitled to receive upon exercise of the
option the same number and kind of shares of stock or the same amount of
property, cash or securities as such holder would have been entitled to
receive upon the occurrence of the transaction if the holder had been,
immediately prior to the transaction, the holder of the number of Shares of
Common Stock covered by the option at such time (after giving effect to any
adjustments in the number of Shares covered by the option as provided for in
this Section 19); provided however that if the consideration received in the
transaction is not solely common stock of the successor corporation or its
parent (as defined in Section 424(e) of the Code), the Board may, with the
consent of the successor corporation, provide for the consideration to be
received upon exercise of the option to be solely common stock of the
successor corporation or its parent equal in Fair Market Value to the per
Share consideration received by holders of Common Stock in the transaction.
The Board may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the Reserves, as well as the
price per Share of Common Stock covered by each outstanding option, in the
event that the Company effects one or more reorganizations, recapitalizations,
rights offerings or other increases or reductions of Shares of its outstanding
Common Stock, and in the event of the Company's being consolidated with or
merged into any other corporation.
20. AMENDMENT OR TERMINATION.
(a) The Board may at any time and for any reason terminate
or amend the Plan. Except as provided in Section 19, no such termination of
the Plan may affect options previously granted, provided that the Plan or an
Offering Period may be terminated by the Board on a Purchase Date or by the
Board's setting a new Purchase Date with respect to an Offering Period and
Purchase Period then in progress if the Board determines that termination of
the Plan and/or the Offering Period is in the best interests of the Company
and the stockholders or if continuation of the Plan and/or the Offering
Period would cause the Company to incur adverse accounting charges as a
result of a change after the effective date of the Plan in the generally
accepted accounting rules applicable to the Plan. Except as provided in
Section 19 and in this
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Section 20, no amendment to the Plan shall make any change in any option
previously granted that adversely affects the rights of any participant. In
addition, to the extent necessary to comply with Rule 16b-3 under the
Exchange Act, or under Section 423 of the Code (or any successor rule or
provision or any applicable law or regulation), the Company shall obtain
stockholder approval in such a manner and to such a degree as so required.
(b) Without stockholder consent and without regard to
whether any participant rights may be considered to have been adversely
affected, the Board (or its committee) shall be entitled to change the
Offering Periods and Purchase Periods, limit the frequency and/or number of
changes in the amount withheld during an Offering Period, establish the
exchange ratio applicable to amounts withheld in a currency other than U.S.
dollars, permit payroll withholding in excess of the amount designated by a
participant in order to adjust for delays or mistakes in the Company's
processing of properly completed withholding elections, establish reasonable
waiting and adjustment periods and/or accounting and crediting procedures to
ensure that amounts applied toward the purchase of Common Stock for each
participant properly correspond with amounts withheld from the participant's
Compensation, and establish such other limitations or procedures as the Board
(or its committee) determines in its sole discretion advisable that are
consistent with the Plan.
21. NOTICES. All notices or other communications by a participant
to the Company under or in connection with the Plan shall be deemed to have
been duly given when received in the form specified by the Company at the
location, or by the person, designated by the Company for the receipt thereof.
22. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
with respect to an option unless the exercise of such option and the issuance
and delivery of such Shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Exchange Act, the rules and
regulations promulgated thereunder, applicable state securities laws and the
requirements of any stock exchange upon which the Shares may then be listed,
and shall be further subject to the approval of counsel for the Company with
respect to such compliance.
As a condition to the exercise of an option, the Company may require
the person exercising such option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any
of the aforementioned applicable provisions of law.
23. TERM OF PLAN; EFFECTIVE DATE. The Plan shall become effective
upon the IPO Date. It shall continue in effect for a term of ten (10) years
unless sooner terminated under Section 20.
24. ADDITIONAL RESTRICTIONS OF RULE 16B-3. The terms and
conditions of options granted hereunder to, and the purchase of Shares by,
persons subject to Section 16 of the Exchange Act shall comply with the
applicable provisions of Rule 16b-3. This Plan shall be deemed to contain,
and such options shall contain, and the Shares issued upon exercise thereof
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shall be subject to, such additional conditions and restrictions as may be
required by Rule 16b-3 to qualify for the maximum exemption from Section 16
of the Exchange Act with respect to Plan transactions.
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IMPRESSE CORPORATION
2000 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
New Election ______
Change of Election ______
1. I, ________________________, hereby elect to participate in the
Impresse Corporation 2000 Employee Stock Purchase Plan (the "PLAN") for the
Offering Period ______________, ____ to _______________, ____, and subscribe
to purchase shares of the Company's Common Stock in accordance with this
Subscription Agreement and the Plan.
2. I elect to have Contributions in the amount of ____% of my
Compensation, as those terms are defined in the Plan, applied to this
purchase. I understand that this amount must not be less than 1% and not more
than 20% of my Compensation during the Offering Period. (Please note that no
fractional percentages are permitted).
3. I hereby authorize payroll deductions from each paycheck during
the Offering Period at the rate stated in Item 2 of this Subscription
Agreement. I understand that all payroll deductions made by me shall be
credited to my account under the Plan and that I may not make any additional
payments into such account. I understand that all payments made by me shall
be accumulated for the purchase of shares of Common Stock at the applicable
purchase price determined in accordance with the Plan. I further understand
that, except as otherwise set forth in the Plan, shares will be purchased for
me automatically on the Purchase Date of each Offering Period unless I
otherwise withdraw from the Plan by giving written notice to the Company for
such purpose.
4. I understand that I may discontinue at any time prior to the
Purchase Date my participation in the Plan as provided in Section 10 of the
Plan. I also understand that, unless otherwise provided by the Plan
administrator, I can increase or decrease the rate of my Contributions during
a Purchase Period on one occasion only with respect to any increase and on
one occasion only with respect to any decrease during any Purchase Period by
completing and filing a new Subscription Agreement with such increase or
decrease taking effect as of the beginning of the first full payroll
following five (5) business days after the Company's receipt of the new
Subscription Agreement, unless the Company elects to process a given rate
change more quickly. Further, I may change the rate of deductions for future
Offering Periods by filing a new Subscription Agreement, and any such change
will be effective as of the beginning of the next Offering Period. In
addition, I acknowledge that, unless I discontinue my participation in the
Plan as provided in Section 10 of the Plan, my election will continue to be
effective for each successive Offering Period.
<PAGE>
5. I have received a copy of the Company's most recent description
of the Plan and a copy of the complete "Impresse Corporation 2000 Employee
Stock Purchase Plan." I understand that my participation in the Plan is in
all respects subject to the terms of the Plan.
6. In connection with the initial public offering of the Company's
securities and upon request of the Company or the underwriters managing any
underwritten offering of the Company's securities, I agree not to sell, make
any short sale of, loan, grant any option for the purchase of, or otherwise
dispose of any securities of the Company, however or whenever acquired,
without the prior written consent of the Company or such underwriters, as the
case may be, for such period of time (not to exceed 180 days) from the
effective date of such registration as may be requested by the Company or
such managing underwriters and to execute an agreement reflecting the
foregoing as may be requested by the underwriters at the time of the public
offering; PROVIDED HOWEVER, that I need not so agree unless a majority of the
Company's officers and directors and a majority of the holders of at least 5%
of the Company's outstanding securities also agree to be similarly bound.
7. Shares purchased for me under the Plan should be issued in the
name(s) of (name of employee or employee and spouse only):
____________________________________
____________________________________
8. In the event of my death, I hereby designate the following as
my beneficiary(ies) to receive all payments and shares due to me under the
Plan:
NAME: (Please print) _____________________________________
(First) (Middle) (Last)
____________________ _____________________________________
(Relationship) (Address)
_____________________________________
9. I understand that if I dispose of any shares received by me
pursuant to the Plan within 2 years after the Offering Date (the first day of
the Offering Period during which I purchased such shares) or within 1 year
after the Purchase Date, I will be treated for federal income tax purposes as
having received ordinary compensation income at the time of such disposition
in an amount equal to the excess of the fair market value of the shares on
the Purchase Date over the price that I paid for the shares, regardless of
whether I disposed of the shares at a price less than their fair market value
at the Purchase Date. The remainder of the gain or loss, if any, recognized
on such disposition will be treated as capital gain or loss.
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I HEREBY AGREE TO NOTIFY THE COMPANY IN WRITING WITHIN 30 DAYS AFTER
THE DATE OF ANY SUCH DISPOSITION, AND I WILL MAKE ADEQUATE PROVISION FOR
FEDERAL, STATE OR OTHER TAX WITHHOLDING OBLIGATIONS, IF ANY, THAT ARISE UPON
THE DISPOSITION OF THE COMMON STOCK. The Company may, but will not be
obligated to, withhold from my compensation the amount necessary to meet any
applicable withholding obligation including any withholding necessary to make
available to the Company any tax deductions or benefits attributable to the
sale or early disposition of Common Stock by me.
10. If I dispose of such shares at any time after expiration of the
2-year and 1-year holding periods, I understand that I will be treated for
federal income tax purposes as having received compensation income only to
the extent of an amount equal to the lesser of (1) the excess of the fair
market value of the shares at the time of such disposition over the purchase
price that I paid for the shares under the option, or (2) 15% of the fair
market value of the shares on the Offering Date. The remainder of the gain
or loss, if any, recognized on such disposition will be treated as capital
gain or loss.
I UNDERSTAND THAT THIS TAX SUMMARY IS ONLY A SUMMARY AND IS SUBJECT TO
CHANGE. I further understand that I should consult a tax advisor concerning
the tax implications of the purchase and sale of stock under the Plan.
11. I hereby agree to be bound by the terms of the Plan. The
effectiveness of this Subscription Agreement is dependent upon my eligibility
to participate in the Plan.
SIGNATURE:_________________________________
SOCIAL SECURITY #:_________________________
DATE:______________________________________
SPOUSE'S SIGNATURE (necessary
if beneficiary is not spouse):
___________________________________________
(Signature)
___________________________________________
(Print name)
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IMPRESSE CORPORATION
2000 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
I, __________________________, hereby elect to withdraw my
participation in the Impresse Corporation 2000 Employee Stock Purchase Plan
(the "PLAN") for the Offering Period that began on _________ ___, _____.
This withdrawal covers all Contributions credited to my account and is
effective on the date designated below.
I understand that all Contributions credited to my account will be
paid to me within ten (10) business days of receipt by the Company of this
Notice of Withdrawal and that my option for the current period will
automatically terminate, and that no further Contributions for the purchase
of shares can be made by me during the Offering Period.
The undersigned further understands and agrees that he or she shall be
eligible to participate in succeeding offering periods only by delivering to
the Company a new Subscription Agreement.
Dated:___________________ __________________________________
Signature of Employee
__________________________________
Social Security Number
<PAGE>
IMPRESSE CORPORATION EXHIBIT 10.6
2000 DIRECTORS' STOCK OPTION PLAN
1. PURPOSES OF THE PLAN. The purposes of this Directors' Stock Option
Plan are to attract and retain the best available personnel for service as
Directors of the Company, to provide additional incentive to the Outside
Directors of the Company to serve as Directors, and to encourage their
continued service on the Board.
All options granted hereunder shall be nonstatutory stock
options.
2. DEFINITIONS. As used herein, the following definitions shall
apply:
(a) "BOARD" means the Board of Directors of the Company.
(b) "CHANGE OF CONTROL" means (A) the acquisition of the
Company by another entity by means of any transaction or series of related
transactions (including, without limitation, any reorganization, merger or
consolidation but excluding any merger effected exclusively for the purpose
of changing the domicile of the Company); or (B) a sale of all or
substantially all of the assets of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as
amended.
(d) "COMMON STOCK" means the Common Stock of the Company.
(e) "COMPANY" means Impresse Corporation, a [Delaware]
corporation.
(f) "CONSTRUCTIVELY TERMINATED" means: (A) the termination
of Optionee's employment or engagement to render services to the Company
without good cause and other than due to death or disability of Optionee; or
(B) Optionee's resignation from the Company as a result of (i) a reduction in
Optionee's responsibilities with respect to the business of the Company such
that Optionee's reduced responsibilities are not substantially similar to
Optionee's responsibilities immediately prior to the Change of Control; (ii)
a requirement that, in order to preserve Optionee's employment or engagement
by the Company, Optionee perform his or her customary services at a location
more than forty (40) miles from the Company's principal place of business
immediately prior to the closing of the Change of Control; or (iii) a
reduction in Optionee's compensation such that Optionee's reduced
compensation is not substantially similar to Optionee's compensation
immediately prior to the Change of Control.
(g) "CONTINUOUS STATUS AS A DIRECTOR" means the absence of
any interruption or termination of service as a Director.
(h) "DIRECTOR" means a member of the Board.
(i) "EMPLOYEE" means any person, including any officer or
Director, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a
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director's fee by the Company shall not be sufficient in and of itself to
constitute "employment" by the Company.
(j) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
(k) "OPTION" means a stock option granted pursuant to the
Plan. All options shall be nonstatutory stock options (i.e., options that are
not intended to qualify as incentive stock options under Section 422 of the
Code).
(l) "OPTIONED STOCK" means the Common Stock subject to an
Option.
(m) "OPTIONEE" means an Outside Director who receives an
Option.
(n) "OUTSIDE DIRECTOR" means a Director who is not an
Employee.
(o) "PARENT" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(p) "PLAN" means this 2000 Directors' Stock Option Plan.
(q) "SHARE" means a share of the Common Stock, as adjusted
in accordance with Section 11 of the Plan.
(r) "SUBSIDIARY" means a "subsidiary corporation," whether
now or hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of
Section 11 of the Plan, the maximum aggregate number of Shares which may be
optioned and sold under the Plan is 300,000 Shares of Common Stock (the
"POOL"). The Shares may be authorized, but unissued, or reacquired Common
Stock.
If an Option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares which were
subject thereto shall, unless the Plan has been terminated, become available
for future grant under the Plan. In addition, any Shares of Common Stock
that are retained by the Company upon exercise of an Option in order to
satisfy the exercise price for such Option, or any withholding taxes due with
respect to such exercise, shall be treated as not issued and shall continue
to be available under the Plan. If Shares that were acquired upon exercise
of an Option are subsequently repurchased by the Company, such Shares shall
not in any event be returned to the Plan and shall not become available for
future grant under the Plan.
4. ADMINISTRATION OF AND GRANTS OF OPTIONS UNDER THE PLAN.
(a) ADMINISTRATOR. Except as otherwise required herein, the
Plan shall be administered by the Board.
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(b) PROCEDURE FOR GRANTS. All grants of Options hereunder
shall be automatic and nondiscretionary and shall be made strictly in
accordance with the following provisions:
(i) No person shall have any discretion to select
which Outside Directors shall be granted Options or to determine the number
of Shares to be covered by Options granted to Outside Directors.
(ii) Each person who becomes an Outside Director after
the effective date of this Plan shall be automatically granted an Option to
purchase [20,000] Shares (the "FIRST OPTION") on the date on which such
person first becomes an Outside Director, whether through election by the
shareholders of the Company or appointment by the Board of Directors to fill
a vacancy.
(iii) Each Outside Director, including those persons
who were Outside Directors prior to the effective date of this Plan, shall
thereafter be automatically granted an Option to purchase 5,000 Shares (the
"ANNUAL OPTION") on the date of each Annual Meeting of the Company's
stockholders immediately following which such Outside Director is serving on
the Board, provided that, on such date, he or she shall have served on the
Board for at least six (6) months prior to the date of such Annual Meeting.
(iv) Notwithstanding the provisions of subsections
(ii) and (iii) hereof, in the event that a grant would cause the number of
Shares subject to outstanding Options plus the number of Shares previously
purchased upon exercise of Options to exceed the Pool, then each such
automatic grant shall be for that number of Shares determined by dividing the
total number of Shares remaining available for grant by the number of Outside
Directors receiving an Option on the automatic grant date. Any further
grants shall then be deferred until such time, if any, as additional Shares
become available for grant under the Plan through action of the stockholders
to increase the number of Shares which may be issued under the Plan or
through cancellation or expiration of Options previously granted hereunder.
(v) Notwithstanding the provisions of subsections
(ii) and (iii) hereof, any grant of an Option made before the Company has
obtained stockholder approval of the Plan in accordance with Section 17
hereof shall be conditioned upon obtaining such stockholder approval of the
Plan in accordance with Section 17 hereof.
(vii) The terms of each First Option granted hereunder
shall be as follows:
(1) each First Option shall be exercisable
only while the Outside Director remains a Director of the Company, except as
set forth in Section 9 below;
(2) the exercise price per Share shall be 100%
of the fair market value per Share on the date of grant of each option,
determined in accordance with Section 8 hereof;
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(3) each First Option shall become vested and
exercisable as to 1/48 of the total number of shares subject to the option on
the first day of each month following the date of grant.
(viii) The terms of each Annual Option granted hereunder
shall be as follows:
(1) each Annual Option shall be exercisable
only while the Outside Director remains a Director of the Company, except as
set forth in Section 9 below;
(2) the exercise price per Share shall be 100%
of the fair market value per Share on the date of grant of each option,
determined in accordance with Section 8 hereof;
(3) each Annual Option shall become vested and
exercisable as to 1/12 of the total number of shares subject to the option on
the first day of each month following the date of grant.
(c) POWERS OF THE BOARD. Subject to the provisions and
restrictions of the Plan, the Board shall have the authority, in its
discretion: (i) to determine, upon review of relevant information and in
accordance with Section 8(b) of the Plan, the fair market value of the Common
Stock; (ii) to determine the exercise price per Share of Options to be
granted, which exercise price shall be determined in accordance with Section
8 of the Plan; (iii) to interpret the Plan; (iv) to prescribe, amend and
rescind rules and regulations relating to the Plan; (v) to authorize any
person to execute on behalf of the Company any instrument required to
effectuate the grant of an Option previously granted hereunder; and (vi) to
make all other determinations deemed necessary or advisable for the
administration of the Plan.
(d) EFFECT OF BOARD'S DECISION. All decisions,
determinations and interpretations of the Board shall be final and binding on
all Optionees and any other holders of any Options granted under the Plan.
(e) SUSPENSION OR TERMINATION OF OPTION. If the Chief
Executive Officer or his or her designee reasonably believes that an Optionee
has committed an act of misconduct, such officer may suspend the Optionee's
right to exercise any option pending a determination by the Board (excluding
the Outside Director accused of such misconduct). If the Board (excluding
the Outside Director accused of such misconduct) determines an Optionee has
committed an act of embezzlement, fraud, dishonesty, nonpayment of an
obligation owed to the Company, breach of fiduciary duty or deliberate
disregard of the Company rules resulting in loss, damage or injury to the
Company, or if an Optionee makes an unauthorized disclosure of any Company
trade secret or confidential information, engages in any conduct constituting
unfair competition, induces any Company customer to breach a contract with
the Company or induces any principal for whom the Company acts as agent to
terminate such agency relationship, neither the Optionee nor his or her
estate shall be entitled to exercise any Option whatsoever. In making such
determination, the Board of Directors (excluding the Outside Director accused
of such
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<PAGE>
misconduct) shall act fairly and shall give the Optionee an opportunity to
appear and present evidence on Optionee's behalf at a hearing before the
Board or a committee of the Board.
5. ELIGIBILITY. Options may be granted only to Outside Directors.
All Options shall be automatically granted in accordance with the terms set
forth in Section 4(b) above. An Outside Director who has been granted an
Option may, if he or she is otherwise eligible, be granted an additional
Option or Options in accordance with such provisions.
The Plan shall not confer upon any Optionee any right with
respect to continuation of service as a Director or nomination to serve as a
Director, nor shall it interfere in any way with any rights which the
Director or the Company may have to terminate his or her directorship at any
time.
6. TERM OF PLAN; EFFECTIVE DATE. The Plan shall become effective
on the effectiveness of the registration statement under the Securities Act
of 1933, as amended, relating to the Company's initial public offering of
securities. It shall continue in effect for a term of ten (10) years unless
sooner terminated under Section 13 of the Plan.
7. TERM OF OPTIONS. The term of each Option shall be ten (10)
years from the date of grant thereof unless an Option terminates sooner
pursuant to Section 9 below.
8. EXERCISE PRICE AND CONSIDERATION.
(a) EXERCISE PRICE. The per Share exercise price for the
Shares to be issued pursuant to exercise of an Option shall be 100% of the
fair market value per Share on the date of grant of the Option.
(b) FAIR MARKET VALUE. The fair market value shall be
determined by the Board; provided however that in the event the Common Stock
is traded on the Nasdaq National Market or listed on a stock exchange, the
fair market value per Share shall be the closing sales price on such system
or exchange on the date of grant of the Option (or, in the event that the
Common Stock is not traded on such date, on the immediately preceding trading
date), as reported in THE WALL STREET JOURNAL, or if there is a public market
for the Common Stock but the Common Stock is not traded on the Nasdaq
National Market or listed on a stock exchange, the fair market value per
Share shall be the mean of the bid and asked prices of the Common Stock in
the over-the-counter market on the date of grant, as reported in THE WALL
STREET JOURNAL (or, if not so reported, as otherwise reported by the National
Association of Securities Dealers Automated Quotation ("Nasdaq") System).
For purposes of the First Options granted on the effective date of this Plan,
the fair market value per Share shall be the Price to Public as set forth in
the final prospectus filed with the Securities Exchange Commission pursuant
to Rule 424 under the Securities Act of 1933, as amended.
(c) FORM OF CONSIDERATION. The consideration to be paid for
the Shares to be issued upon exercise of an Option shall consist entirely of
cash, check, other Shares of Common Stock having a fair market value on the date
of surrender equal to the aggregate exercise price of the Shares as to which the
Option shall be exercised (which, if acquired from the Company, shall
-5-
<PAGE>
have been held for at least six months), delivery of a properly executed
exercise notice together with such other documentation as the Administrator
and the broker, if applicable, shall require to effect exercise of the Option
and prompt delivery to the Company of the sale or loan proceeds required to
pay the exercise price, or any combination of such methods of payment and/or
any other consideration or method of payment as shall be permitted under
applicable corporate law.
9. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any
Option granted hereunder shall be exercisable at such times as are set forth
in Section 4(b) above; provided however that no Options shall be exercisable
prior to stockholder approval of the Plan in accordance with Section 17 below.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written
notice of such exercise has been given to the Company in accordance with the
terms of the Option by the person entitled to exercise the Option and full
payment for the Shares with respect to which the Option is exercised has been
received by the Company. Full payment may consist of any consideration and
method of payment allowable under Section 8(c) of the Plan. Until the
issuance (as evidenced by the appropriate entry on the books of the Company
or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or
any other rights as a stockholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. A share certificate for
the number of Shares so acquired shall be issued to the Optionee as soon as
practicable after exercise of the Option. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the
stock certificate is issued, except as provided in Section 11 of the Plan.
Exercise of an Option in any manner shall result in a
decrease in the number of Shares which thereafter may be available, both for
purposes of the Plan and for sale under the Option, by the number of Shares
as to which the Option is exercised.
(b) TERMINATION OF CONTINUOUS STATUS AS A DIRECTOR. If an
Outside Director ceases to serve as a Director, he or she may, but only
within ninety (90) days after the date he or she ceases to be a Director of
the Company, exercise his or her Option to the extent that he or she was
entitled to exercise it at the date of such termination. Notwithstanding the
foregoing, in no event may the Option be exercised after its term set forth
in Section 7 has expired. To the extent that such Outside Director was not
entitled to exercise an Option at the date of such termination, or does not
exercise such Option (to the extent he or she was entitled to exercise)
within the time specified above, the Option shall terminate and the Shares
underlying the unexercised portion of the Option shall revert to the Plan.
(c) DISABILITY OF OPTIONEE. Notwithstanding Section 9(b)
above, in the event a Director is unable to continue his or her service as a
Director with the Company as a result of his or her total and permanent
disability (as defined in Section 22(e)(3) of the Code), he or she may, but only
within twelve (12) months from the date of such termination, exercise his or her
-6-
<PAGE>
Option to the extent he or she was entitled to exercise it at the date of
such termination. Notwithstanding the foregoing, in no event may the Option
be exercised after its term set forth in Section 7 has expired. To the
extent that he or she was not entitled to exercise the Option at the date of
termination, or if he or she does not exercise such Option (to the extent he
or she was entitled to exercise) within the time specified above, the Option
shall terminate and the Shares underlying the unexercised portion of the
Option shall revert to the Plan.
(d) DEATH OF OPTIONEE. In the event of the death of an
Optionee: (A) during the term of the Option who is, at the time of his or
her death, a Director of the Company and who shall have been in Continuous
Status as a Director since the date of grant of the Option, or (B) three (3)
months after the termination of Continuous Status as a Director, the Option
may be exercised, at any time within twelve (12) months following the date of
death, by the Optionee's estate or by a person who acquired the right to
exercise the Option by bequest or inheritance, but only to the extent of the
right to exercise that had accrued at the date of death or the date of
termination, as applicable. Notwithstanding the foregoing, in no event may
the Option be exercised after its term set forth in Section 7 has expired. To
the extent that an Optionee was not entitled to exercise the Option at the
date of death or termination or if he or she does not exercise such Option
(to the extent he or she was entitled to exercise) within the time specified
above, the Option shall terminate and the Shares underlying the unexercised
portion of the Option shall revert to the Plan.
10. NONTRANSFERABILITY OF OPTIONS. The Option may not be sold,
pledged, assigned, hypothecated, transferred or disposed of in any manner
other than by will or by the laws of descent or distribution or pursuant to a
qualified domestic relations order (as defined by the Code or the rules
thereunder). The designation of a beneficiary by an Optionee does not
constitute a transfer. An Option may be exercised during the lifetime of an
Optionee only by the Optionee or a transferee permitted by this Section.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; DISSOLUTION,
LIQUIDATION; CHANGE OF CONTROL.
(a) ADJUSTMENT. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, the number of Shares of Common Stock set forth in
Sections 4(b)(ii), (iii) and (iv) above, and the number of Shares of Common
Stock which have been authorized for issuance under the Plan but as to which
no Options have yet been granted or which have been returned to the Plan upon
cancellation or expiration of an Option, as well as the price per Share of
Common Stock covered by each such outstanding Option, shall be
proportionately adjusted for any increase or decrease in the number of issued
Shares of Common Stock resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of the Common Stock
(including any such change in the number of Shares of Common Stock effected
in connection with a change in domicile of the Company) or any other increase
or decrease in the number of issued Shares of Common Stock effected without
receipt of consideration by the Company; provided however that conversion of
any convertible securities of the Company shall not be deemed to have been
"effected without receipt of consideration." Such adjustment shall be made
by the Board, whose
-7-
<PAGE>
determination in that respect shall be final, binding and conclusive. Except
as expressly provided herein, no issuance by the Company of shares of stock
of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect
to, the number or price of shares of Common Stock subject to an Option.
(b) DISSOLUTION OR LIQUIDATION. In the event of the
proposed dissolution or liquidation of the Company, the Administrator shall
notify the Optionee at least fifteen (15) days prior to such proposed action.
To the extent it has not been previously exercised, the Option shall
terminate immediately prior to the consummation of such proposed action.
(c) CHANGE OF CONTROL. In the event of a Change of Control,
each Optionee shall have the right to exercise his or her Option as to all of
the Optioned Stock, including Shares as to which the Option would not
otherwise be exercisable, immediately prior to the consummation of such
transaction.
(d) CERTAIN DISTRIBUTIONS. In the event of any distribution
to the Company's stockholders of securities of any other entity or other
assets (other than dividends payable in cash or stock of the Company) without
receipt of consideration by the Company, the Administrator may, in its
discretion, appropriately adjust the price per Share of Common Stock covered
by each outstanding Option to reflect the effect of such distribution.
12. TIME OF GRANTING OPTIONS. The date of grant of an Option
shall, for all purposes, be the date determined in accordance with Section
4(b) hereof. Notice of the determination shall be given to each Outside
Director to whom an Option is so granted within a reasonable time after the
date of such grant.
13. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may amend or
terminate the Plan from time to time in such respects as the Board may deem
advisable; provided that, to the extent necessary and desirable to comply
with Rule 16b-3 under the Exchange Act (or any other applicable law or
regulation), the Company shall obtain approval of the stockholders of the
Company to Plan amendments to the extent and in the manner required by such
law or regulation.
(b) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment
or termination of the Plan that would impair the rights of any Optionee shall
not affect Options already granted to such Optionee and such Options shall
remain in full force and effect as if this Plan had not been amended or
terminated, unless mutually agreed otherwise between the Optionee and the
Board, which agreement must be in writing and signed by the Optionee and the
Company.
14. CONDITIONS UPON ISSUANCE OF SHARES. Notwithstanding any other
provision of the Plan or any agreement entered into by the Company pursuant
to the Plan, the Company shall not be obligated, and shall have no liability
for failure, to issue or deliver any Shares under the Plan unless such
issuance or delivery would comply with the legal requirements relating to the
-8-
<PAGE>
administration of stock option plans under applicable U.S. state corporate
laws, U.S. federal and applicable state securities laws, the Code, any stock
exchange or Nasdaq rules or regulations to which the Company may be subject
and the applicable laws of any other country or jurisdiction where Options
are granted under the Plan, as such laws, rules, regulations and requirements
shall be in place from time to time (the "APPLICABLE LAWS"). Such compliance
shall be determined by the Company in consultation with its legal counsel.
As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant at the
time of any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation
is required by law.
15. RESERVATION OF SHARES. The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.
16. OPTION AGREEMENT. Options shall be evidenced by written option
agreements in such form as the Board shall approve.
17. STOCKHOLDER APPROVAL. If required by the Applicable Laws,
continuance of the Plan shall be subject to approval by the stockholders of
the Company. Such stockholder approval shall be obtained in the manner and
to the degree required under the Applicable Laws.
-9-
<PAGE>
IMPRESSE CORPORATION
2000 DIRECTORS' STOCK OPTION PLAN
NOTICE OF STOCK OPTION GRANT
< < Optionee > >
< < OptioneeAddress1 > >
< < OptioneeAddress2 > >
You have been granted an option to purchase Common Stock of Impresse
Corporation (the "COMPANY") as follows:
<TABLE>
<S> <C>
Board Approval: < < BoardApproval > >
Date of Grant < < GrantDate > >
Vesting Commencement Date < < VestingStartDate > >
Exercise Price per Share < < ExerisePrice > >
Total Number of Shares Granted < < SharesGranted > >
Total Exercise Price < < TotalExercisePrice > >
Expiration Date < < ExpirDate > >
Vesting Schedule This Option may be exercised, in whole
or in part, in accordance with the
following schedule: 1/[12;48] of
the Option Shares shall become
vested and exercisable as of the
first day of each month following
the Date of Grant.
Termination Period This Option may be exercised for 90 days
after termination of Optionee's
Continuous Status as a Director, or
such longer period as may be
applicable upon death or Disability
of Optionee as provided in the
Plan, but in no event later than
the Expiration Date as provided
above.
</TABLE>
<PAGE>
By your signature and the signature of the Company's representative
below, you and the Company agree that this option is granted under and
governed by the terms and conditions of the 2000 Directors' Stock Option Plan
and the Nonstatutory Stock Option Agreement, all of which are attached and
made a part of this document.
< < Optionee > >: IMPRESSE CORPORATION
By:
- ----------------------------------- ---------------------------------
Signature
Title:
------------------------------
- -----------------------------------
Print Name
-11-
<PAGE>
IMPRESSE CORPORATION
NONSTATUTORY STOCK OPTION AGREEMENT
1. GRANT OF OPTION. The Board of Directors of the Company hereby
grants to the Optionee named in the Notice of Stock Option Grant attached as
Part I of this Agreement (the "OPTIONEE"), an option (the "OPTION") to
purchase a number of Shares, as set forth in the Notice of Stock Option
Grant, at the exercise price per share set forth in the Notice of Stock
Option Grant (the "EXERCISE PRICE"'), subject to the terms and conditions of
the 2000 Directors' Stock Option Plan (the "PLAN"), which is incorporated
herein by reference. (Capitalized terms not defined herein shall have the
meanings ascribed to such terms in the Plan.) In the event of a conflict
between the terms and conditions of the Plan and the terms and conditions of
this Nonstatutory Stock Option Agreement, the terms and conditions of the
Plan shall prevail.
2. EXERCISE OF OPTION.
(a) RIGHT TO EXERCISE. This Option is exercisable during
its term in accordance with the Vesting Schedule set out in the Notice of
Stock Option Grant and the applicable provisions of the Plan and this
Nonstatutory Stock Option Agreement. In the event of Optionee's death,
disability or other termination of Optionee's employment or consulting
relationship, the exercisability of the Option is governed by the applicable
provisions of the Plan and this Nonstatutory Stock Option Agreement.
(b) METHOD OF EXERCISE. This Option is exercisable by
delivery of an exercise notice, in the form attached as EXHIBIT A (the
"EXERCISE NOTICE"), which shall state the election to exercise the Option,
the number of Shares in respect of which the Option is being exercised (the
"EXERCISED SHARES"), and such other representations and agreements as may be
required by the Company pursuant to the provisions of the Plan. The Exercise
Notice shall be signed by the Optionee and shall be delivered in person or by
certified mail to the Secretary of the Company. The Exercise Notice shall be
accompanied by payment of the aggregate Exercise Price as to all Exercised
Shares. This Option shall be deemed to be exercised upon receipt by the
Company of such fully executed Exercise Notice accompanied by such aggregate
Exercise Price.
No Shares shall be issued pursuant to the exercise of this
Option unless such issuance and exercise complies with all relevant
provisions of law and the requirements of any stock exchange or quotation
service upon which the Shares are then listed. Assuming such compliance, for
income tax purposes the Exercised Shares shall be considered transferred to
the Optionee on the date the Option is exercised with respect to such
Exercised Shares.
3. METHOD OF PAYMENT. Payment of the aggregate Exercise Price
shall be by any of the following, or a combination thereof, at the election
of the Optionee:
(a) cash;
<PAGE>
(b) check;
(c) delivery of a properly executed exercise notice together
with such other documentation as the Administrator and the broker, if
applicable, shall require to effect an exercise of the Option and delivery to
the Company of the sale or loan proceeds required to pay the exercise price;
or
(d) surrender of other Shares which (i) in the case of
Shares acquired upon exercise of an option, have been owned by the Optionee
for more than six (6) months on the date of surrender, and (ii) have a fair
market value on the date of surrender equal to the aggregate Exercise Price
of the Exercised Shares.
4. NON-TRANSFERABILITY OF OPTION. This Option may not be
transferred in any manner otherwise than by will or by the laws of descent or
distribution or pursuant to a domestic relations order (as defined by the
Code or the rules thereunder) and may be exercised during the lifetime of
Optionee only by the Optionee or a transferee permitted by Section 10 of the
Plan. The terms of the Plan and this Nonstatutory Stock Option Agreement
shall be binding upon the executors, administrators, heirs, successors and
assigns of the Optionee.
5. TERM OF OPTION. This Option may be exercised only within the
term set out in the Notice of Stock Option Grant, and may be exercised during
such term only in accordance with the Plan and the terms of this Nonstatutory
Stock Option Agreement.
6. TAX CONSEQUENCES. Set forth below is a brief summary of
certain federal tax consequences relating to this Option under the law in
effect as of the date of grant. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND
THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT
HIS OR HER OWN TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES.
(a) EXERCISING THE OPTION. Since this Option does not
qualify as an incentive stock option under Section 422 of the Code, the
Optionee may incur regular federal income tax liability upon exercise. The
Optionee will be treated as having received compensation income (taxable at
ordinary income tax rates) equal to the excess, if any, of the fair market
value of the Exercised Shares on the date of exercise over their aggregate
Exercise Price.
(b) DISPOSITION OF SHARES. If the Optionee holds the Option
Shares for more than one year, gain realized on disposition of the Shares
will be treated as long-term capital gain for federal income tax purposes.
The long-term capital gain will be taxed for federal income tax purposes as a
maximum rate of 20 percent.
-13-
<PAGE>
By your signature and the signature of the Company's representative
below, you and the Company agree that this Option is granted under and
governed by the terms and conditions of the Plan and this Nonstatutory Stock
Option Agreement. Optionee has reviewed the Plan and this Nonstatutory Stock
Option Agreement in their entirety, has had an opportunity to obtain the
advice of counsel prior to executing this Nonstatutory Stock Option Agreement
and fully understands all provisions of the Plan and Nonstatutory Stock
Option Agreement. Optionee hereby agrees to accept as binding, conclusive and
final all decisions or interpretations of the Administrator upon any
questions relating to the Plan and Nonstatutory Stock Option Agreement.
IMPRESSE CORPORATION
By:
- --------------------------------- ------------------------------------
< < Optionee > >
Title:
---------------------------------
-14-
<PAGE>
CONSENT OF SPOUSE
The undersigned spouse of Optionee has read and hereby approves the
terms and conditions of the Plan and this Nonstatutory Stock Option
Agreement. In consideration of the Company's granting his or her spouse the
right to purchase Shares as set forth in the Plan and this Nonstatutory Stock
Option Agreement, the undersigned hereby agrees to be irrevocably bound by
the terms and conditions of the Plan and this Nonstatutory Stock Option
Agreement and further agrees that any community property interest shall be
similarly bound. The undersigned hereby appoints the undersigned's spouse as
attorney-in-fact for the undersigned with respect to any amendment or
exercise of rights under the Plan or this Nonstatutory Stock Option Agreement.
---------------------------------
Spouse of Optionee
<PAGE>
EXHIBIT A
NOTICE OF EXERCISE
To: Impresse Corporation
Attn: Stock Option Administrator
Subject: NOTICE OF INTENTION TO EXERCISE STOCK OPTION
This is official notice that the undersigned ("OPTIONEE") intends to
exercise Optionee's option to purchase __________ shares of Impresse
Corporation Common Stock, under and pursuant to the Company's 2000 Directors'
Stock Option Plan and the Nonstatutory Stock Option Agreement dated
_______________, as follows:
Grant Number:
----------------------------------------
Date of Purchase:
----------------------------------------
Number of Shares:
----------------------------------------
Purchase Price:
----------------------------------------
Method of Payment of
Purchase Price:
----------------------------------------
Social Security No.:
----------------------------------------
The shares should be issued as follows:
Name:
-----------------------------------
Address:
-----------------------------------
-----------------------------------
-----------------------------------
Signed:
-----------------------------------
Date:
-----------------------------------
<PAGE>
[LOGO]
June 20th, 1999
Mr Sanjai K Bijawat
31 River Court, #2805
Jersey City, NJ 07310
Dear Sanjai:
On behalf of Impresse Corporation (the "Company"), I am pleased to offer you
the position of Vice President and Chief Financial Officer. You will report
to the President & CEO.
The terms of your employment are as follows:
- - Base Salary: Your base salary shall be $175,000 per year, payable
semi-monthly in amounts of $7291.67 in accordance with customary Company
payroll procedures (including compliance with applicable US withholding and
other US laws) as the same currently exists or may exist in the future.
Your position is classified as "exempt" and you will not be eligible for
overtime pay.
- - Annual Bonus: You will receive quarterly bonuses based on accomplishment
of MBO's. Your FY99 target quarterly bonus will be $18,750. The
Company will require you to propose this year's MBO's within 4 weeks of
your start date, and they will be subject to approval by the President and
CEO. Your bonus will be in accordance with customary Company payroll
procedures (including compliance with applicable withholding and other
laws) and will be paid in equal amounts, quarterly, 4 weeks after end of
each fiscal quarter (currently, the Company's fiscal quarters end on March
31, June 30, September 30, Dec 31.)
- - Incentive Stock Options: Company management will recommend to the Board
of Directors that you be granted a stock option (the "Stock Option")
entitling you to purchase up to 150,000 shares of Company Common Stock. The
number of shares purchasable pursuant to the Stock Option shall vest as to
1/4th upon the one-year anniversary of your employment start date, and
thereafter as to 1/48th at the end of each calendar month until the Stock
Option is fully vested (such that the entire Stock Option shall be vested
approximately four years after your start date). The Stock Option will be
an incentive stock option to the extent permitted by applicable law. The
grant of the Stock Option is subject in all respects to the approval of the
Board of Directors and the terms of the Company's 1997 Stock Option Plan.
You will also be granted 50,000 additional stock options ("Bonus Option")
if you accomplish MBOs as described in the second bullet above. The grant
of these additional stock options is subject in all respects to the
approval of the Board of Directors and the terms of the Company's 1997
Stock Option Plan. The strike price of the options (Stock Option and Bonus
Option) will equal the price
<PAGE>
of each Common share at the time of the grant (in other words, the "Fair
Market Value as determined by the Board of Directors"). If the Company
expects to have a Liquidity Event prior to the first anniversary of the
Start Date, then the Bonus Option will be distributed to you at a point in
time prior to the expected Liquidity Event (the "Bonus Option Grant Date"),
with the number of options granted determined on a pro-rata basis based on
the time elapsed from the Start Date to the Bonus Option Grant Date. The
term "Liquidity Event" includes an IPO or a merger/sale of the Company.
This offer of additional options is a one-time offer only, valid for the
first twelve months of your employment.
- - 83(b)Election: The Company will offer you an opportunity to perform an
83(b) election for your stock option shares. If you wish, the Company will
also offer you a loan to help finance the purchase of these shares.
- - Evergreen Program: The Company intends to offer additional shares to
current employees as part of any "evergreen" program. If and when these
shares are offered, you will be eligible to participate in the program.
- - Benefits: The Company will offer you the same basic employment benefits
that are available to all Company employees, as the same currently exists
or may exist in the future. You acknowledge that participation in Company
benefit programs may require payroll deductions and/or direct contributions
by you.
- - Relocation: You agree to relocate your residence to the California Bay Area
within a reasonable time period. When the move occurs, the Company will
grant you a relocation allowance of $50,000 to move your personal effects
and to pay for home selling and buying costs for your primary residence as
well as other legitimate move-related expenses. You may be required to
submit proof of expenses in order to claim all or part of this allowance.
The Company cannot compensate you for differences in real estate prices as
the same currently exist or may exist in the future. If you resign from the
company at your own choice within one year from the date you start
employment, you will need to repay this relocation allowance. If you are
terminated with or without cause, you will not need to repay this
allowance.
- - At-Will Employment: You understand and acknowledge that your employment
with the Company is for an unspecified duration and constitutes "at-will"
employment. You acknowledge that this employment relationship may be
terminated at any time, with or without good cause or for any or no cause,
at the option either of the Company or yourself.
- - Employment Terms: This offer of employment is contingent upon your
signing and returning to the Company on or before your employment start
date, the attached "Confidential Information and Inventions Assignment
Agreement." Please note that this offer letter and the attached agreement
set forth the entire agreement and understanding between you and the
Company regarding your employment relationship and supersedes any other
written or oral representation or promise.
- - Start Date: Your start date will be July 15th 1999. Please indicate your
acceptance of this offer letter by signing and returning a copy of this
letter on or before June 24th, 1999.
<PAGE>
Sanjai, we are very excited at the prospect of your joining Impresse. We look
forward to your enthusiastic efforts in building a great company.
Very truly yours,
/s/ Nimish Mehta
Nimish Mehta
President & CEO
Agreed and Accepted:
I accept this offer of employment on the terms stated above.
/s/ Sanjai K. Bijawat June 24, 1999
- ------------------------------------- --------------
Sanjai K. Bijawat Date
<PAGE>
[LOGO]
Jan 29th, 1999
Mr. Scott Yetter
16 E. Chestnut Hill Ave.
Philadelphia, PA 19118
Dear Scott:
On behalf of Impresse Corporation (the "Company"), I am pleased to offer you
the position of Vice President, Americas Sales & Marketing. You will report
to the President & CEO.
The terms of your employment are as follows:
- - Base Salary: Your base salary shall be $150,000 per year, payable
semi-monthly in amounts of $6,250 in accordance with customary Company
payroll procedures (including compliance with applicable US withholding and
other US laws) as the same currently exists or may exist in the future.
Your position is classified as "exempt" and you will note be eligible for
overtime pay.
- - Quarterly Bonus: You will receive a quarterly bonus based on
accomplishment of MBO's which will include revenue goals. At target (i.e.
100% accomplishment of goals), your quarterly bonus amount will be $37,500.
The Company will require you to propose MBO's at least 4 weeks before the
end of the fiscal year, and they will be subject to approval by the
President & CEO as well at the Board of Directors. Your bonus will be in
accordance with customary Company payroll procedures (including compliance
with applicable US withholding and other laws) and will be paid four
times per year, 4 weeks after end of each fiscal quarter (currently, the
Company's fiscal year ends on Dec 31). For FY99, your bonus will be
calculated based on the goals set out in Appendix A. Any outstanding draws
will be deducted before bonuses are paid to you.
- - Non-recoverable Draw: Each year, you will receive a $24,000 draw against
your annual bonus. The draw will be payable semi-monthly in amounts of
$1,000 in accordance with customary Company payroll procedures (including
compliance with applicable US withholding and other US laws) as the same
currently exists or may exist in the future. The draw will be deducted
from your annual bonus payment. If you leave the company for any reason, you
will not need to return unpaid draws.
- - Incentive Stock Options: Company management will recommend to the Board
of Directors that you be granted a stock option (the "Stock Option")
entitling you to purchase up to 300,000 shares of Company Common Stock.
The number of shares purchasable pursuant to the Stock Option shall vest as
to 1/4th upon the one-year anniversary of your employment start date, and
thereafter as to 1/48th at the end of each calendar month until the Stock
Option is fully vested (such that the entire Stock Option shall be vested
approximately four years after your employment start date). The Stock
Option will be an incentive stock option
<PAGE>
to the extent permitted by applicable law. The grant of the Stock Option
is subject in all respects to the approval of the Board of Directors and
the terms of the Company's 1997 Stock Option Plan. You will also be granted
25,000 additional stock options if you accomplish 125% of your License and
Service Fee Goals as set out in Appendix A. Upon achieving 150% of your
goals, you will be granted yet another 25,000 stock options. The grant of
the additional stock options is subject in all respects to the approval of
the Board of Directors and the terms of the Company's 1997 Stock Option
Plan. The strike price of the options will equal the price of each Common
share at the time of the grant (in other words, the "Fair Market Value as
determined by the Board of Directors"). This offer of additional options is
valid only for FY99.
- - 83(b) Election: The Company will offer you an opportunity to perform an
83(b) election for your stock options shares. If you wish, the Company will
also offer you a loan to help finance the purchase of these shares. Note
that you will need to secure the loan with personal assets in order to not
invalidate your 83(b) election.
- - Evergreen Program: The Company intends to offer additional shares to
current employees as part of an "evergreen" program. If and when these
shares are offered, you will be eligible to participate in the program.
- - Benefits: The Company will offer you the same basic employment benefits
that are available to all Company US employees, as the same currently
exists or may exist in the future. You acknowledge that participation in
Company benefit programs may require payroll deductions and/or direct
contributions by you.
- - Relocation: As and when the President & CEO and you mutually deem it
necessary and you agree to relocate your residence to the California Bay
Area, the Company will grant you a relocation allowance of $100,000 to move
your personal effects and to pay for home selling and buying costs for your
primary residence only. You may be required to submit proof of expenses in
order to claim all or part of this allowance. The Company cannot compensate
you for differences in real estate prices as the same currently exist or
may exist in the future. If you resign from the company at your own choice
within one year from the date you start employment, you will need to repay
this relocation allowance. If you are terminated with or without cause, you
will not need to repay this allowance.
- - At-Will Employment: You understand and acknowledge that your employment
with the Company is for an unspecified duration and constitutes "at-will"
employment. You acknowledge that this employment relationship may be
terminated at any time, with or without good cause or for any or no cause,
at the option either of the Company or yourself.
- - Severance Pay: If you are terminated with or without cause, you will be
eligible to receive 6 months' base salary. If you resign from the company
at you own choice, you will not be eligible for any severance pay. If you
have not relocated to the California Bay Area within a reasonable period of
time, you will not be eligible for any severance pay.
<PAGE>
- - Employment Terms: This offer of employment is contingent upon your
signing and returning to the Company on or before your employment start
date, the attached "Confidential Information and Invention Assignment
Agreement." Please note that this offer letter and the attached agreement
set forth the entire agreement and understanding between you and the
Company regarding your employment relationship and supersedes any other
written or oral representation or promise.
- - Start Date: Your start date will be on or around February 15th 1999.
Please indicate your acceptance of this offer letter by signing and
returning a copy of this letter on or before Jan 30th 1999.
Scott, we are very excited at the prospect of your joining Impresse. We look
forward to your enthusiastic efforts in building a great company.
Very truly yours,
/s/ Siva Kumar
----------------------------
Siva Kumar
Nimish Mehta For
President & CEO Nimish Mehta.
Agreed and Accepted:
I accept this offer of employment on the terms stated above.
/s/ Scott Yetter 1/30/99
- ------------------------------------ -------------
Scott Yetter Date
<PAGE>
APPENDIX A
FY99 GOALS FOR SCOTT YETTER
QUARTERLY GOALS
- - Quarter ending 3/31: Based on MBO's determined jointly by you and the CEO
and services quota of $0, license fee quota of $0 for a bonus of $18,750.
- - Quarter ending 5/31: Based on MBO's determined jointly by you and the CEO
services quota of $0, license quota of $0 for a bonus of $37,500.
- - Quarter ending 9/30: Based on achievement of a services quota of $1,100,000
and a license fee quota of $2,100,00 for a total bonus of $37,500.
- - Quarter ending 12/31: Based on achievement of a services quota of $1,100,000
and a license fee quota of $2,100,00 for a total bonus of $37,500.
FY99 LICENSE FEE AND SERVICES GOALS
<TABLE>
<CAPTION>
SERVICES LICENSE FEE TOTAL
<S> <C> <C> <C>
1Q99 $0 $0 $0
2Q99 $0 $0 $0
3Q99 $1,100,000 $2,100,000 $3,200,000
4Q99 $1,100,000 $2,100,000 $3,200,000
</TABLE>
LICENSE FEE QUOTA: $4.2M
SERVICES QUOTA: $2.2M
FY99 COMMISSION SCHEDULE BASED ON REVENUE BOOKED:
Up to License Revenue Booked of $4.3M; 2.5% of Revenue
All additional Revenue Booked above $4.3M; 3.75%
Plus
2% of Services billed
<PAGE>
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the references to our firm under the caption "Experts" and
"Selected Financial Data" and to the use of our report dated January 19, 2000
(except for Note 11, as to which the date is , 2000), in the
Registration Statement on Form S-1 and the related Prospectus of Impresse
Corporation for the registration of shares of its common stock.
Palo Alto, California
- --------------------------------------------------------------------------------
The foregoing consent is in the form that will be signed upon the consummation
of the Delaware reincorporation and other matters described in Note 11 to the
financial statements.
Palo Alto, California /s/ ERNST & YOUNG LLP
February 1, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE
SHEET AS OF DECEMBER 31, 1999 AND 1998 AND STATEMENT OF OPERATIONS FOR THE YEAR
ENDED DECEMBER 31, 1999 AND FOR THE PERIOD FROM OCTOBER 7, 1997 (INCEPTION)
THROUGH DECEMBER 31, 1998.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> YEAR OTHER
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-START> JAN-01-1998 OCT-07-1997
<PERIOD-END> DEC-31-1999 DEC-31-1998
<CASH> 48,077,472 11,425,193
<SECURITIES> 997,020 0
<RECEIVABLES> 242,296 17,500
<ALLOWANCES> 20,000 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 50,087,052 11,661,274
<PP&E> 4,195,903 1,065,286
<DEPRECIATION> 646,214 101,719
<TOTAL-ASSETS> 60,366,704 12,924,841
<CURRENT-LIABILITIES> 5,253,234 2,136,804
<BONDS> 0 0
0 0
16,247 11,863
<COMMON> 8,903 7,379
<OTHER-SE> 49,060,243 10,483,348
<TOTAL-LIABILITY-AND-EQUITY> 60,366,704 12,924,841
<SALES> 0 0
<TOTAL-REVENUES> 163,581 0
<CGS> 0 0
<TOTAL-COSTS> 520,352 0
<OTHER-EXPENSES> 19,497,810 4,478,446
<LOSS-PROVISION> 20,000 0
<INTEREST-EXPENSE> 493,700 14,766
<INCOME-PRETAX> (19,800,274) (4,369,530)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (19,800,274) (4,369,530)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (19,800,274) (4,369,530)
<EPS-BASIC> (7.36) (3.35)
<EPS-DILUTED> (7.36) (3.35)
</TABLE>