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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
/x/ Annual report under Section 13 or 15(d) of the Securities Exchange Act of
1934 for the fiscal year ended April 30, 1996
or
/ / Transition report under Section 13 or 15(d) of the Securities Act of 1934
for the transition period from ______________________ to __________________
SPIRE INTERNATIONAL CORP.
(Name of Small Business Issuer in its Charter)
UTAH 0-6425 87-0284979
- ----------------------------- --------------------- -------------------
(State or Other (Commission File No.) (IRS Employer
Jurisdiction of Incorporation) Identification No.)
311 NORTH STATE STREET
OREM, UTAH 84057
-----------------------------------------------------------
(Address of Principal Executive Offices, including Zip Code)
Issuer's Telephone Number, including Area Code: (801) 226-3355
Securities registered under Section 12(g) of the Exchange Act:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------------------------ -------------------------
Common Stock, $.25 par value. . . . . None
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the preceding 12 months (or for such
shorter period that the Issuer was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
(1) Yes X No
--- ---
(2) Yes X No
--- ---
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of Issuer's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. /X/
The aggregate market value of voting stock held by non-affiliates computed
by reference to the price at which the stock sold, or the average bid and asked
prices of such stock, as of July 24, 1996 was approximately $4,423,352.
Issuer's revenues for its most recent fiscal year: $13,873,401.
Number of shares outstanding of each of Issuer's classes of common
stock as of the latest practicable date:
OUTSTANDING AT
CLASS JULY 25, 1996
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Common Stock, $.25 par value. . . . . 4,337,373
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for Issuer's 1996 Annual Meeting of
Shareholders to be held on September 10, 1996 are incorporated by reference
in Part III of this Annual Report on Form 10-KSB.
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL
Spire International Corp. (the "Company") resells Digital Equipment
Corporation ("Digital" or "DEC") network computer systems and components on a
value added basis, develops and sells office automation software products, acts
as a "service and value-added reseller" and distributor of software developed by
third parties and develops and implements client/server solutions for open
computing environments. The Company offers a range of desktop, client/server
and production systems and related components, peripheral equipment, software
and services used in a wide variety of applications, industries and computing
environments.
The Company was incorporated as United Energy Corporation in the State of
Utah in May 1969 for the purpose of mineral exploration and development. From
1974 until April 1996, the Company operated as Amacan Resources Corporation and
was almost exclusively engaged as a participant with others in oil and gas
exploration and development. On April 18, 1996, the Company consummated a share
exchange and related transactions (collectively, the "Share Exchange") by which
the Company acquired all the issued and outstanding capital stock of Spire
Technologies, Inc. ("Spire Technologies") and Spire Technologies Systems
Division, Inc. ("Spire Systems" and, collectively with Spire Technologies, the
"Spire Companies"), in exchange for the issuance to the former stockholders of
the Spire Companies (the "Spire Stockholders") of a number of shares of the
common stock of the Company (the "Common Stock") equal to approximately 90% of
the number of issued and outstanding shares of Common Stock immediately after
the consummation of the Share Exchange. Spire Technologies and Spire Systems
were incorporated in the State of Utah in 1986 and 1992, respectively.
PRODUCTS AND SERVICES
OVERVIEW. The Company is an authorized Digital value-added reseller and
provides its customers with desktop integration and system hardware. The
Company fills its customers' computer needs by providing a combination of
integrated software packages from different manufacturers and technical support
for such products. The Company endeavors to meet the specialized mid-range
computing needs of governmental, educational and corporate organizations
worldwide by providing networking expertise in integrating multi-vendor
networks, network consulting with respect to connectivity, compatibility, inter-
operability and management of the end-user's local area network ("LAN"),
installation of the end-user's LAN, including interface hardware and software,
and timely and professional technical support.
DIGITAL HARDWARE. The Company is licensed to sell Digital's 64-bit reduced
instruction set computing ("RISC") architecture known as "Alpha-TM-" which is
designed to support multiple operating systems. The Company offers Digital's
line of Alpha-based products ranging from high performance workstations to
servers. Alpha supports three major operating systems: Digital's 64-bit
UNIX-Registered Trademark- operating system, Digital's OpenVMS-TM- operating
system and the Windows NT-Registered Trademark- operating system of Microsoft
Corporation ("Microsoft"). The Alpha-based systems include high performance
database servers and workstations. The Company also sells Digital's
VAX-Registered Trademark- computer systems, components and Intel-Registered
Trademark--based personal computer systems, as well as peripherals manufactured
by Digital and other entities, including without limitation, magnetic disk
drives, tape drives, solid state disk and in-film heads, video terminals,
printers and network components.
SOFTWARE. The Company designs and develops, acquires from third parties
and distributes under license, or acts as a reseller for, various software
products for use on DEC computer systems and computer systems from other
vendors.
OFFICE AUTOMATION. Under licenses from IBM Corporation ("IBM") and Corel
Corporation ("Corel") the Company has obtained the right to create derivative
works of the source code for WordPerfect-Registered Trademark-, Lotus 1-2-3-TM-
and WP Office-TM- (aka Groupwise-TM-) with ownership of such derivative works
remaining in the licensors. The Company's engineers have developed, and the
Company now markets, these software solutions for the OpenVMS operating
platform. The Company also markets these office automation products developed
by third parties for UNIX, MS-DOS-Registered Trademark- and Windows 95-TM-
operating platforms. Because of the wide variety of computing platforms used
today in many organizations, the ability of the Company to offer office tools
which provide cross-platform compatibility and user familiarity is important
in assisting customers to create effective corporate standards. The Company also
offers other third-party office automation products including FAX SR.-TM-, an
enterprise faxing server.
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SYSTEM SECURITY. The Company offers a range of third-party UNIX and
OpenVMS operating system security products. These system security software
tools include firewalls (products designed to protect an organization's computer
network from unauthorized external access, such as from the Internet), user
monitoring, auditing and logging, authorization and access control, message
integrity and confidentiality protocols, and automated system security analysis,
reporting and correction tools. System security products offered by the Company
include THE BORDERWARE FIREWALL SERVER-TM- and KBLOCK-TM-.
STORAGE MANAGEMENT. The Company offers third-party media management and
remote device access products including media libraries, backup and restoration
products, and data recovery solutions, including THRUWAY-Registered Trademark-,
TAPESYS-Registered Trademark-, and RAXMASTER-TM-.
USER TRAINING AND SUPPORT. The third-party software solutions offered by
the Company for training and support allow customers to track user problems and
establish interactive links between the terminals of trainers and users. From
the trainer's keyboard, the trainer may intervene, create log files of sessions
and conduct local and remote product training for groups of users. Among the
Company's user-training and support products are CONTRL-Registered Trademark-,
CLYDESUPPORT-TM-, and PC-DUO-Registered Trademark-.
NETWORK PERFORMANCE MANAGEMENT. The Company's third-party network
performance management software allows customers to monitor systems, databases,
events and remote nodes to manage performance tuning, capacity planning,
saturation analysis, bench marking and resource accounting from a central site.
This performance management is conducted in real time interactive or background
modes, across a wide array of UNIX and database environments. The Company's
performance management products include SYSMON-TM-, ENSIGN-TM-, LANUTIL-TM-,
PATHWORKS-TM-, XJET-TM- and XCONNECT-TM-.
TECHNICAL SERVICES AND SUPPORT. The Company provides technical consulting,
systems integration and product support services to help its customers plan,
implement and manage their information technology solutions. The Company's
services include maintenance and support services for Company software
solutions, as well as third-party products sold by the Company; information
systems consulting; technical and application design services; education and
training services; systems integration and project management services; network
design and support services; and outsourcing and resourcing management services.
The Company's service organization provides these services through two sites in
the United States.
SALES AND DISTRIBUTION
The Company markets its products and services through a direct sales force
of 34 representatives based in Utah and North Carolina. Arrangements with third
parties, including hardware manufacturers, software developers, resellers and
authorized distributors are an increasingly important part of the Company's
focus on providing complete solutions to its customers and expanding
distribution of its products and services through indirect channels domestically
and to customers in Europe and Asia.
COMPETITION
The information technology industry is highly competitive, international in
scope, and comprised of many companies. The methods of competition include
marketing, product performance, price, service, technology and compliance with
various industry standards. Present and potential competition in the various
markets served by the Company comes from firms of various sizes and types, many
of which are larger and have greater resources than the Company. Firms not now
in direct competition with the Company may introduce competing products in the
future. It is possible for companies to be at various times competitors,
customers and collaborators in different markets.
MATERIALS
The Company is solely dependent on Digital and authorized distributors of
Digital products for its supply of hardware. In addition, the Company obtains
software from numerous third-party vendors, many of which are the sole sources
for such software. The Company then incorporates the various hardware,
peripheral and software components into an integrated system for on-site
installation at each customer's location. If one of the third-party vendors of
either hardware or software were to become unavailable to the Company,
management believes that the Company would be able to obtain competing and
alternate sources of supply of similar but not identical products. The failure
of such suppliers to deliver such items on a timely basis could adversely effect
the operating results of the Company until alternative sources of supply could
be arranged. Also, if any of the license agreements relating
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to the office automation products developed by the Company were to be
terminated, the operating results of the Company could also be adversely
affected.
SIGNIFICANT CUSTOMERS
Although the Company sells to many customers involved in certain industries
such as, government and education, which, if aggregated together, would result
in sales to a particular industry of more than ten percent, no single customer
represents sales by the Company in the aggregate amount of ten percent, or,
more of its consolidated revenues. Accordingly, Company management believes
that the loss of any single customer would not have a material adverse effect
on the Company taken as a whole.
PATENTS AND PROPRIETARY TECHNOLOGY
The Company does not own any patents nor has it filed any patent
application relating to its products. The Company has a limited number of
copyrights and has obtained licenses to create derivative works relative to
copyrights owned by third parties. The ownership of such derivative works vests
in the licensor. The Company is also seeking tradename and trademark protection
for certain of its names and marks. Accordingly, Company management does not
believe that any particular patent or group of patents, copyrights, trademarks,
or tradenames is of material importance to the business of the Company as a
whole.
RESEARCH AND ENGINEERING
The Company competes in an industry which is characterized by rapid
technological change. Historically, neither the Company nor the Spire Companies
(prior to the consummation of the Share Exchange) has incurred significant
expenses for research and development. Company management anticipates that it
will begin investing in research and development during the 1997 fiscal year to
maintain and strengthen its competitive position. Management does not
anticipate that research and development expense will exceed five percent of
gross revenues for the fiscal year ending March 31, 1997.
OIL AND GAS OPERATIONS
Prior to the consummation of the Share Exchange, the Company operated
almost exclusively since 1974 as a participant with others in oil and gas
exploration and development. The Company's principal assets during this period
were working interests in producing oil and gas wells and options or rights to
participate in the drilling of additional wells. During this period, the
Company participated almost exclusively with an independent operator, Luff
Exploration Company ("Luff Exploration") of Denver, Colorado, in its exploration
activity. From 1974 to April 1996, the Company participated with Luff
Exploration in drilling a total of 122 wells, 31 of which are presently
productive. Of the 122 wells, 50 were exploratory wells and 72 were
developmental wells. During its participation with Luff Exploration, the
Company farmed out its interests for drilling by other companies, at their
expense, a total of 28 additional wells, one of which is presently productive.
Effective May 1, 1996, the Company transferred to a group of purchasers,
including Kenneth D. Luff, President of Luff Exploration and a former director
of the Company, all of the Company's oil and gas interests in exchange for the
payment of $197,000. The Company does not intend to participate in any oil or
gas operations in the future.
AMACAN INDUSTRIES, INC.
In fiscal year 1991, the Company formed a wholly owned subsidiary, Amacan
Industries, Inc. ("AII"), for the purpose of seeking out and considering
business opportunities unrelated to the oil and gas industry. Although prior to
the Share Exchange, AII was not engaged in any business operations, the Company
continues to hold AII as a wholly-owned subsidiary and anticipates that AII will
become engaged in operating activities related to the Company's business.
EMPLOYEES
As of April 30, 1996, the Company had approximately 67 total employees,
approximately 62 of which were full-time employees. None of the Company's
employees is represented by a labor organization with respect to their
employment with the Company, the Company has never had a work stoppage, and the
Company considers its employee relations satisfactory.
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ITEM 2. DESCRIPTION OF PROPERTY
The headquarters and research and development facilities of the Company
are located at 311 North State Street, Orem, Utah. The Company owns a 5200
square foot building, subject to encumbrances of approximately $123,000 and
$102,000 at April 30, 1996, which bear interest at rates of 8.25% and 8.70%,
respectively. In addition, the Company occupies approximately 17,500 square
feet of contiguous space under two leases of one year and two years,
respectively, both subject to options to extend the terms thereof for five
extensions of one year each. The monthly base rents of those leases are
$5,500 and $4,675, respectively, subject to adjustment during the renewal
periods.
ITEM 3. LEGAL PROCEEDINGS
There are no pending legal proceedings to which the Company is a party.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On April 18, 1996, a special meeting of the shareholders of the Company
(the "Special Meeting") was held for the purpose of considering and acting upon
a proposal to approve, authorize and adopt (a) the Agreement and Plan of
Reorganization (the "Exchange Agreement") dated January 23, 1996, by and among
the Company, the Spire Companies and the Spire Stockholders, and (b) the Share
Exchange and its constituent transactions contemplated by the Exchange
Agreement, including, among other things: (i) acquisition by the Company of all
of the issued and outstanding shares of the capital stock of each of the Spire
Companies in exchange for the issuance by the Company of an aggregate of
3,501,883 shares of Common Stock to the Spire Stockholders; (ii) a one-for-seven
reverse split of the shares of Common Stock issued and outstanding at the
effective time (the "Effective Time") of the Share Exchange; (iii) amendment of
the Articles of Incorporation of the Company to change the name of the Company
to Spire International Corp.; (iv) adoption of the Amacan Resources Corporation
Stock Incentive Plan (the "Amacan Option Plan"); (v) substitution of options to
purchase shares of the common stock, par value $.01 per share, of Spire
Technologies issued pursuant to the Spire 1995 Stock Option and Award Plan; and
(vi) the resignation, subsequent to the Effective Time, of the Company's
officers and directors, and the appointment of replacement officers and
directors by the Spire Stockholders.
Holders of the Common Stock cast 1,725,502 votes in favor of the Exchange
Agreement and the Share Exchange, representing 63.4% of the shares outstanding
and entitled to vote thereon at the Special Meeting. No shareholder cast a vote
against the Exchange Agreement and the Share Exchange, and no shareholder
abstained from voting on the Exchange Agreement and the Share Exchange.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The following table shows the range of bid prices for the Common Stock in
the over-the-counter market for the calendar quarters indicated, as reported
by the National Quotation Bureau. The quotations represent prices in the
over-the-counter market between dealers in securities, do not include retail
markup, markdown or commissions and do not necessarily represent actual
transactions. Prices shown for the quarter ended April 30, 1996 reflect the
consummation of the Share Exchange, including a one-for-seven reverse split of
the shares of Common Stock issued and outstanding at the Effective Time.
Bid Prices
-----------------------
Quarter Ended High Low
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April 30, 1996 . . . . . . $6.00 $5.00
January 31, 1996 . . . . . .375 .1875
October 30, 1995 . . . . . .25 .125
July 31, 1995 . . . . . . .25 .125
April 30, 1995 . . . . . . $ .125 $ .10
January 31, 1995 . . . . . .15 .125
October 31, 1994 . . . . . .165 .125
July 31, 1994 . . . . . . .125 .125
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As of July 25, 1996, there were approximately 423 holders of record of
Common Stock, which did not include shares of Common Stock held in securities
position listings. The Common Stock is quoted on the NASD's OTC Bulletin Board
service under the symbol SPCC.
The Company did not declare or pay dividends in either of the two years
ending April 30, 1996 and 1995. Payment of dividends will be within the
discretion of the Company's Board of Directors and will depend, among other
factors, on earnings, capital requirements and the operating and financial
condition of the Company. At the present time, the Company's anticipated
capital requirements are such that it intends to follow a policy of retaining
any future earnings in order to finance the development of its business.
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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
OVERVIEW
Historically, the Spire Companies have focused their sales and
distribution efforts on two product lines within the midrange client/server
computer market niche. The Spire Companies have been a value added reseller
("VAR") of Digital network computer hardware systems and components. The
Spire Companies have also been a distributor/VAR for a variety of software
developed by third parties used in a wide spectrum of mid-range, client/server,
production systems, and related environments. Recently, the Spire Companies
have entered into strategic licensing and product development arrangements
with IBM/Lotus, Corel/WordPerfect and Digital wherein the Company became the
licensed developer and sole distributor of various software products.
As part of its ongoing efforts to support customers' needs in the areas
of training, support, and system configuration, the Company offers its
customers an annual maintenance agreement. This allows customer access to
the technical resources and support personnel of the Company, including
automatic product upgrades, "bug fixing," and system configuration
consulting. The demand for technical computer systems consulting is also an
area of prospective growth for the Company. Additional technical consultants
are hired during the latter end of fiscal year 1996 and the Company is
beginning to concentrate on marketing its consulting services to generate
additional revenues.
During fiscal year 1996, the Company expanded its
distribution model to include software products that operate in the growing
UNIX and NT operating systems environments. In addition to adding this new
family of products, which serve the UNIX and NT environments, the Company
also began marketing a family of products which provide solutions relating to
the Internet. These products include a third-party product known in the
industry as a "firewall," which is designed to protect an organization's
computer network from access by unauthorized users, and an "antivirus"
product which is designed to protect the computer network from virus
intrusion originating from the Internet.
The combined revenues of the Company, during fiscal year 1996, from these
various activities are broken down as follows:
Software sales 44% of revenues
System configuration and hardware sales 45% of revenues
Technical consulting and maintenance services 11% of revenues
With the addition of the new product lines, as described above, the
Company's management expects revenues from the sale of UNIX platform
products, Internet security products, and technical consulting to grow
faster, as a percentage of revenues, than the historical product lines of the
Spire Companies.
No single market sector represents a dominant portion of the Company's
revenue base, with governmental and educational institutions representing
approximately 32% of combined revenues and small to large corporations
representing the remaining 68%. No single customer represents more than ten
percent of the combined revenues of the Company.
Like other "value added resellers" and distributors, the Company relies on
its vendors and suppliers of software and hardware products for its ongoing
product lines. Prior to the Share Exchange, over 70% of the combined revenues
of the Spire Companies were derived from products they obtained from Digital,
Corel, and Lotus. Should these suppliers select a different distribution
channel or fail to renew existing distribution agreements with the Company,
its profitability and its ability to continue in business could be
significantly compromised. The Company is expanding its product lines in an
effort to reduce this risk; however, its business will continue to be
dependent on its vendors' selection of this particular channel of distribution
for their products.
The Company sells its products through a direct sales force of 34
representatives in the United States, and through a network of third-party
resellers in North America, Europe, Australia, and Southeast Asia.
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<TABLE>
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SELECTED FINANCIAL INFORMATION
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1996 1995
PERCENT OF ANNUAL PERCENT OF
AMOUNT REVENUE CHANGE AMOUNT REVENUE
------------ ---------- ------- --------- ----------
<S> <C> <C> <C> <C> <C>
Revenues 13,873,401 100% 43% 9,674,683 100%
Gross 5,421,358 39% 77% 3,060,608 32%
Selling, General & Admin. 4,605,402 33% 57% 2,927,081 30%
Research & Development 268,028 2% - 0%
Operating Income 547,928 4% 310% 133,527 1%
Net Income 339,555 2% 244% 98,735 1%
Cash 1,552,806 103% 766,247
Working Capital 943,332 415% 183,268
Total Assets 4,544,825 61% 2,815,857
Stockholders Equity 1,480,907 250% 423,294
</TABLE>
RESULTS OF OPERATIONS
For fiscal year 1996, the Company recorded net income of $339,555, or
$.08 per share, on net sales of $13,873,401. This compares to 1995 net
income of approximately $98,735, or $.03 per share, on net sales of
approximately $9,674,683. The improvement in net sales resulted from an
increased market penetration in both the software license/maintenance and
hardware product lines.
REVENUES
1996 % CHANGE 1995
---------- -------- ----------
Software $ 7,694,695 44% 5,356,572
Licenses/Maint.
Hardware Sales 6,178,706 43% 4,318,111
& Service ----------- ----------
Net Sales $13,873,401 43% $9,674,683
Net sales increased $4.2 million or 43% in fiscal year 1996 as compared
to 1995. The increase in net sales reflected increases in each of the
Company's product lines. Software sales in fiscal year 1996 increased by $2.3
million. This increase was due primarily to the growth of UNIX and Windows
NT software product sales and the release of new versions of WordPerfect for
the Digital operating platforms. Upgrade sales of these products
continued strong through the third and fourth quarters of fiscal year 1996.
The Company also released a new maintenance program which has been positively
accepted in the market. The expansion of the Company s technical consulting
services and maintenance program has also contributed to revenue growth
during the latter part of fiscal year 1996. Management believes the change
in ownership of the WordPerfect product earlier this year to Corel
and the Company's new maintenance program have generally been
received well by the Company's customer base.
The release and customer acceptance of Digital Equipment's Alpha operating
platform hardware system contributed substantially to the increase in the
hardware product line revenues. The Company's promotion during the year
bundling the new Alpha Server and Alpha version of WordPerfect was also a key to
the increase in hardware sales.
GROSS PROFIT
1996 % OF CHANGE 1995
---------- ----------- ----------
Gross Profit $5,421,358 77% $3,060,608
% of Net Sales 39% 32%
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As a percentage of sales, gross profit increased from 32% to 39% in
fiscal year 1996 compared to 1995. The increase in gross profit as a
percentage of sales in fiscal year 1996 can be attributed to three major
factors: First, the Company received the full license rights to WordPerfect for
VMS and Lotus products. This decreased the royalty paid to the owners and
manufacturers of those products. Second, the new product lines sold by the
Company are more technical in nature and therefore carry a higher discount
from the manufacturers. Third, the Company enjoyed a higher growth in
revenues than the corresponding growth required for personnel; therefore,
fixed costs related to cost of sales were spread over a larger sales base.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE
1996 % OF CHANGE 1995
---------- ----------- ----------
Selling, General
and Administrative
Expense $4,605,402 57% $2,927,081
% of Net Sales 33% 30%
Selling, general, and administrative expenses increased as a percentage
of sales from 30% in fiscal year 1995 to 33% in fiscal year 1996. This
increase was due primarily to four factors: First, the Company began
expanding its international sales channel aggressively during the fiscal year
1996. Second, a new UNIX sales division was created to focus on new product
lines. Third, activities relating to the Company's expanded accounting,
legal, and public reporting requirements increased expenses. Fourth,
activities relating to the Company's strategy of acquiring additional
products and other companies required greater expenditures.
RESEARCH AND DEVELOPMENT
Research and development expense consists of programming costs for new
software. The Company had total responsibility for several of the newly
licensed products. During fiscal year 1996 the Company released a
WordPerfect upgrade, version 5.1+ for Open VMS/VAX, WordPerfect 5.1+ for Open
VMS/Alpha, and Lotus 1-2-3 for Open VMS/Alpha. Ongoing programming is
necessary to keep pace with software innovations in several segments of the
Company's market niche. With the Company's aggressive strategy to acquire
additional exclusive licenses and proprietary technology, management expects
this expense category to increase more rapidly as a percentage of sales in
future periods. Research and development costs prior to fiscal year 1996 were
not material.
OTHER INCOME
Other income consists primarily of interest income and interest expense.
Interest income has been earned on excess cash invested in interest-bearing
instruments. Interest income is expected to decline in the future as cash is
used increasingly for operational needs and strategic expansion.
LIQUIDITY AND CAPITAL RESOURCES
1996 % OF CHANGE 1995
---------- ----------- --------
Cash $1,552,806 103% $776,247
Working Capital 943,322 415% 183,268
Since inception, the Spire Companies have satisfied their liquidity and
capital resource requirements primarily through cash flow from operations.
Long-term bank borrowings have been kept to a minimum and used primarily for
the purchase of a building to house a portion of corporate operations.
During fiscal years 1996 and 1995 the Company generated cash from
operating activities in the amounts of $362,131 and $434,910 respectively.
For the same years, net cash increased $786,559 and $272,787 respectively.
The Company's cash equivalents at year end reflect the additional cash
obtained in the Share Exchange.
Working capital increased from $183,268 at April 30, 1995 to $943,332 at
April 30, 1996. The Company's current ratio increased from 1.08 at April 30,
1995 to 1.33 at April 30, 1996. This increase is due primarily to cash
generated from operations and the cash received in the Share Exchange.
Based on anticipated working capital requirements, management believes that
existing cash and cash equivalents, cash generated from operations, long-term
debt financing and borrowings under the Company's existing lines of credit will
be sufficient to finance the operations of the Company for the foreseeable
future.
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The Company continues to evaluate opportunities for the license or
acquisition of additional software products as well as the possible acquisition
of, or development of strategic relations with, other companies which may have
products or distribution channels that are compatible with the business
objectives of the Company.
ITEM 7. FINANCIAL STATEMENTS
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Financial Statements Page
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<S> <C>
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . []
Consolidated Financial Statements:
Consolidated Balance Sheets -- April 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . []
Consolidated Statements of Income -- Years ended April 30, 1996 and
1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . []
Consolidated Statements of Stockholders' Equity -- Years ended April 30, 1996
and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . []
Consolidated Statements of Cash Flows -- Years ended April 30, 1996 and
1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . []
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . []
</TABLE>
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ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been no disagreements with the Company's accountants on
accounting and financial disclosure. The Company effected a change in
accountants which has been reported on Form 8-K dated April 18, 1996 (as amended
by Form 8-K/A dated July 29, 1996) which is incorporated herein by this
reference.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The information required by this Item is incorporated by reference to the
sections entitled "Election of Directors--Nominees for Election as Directors",
"Executive Officers" and "Executive Compensation--Section 16(a) Compliance" in
the Company's definitive proxy statement for the annual meeting of the Company's
shareholders to be held on September 10, 1996. The definitive proxy statement
will be filed with the Securities and Exchange Commission not later than 120
days after April 30, 1996 pursuant to Regulation 14A of the Securities Exchange
Act of 1934, as amended.
ITEM 10. EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference to the
sections entitled "Election of Directors--Director Compensation" and "Executive
Compensation" in the Company's definitive proxy statement for the annual meeting
of the Company's shareholders to be held on September 10, 1996.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated by reference to the
section entitled "Voting Securities and Principal Holders" in the Company's
definitive proxy statement for the annual meeting of the Company's shareholders
to be held on September 10, 1996.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this Item is incorporated by reference to the
section entitled "Certain Relationships and Related Transactions" in the
Company's definitive proxy statement for the Company's annual meeting of
shareholders to be held on September 10, 1996.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
<TABLE>
<CAPTION>
NUMBER DESCRIPTION INCORPORATED FILED
BY REFERENCE HEREWITH
------ ------------------------------------------ ------------ --------
<S> <C> <C> <C>
2 Agreement and Plan of Reorganization dated (1) ---
January 23, 1996, among the Company, Spire
Technologies, Spire Systems and the Spire
Stockholders.
3.1 Articles of Incorporation. (2) ---
3.2 Articles of Amendment and Share Exchange. (3) ---
3.3 Bylaws, as amended on April 18, 1996. (4)
11
<PAGE>
10.1 Exclusive License and Technical Assistance
Agreement dated as of July 1, 1996 by and
between Australian Software Innovations
(Services) Pty. Ltd and the Company (4)
10.2 Spire International Corp. Stock Incentive Plan (4)
21 Subsidiaries of the Registrant (4)
27 Financial Data Schedule. (4)
</TABLE>
-------------------------------------
(1) Incorporated by reference to Current Report on Form 8-K
filed with the Securities and Exchange Commission on
February 2, 1996.
(2) Incorporated by reference to the exhibits to Registration
Statement No. 2-39659 on Form S-3 filed with the Securities
and Exchange Commission in March 1971.
(3) Incorporated by reference to Current Report on Form 8-K
filed with the Securities and Exchange Commission on
May 2, 1996, as amended by Form 8-K/A filed with the
Securities and Exchange Commission on July 29, 1996.
(4) Filed herewith and attached to this Form 10-KSB following
page ______ hereof.
(b) REPORTS ON FORM 8-K.
On May 2, 1996, the Registrant filed a Current Report
on Form 8-K, dated April 18, 1996, reporting the consummation of
the Registrant's share exchange with Spire Technologies, Inc.
("Spire"), Spire Technologies Systems Divisions, Inc. ("Spire
Systems") and the shareholders of Spire and Spire Systems
(Item 1) and the acquisition by the Registrant of all of the
capital stock of Spire and Spire Systems in connection therewith
(Item 2). On July 29, 1996, the Registrant filed an Amendment to
Current Report on Form 8-K/A reporting a change in accountant
resulting from the transactions described in the Form 8-K as
required by Item 4 of the Current Report on Form 8-K. The
Current Report on Form 8-K included the Combined Financial
Statements of Spire and Spire Systems, together with pro forma
financial information of the Registrant, Spire and Spire Systems,
required pursuant to Item 7 of the Current Report.
12
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized, on July 29, 1996.
SPIRE INTERNATIONAL CORP.
By: /s/ Robert K. Bench
--------------------------------------------
Robert K. Bench, President, Chief Financial
Officer and Director
In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Gary B. Godfrey Chairman of the Board and Chief July 29, 1996
- ----------------------------- Executive Officer (Principal
Gary B. Godfrey Executive Officer)
/s/ Robert K. Bench President and Chief Financial July 29, 1996
- ----------------------------- Officer and Director (Principal
Robert K. Bench Financial and Accounting
Officer)
/s/ Brian W. Braithwaite Secretary, Treasurer and July 29, 1996
- ----------------------------- Director)
Brian W. Braithwaite
Director July __, 1996
- -----------------------------
Sherman H. Smith
Director July __, 1996
- -----------------------------
William A. Fresh
13
<PAGE>
SPIRE INTERNATIONAL CORP. AND SUBSIDIARIES
FINANCIAL STATEMENTS
APRIL 30, 1996 AND 1995
(WITH INDEPENDENT AUDITORS' REPORT THEREON)
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders of
Spire International Corp. and Subsidiaries:
We have audited the accompanying consolidated balance sheet of Spire
International Corp. and subsidiaries as of April 30, 1996, and the related
consolidated statements of income, stockholders' equity, and cash flows for the
year then ended. We have also audited the combined balance sheet of Spire
Technologies, Inc. and Spire Technologies Systems Division, Inc. as of April 30,
1995, and the related combined statements of income, stockholders' equity, and
cash flows for the year then ended. These consolidated and combined financial
statements are the responsibility of the Companies' management. Our
responsibility is to express an opinion on these consolidated and combined
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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 the Companies as of April
30, 1996 and 1995, and the results of their operations and their cash flows
for each of the years then ended in accordance with generally accepted
accounting principles.
Salt Lake City, Utah
June 21, 1996
<PAGE>
SPIRE INTERNATIONAL CORP. AND SUBSIDIARIES (CONSOLIDATED)
SPIRE TECHNOLOGIES INC. AND SPIRE TECHNOLOGY SYSTEMS, INC. (COMBINED)
Balance Sheets
April 30, 1996 and 1995
<TABLE>
<CAPTION>
Assets 1996 1995
------ ---- ----
<S> <C> <C>
Current assets:
Cash $1,552,806 766,247
Accounts receivable 2,176,642 1,524,948
Other current assets 7,806 17,410
Deferred tax asset (note 4) 42,723 39,041
--------- ---------
Total current assets 3,779,977 2,347,646
Fixed assets (note 3):
Land 36,021 36,021
Buildings 250,489 250,489
Furniture and equipment 526,005 372,669
Transportation equipment 11,516 11,516
Accumulated depreciation (256,183) (202,484)
--------- ---------
Net fixed assets 567,848 468,211
Interest in oil and gas properties (note 2) 197,000 -
--------- ---------
$4,544,825 2,815,857
--------- ---------
--------- ---------
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Current portion of long-term debt (note 3) $ 7,721 87,527
Accounts payable 1,050,535 998,115
Accrued liabilities 488,660 360,388
Income taxes payable (note 4) 52,715 32,154
Deferred maintenance revenue 1,017,364 686,194
Other deferred revenue 219,650 -
--------- ---------
Total current liabilities 2,836,645 2,164,378
--------- ---------
Long-term liabilities:
Long-term debt, excluding current portion (note 3) 215,691 223,412
Deferred tax liability (note 4) 11,582 4,773
--------- ---------
Total long-term liabilities 227,273 228,185
--------- ---------
Stockholders' equity (notes 2 and 7):
Common stock, $.25 par value. Authorized 8,000,000 shares;
issued and outstanding 3,891,325 shares in 1996 972,832 2,000
Additional paid-in capital - 7,410
Treasury stock, 17,000 shares in 1995, at cost - (170,000)
Retained earnings 508,075 583,884
--------- ---------
Total stockholders' equity 1,480,907 423,294
Commitments (note 5)
--------- ---------
$4,544,825 2,815,857
--------- ---------
--------- ---------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
SPIRE INTERNATIONAL CORP. AND SUBSIDIARIES (CONSOLIDATED)
SPIRE TECHNOLOGIES INC. AND SPIRE TECHNOLOGY SYSTEMS, INC. (COMBINED)
Statements of Income
Years ended April 30, 1996 and 1995
1996 1995
---------- ---------
Revenues:
Software licenses and maintenance $7,694,695 5,356,572
Hardware sales and service 6,178,706 4,318,111
---------- ---------
Total revenues 13,873,401 9,674,683
---------- ---------
Cost of sales:
Software licenses and maintenance 3,100,738 2,879,943
Hardware sales and service 5,351,305 3,734,132
---------- ---------
Total cost of sales 8,452,043 6,614,075
---------- ---------
Gross profit 5,421,358 3,060,608
Selling, general, and administrative expenses 4,605,402 2,927,081
Research and development expense 268,028 -
---------- ---------
Income from operations 547,928 133,527
Other income (expense):
Interest income 24,918 10,272
Interest expense (31,831) (28,348)
Other income (expense) (4,715) 29,772
---------- ---------
Total other income (expense) (11,628) 11,696
---------- ---------
Income before taxes 536,300 145,223
Income tax expense (note 4) 196,745 46,488
---------- ---------
Net income $339,555 98,735
---------- ---------
---------- ---------
Net income per share $0.08 0.03
---------- ---------
---------- ---------
See accompanying notes to financial statements.
<PAGE>
SPIRE INTERNATIONAL CORP. AND SUBSIDIARIES (CONSOLIDATED)
SPIRE TECHNOLOGIES INC. AND SPIRE TECHNOLOGY SYSTEMS, INC. (COMBINED)
Statements of Stockholders' Equity
Years ended April 30, 1996 and 1995
<TABLE>
<CAPTION>
Total
Common stock Additional stock-
------------------------- paid-in Treasury Retained holders'
Shares Amount capital stock earnings equity
-------- --------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Balances at April 30, 1994 183,000 $ 2,000 7,410 (170,000) 485,149 324,559
Net income - - - - 98,735 98,735
----------- --------- -------- ---------- ---------- -----------
Balances at April 30, 1995 183,000 2,000 7,410 (170,000) 583,884 423,294
Issuance of treasury stock 4,386 - 65,790 43,860 - 109,650
Business combination (note 2) 3,703,939 970,832 (73,200) 126,140 (415,364) 608,408
Net income - - - - 339,555 339,555
----------- --------- -------- ---------- ---------- -----------
Balances at April 30, 1996 3,891,325 $ 972,832 - - 508,075 1,480,907
----------- --------- -------- ---------- ---------- -----------
----------- --------- -------- ---------- ---------- -----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
SPIRE INTERNATIONAL CORP. AND SUBSIDIARIES (CONSOLIDATED)
SPIRE TECHNOLOGIES INC. AND SPIRE TECHNOLOGY SYSTEMS, INC. (COMBINED)
Statements of Cash Flows
Years ended April 30, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
---------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 339,555 98,735
Adjustments to reconcile net income to net cash provided by
operating activities:
Deferred taxes 3,127 (12,931)
Depreciation 53,699 41,056
Stock issued in lieu of compensation 109,650 -
Decrease (increase) in assets:
Accounts receivable (632,225) (645,941)
Other current assets 9,604 9,108
Increase (decrease) in liabilities:
Accounts payable 5,327 456,304
Accrued liabilities (95,987) 305,018
Income taxes payable 18,561 19,417
Deferred maintenance revenue 331,170 164,144
Other deferred revenue 219,650 -
---------- --------
Net cash provided by operating activities 362,131 434,910
---------- --------
Cash flows from investing activities:
Capital expenditures (153,336) (114,395)
Net cash acquired in business combination 484,781 -
---------- --------
Net cash provided by (used in) investing activities 331,445 (114,395)
---------- --------
Cash flows from financing activities:
Proceeds from issuance of stock - -
Net borrowings on note payable to bank - -
Principal payments of long-term debt (87,527) (176,167)
Proceeds from issuance of long-term debt - 128,439
Deposit for private placement subscriptions 180,510 -
---------- --------
Net cash provided by (used in) financing activities 92,983 (47,728)
---------- --------
Net increase in cash 786,559 272,787
Cash at beginning of year 766,247 493,460
---------- --------
Cash at end of year $1,552,806 766,247
---------- --------
---------- --------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest $ 21,016 28,348
Cash paid for income taxes 378,587 23,832
</TABLE>
See accompanying notes to financial statements.
<PAGE>
SPIRE INTERNATIONAL CORP. AND SUBSIDIARIES (CONSOLIDATED)
SPIRE TECHNOLOGIES INC. AND SPIRE TECHNOLOGY SYSTEMS, INC. (COMBINED)
Notes to Financial Statements
April 30, 1996 and 1995
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
Spire International Corp. (Spire International) is the parent of Spire
Technologies, Inc. (STI) and Spire Technologies Systems Division, Inc.
(STSDI) (collectively, the Company). STI and STSDI are resellers of
computer software and hardware respectively, and also provide technical
support for certain software. STSDI has no employees or facilities, with
all work performed by STI in exchange for a management fee. Their
customers consist of business and governmental entities, geographically
dispersed throughout the United States and abroad. Revenue from foreign
sales was insignificant in previous years, and in the year ended April 30,
1996, was approximately nine percent of total sales. As a reseller the
Company is dependent on third-party suppliers, with over seventy percent of
the Company's revenues derived from products it obtains from three
suppliers. At April 30, 1996, Spire International owned certain
investments in oil and gas producing properties, which were disposed of in
May 1996 as discussed in note 2.
BASIS OF PRESENTATION
The consolidated financial statements as of and for the year ended
April 30, 1996, include the financial statements of Spire International and
its two wholly owned subsidiaries, STI and STSDI. The financial statements
as of April 30, 1995, and for the year then ended are the combined financial
statements of STI and STSDI. All significant intercompany balances and
transactions have been eliminated in consolidation or combination.
FIXED ASSETS
Fixed assets are stated at cost. Depreciation of fixed assets is computed
on the straight-line method over the estimated useful lives of individual
classes of assets. The estimated useful lives of the individual classes of
assets are as follows:
Buildings 40 years
Furniture and equipment 3-10 years
Transportation equipment 5 years
INTERESTS IN OIL AND GAS PROPERTIES
Interests in oil and gas properties, acquired in the business combination
discussed in note 2 are stated at cost to the Company, which is fair market
value at the date of the business combination.
<PAGE>
2
SPIRE INTERNATIONAL CORP. AND SUBSIDIARIES (CONSOLIDATED)
SPIRE TECHNOLOGIES INC. AND SPIRE TECHNOLOGY SYSTEMS, INC. (COMBINED)
Notes to Financial Statements
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
REVENUE RECOGNITION
Revenue from the sale of software licenses and hardware sales is recognized
at the time of delivery. Revenue from maintenance contracts and customer
service is recognized as the service is performed. Deferred maintenance
revenue consists of payments received on software maintenance contracts and
recorded as revenue over the period of the contract, which is typically one
year.
RESEARCH AND DEVELOPMENT
Research and development costs are expended as incurred.
INCOME TAXES
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
INCOME PER SHARE
Per share amounts are computed by dividing net income by the weighted
average number of common shares and common share equivalents resulting from
options outstanding. There were 3,992,768 and 3,346,274 weighted average
common shares and common share equivalents outstanding for the years ended
April 30, 1996 and 1995, respectively. Income per share for 1995 has been
restated for the effects of the business combination discussed in note 2
which for accounting purposes represented stock splits for the STI and
STSDI stockholders.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of trade receivables, notes payable, trade accounts
payable, accrued expenses, and long-term debt approximate fair value.
<PAGE>
3
SPIRE INTERNATIONAL CORP. AND SUBSIDIARIES (CONSOLIDATED)
SPIRE TECHNOLOGIES INC. AND SPIRE TECHNOLOGY SYSTEMS, INC. (COMBINED)
Notes to Financial Statements
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
USE OF ESTIMATES
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with generally accepted accounting principles. Actual results
could differ from those estimates.
(2) BUSINESS COMBINATION AND ASSET DISPOSITION
On January 23, 1996, STI and STSDI, which were both privately held by the
same group of owners, entered into an agreement and plan of reorganization
(Exchange Agreement) with Amacan Resources Corporation (Amacan) wherein STI
and STSDI became wholly owned subsidiaries of Amacan. The Exchange
Agreement was approved by Amacan stockholders on April 18, 1996. Since
1974, Amacan, a publicly-traded company, has been almost exclusively
engaged as a participant with others in oil and gas operations and
development. Amacan's principal assets were working interests in producing
oil and gas wells and options or rights to participate in the drilling of
additional wells. As part of the merger, Amacan was renamed Spire
International Corp.
Upon approval of the Exchange Agreement by the Amacan stockholders, (a) the
389,102 shares of Amacan's common stock previously outstanding (as adjusted
for a reverse stock split) remained outstanding and (b) Amacan issued an
additional 3,502,223 shares of its common stock for all of the issued and
outstanding shares of STI and STSDIs' common stock. The business
combination is treated for accounting purposes as a "reverse merger"
wherein STI and STSDI are shown as the acquiring companies because the
former stockholders of STI and STSDI have the significant majority of the
outstanding common stock after the combination, and management of STI and
STSDI has become the management of the combined companies. The business
combination is accounted by the purchase method of accounting with the net
assets of Amacan being recorded at their fair value at the date of closing
and the operating results of Amacan prior to the business combination are
not included with the historical operating results of STI and STSDI.
<PAGE>
4
SPIRE INTERNATIONAL CORP. AND SUBSIDIARIES (CONSOLIDATED)
SPIRE TECHNOLOGIES INC. AND SPIRE TECHNOLOGY SYSTEMS, INC. (COMBINED)
Notes to Financial Statements
(2) BUSINESS COMBINATION AND ASSET DISPOSITION (continued)
The following pro forma financial information presents the combined results
of operations of STI, STSDI, and Amacan as if the acquisition had occurred
as of May 1, 1994. The pro forma financial information does not
necessarily reflect the results of operations that would have occurred had
STI, STSDI, and Amacan constituted a single entity during such periods.
Years ended April 30,
---------------------
1996 1995
----------- ---------
Net sales $14,020,329 9,862,216
Net income $ 238,365 127,258
Net income per share $ 0.06 0.04
As described above, the Company acquired Amacan's interest in oil and gas
producing properties in the business combination. On May 1, 1996, these
properties were sold to an unrelated party. The properties were recorded
at fair market value as of acquisition date, as determined by the
subsequent sales price. Accordingly, no gain or loss was recorded on
disposal. The operating loss for the oil and gas operations during the
period from date of acquisition (April 18, 1996) to April 30, 1996, was
insignificant.
(3) NOTE PAYABLE TO BANK AND LONG-TERM DEBT
The Company had a $75,000 unsecured line of credit with a commercial bank
that expired March 23, 1996. No amounts were outstanding at April 30, 1996
or April 30, 1995. Subsequent to year-end, the Company established two new
lines of credit with a commercial bank: one for $1,000,000, secured by
trade receivables, at prime plus two percent, expiring June 1, 1997; the
other for $350,000, secured by equipment, at prime plus two percent,
expiring May 1, 1999.
<PAGE>
5
SPIRE INTERNATIONAL CORP. AND SUBSIDIARIES (CONSOLIDATED)
SPIRE TECHNOLOGIES INC. AND SPIRE TECHNOLOGY SYSTEMS, INC. (COMBINED)
Notes to Financial Statements
(3) NOTE PAYABLE TO BANK AND LONG-TERM DEBT (continued)
Long-term debt at April 30, 1996 and 1995, consisted of the following:
<TABLE>
<CAPTION>
1996 1995
--------- -------
<S> <C> <C>
8.25% first mortgage payable in monthly installments of
$1,173, including interest, with final payment of $107,417
due July 15, 1999, secured by the Company's land and
building with a book value of $255,831 at April 30, 1996 $121,909 125,755
8.70% SBA loan payable in monthly installments of $1,078,
including interest, secured by the Company's land
and building with a book value of $255,831 at April 30, 1996 101,503 104,754
5% simple interest loan payable in monthly installments
of 1.4% of the Spire Technologies gross margin from the prior
month, secured by common stock of Spire Technologies.
Paid off in December 1995 - 80,430
-------- -------
Total long-term debt 223,412 310,939
Less current portion 7,721 87,527
-------- -------
Long-term debt, excluding current portion $215,691 223,412
-------- -------
-------- -------
</TABLE>
Aggregate maturities of long-term debt are as follows: 1997, $7,721; 1998,
$8,400; 1999, $9,139; 2000, $112,877; 2001, $5,469; and thereafter $79,806.
<PAGE>
6
SPIRE INTERNATIONAL CORP. AND SUBSIDIARIES (CONSOLIDATED)
SPIRE TECHNOLOGIES INC. AND SPIRE TECHNOLOGY SYSTEMS, INC. (COMBINED)
Notes to Financial Statements
(4) INCOME TAXES
Income tax expense consists of:
Current Deferred Total
------- -------- -------
Year ended April 30, 1996:
Federal $165,923 5,139 171,062
State 25,683 - 25,683
-------- ------- -------
$191,606 5,139 196,745
-------- ------- -------
-------- ------- -------
Year ended April 30, 1995:
Federal $ 50,242 (11,273) 38,969
State 9,177 (1,658) 7,519
-------- ------- -------
$59,419 (12,931) 46,488
-------- ------- -------
-------- ------- -------
Actual income tax expense differs from the "expected" tax expense (computed
by applying the U.S. federal corporate income tax rate of 34 percent to
income before income taxes) as follows:
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Computed "expected" tax expense $182,342 49,376
Increase (decrease) in income taxes resulting from:
State income taxes, net of federal tax benefit 16,950 4,963
Other (2,547) (7,851)
------- -------
Income tax expense $196,745 46,488
------- -------
------- -------
</TABLE>
<PAGE>
7
SPIRE INTERNATIONAL CORP. AND SUBSIDIARIES (CONSOLIDATED)
SPIRE TECHNOLOGIES INC. AND SPIRE TECHNOLOGY SYSTEMS, INC. (COMBINED)
Notes to Financial Statements
(4) INCOME TAXES (continued)
The tax effects of temporary differences that give rise to current deferred
tax assets and noncurrent deferred tax liabilities at April 30, 1996 and
1995, are presented below:
<TABLE>
<CAPTION>
1996 1995
-------- -------
<S> <C> <C>
Current deferred tax assets:
Deferred compensation $16,514 9,232
Allowance for bad debts 42,723 29,809
-------- -------
Total gross current deferred assets 59,237 39,041
Less valuation allowance (16,514) -
-------- -------
Net current deferred tax assets $42,723 39,041
-------- -------
-------- -------
Noncurrent deferred tax assets:
Investment tax credit carryforwards $10,095 -
Net operating loss carryfoward 73,903 -
-------- -------
Total gross noncurrent deferred assets 83,998 -
Less valuation allowance (3,667) -
-------- -------
Net noncurrent deferred tax assets 80,331 -
Deferred tax liability - tax depreciation in excess of
book depreciation 91,913 4,773
-------- -------
Net noncurrent deferred tax liability $11,582 4,773
-------- -------
-------- -------
</TABLE>
The valuation allowance for deferred tax assets as of May 1, 1994, was $-0-.
The net change in the total valuation allowance for the years ended
April 30, 1996 and 1995, was an increase of $-0- and $20,181,
respectively.
Subsequently recognized tax benefits relating to the valuation allowance for
deferred tax assets as of April 30, 1996, will be allocated as an income tax
benefit to be reported in the statement of operations.
<PAGE>
8
SPIRE INTERNATIONAL CORP. AND SUBSIDIARIES (CONSOLIDATED)
SPIRE TECHNOLOGIES INC. AND SPIRE TECHNOLOGY SYSTEMS, INC. (COMBINED)
Notes to Financial Statements
(4) INCOME TAXES (continued)
At April 30, 1996, the Company has net operating loss carryforwards for
federal income tax purposes of $189,500 which expire from 1997 to 2008.
The Company also has investment tax credit carryforwards for federal income
tax purposes of $10,095 which expire from 1997 to 2001.
As a result of the business combination discussed in note 2, Spire
International has undergone greater than 50 percent change of ownership
under the rules of the Tax Reform Act of 1986. Consequently, certain of
the Company's net operating loss carryforwards and investment credit
carryforwards may expire unutilized. The maximum amount of the
remaining carryforwards available to offset future income in a given year
is limited to the product of Spire International value on the date of
ownership change and the federal long-term tax-exempt rate, plus any
limited carryforward not utilized in prior years.
(5) LEASES
The Company has operating leases for office space and equipment. The
Company incurred rent expense of $80,426 and $19,973 for the years ended
April 30, 1996 and 1995, respectively. Future minimum rent payments under
existing operating leases are $128,476 in fiscal 1997 and $122,425 in
fiscal 1998.
(6) RETIREMENT PLAN
The Company has a qualified defined contribution retirement plan under
Section 401(k) of the Internal Revenue Code. The plan covers all employees
who meet minimum age and service requirements, and allows participants to
defer a portion of their annual compensation on a pretax basis. In
addition, employer contributions are made at the discretion of the Board of
Directors. Participants are fully vested at all times in employee
contributions. Employer contributions vest over a six-year period. Employer
contributions of $12,376 and $11,545 were made for the years ended April
30, 1996 and 1995, respectively.
<PAGE>
9
SPIRE INTERNATIONAL CORP. AND SUBSIDIARIES (CONSOLIDATED)
SPIRE TECHNOLOGIES INC. AND SPIRE TECHNOLOGY SYSTEMS, INC. (COMBINED)
Notes to Financial Statements
(7) COMMON STOCK
At December 31, 1995, STI had common stock with a par value of $.01 per
share and 100,000 shares authorized and issued. STSDI had common stock
with no par value, 1,000,000 shares authorized and 100,000 shares issued
and outstanding.
The Company has a stock option plan under which incentive stock options,
nonqualified stock options, stock appreciation rights, and stock units may
be granted to directors and employees of the Company. The Company has
reserved 1,000,000 shares of common stock for issuance under the plan. The
number of shares, exercise price, terms, and exercise period are determined
by the Board of Directors on an option-by-option basis. No options were
granted prior to May 1, 1995. At April 30, 1996, options to acquire
551,685 shares have been granted of which 41,830 are exercisable. A
summary of activity follows:
Number Price per
of shares share
--------- -------------
Options outstanding at beginning of year - $ -
Plus options granted 551,685 1.24 - 3.50
Less options canceled or expired - -
--------- -------------
Options outstanding at end of year 551,685 $ 1.24 - 3.50
--------- -------------
--------- -------------
(8) SUBSEQUENT EVENTS
In April, 1996, the Company undertook a private offering to sell
unregistered shares of its common stock to certain accredited investors.
The Company intends to use the proceeds to acquire additional software
licenses and technology, to fund additional research and development, and
for additional working capital. The shares were offered in units, at $7.00
per unit, with each unit consisting of two shares of common stock plus one
warrant to buy one share of common stock for $3.50 before April 30, 1998.
The Company closed the offer in June 1996, when 223,024 units had been
subscribed from which $1,561,168 of cash proceeds were received.
<PAGE>
BYLAWS
OF
SPIRE INTERNATIONAL CORP.
Approved by Resolution of the
Board of Directors effective as of April 18, 1996.
ARTICLE 1 - CORPORATE OFFICES
1.1 BUSINESS OFFICE. The principal office of the corporation shall be
located at such place, either within or outside the State of Utah, as designated
from time to time by the Board of Directors. The corporation may have such
other offices, either within or without the State of Utah, as the Board may
designate or as the business of the corporation may require from time to time.
The corporation shall maintain at its principal office a copy of certain
records, as specified in Section 2.13 hereof.
1.2 REGISTERED OFFICE. The registered office of the corporation shall be
located within the State of Utah and may be, but need not be, identical with the
principal office (if located within the State of Utah). The address of the
registered office may be changed from time to time.
ARTICLE 2 - SHAREHOLDERS
2.1 ANNUAL MEETING. The annual meeting of shareholders shall be held each
year on the second Tuesday of the fifth calendar month immediately following the
close of the corporation's fiscal year, at 10:00 a.m., or on such other date and
at such other time as designated by the Board of Directors. At the meeting,
directors shall be elected and any other proper business may be transacted. If
the election of directors shall not be held on the day designated herein for the
annual meeting of the shareholders, or at any adjournment thereof, the Board of
Directors shall cause the election to be held at a special meeting of the
shareholders as soon thereafter as may be convenient.
2.2 SPECIAL MEETINGS. Special meetings of the shareholders may be called
at any time by the President or by the Board of Directors. Special meetings of
the shareholders may also be called by the holders of not less than one-tenth of
all the shares entitled to vote on any issue proposed to be considered at the
proposed special meeting by delivery of one or more signed and dated written
demands for the meeting stating the purpose for which it is to be held to the
corporation's secretary or other designated officer.
2.3 PLACE OF MEETINGS. Meetings of shareholders may be held at any place
within or outside the State of Utah as designated by the Board of Directors. In
the absence of any such designation, meetings shall be held at the principal
office of the corporation.
2.4 NOTICE OF MEETINGS. Written or printed notice stating the place, date
and time of the meeting, and in case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than ten
(10) nor more than sixty (60) days before the date of the meeting, either
personally or by mail, by or at the direction of the President, the Secretary or
the officer or persons calling the meeting, to each shareholder of record
entitled to vote at such meeting or to any other shareholder entitled by the
Utah Revised Business Corporation Act, as amended (the "Act") or
the corporation's Articles of Incorporation, as amended (the "Articles"), to
receive notice of the meeting. Notice shall be deemed to be effective at the
earlier of: (a) when deposited in the United States mail, addressed to the
shareholder at his address as it appears on the stock transfer books of the
corporation, with postage thereon prepaid; (b) on the date shown on the return
receipt if sent by registered or certified mail, return receipt requested, and
the receipt is signed by or on behalf
<PAGE>
of the addressee; (c) when received; or (d) 5 days after deposit in the United
States mail, if mailed postpaid and correctly addressed to an address other than
that shown in the corporation's current record of shareholders.
If any shareholders' meeting is adjourned to a different date, time or
place, notice need not be given of the new date, time and place, if the new
date, time, and place is announced at the meeting before adjournment and if the
meeting is to take place within 30 days. But if a new record date for the
adjourned meeting is or must be fixed, notice must be given pursuant to the
requirements of this Section, to those persons who are shareholders as of the
new record date.
2.5 WAIVER OF NOTICE/OBJECTION. A shareholder may waive notice of the
meeting (or any notice required by the Act, the Articles or these Bylaws), by a
writing signed by the shareholder entitled to the notice, which is delivered to
the corporation (either before or after the date and time stated in the notice)
for inclusion in the minutes or filing with the corporation records.
A shareholder's attendance at a meeting: (a) waives objection to lack of
notice or defective notice of the meeting, unless the shareholder at the
beginning of the meeting objects to holding the meeting or the transaction of
any business at the meeting; and (b) waives objection to consideration of a
particular matter at the meeting that is not within the purpose or purposes
described in the meeting notice, unless the shareholder objects to considering
the matter when it is presented.
2.6 FIXING OF RECORD DATE. For the purpose of determining shareholders of
any voting group entitled to notice of or to vote at any meeting of
shareholders, or shareholders entitled to take action without a meeting, or
shareholders entitled to receive payment of any distribution or dividend, or in
order to make a determination of shareholders for any other proper purpose, the
Board of Directors may fix in advance a date as the record date. Such record
date shall not be more than seventy (70) days prior to the meeting or action
requiring such determination of the shareholders. If no record date is so fixed
by the Board, the record date for determination of such shareholders shall be at
the close of business on: (a) with respect to an annual shareholders' meeting or
any special shareholders' meeting called by the Board or any person specifically
authorized by the Board or these Bylaws to call a meeting, the day before the
first notice is delivered to shareholders;(b) with respect to a special
shareholders' meeting demanded by the shareholders, the date the first
shareholder signs the demand;(c) with respect to the payment of a share
dividend, the date the Board of Directors authorizes the share dividend;(d) with
respect to a distribution to shareholders (other than one involving a repurchase
or reacquisition of shares), the date the Board authorizes the distribution.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof unless the Board of Directors fixes a new
record date which it must do if the meeting is adjourned to a date more than 120
days after the date fixed for the original meeting.
2.7 VOTING LIST. The officers of the company shall prepare a list of the
names of all of the shareholders who are entitled to be given notice of the
meeting. The list must be arranged by voting group, and within each voting
group by class or series of shares. The list must be alphabetical within each
class or series and must show the address of, and the number of shares held by,
each shareholder.
The shareholders' list must be available for inspection by any shareholder,
beginning on the earlier of ten (10) days before the meeting for which the list
was prepared or two (2) business days after notice of the meeting is given and
continuing throughout the meeting and any meeting adjournments, at the
corporation's principal office or the place identified in the meeting notice in
the city where the meeting will be held. A shareholder or shareholder's agent
or attorney is entitled, on written demand to the corporation and, subject to
requirement of any other section of these Bylaws or by any applicable sections
of the Act, to inspect and copy the list, during regular business hours and
during the period it is available for inspection. The corporation shall make
the shareholders list available at the meeting, and any shareholder, or any
shareholder's agent or attorney is entitled to inspect the list at any time
during the meeting or any adjournment, for any purpose germane to the meeting.
2.8 SHAREHOLDER QUORUM AND VOTING REQUIREMENTS. If the Articles or the
Act provides for voting by a single voting group on a matter, action on that
matter is taken when voted upon by that voting group.
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<PAGE>
If the Articles or the Act provides for voting by two (2) or more voting
groups on a matter, action on that matter is taken only when voted upon by each
of those voting groups counted separately. One voting group may vote on a
matter even though another voting group entitled to vote on the matter has not
voted.
Shares entitled to vote as a separate voting group may take action on a
matter at a meeting only if a quorum of those shares exists with respect to that
matter. Unless the Articles or the Act provides otherwise, a majority of the
votes entitled to be cast on the matter by the voting group constitutes a quorum
of that voting group for action on that matter.
Once a share is represented for any purpose at a meeting, it is deemed
present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is or must be set for that
adjourned meeting.
If a quorum exists, action on a matter (other than the election of
directors) by a voting group is approved if the votes cast within the voting
group favoring the action exceed the votes cast opposing the action, unless the
Articles, these Bylaws or the Act requires a greater number of affirmative
votes.
2.9 PROXIES. At all meetings of shareholders, a shareholder may vote in
person or by proxy. A shareholder may appoint a proxy (1) by signing an
appointment form, either personally or by the shareholder's attorney-in-fact or
(2) by transmitting or authorizing the transmission of a telegram, teletype, or
other electronic transmission providing a written statement of the appointment
to the proxy, to a proxy solicitor, proxy support or to the corporation,
provided that the transmitted appointment shall set forth or be transmitted with
written evidence from which it can be determined that the shareholder
transmitted or authorized the transmission of the appointment. Such proxy shall
be filed with the Secretary of the corporation or other person authorized to
tabulate votes before or at the time of the meeting. No proxy shall be valid
after eleven (11) months from the date of its execution unless otherwise
provided in the proxy.
2.10 VOTING SHARES. Each outstanding share, regardless of class, shall be
entitled to one vote, and each fractional share is entitled to a corresponding
fractional vote, on each matter submitted to vote at a meeting of shareholders,
except to the extent that the voting rights of the shares of any class or
classes are limited or denied by the Articles or by the Act.
Except as provided by specific court order, no shares held by another
corporation, if a majority of the shares entitled to vote for the election of
directors of such other corporation are held by the corporation, shall be voted
at any meeting or counted in determining the total number of outstanding shares
at any given time for purposes of any meeting. Provided, however, the prior
sentence shall not limit the power of the corporation to vote any shares,
including its own shares, held by it in a fiduciary capacity.
Redeemable shares are not entitled to vote after notice of redemption is
mailed to the holders and a sum sufficient to redeem the shares has been
deposited with a bank, trust company or other financial institution under an
irrevocable obligation to pay the holders the redemption price on surrender of
the shares.
Unless the Articles or the Act otherwise provide, at each election for
directors, every shareholder entitled to vote at such election shall have the
right to vote, in person or by proxy, all of the votes to which the
shareholder's shares are entitled for as many persons as there are directors to
be elected and for whose election such shareholder has a right to vote.
Directors are elected by a plurality of the votes cast by the shares entitled to
vote in the election at a meeting of shareholders at which a quorum is present.
2.11 CORPORATION'S ACCEPTANCE OF VOTES. If the name signed on a vote,
consent, waiver or proxy appointment corresponds to the name of a shareholder,
the corporation, if acting in good faith, is entitled to accept the vote,
consent, waiver, or proxy appointment and give it effect as the act of the
shareholder.
If the name signed on a vote, consent, waiver or proxy appointment does not
correspond to the name of its shareholder, the corporation, if acting in good
faith, is nevertheless entitled to accept the vote, consent, waiver or proxy
appointment and give it effect as the act of the shareholder if: (a) the
shareholder is an entity as defined in the Act and the name signed purports to
be that of an officer or agent of the entity; (b)the name signed purports to be
that of an administrator, executor, guardian or conservator representing the
shareholder
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<PAGE>
and, if the corporation requests, evidence of fiduciary status acceptable to the
corporation has been presented with respect to the vote, consent, waiver or
proxy appointment;(c) the name signed purports to be that of a receiver or
trustee in bankruptcy of the shareholder and, if the corporation requests,
evidence of this status acceptable to the corporation has been presented with
respect to the vote, consent, waiver or proxy appointment;(d) the name signed
purports to be that of a pledgee, beneficial owner, or attorney-in-fact of the
shareholder and, if the corporation requests, evidence acceptable to the
corporation of the signatory's authority to sign for the shareholder has been
presented with respect to the vote, consent, waiver or proxy appointment;(e) two
(2) or more persons are the shareholder as co-tenants or fiduciaries and the
name signed purports to be the name of at least one of the co-tenants or
fiduciaries and the person signing appears to be acting on behalf of all the co-
tenants or fiduciaries.
The corporation is entitled to reject a vote, consent, waiver or proxy
appointment if the Secretary or other officer or agent authorized to tabulate
votes, acting in good faith, has reasonable basis for doubt about the validity
of the signature on it or about the signatory's authority to sign for the
shareholder.
The corporation and its officer or agent who accepts or rejects a vote,
consent, waiver or proxy appointment in good faith and in accordance with the
standards of this section are not liable in damages to the shareholder for the
consequences of the acceptance or rejection.
Corporate action based on the acceptance or rejection of a vote, consent,
waiver or proxy appointment under this section is valid unless a court of
competent jurisdiction determines otherwise.
2.12 SHAREHOLDER ACTION WITHOUT A MEETING. Any action which may be taken
at any annual or special meeting of the shareholders may be taken without a
meeting and without prior notice, if one or more consents in writing, setting
forth the actions so taken, shall be signed by the holders of outstanding shares
having not less than the minimum number of votes that would be necessary to
authorize or take the action in a meeting at which all shares entitled to vote
thereon were present and voted.
Unless the written consents of all of the shareholders entitled to vote
have been obtained, notice of any shareholder approval without a meeting shall
be given at least ten days before the consummation of the action authorized by
the approval to: (i) those shareholders entitled to vote who have not consented
in writing and (ii) those shareholders not entitled to vote and to whom the Act
requires a notice of the above action be given. The notice must contain or be
accompanied by the same material that would have been required to be sent in a
notice of a meeting at which the proposed action would have been submitted to
the shareholders for action.
Directors may not be elected by written consent except by unanimous written
consent of all shares entitled to vote for the election of directors.
2.13 SHAREHOLDER'S RIGHT TO INSPECT CORPORATE RECORDS. The corporation
shall keep as permanent records minutes of all meetings of its shareholders and
Board of Directors, a record of all actions taken by the shareholders or Board
of Directors without a meeting, a record of all actions taken by a committee of
the Board of Directors in place of the Board of Directors on behalf of the
corporation and records of all waivers of notices of meetings of shareholders,
meetings of the Board of Directors or any meetings of committees of the Board of
Directors. The corporation shall maintain appropriate accounting records.
If a shareholder gives the corporation written notice of his or her demand
at least five (5) business days before the date on which he or she wishes to
inspect and copy the below listed records, the shareholder (or his or her agent
or attorney) has the right to inspect and copy, during regular business hours,
any of the following records, all of which the corporation is required to keep
at its principal office: (a) the Articles as currently in effect;(b) the Bylaws
or restated Bylaws and all amendments to them currently in effect;(c) the
minutes of all shareholders' meetings and records of all action taken by
shareholders without a meeting, for the past three (3) years;(d) all written
communications to shareholders generally within the past three (3) years,
including the financial statements furnished for the past three (3) years to the
shareholders; (e) a list of the names and business addresses of its current
directors and officers; and,(f) the most recent annual report delivered to the
Secretary of State.
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<PAGE>
In addition, if a shareholder gives the corporation a written demand made
in good faith and for a proper purpose at least five (5) business days before
the date on which he or she wishes to inspect and copy the below described
records, and if the shareholder describes with reasonable particularity his or
her purpose and the records the shareholder desires to inspect and the records
are directly connected with his or her purpose, the shareholder of the
corporation (or his or her agent or attorney) is entitled to inspect and copy,
during regular business hours at a reasonable location specified by the
corporation, any of the following records of the corporation: (a) excerpts from
minutes of any meeting of the Board of Directors, records of any action of a
committee of the Board of Directors on behalf of the corporation, minutes of any
meeting of the shareholders and records of action taken by the shareholders or
Board of Directors without a meeting, to the extent not subject to inspection
under this Section 2.13; (b) accounting records of the corporation; and (c) the
record of shareholders (compiled no earlier than the date of the shareholder's
demand).
The right to copy records includes, if reasonable, the right to receive
copies made by photographic, xerographic or other means. The corporation may
impose a reasonable charge, covering the costs of labor and material, for copies
of any documents provided to the shareholder. The charge may not exceed the
estimated cost of production or reproduction of the records.
2.14 FINANCIAL STATEMENTS. Upon the written request of any shareholder,
the corporation at its own expense shall mail to the shareholder the
corporation's most recent annual or quarterly financial statements showing in
reasonable detail its assets, liabilities and the results of its operations.
ARTICLE 3 - BOARD OF DIRECTORS
3.1 GENERAL POWERS. All corporate powers shall be exercised by or under
the authority of the Board of Directors, and the business and affairs of the
corporation managed under the direction thereof, subject to any limitation set
forth in the Articles or in a shareholder's agreement authorized under the Act.
3.2 NUMBER OF DIRECTORS AND QUALIFICATION. The authorized number of
directors of the corporation shall be as determined by resolution of the Board
of Directors, but shall not be more than nine (9) nor less than three (3).
Directors need not be residents of the State of Utah or shareholders of the
corporation.
3.3 ELECTION AND TERM OF OFFICE. Directors shall be elected at each
annual meeting of shareholders to hold office until the next succeeding annual
meeting. Each director, including a director elected to fill a vacancy, shall
hold office until the expiration of the term for which elected and until a
successor has been elected and qualified. No decrease in the authorized number
of directors shall have the effect of shortening the term of any incumbent
director.
3.4 CHAIRMAN OF THE BOARD. The Board of Directors shall elect from among
its members, one member to serve as Chairman. The duties of the Chairman are to
prepare the agenda, conduct the Board meetings and to nominate members for
election to the various committees as established by the Board of Directors.
3.5 VICE CHAIRMAN. The Board of Directors shall elect from among its
members, one member to serve as Vice Chairman. The duty of the Vice Chairman is
to act in the absence, death, inability or refusal to act, of the Chairman.
3.6 REGULAR MEETINGS. The Board of Directors may provide by resolution
the time and place, either within or outside the State of Utah, for the holding
of regular meetings without notice other than such resolution.
3.7 SPECIAL MEETINGS. Special meetings of the Board of Directors for any
purpose or purposes may be called at any time by or at the request of the
Chairman of the Board, the President or any two (2) directors. The person or
persons authorized to call special meetings of the Board of Directors may fix
any place, either within or outside the State of Utah, as the place for holding
any special meeting of the Board of Directors.
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<PAGE>
3.8 NOTICE. Notice of the date, time and place of any special meeting
shall be delivered personally or by telephone to each director or sent by
first-class mail, telecopier or electronic communication, 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 or
telecopier, it shall be delivered personally or by telephone or telecopier at
least forty-eight (48) hours before the meeting begins. 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 notice has reason to
believe will promptly communicate it to the director. Any director may waive
notice of any meeting before or after the date and time of the meeting stated in
the notice by delivering a written waiver signed by the director entitled to
notice to the corporation to file in its corporate records. A director's
attendance at or participation in a meeting waives any required notice to the
director of the meeting unless the director at the beginning of the meeting or
promptly upon the director's arrival, objects to holding the meeting or
transacting business at the meeting because of lack of notice or defective
notice and does not thereafter vote for or assent to action taken at the
meeting.
3.9 QUORUM. One-third (1/3) of the authorized number of directors as
fixed in accordance with these Bylaws shall constitute a quorum for the
transaction of business at any meeting of the Board of Directors, but if less
than one-third (1/3) is present at a meeting, a majority of the directors
present may adjourn the meeting from time to time without further notice.
3.10 MANNER OF ACTING. The act of a majority of the directors present at a
meeting at which a quorum is present shall, unless the act of a greater number
of directors is required by the Articles or these Bylaws, be the act of the
Board of Directors.
3.11 VACANCIES AND NEWLY CREATED DIRECTORSHIPS. Any vacancy occurring in
the Board of Directors may be filled by the affirmative vote of a majority of
the remaining directors, though less than a quorum, or by the affirmative vote
of the majority of shares entitled to vote for directors. A director elected to
fill a vacancy created other than by an increase in the number of directors
shall be elected for the unexpired term of his predecessor in office. If a
director is elected to fill a vacancy created by reason of an increase in the
number of directors, then the term of the director so elected expires at the
next shareholders' meeting at which directors are elected. If the vacant
director's position was held by a director elected by a voting group of
shareholders, that vacant director position shall be filled by the affirmative
vote of one or more directors who are elected by the same voting group, or by
the affirmative vote of the holders of shares of that voting group.
3.12 COMMITTEES. The Board of Directors, by resolution adopted by the
majority of the number of directors, may create one or more committees
consisting of not less than two (2) directors, which committee or committees, to
the extent provided in such resolution or in the Articles or these Bylaws, shall
have and may exercise all the authority so provided; except that the designation
of such committees and the delegation thereto of authority shall not operate to
relieve the Board of Directors, or any member thereof, of any responsibility
imposed upon it or him or her by law.
3.13 FEES AND COMPENSATION. Directors may receive such compensation, if
any, for their services and such reimbursement of expenses as may be fixed or
determined by resolution of the Board of Directors. This section shall not be
construed to preclude any director from serving the corporation in any other
capacity as an officer, agent, employee or otherwise and receiving compensation
for those services. No salaried director may receive compensation for Board
meetings or assignments unless specifically authorized by the Board of
Directors.
3.14 PRESUMPTION OF ASSENT. A director who is present at a meeting of the
Board of Directors when corporate action is taken is considered to have
consented to the action taken at the meeting unless: (a) the director objects
at the beginning of the meeting, or promptly upon arrival, to holding the
meeting or transacting business at the meeting and does not thereafter vote for
or assent to any action taken at the meeting; (b) the director contemporaneously
requests his dissent or abstention as to any specific action to be entered into
the minutes of the meeting; or (c) the director causes written notice of a
dissent or abstention as to a specific action to be received by the presiding
officer of the meeting before adjournment of the meeting or by the corporation
promptly after adjournment of the meeting.
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<PAGE>
3.15 RESIGNATIONS. A director may resign at any time by giving a written
notice of resignation to either the Chairman of the Board of Directors, the
President, a Vice-President or the Secretary or Assistant Secretary, if any.
Unless otherwise provided in the resignation, the resignation shall become
effective when the notice is received by the designated officer or director. If
the resignation is to become effective at a future time, the Board of Directors
may elect a successor to take office when the resignation becomes effective.
3.16 ACTION BY WRITTEN CONSENT. Any action required to be taken at a
meeting of the Board of Directors of the corporation or any other action which
may be taken at a meeting of the Board of Directors, may be taken without a
meeting if a consent or consents in writing, setting forth the action so taken,
shall be signed by all of the directors. Such consent shall have the same legal
effect as a unanimous vote of all the directors and may be described as such in
any document.
Action taken in this section is effective at the time the last director
signs a writing describing the action taken, unless the Board of Directors
establishes a different effective date.
3.17 MEETINGS BY TELEPHONE CONFERENCE CALL. Members of the Board of
Directors may participate in a meeting of the Board of Directors by means of
conference telephone or similar communications equipment by which all persons
participating in the meeting can hear each other. Participation in such a
meeting shall constitute presence in person at such meeting.
3.18 REMOVAL OF DIRECTORS. The shareholders may remove one or more
directors at a meeting called for that purpose if notice has been given that a
purpose of the meeting is such removal. The removal may be with or without
cause unless the Articles provide that directors may only be removed with cause.
If a director is elected by a voting group of shareholders, only the
shareholders of that voting group may participate in the vote to remove him. If
cumulative voting is authorized, a director may not be removed if the number of
votes sufficient to elect him under cumulative voting is voted against his
removal. If cumulative voting is not authorized, a director may be removed only
if the number of votes cast to remove him exceeds the number of votes cast not
to remove him.
ARTICLE 4 - COMMITTEES OF DIRECTORS
4.1 HOW CONSTITUTED. The Board of Directors may, by resolution adopted by
a majority of the authorized number of directors, designate one or more
committees, each consisting of two (2) or more directors, to serve at the
pleasure of the Board. The Board may designate one or more directors as
alternate members of any committee, who may replace any absent member at any
meeting of the committee. The appointment of members or alternate members of a
committee requires the vote of a majority of the authorized number of directors.
4.2 POWERS. Each committee shall have and may exercise all powers
relating to the business and affairs of the corporation as may be granted to it
by the Board of Directors, except for such power as by law may not be delegated
by the Board of Directors to a committee.
4.3 PROCEEDINGS. Each committee as may be designated hereunder by the
Board of Directors may fix its own presiding and recording officer or officers
and may meet at such place or places, at such time or times and upon such notice
(or without notice if allowed by law) as it shall determine from time to time.
It shall keep a record of its proceedings and shall report such proceedings to
the Board of Directors at the meeting of the Board of Directors next following.
4.4 QUORUM AND MANNER OF ACTING. At all meetings of each committee as may
be designated hereunder by the Board of Directors, the presence of members
constituting two-thirds (2/3) of the total authorized membership of the
committee shall be necessary and sufficient to constitute a quorum for the
transaction of business, and the act of two-thirds (2/3) of the members present
at any meeting at which a quorum is present shall be the act of such committee.
The members of each committee as may be designated hereunder by the Board of
Directors, shall act only as a committee and the individual members thereof
shall have no powers as such.
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4.5 MEETINGS BY TELEPHONE CONFERENCE CALL; CONSENT. Members of each
committee as may be designated hereunder by the Board of Directors may
participate in a meeting of the committee by means of conference telephone or
similar communication equipment by means of which all persons participating in
the meeting can hear each other. Participation in such a meeting shall
constitute presence in person at such a meeting.
Action may be taken by any committee without a meeting if all members
thereof consent in writing, and the writing or writings are filed with the
minutes of the proceedings of such committee. Such consent shall have the same
legal effect as a unanimous vote of all the committee members and may be
described as such in any document. Action taken in this section is effective at
the time the last committee member signs a writing describing the action taken,
unless the committee establishes a different effective date.
4.6 RESIGNATIONS. Any member of any committee as may be designated
hereunder by the Board of Directors may resign at any time by delivering a
written resignation to the Chairman of the Board, the President, the Secretary
or Assistant Secretary, if any, or to the presiding officer of the committee of
which he or she is a member, if any shall have been appointed and shall be in
office. Unless otherwise specified therein, such resignation shall take effect
upon delivery.
4.7 REMOVAL. The Board of Directors may at any time remove any member of
any committee designated by it hereunder either with or without cause.
4.8 VACANCIES. If any vacancy shall occur in any committee designated by
the Board of Directors hereunder, by reason of disqualification, death,
resignation, removal, or otherwise, the remaining members shall, until the
filling of such vacancy, constitute the then total authorized membership of the
committee and, provided that two (2) or more members are remaining, shall
continue to act. Such vacancy may be filled at any meeting of the Board of
Directors.
4.9 COMPENSATION. The Board of Directors may allow a fixed sum and
expenses of attendance to any member of any committee designated by it hereunder
who is not an active salaried employee of the corporation for attendance at each
meeting of such committee.
ARTICLE 5 - OFFICERS
5.1 OFFICERS. Except as provided otherwise by a resolution of the Board
of Directors, the officers of the corporation shall be a President, one or more
Vice Presidents, a Secretary and a Treasurer, each of whom shall be approved by
the Board of Directors. Any two (2) or more offices may be held by the same
person. The corporation may also have such other officers and assistants as may
be appointed by the Board of Directors.
5.2 APPOINTMENT, TERM OF OFFICE AND QUALIFICATION. The officers of the
corporation shall be approved by, and serve at the pleasure, of the Board of
Directors, subject to any rights of an officer under any contract of employment.
Such approval of officers shall take place annually or at such other intervals
as the Board of Directors may determine, and may be held at regular or special
meetings of the Board or by the written consent of the directors. Each officer
shall hold office until his or her successor shall have been duly appointed and
qualified or until such officer's death, resignation or removal in the manner
provided in these Bylaws. Any two or more offices may be held by the same
person. The Chairman of the Board, if any, shall be and remain a director of
the corporation during the term of his or her office. No other officer need be
a director of the corporation.
5.3 RESIGNATIONS. Any officer may resign at any time by delivering a
written resignation to the Board of Directors, the President, or the Secretary.
Unless otherwise specified therein, such resignation shall take effect upon such
delivery of the resignation; and, unless otherwise specified in the resignation,
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.
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5.4 REMOVAL. Any officer may be removed by the Board of Directors or by a
committee, if any, if so authorized by the Board of Directors, whenever in its
judgment the best interests of the corporation would be served thereby, but such
removal shall be without prejudice to the contract rights, if any, of the person
so removed.
5.5 VACANCIES AND NEWLY CREATED OFFICES. A vacancy in any office by
reason of death, resignation, removal, disqualification, the creation of a new
office or otherwise, may be filled by the Board of Directors at any regular or
special meeting or by the unanimous written consent of the directors.
5.6 PRESIDENT. Subject to any supervisory duties that may be given by the
Board of Directors to any Chairman of the Board, the President shall be the
Chief Executive Officer of the corporation. Subject to the control of the Board
of Directors, the President shall supervise and direct generally all the
business and affairs of the corporation. In the absence of the Chairman of the
Board, or Vice Chairman, or if there is no such Chairman or Vice Chairman, the
President shall preside at all meetings of the Board of Directors. The
President shall conduct the annual shareholders' meeting. The President shall
have the general powers and duties of management usually vested in the office of
President of a corporation, and shall have such other powers and duties as may
be prescribed by the Board of Directors or these Bylaws.
5.7 VICE PRESIDENT. If appointed, in the absence of the President or in
the event of his death, inability or refusal to act, the Vice President (or in
the event there be more than one Vice President, the Vice Presidents in the
order designated at the time of their election, or in the absence of any
designation, then in the order of their appointment) shall perform 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 perform
such other duties as from time to time may be assigned to them by the President
or by the Board of Directors.
5.8 SECRETARY. The Secretary shall keep, or cause to be kept, the minutes
of the proceedings of all meetings of, and a record of all actions taken by, the
Board of Directors, committees of directors and shareholders of the corporation.
The Secretary shall cause all notices of meetings to be duly given in accordance
with the provisions of these Bylaws and as required by statute. The Secretary
shall see that the books, reports, statements, certificates, and other documents
and records required by statute are properly kept and filed. The Secretary
shall have charge of the stock books of the corporation and cause the stock and
transfer books to be kept in such manner as to show at any time the amount of
the stock of the corporation of each class issued and outstanding, the manner in
which and the time when such stock was paid for, the alphabetically arranged
names and the addresses of the holders of record thereof, the number of shares
held by each holder and the time when each became such holder of record; and
shall exhibit at all reasonable times to any director, upon application, the
original or duplicate stock register. The Secretary shall perform all duties
incident to the office of Secretary and such other duties as are given to him or
her by law or as from time to time may be assigned by the President or the Board
of Directors. The President may appoint an Assistant Secretary to aid the
Secretary in the performance of the duties of Secretary and may act for the
Secretary in his absence as authorized by the Secretary.
5.9 TREASURER. The Treasurer 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 Treasurer shall deposit all money 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. The Treasurer
shall disburse the funds of the corporation as may be ordered by the Board of
Directors, shall render to the President and directors, whenever they request
it, an account of all of transactions taken as Treasurer and of the financial
condition of the corporation and shall have such other powers and perform such
other duties as may be prescribed by the President or the Board of Directors.
5.10 SALARIES. The salaries or other compensation of the officers of the
corporation shall be fixed from time to time by the Board of Directors, except
that the Board of Directors may delegate to any person or group of persons the
power to fix the salaries or other compensation of any officers. No officer
shall be prevented from receiving any such salary or compensation by reason of
the fact that he or she is also a director of the corporation.
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5.11 SURETY BONDS. In case the Board of Directors shall so require, any
officer or agent of the corporation shall provide the corporation with a bond,
in such sums and with such surety or sureties as the Board of Directors may
direct, conditioned upon the faithful performance of his duties to the
corporation, including responsibility for negligence and for the accounting of
all property, monies or securities of the corporation which may come under his
responsibility.
ARTICLE 6 - EXECUTION OF INSTRUMENTS,
BORROWING OF MONEY AND DEPOSIT OF CORPORATE FUNDS
6.1 INSTRUMENTS. The Board of Directors may authorize any officer, agent
or agents to enter into any contract or execute and deliver any instrument in
the name of, and on behalf of, the corporation, and such authority may be
general or confined to specific instances.
6.2 LOANS. No loan or advance shall be contracted on behalf of the
corporation, no negotiable paper or other evidence of its obligation under any
loan or advance shall be issued in its name and no property of the corporation
shall be mortgaged, pledged, hypothecated, transferred or conveyed as security
for the payment of any loan, advance, indebtedness, or liability of the
corporation, unless and except as authorized by the Board of Directors. Any
such authorization may be general or confined to specific instances.
6.3 DEPOSITS. All monies of the corporation not otherwise employed shall
be deposited from time to time to its credit in such banks or trust companies or
with such bankers or other depositories as the Board of Directors may select, or
as from time to time may be selected by any officer or agent authorized so to do
by the Board of Directors.
6.4 CHECKS, DRAFTS, ETC.. All checks, drafts, acceptances, notes,
endorsements, and, subject to the provisions of these Bylaws, evidences of
indebtedness of the corporation shall be signed by such officer or officers or
such agent or agents of the corporation and in such manner as the Board of
Directors from time to time may determine. Endorsements for deposit to the
credit of the corporation in any of its duly authorized depositories shall be in
such manner as the Board of Directors from time to time may determine.
6.5 BONDS AND DEBENTURES. Every bond or debenture issued by the
corporation shall be evidenced by an appropriate instrument which shall be
signed by the President or a Vice-President and by the Secretary and sealed with
the seal of the corporation. The seal may be a facsimile, engraved or printed.
Where such bond or debenture is authenticated with the manual signature of an
authorized officer of the corporation or other trustee designated by the
indenture of trust or other agreement under which such security is issued, the
signature of any of the corporation's officers named thereon may be a facsimile.
In case any officer who signed, or whose facsimile signature has been used on
any such bond or debenture, shall cease to be an officer of the corporation for
any reason before the same has been delivered by the corporation, such bond or
debenture may nevertheless be adopted by the corporation and issued and
delivered as though the person who signed it or whose facsimile signature has
been used thereon had not ceased to be such officer.
6.6 SALE, TRANSFER, ETC., OF SECURITIES. Sales, transfers, endorsements
and assignments of shares of stocks, bonds and other securities owned by or
standing in the name of the corporation and the execution and delivery on behalf
of the corporation of any and all instruments in writing incident to any such
sale, transfer, endorsement or assignment, shall be effected by the President,
or by any Vice-President, together with the Secretary, or by any officer or
agent thereunto authorized by the Board of Directors.
6.7 PROXIES. Proxies to vote with respect to shares of stock of other
corporations owned by or standing in the name of the corporation shall be
executed and delivered on behalf of the corporation by the President or any
Vice-President and the Secretary of the corporation or by any officer or agent
thereunto authorized by the Board of Directors.
ARTICLE 7 - CAPITAL STOCK
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7.1 STOCK CERTIFICATES. The shares of the corporation shall be
represented by certificates. The certificates shall be signed by two (2)
officers as designated by the Board of Directors, or in the absence of such
designation, any two (2) of the following officers: the President,
Vice-President, Secretary or Assistant Secretary, if any, of the corporation.
The certificates may be sealed with the seal of the corporation or a facsimile
thereof. The signatures of the designated officers upon a certificate may be
facsimiles if the certificate is countersigned by a transfer agent, or
registered by a registrar, other than the corporation itself or an employee of
the corporation. In case any officer who has signed or whose facsimile
signature has been placed upon such certificate shall have ceased to be such
officer before such certificate is issued, it may be issued by the corporation
with the same effect as if he or she were such officer at the date of its issue.
If the corporation is authorized to issue different classes of shares or a
different series within a class, the designations, preferences, limitations and
relative rights applicable to each class, the variations in preferences,
limitations and relative rights determined for each series and the authority of
the Board of Directors to determine variations for any existing or future class
or series, must be summarized on the front or back of each share certificate.
Alternatively, each certificate may state conspicuously on its front or back
that the corporation will furnish the shareholder this information on request in
writing, without charge.
Each certificate representing shares shall also state upon the face
thereof: (a) the name of the issuing corporation and that it is organized under
the laws of the State of Utah;(b) the name of the person to whom the certificate
is issued; and (c) the number and class of shares, and the designation of the
series, if any, which such certificate represents.
There shall be entered upon the stock transfer books of the corporation at
the time of issuance of each share, the number of the certificate issued, the
name and address of the person owning the shares represented thereby, the number
and kind, class or series of such shares and the date of issuance thereof.
Every certificate exchanged or returned to the corporation shall be marked
"Cancelled" with the date of cancellation.
7.2 TRANSFER OF STOCK. Transfers of stock shall be made only upon the
stock transfer books of the corporation kept at an office of the corporation or
by transfer agents designated to transfer shares of the stock of the
corporation. Except where a certificate is issued in replacement of a lost or
destroyed certificate as provided in these Bylaws, an outstanding certificate
for the number of shares involved shall be surrendered for cancellation before a
new certificate is issued therefor. Except as otherwise provided by law, the
corporation and transfer agents and registrars, if any, shall be entitled to
treat the holder of record of any share or shares of stock as the absolute owner
thereof for all purposes, and accordingly shall not be bound to recognize any
legal, equitable or other claim to or interest in such share or shares on the
part of any other person whether or not it or they shall have express or other
notice thereof.
7.3 RESTRICTIONS ON TRANSFER OR REGISTRATION OF SHARES. The Board of
Directors may, as they may deem expedient, impose restrictions on the transfer
or registration of transfer of shares of the corporation. The restriction does
not effect shares issued before the restriction was adopted unless the holders
of the shares are parties to the restriction agreement or voted in favor of the
restriction or otherwise consented to the restriction.
The restriction on the transfer or registration of transfer of shares is
valid and enforceable against the holder or a transferee of the holder, if the
restriction is authorized by the Act and its existence is noted conspicuously on
the front or back of the certificate.
7.4 REGULATIONS. Subject to the provisions of these Bylaws and of the
Articles, the Board of Directors may make such rules and regulations as they may
deem expedient concerning the issuance, transfer, redemption, and registration
of certificates for shares of the stock of the corporation.
7.5 TRANSFER AGENTS AND REGISTRARS. The Board of Directors may appoint
one or more transfer agents and one or more registrars with respect to the
certificates representing shares of stock of the corporation, and may require
all such certificates to bear the signature of either or both. The Board of
Directors may from time to time define the respective duties of such transfer
agents and registrars.
7.6 LOST OR DESTROYED CERTIFICATES. In the event of the loss or
destruction of any certificate of stock, another may be issued in its place
pursuant to such regulations as the Board of Directors may establish
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concerning proof of such loss, theft or destruction and concerning the giving
of a satisfactory bond or bonds of indemnity.
7.7 CONSIDERATION FOR SHARES. The Board of Directors may authorize the
issuance of shares for consideration consisting of any tangible or intangible
property or benefits to the corporation, including cash, promissory notes,
services performed, contracts or arrangements for services to be performed, or
other securities of the corporation. The terms and conditions of any tangible
or intangible property or benefit to provided in the future as to the
corporation, including contracts or arrangements for services to be performed,
shall be set forth in writing. The corporation may place in escrow shares
issued in consideration for contracts, arrangements for future services or
benefits or in consideration of a promissory note, or make other arrangements to
restrict transfer of the shares issued for any such consideration, and may
credit distributions in respect of the shares against the purchase price until
the services are performed, the note is paid or the benefits are received. If
the specified future services are not performed, the note is not paid or the
benefits are not received, the shares escrowed or restricted or the
distributions credited may be cancelled in whole or part.
ARTICLE 8 - MAINTENANCE AND INSPECTION OF BOOKS AND RECORDS
The corporation shall keep correct and complete books and records of
account and shall keep minutes of the proceedings of its shareholders and Board
of Directors; and shall keep at its registered office or principal place of
business, or at the office of its transfer agent or registrar, a record of its
shareholders, giving the names and addresses of all shareholders and the number
and class of the shares held by each. Any shareholder shall have the right to
examine in person the corporation's books and records as provided for in these
Bylaws.
ARTICLE 9 - INDEMNIFICATION
9.1 INDEMNIFICATION. Except as provided in Section 9.2 below, the
corporation shall, to the maximum extent and in the manner permitted by the Act,
indemnify an individual made party to a proceeding because such person is or was
a director or officer of the corporation, against liability incurred in the
proceeding if his or her conduct was in good faith, such person reasonably
believed that his or her conduct was in, or not opposed to, the corporation's
best interests and, in the case of any criminal proceeding, such person had no
reasonable cause to believe his or her conduct was unlawful. Termination of the
proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent is not, of itself, determinative that the director
or officer did not meet the standard of conduct described in this section.
Except as provided in Section 9.2 below, the corporation may, to the
maximum extent and in the manner permitted by the Act, indemnify an individual
made party to a proceeding because such person is or was an employee, fiduciary
or agent of the corporation, against liability incurred in the proceeding if
such person's conduct was in good faith, such person reasonably believed that
his or her conduct was in, or not opposed to, the corporation's best interests
and, in the case of any criminal proceeding, such person had no reasonable cause
to believe his or her conduct was unlawful. Termination of the proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or its
equivalent is not, of itself, determinative that the employee, fiduciary or
agent did not meet the standard of conduct described in this section.
9.2 CERTAIN RESTRICTIONS ON INDEMNIFICATION. The corporation may not
indemnify a director, officer, employee, fiduciary or agent of the corporation
under Section 9.1 above, in connection with a proceeding by or in the right of
the corporation in which such person was adjudged liable to the corporation, or
in connection with any other proceeding charging that such person derived an
improper personal benefit, whether or not involving action in his official
capacity, in which proceeding he was adjudged liable on the basis that he
derived an improper personal benefit, unless ordered by a court of competent
jurisdiction.
9.3 MANDATORY INDEMNIFICATION. The corporation shall indemnify a director
or officer of the corporation who was successful, on the merits or otherwise, in
the defense of any proceeding, or the defense of any claim, issue or matter in
the proceeding, to which such person was a party because he or she is or was a
director or officer of the corporation, against reasonable expenses incurred by
such person in connection with the proceeding or claims with respect to which he
or she has been successful.
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9.4 DETERMINATION. The corporation may not indemnify a director or
officer under Section 9.1 unless a determination has been made in the specific
case that indemnification of the director or officer is permissible in the
circumstances because the director or officer has met the applicable standard of
conduct set forth in Section 9.1. The corporation may not indemnify an
employee, fiduciary or agent under Section 9.1 unless authorized and a
determination has been made in the specific case that indemnification of the
employee, fiduciary or agent is permissible in the circumstances because the
employee, fiduciary or agent has met the applicable standard of conduct set
forth in Section 9.1. Such determination with respect to directors, officers,
employees, fiduciaries or agents shall be made (a) by the Board of Directors by
majority vote of those present at a meeting at which a quorum is present, and
only those directors not parties to the proceedings shall be counted in
satisfying the quorum, (b) if a quorum can not be attained, by majority vote of
a committee of the Board of Directors, which committee shall consist of two (2)
or more directors not parties to the proceeding, except that the directors who
are parties to the proceeding may participate in the designation of directors
for the committee, (c) by special legal counsel selected by the Board of
Directors or its committee in the manner prescribed in clauses (a) or (b) of
this Section 9.4 or (d) by the shareholders, by a majority of the votes entitled
to be cast by holders of qualified shares that are present in person or by proxy
at a meeting. A majority of the votes entitled to be cast by the holders of all
qualified shares constitutes a quorum for purposes of action that complies with
this section. Shareholders' action that otherwise complies with this section is
not affected by the presence of holders, or the voting, of shares that are not
qualified shares.
9.5 GENERAL INDEMNIFICATION. The indemnification and advancement of
expenses provided by this Article 9 shall not be construed to be exclusive of
any other rights to which a person seeking indemnification or advancement of
expenses may be entitled under any articles of incorporation, 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.
9.6 ADVANCES. The corporation may pay for or reimburse the reasonable
expenses incurred by the director, officer, employee, fiduciary or agent of the
corporation who is a party to a proceeding in advance of final disposition of
the proceeding if: (a) such person furnishes to the corporation a written
affirmation of his good faith belief that he has met the applicable standard of
conduct described in Section 9.1, (b) the director furnishes to the corporation
a written undertaking, executed personally or on his behalf, to repay the
advance if it is ultimately determined that he did not meet the standard of
conduct and (c) a determination is made that the facts then known to those
making a determination would not preclude indemnification under this Article 9.
9.7 SCOPE OF INDEMNIFICATION. The indemnification and advancement of
expenses authorized by this Article 9 is intended to permit the corporation to
indemnify to the fullest extent permitted by the laws of the State of Utah, any
and all persons whom it shall have power to indemnify under such laws from and
against any and all of the expenses, disabilities or other matters referred to
in or covered by such laws. Any indemnification or advancement of expenses
hereunder shall, unless otherwise provided when the indemnification or
advancement of expenses is authorized or ratified, continue as to a person who
has ceased to be a director, officer, employee fiduciary or agent and shall
inure to the benefit of such person's heirs, executors and administrators.
9.8 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 in any such capacity, whether or not the corporation would have the power
to indemnify such person against such liability under the provisions of this
Article 9 or the laws of the State of Utah, as the same may hereafter be amended
or modified.
ARTICLE 10 - FISCAL YEAR
The fiscal year of the corporation shall be fixed by resolution of the
Board of Directors.
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ARTICLE 11 - DIVIDENDS
The Board of Directors may from time to time declare, and the corporation
may pay, dividends on its outstanding shares in the manner and upon the terms
and conditions provided by law.
ARTICLE 12 - AMENDMENTS
These Bylaws may be amended by the Board of Directors at any meeting or by
the shareholders at any meeting.
ARTICLE 13 - SAVINGS CLAUSE
If, and at such time as, any part of these Bylaws is declared by a majority
vote of the shareholders or Board of Directors, or by a judicial body to be
invalid, such determination shall not affect the remainder of this instrument.
These Bylaws are to be construed as being consistent with the laws of the State
of Utah and the Articles.
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CERTIFICATE OF ADOPTION OF BYLAWS
OF
SPIRE INTERNATIONAL CORP.
CERTIFICATE BY SECRETARY OF ADOPTION BY BOARD OF DIRECTORS
The undersigned hereby certifies that He is the duly elected, qualified,
and acting Secretary of SPIRE INTERNATIONAL CORP. and that the foregoing Bylaws
were submitted to and approved and adopted by the Board of Directors of this
corporation by resolution dated effective as of April 18, 1996.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this ______
day of __________, 1996.
------------------------------
Brian W. Braithwaite
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EXCLUSIVE LICENSE AND TECHNICAL ASSISTANCE AGREEMENT
THIS EXCLUSIVE LICENSE AND TECHNICAL ASSISTANCE AGREEMENT (the "AGREEMENT")
is made and entered into in Orem, Utah, as of the 1 day of July, 1996 (the
"EFFECTIVE DATE"), by and between AUSTRALIAN SOFTWARE INNOVATIONS (SERVICES) PTY
LTD, a limited company organized under the laws of Australia whose principal
place of business is located at 51 Rawson Street, Suite 301, Epping NSW 2121,
Australia (the "LICENSOR"), and SPIRE TECHNOLOGIES, INC., a Utah corporation
whose principal place of business is located at 311 North State Street, Orem,
Utah 84057 (the "LICENSEE").
RECITALS
WHEREAS, Licensor and Licensee are engaged in the business of developing,
marketing and providing support services relating to various computer hardware
and software products; and
WHEREAS, Licensor desires to grant to Licensee, and Licensee desires to
obtain from Licensor, an exclusive license to use, market, manufacture,
assemble, modify and sublicense the Licensed Materials (as defined herein),
subject to and in accordance with the provisions set forth herein; and
WHEREAS, Licensor and Licensee have heretofore entered into a certain
Letter of Intent (the "LETTER OF INTENT"), a copy of which is attached hereto as
Exhibit "A" and by this reference incorporated herein, setting forth the
fundamental provisions of this Agreement; PROVIDED, HOWEVER, that Licensor and
Licensee intend that this Agreement shall supersede in every respect the
provisions of the Letter of Intent.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants, promises and
obligations contained herein, and for other good and valuable consideration, the
receipt, adequacy and legal sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I - DEFINITIONS
1.1 DEFINITIONS. For purposes of this Agreement, the following terms
shall have the meanings indicated:
(a) "ASI DOCUMENTS" shall mean all materials, records, reports,
manuals, drawings, depictions, schematics, notes, memoranda, printouts, graphs,
writings of any kind or nature, tape, films and other magnetic, computerized or
electronic (visual or audio) recordings, information or files of any kind or
nature relating, directly or indirectly, to the ASI Products or containing, in
whole or in part, Technical Information, whether originals or copies.
(b) "ASI PRODUCTS" shall mean all computer software products,
systems, documentation and instructional materials which have been conceived,
developed, designed, or manufactured, directly or indirectly, by Licensor or in
which Licensor has rights of ownership, including, without limitation, the
products identified and described on EXHIBIT "B" attached hereto
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and by this reference incorporated herein; and shall include all enhancements,
modifications and improvements of the foregoing described items and any other
products developed during the Term which employ the Technical Information,
whether developed by Licensor, any affiliate of Licensor or any entity,
partnership or venture in which Licensor or any of its shareholders is a
participant or possesses a financial or ownership interest.
(c) "LETTER OF INTENT" shall mean that certain Letter of Intent among
Licensor and Licensee setting forth the initial understandings of the parties
with respect to the License, which Letter of Intent is superseded in its
entirety by this Agreement.
(d) "LICENSE" shall mean the license granted by Licensor to Licensee
pursuant to Section 2.1.
(e) "LICENSE FEE" shall have the meaning set forth in Section 2.3.
(f) "LICENSED MATERIALS" shall refer collectively to the ASI
Documents, the ASI Products and the Technical Information.
(g) "MAINTENANCE SERVICES" shall mean technical support, customer
assistance and training services provided by Licensee or any Related Corporation
or any contractor, subcontractor or agent of Licensee or any Related Corporation
to facilitate the use of the ASI Products by Licensee's customers.
(h) "MAINTENANCE REVENUES" shall mean the portion of the gross
revenues actually collected by Licensee or any Related Corporation that are
attributable directly to the Maintenance Services in the Territory during the
Term, net of reasonable discounts, allowances and taxes.
(i) "PRODUCT REVENUES" shall mean the portion of gross revenues
actually collected by Licensee or any Related Corporation that are attributable
to the sale, license or use of ASI Products in the Territory during the Term,
net of reasonable discounts, returns, allowances, freight, insurance, commodity
taxes, value added taxes, sales taxes and special packing costs; PROVIDED,
HOWEVER, that if any ASI Products are combined or integrated by Licensee with
other hardware or software products, the Product Revenues attributable to the
sale of such ASI Products shall be limited to the portion of the revenues
actually collected by Licensee or any Related Corporation that are attributable
to the sale of such combined or integrated products represented by ASI Products,
net of discounts, returns, allowances, freight, insurance, taxes and costs and
as shall be agreed between Licensor and Licensee. In the event of a dispute
between Licensor and Licensee as to such apportionment, such dispute shall be
referred to a person with expertise and not less than ten years' experience in
working in system products as shall be agreed by Licensee and Licensor and
failing agreement as shall be appointed by the President of the governing body
for Attorneys in the State of Utah. Such expert shall act as an expert and not
as an arbitrator and shall make a determination as to the apportionment which
shall be final and binding on the parties.
(j) "PROPRIETARY INFORMATION" means all products, documentation,
software, ideas, concepts, techniques, know-how, technical information, designs
or other information or materials, in whatever form, which one party to this
Agreement receives from the other. However, Proprietary Information does not
include any information that (a) enters the public domain other
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than through a breach of this Agreement; (b) is subsequently lawfully obtained
by the receiving party from a third party or parties without breach of this
Agreement; (c) the disclosing party has expressly declared in writing as not
being "Proprietary Information;" and (d) was rightfully disclosed to the
receiving party prior to such disclosure by the disclosing party as shown by
documentation sufficient to establish such knowledge.
(k) "RELATED CORPORATION" shall mean any affiliate of Licensee or any
entity, partnership or venture in which Licensee or any of its shareholders is a
participant or possesses a financial or ownership interest and shall include,
without limitation:
(i) Spire International;
(ii) any subsidiary of Licensee or Spire International;
(iii) any Company, person or trust which has a direct or
indirect legal or beneficial interest in either of the entities
referred to in (a) and (b) above.
(l) "ROYALTIES" shall have the meaning set forth in Section 2.4.
(m) "SPIRE INTERNATIONAL" shall mean Spire International Corp., a
Utah corporation.
(n) "TECHNICAL INFORMATION" shall mean any and all technology, source
code, releases, plans, drawings, depictions, photographs, models, data,
inventions, assembly procedures, machines, improvements, designs, discoveries,
know-how, software, testing information, concepts, methods, algorithms,
programs, trade secrets, processes, formulas, techniques, data, vendor lists,
parts lists, customer lists, marketing and business plans, financial information
(including, without limitation, information concerning costs, profits, revenues,
margins and other marketing, sales and business financial information, whether
actual, estimated or projected) and all other materials, intellectual property
or proprietary information of any kind or nature, whether patentable or
copyrightable, of Licensor, pertaining to the Licensed Materials which are not
found in the public domain.
(o) "TERM" shall have the meaning set forth in Section 4.1.
(p) "TERRITORY" shall mean the countries located on the continents of
North and South America.
ARTICLE II - LICENSE, FEES AND ROYALTIES
2.1. GRANT OF LICENSE. On the terms and subject to the conditions set
forth herein, Licensor hereby grants to Licensee the exclusive right and
license in the Territory during the Term to use, modify, duplicate and
sublicense the Technical Information and ASI Documents and to use, market,
modify, manufacture, assemble, test and sublicense the ASI Products (the
"LICENSE"). Licensee agrees that it will use commercially reasonable
efforts, in good faith, to promote the sale, license and use of the ASI
Products in the Territory during the Term. Notwithstanding the foregoing
grant of the License, Licensor and Licensee agree that Licensee shall not
modify the ASI Products without the prior written consent of Licensor, which
consent shall not be withheld unreasonably by Licensor.
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2.2 TERMINATION OF EXCLUSIVITY. Subject to the following provisions of
this Section 2.2, if for two consecutive years during the Term, Licensee shall
fail to pay to Licensor Royalties equal to or in excess of the amounts set forth
below, Licensor may, upon sixty (60) days' prior notice to Licensee, terminate
the exclusive nature of the License and Licensee shall continue to possess the
License on a non-exclusive basis throughout the remainder of the Term:
Year 1 $ 700,000
Year 2 $ 1,200,000
Year 3 $ 1,512,000
Year 4 $ 1,555,200
Year 5 (and each $ 1,866,000
year thereafter)
Notwithstanding the obligation of Licensee to pay Royalties in the amounts
set forth above in order to retain the exclusive nature of the License, Licensor
and Licensee agree that, if for any year or years during the Term the amount of
Royalties paid by Licensee to Licensor is less than the applicable amount set
forth above, Licensee may elect to pay to Licensor an additional payment in an
amount equal to the difference between the applicable amount set forth above and
the actual Royalty amount for the year. Upon Licensee's payment to Licensor of
such amount in addition to Royalties otherwise payable by Licensee for the
applicable year, the exclusive nature of the License will remain in good
standing as if Licensee had paid to Licensor the applicable amount set forth
above. Furthermore, Licensee's failure to pay to Licensor Royalties in an
amount equal to or in excess of the amounts set forth above shall not constitute
a breach of this Agreement and Licensor's sole and exclusive remedy in the event
the Royalty amount for two consecutive years does not equal or exceed the
applicable amount set forth above shall be termination of the exclusive nature
of the License as contemplated by this Section 2.2.
2.3 LICENSE FEE. In consideration of the grant of the License and the
covenants and obligations of Licensee set forth herein (including, without
limitation, Licensor's obligation to provide the Technical Assistance required
pursuant to Section 3.1), upon the execution of this Agreement, Licensee shall
pay to Licensor a non-refundable license fee (the "LICENSE FEE") in an amount
equal to Five Hundred Fifty Thousand Dollars ($550,000).
2.4 ROYALTIES. In further consideration of the grant of the License and
the covenants and obligations of Licensor set forth herein (including, without
limitation, Licensor's obligation to provide the Technical Assistance required
pursuant to Section 3.1), Licensee shall pay to Licensor the following royalties
(the "ROYALTIES") during the Term:
(a) For the first year of the Term, Licensee shall pay to Licensor
Royalties in an amount equal to the sum of Forty Five Percent (45%) of the
Product Revenues for the year and Fifty Percent (50%) of the Maintenance
Revenues for the year;
(b) For the second year of the Term, Licensee shall pay to Licensor
Royalties in an amount equal to the sum of Forty Percent (40%) of the
Product Revenues for the year and Fifty Percent (50%) of the Maintenance
Revenues for the year;
(c) For the third year of the Term, Licensee shall pay to Licensor
Royalties in an amount equal to the sum of Thirty Five Percent (35%) of
the Product Revenues for the year and Fifty Percent (50%) of the Maintenance
Revenues for the year; and
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(d) For each year of the Term subsequent to the third year of the
Term, Licensee shall pay to Licensor Royalties in an amount equal to the
sum of Thirty Percent (30%) of the Product Revenues for the year and Fifty
Percent (50%) of the Maintenance Revenues for the year.
2.5 PAYMENT OF ROYALTIES. Royalties shall be due and payable by Licensee
on or before the forty-fifth (45th) day following the conclusion of each month
during the Term. Royalties paid with respect to ASI Products that are
afterwards returned to Licensee by purchasers may be credited to future Royalty
payments, provided that Royalties are paid on such returned ASI Products that
are later sold. Within ninety (90) days after the termination of this Agreement
pursuant to Section 4.2, Licensee shall pay to Licensor all Royalties
attributable to Product Revenues and Maintenance Revenues paid to Licensee or
any Related Corporation during the period of time from the conclusion of the
most recent month of the Term to the date of such termination.
2.6 ACCOUNTING FOR ROYALTIES. Licensee shall at all times keep accurate
and complete records showing the Product Revenues and the Maintenance Revenues,
in sufficient detail to determine the amount of the Royalties, Licensee's
compliance with this Agreement and the accuracy and completeness of the reports
and the statements to be furnished hereunder. Licensee agrees to permit
Licensor's duly authorized representative to inspect such records during
reasonable business hours upon not less than five (5) days prior notice to
Licensee. Within forty-five (45) days following the end of each year during the
Term, Licensee shall furnish Licensor with a written summary specifying, with
respect to the immediately preceding year: (a) the gross selling price of ASI
Products sold by Licensee in the Territory during the year, (b) the aggregate
amount of Maintenance Services invoiced and collected by Licensee from
Maintenance Services provided by Licensee in the Territory during the year, (c)
the amount of Royalties payable by Licensee for the year, and (d) any other
information reasonably requested by Licensor to confirm Licensee's compliance
with the provisions of this Agreement.
2.7 OUT-OF-POCKET EXPENSES. Each of Licensor and Licensee shall bear its
own out-of-pocket expenses incurred by it in performing its obligations under
this Agreement, including, without limitation, all travel, lodging, food,
telephone, shipping and postage expenses.
ARTICLE III - LICENSOR OBLIGATIONS AND REPRESENTATIONS
3.1 TECHNICAL ASSISTANCE. In consideration of Licensee's obligation to
pay the License Fee and the Royalties, at all times during the Term, Licensor
shall provide to Licensee all Licensed Materials and any related technical
assistance, customer service and employee training that are reasonably requested
by Licensee for the purpose of enabling Licensee (or any agent, representative
or sublicensee of Licensee) to manufacture, produce, market, sell, use, develop,
test and modify the ASI Products and provide the Maintenance Services in
accordance with the purposes and provisions of this Agreement. Upon the
expiration or termination of the License, Licensor shall provide such additional
technical assistance, customer service and employee training to Licensee as
Licensee shall request, at such commercially reasonable rates and on such
commercially reasonable terms as the parties shall mutually agree upon
hereafter.
3.2 UPDATES AND DEVELOPMENT. During the Term, Licensor shall provide to
Licensee free of charge all updates, enhancements, modifications, revisions
or supplements to the Licensed Materials as soon as reasonably possible
following their development, acquisition or utilization by Licensee. During
the course of Licensor's development, acquisition or utilization of such
updates, enhancements,
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modifications, revisions and supplements, Licensor shall permit Licensee full
and reasonable access to all information regarding such development, acquisition
or utilization. During the Term, Licensor shall use commercially reasonable
efforts, in good faith, to develop, expand, supplement and improve the ASI
Products in order that the ASI Products will constitute "state-of-the-art"
products that are competitive in the international market.
3.3 LICENSOR REPRESENTATION AND WARRANTIES. As an inducement to Licensee
to enter into this Agreement, and with the express understanding that Licensee
has and will continue to rely upon the following representations and warranties,
Licensor represents and warrants to Licensee that (a) it is the sole and
exclusive owner of all rights in and to the Licensed Materials, including all
intellectual property rights therein, under copyright, patent, trademark, trade
secret and other applicable laws, free and clear of any claim, right, lien or
interest of any other person of any nature whatsoever; (b) it possesses the full
and sufficient right, title and authority to grant the rights and licenses
granted herein; (c) the Licensed Materials to be delivered by Licensor hereunder
have been and will be prepared in a workmanlike manner and with professional
diligence and skill, are and will be merchantable and are and will be fit for
the particular purpose for which they are designed; (d) neither the execution
and delivery of this Agreement, nor the consummation of the transactions
provided for herein, will violate any agreement, lien, instrument, decree, law,
regulation, order or judgment to which Licensor is a party or by which it is
bound; and (e) Licensor is, and during the Term shall remain, in compliance with
all applicable foreign, federal, state and local governmental laws, regulations
and ordinances relating to its business and operations and shall cause its
employees and agents to adhere thereto.
3.4 DEFECTS. The parties acknowledge that the correction and remedy of any
undetected or future defect or inadequacy with respect to the Licensed Materials
is in the best interests of both parties. Therefore, if Licensee discovers any
defect or inadequacy with respect to the Licensed Materials and communicates
such in writing to Licensor, Licensor shall use its best efforts to correct or
remedy such defect or inadequacy as soon as reasonably possible.
3.5 FURTHER ACTION. Licensor shall provide to Licensee any assistance
reasonably necessary for Licensee to obtain and procure from third party vendors
those components, parts and supplies necessary, as reasonably determined by
Licensee, in the manufacture, assembly, modification and sublicense of the ASI
Products.
ARTICLE IV - TERM AND TERMINATION
4.1 TERM. Unless sooner terminated pursuant to Section 4.2, the term of
the License and this Agreement (the "TERM") shall commence on the Effective Date
and shall continue for a period of five years thereafter; provided, however,
that the Term shall be extended automatically for up to three additional two-
year periods upon the expiration of the initial five-year period of the Term or
any extension thereof, unless Licensor or Licensee affirmatively elects to
terminate the Term by notifying the other party of such election not less than
one hundred twenty (120) days prior to the applicable expiration date.
4.2 TERMINATION. Either party may, at its option, terminate the License
and this Agreement in the event of a material breach of this Agreement by the
other party. Such termination may be effected only through a written notice,
specifically identifying the breach on which termination is based. Following
receipt of such notice, the party in breach shall have thirty (30) calendar days
to cure such
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breach, and the License and this Agreement shall terminate in the event that
such cure is not effected by the end of such period. Notwithstanding the
foregoing, Licensee may, in its discretion, elect to terminate the License and
this Agreement at any time during the Term upon one hundred eighty (180) days'
prior notice to Licensor.
4.3 SURVIVAL. In the event of the termination of this Agreement, in whole
or in part, the provisions of Sections 3.3, 3.4, 5.2, 5.3 and 5.4 and Articles
VI and VII shall survive and continue in full force and effect.
ARTICLE V - PROPRIETARY RIGHTS AND CONFIDENTIALITY
5.1 PROPRIETARY RIGHTS. Licensor and Licensee acknowledge and agree that
the Licensed Materials are and, except as set forth in a separate agreement
between Licensor and Licensee, shall remain the exclusive proprietary property
of Licensor. The rights to any modifications, enhancement or improvement to the
Licensed Materials made by Licensee or on behalf of Licensee during the Term
shall be the property of Licensor and Licensee shall cooperate in the assignment
or transfer of any right or interest it has in or to such modifications,
enhancements and improvements to Licensor. Licensee shall not remove Licensor's
trademarks, copyright notices or other markings or legends to any ASI Product
without Licensor's prior written consent, such consent shall not be withheld
unreasonably.
5.2 CONFIDENTIALITY. Licensor and Licensee each acknowledge and agree
that in the course of the dealings with each other as contemplated by this
Agreement, each party will acquire Proprietary Information of the other party
which they shall protect with at least the same degree of care that they protect
their own Proprietary Information of a similar nature, but in no event less than
a reasonable degree of care. Neither party shall have the right to disclose or
disseminate Proprietary Information of the other party to any person or entity
except to the extent necessary to perform its obligations under this Agreement,
provided that confidentiality restrictions shall be imposed upon the parties to
whom such disclosures are made, which confidentiality restrictions shall not be
less stringent then those the disclosing party places upon its own Proprietary
Information of a similar nature. Neither party shall have the right to use
Proprietary Information of the other party for any reason other than as
necessary for the performance of its obligations under this Agreement. Each
party shall ensure that its employees, agents and consultants shall be permitted
access to the other party's Proprietary Information only on a need-to-know basis
and are instructed regarding, and agree to act in accordance with, the
obligations of non-disclosure and non-use imposed by this Agreement.
5.3 RETURN ON TERMINATION. Except as otherwise contemplated by this
Agreement, upon any termination or expiration of this Agreement (whether
pursuant to Section 4.1 or 4.2) each party shall deliver to the other the
original and all copies or adaptations of all Proprietary Information in all
forms, partial or complete, in all types of media and computer memory, or, in
the alternative, shall destroy all such originals, copies and adaptations.
Each party shall promptly provide to the other appropriate certificates of
compliance with this Section 5.3 in a form reasonably acceptable to the party
receiving such certificate.
5.4 REMEDIES. In the event of any breach of the provisions of this
Article V, the parties acknowledge and agree that the non-breaching party would
suffer irreparable harm and that the total amount of monetary damages for any
injury to the non-breaching party would be impossible to calculate and would,
therefore, be an inadequate remedy. Accordingly, the parties acknowledge and
agree that
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the non-breaching party may be entitled to temporary, preliminary or permanent
injunctive relief against the breaching party and its officers, employees and
agents, in addition to such other rights and remedies to which the non-breaching
party may be entitled at law, in equity or under this Agreement.
ARTICLE VI - INDEMNIFICATION
6.1 LICENSOR INDEMNIFICATION. Licensor hereby indemnifies and agrees to
hold Licensee harmless from any and all losses, liabilities, claims, damages
and expenses (including, without limitation, attorneys' fees and costs
associated therewith, whether prior or subsequent to the commencement of
litigation) regarding the Licensed Materials based upon or arising in
connection with any actual or alleged infringement of a patent, copyright,
trade secret or other intellectual property right in any jurisdiction,
provided that such infringement is not due principally to any modification to
the ASI Products by Licensee. Notwithstanding the foregoing, if any such
losses, liabilities, claims, damages or expenses arise in connection with a
proceeding in which a court of final and competent jurisdiction determines
that no actual infringement occurred (a "Non-Infringement Proceeding"),
Licensor's obligation to indemnify Licensee for any losses, liabilities,
claims, damages or expenses arising in connection with the Non-Infringement
Proceeding shall be reduced to an amount equal to the product obtained by
multiplying (a) the aggregate amount of such losses, liabilities, claims,
damages and expenses incurred by Licensee in connection with the
Non-Infringement Proceeding by (b) the Product Revenue Royalty percentage set
forth in Section 2.4 (e.g., forty-five percent (45%) in the first year of the
Term, forty percent (40%) in the second year of the Term, etc.) for the year
of the Term in which the initial claim giving rise to the Non-Infringement
Proceeding first arose.
6.2 MUTUAL INDEMNITY. Each party shall indemnify and hold harmless the
other party, its agents, employees, officers or trustees from and against any
and all losses, liabilities, claims, damages and expenses (including, without
limitation, attorneys' fees and costs associated therewith, whether prior or
subsequent to the commencement of litigation) finally awarded or determined
arising out of or resulting directly from (i) any breach of a material
obligation, covenant or duty arising pursuant to the terms of this Agreement, or
(ii) the gross negligence or willful misconduct of the other party, its agents,
employees, officers or trustees.
6.3 CONDITIONS TO INDEMNIFICATION. The indemnifying party's
indemnification obligations pursuant to this Article VI are contingent upon (i)
such indemnifying party's having received prompt written notice from the other
party of any claim described in this Article VI, (ii) the other party providing
the indemnifying party with all reasonable assistance for the defense or
settlement of such claim, and (iii) such indemnifying party's having sole
control of the defense of such claim and all negotiations for its settlement or
compromise. Any indemnification pursuant to this Article VI shall include the
payment of all reasonable attorneys' fees, expert witness' fees and other costs
incurred by the indemnified party defending any such claims.
ARTICLE VII - MISCELLANEOUS
7.1 NOTICES. All notices, demands and other communications hereunder
shall be in writing and shall be sufficient if mailed by certified mail, return
receipt requested and postage prepaid, to the parties at the addresses first set
forth above. Notice shall be deemed to have been given and received (a) when
actually received if delivered in person, or (b) on the date three (3) business
days after a letter
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containing such notice is postmarked by the United States Post Office. Any
party hereto may at any time upon written notice to the other party hereto
change its address for notice purposes by furnishing the new address in writing
to the other party as provided in this Section 7.1.
7.2 WAIVER. No failure by any party to insist upon the strict performance
of any covenant, duty, agreement or condition of this Agreement or to exercise
any right or remedy consequent upon a breach thereof shall constitute a waiver
of any such breach or of any other covenant, agreement, term or condition. Any
party may, by notice delivered in the manner provided in this Agreement, but
shall be under no obligation to, waive any of its rights or any conditions to
its obligations hereunder, or any duty, obligation or covenant of any other
party. No waiver shall affect or alter the remainder of this Agreement but each
and every other covenant, agreement, term and condition hereof shall continue in
full force and effect with respect to any other then existing or subsequently
occurring breach.
7.3 SEVERABILITY. Any provision hereof prohibited by or deemed unlawful
or unenforceable under any applicable law of any jurisdiction shall, as to such
jurisdiction, be ineffective without affecting any other provision of this
Agreement. To the full extent, however, that the provisions of such applicable
law may be waived, they are hereby waived to the end that this Agreement be
deemed to be a valid and binding agreement enforceable in accordance with its
terms. In the event that any term or provision of this Agreement shall be held
invalid by a competent court or government agency, the remainder of this
Agreement shall not be affected thereby and the parties hereto shall continue to
be bound by the remaining terms hereof. In such event, the relevant term or
provision (or should such term(s) or provisions(s) be such a crucial element of
this Agreement, then the entire Agreement) shall be renegotiated by the parties
in a good faith effort to achieve mutual agreement consistent with such holding
and shall continue to perform under this Agreement in a manner consistent with
its intent and objectives.
7.4 FORCE MAJEURE. Any cause or circumstances of whatever nature which
prevents or delays performance by a party of its obligations hereunder,
including without limitation, any riot, labor dispute, strike or civil
disturbance, or any governmental statute, rule, regulation or order of approval,
which cause or circumstance is not within the control of the party chargeable,
and which cannot by the exercise of reasonable diligence by such party be
prevented or overcome, shall release such party from the performance of such
affected obligations, or in the case of delay shall extend the time for
performance thereof, provided such cause or circumstances was the proximate
cause of the failure to perform.
7.5 FURTHER ACTION. The parties agree to execute and deliver all
documents, provide all information and take or forebear from all such action as
may be necessary or appropriate to achieve the purposes of this Agreement.
7.6 APPLICABLE LAW AND JURISDICTION: ATTORNEYS' FEES. This Agreement
shall be governed by and construed in accordance with laws of the State of Utah,
United States of America, without reference to choice of law remedies. Each of
Licensor and Licensee hereby expressly submits itself to the exclusive, personal
jurisdiction of the federal and state courts situated in Salt Lake and Utah
Counties, State of Utah, United States of America, with respect to any and all
claims, demands and causes of action relating to or arising out of this
Agreement. In the event of any litigation to enforce the terms and conditions
of this Agreement, the non-prevailing party shall pay the costs and expenses,
including reasonable attorneys' fees, incurred by the party which prevails in
such litigation by enforcing the provisions of this Agreement.
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7.7 BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors, legal representatives
and assigns; provided that this provision shall not be construed as permitting
assignment, substitution, delegation or other transfer of rights or obligations
except strictly in accordance with the other provisions of this Agreement.
None of the provisions of this Agreement shall be for the benefit of or
enforceable by any creditors of any party hereto.
7.8 INTEGRATION. This Agreement constitutes the entire agreement between
the parties pertaining to the subject matter hereof, and supersedes all prior
agreements and understandings pertaining thereto including, without limitation,
the Letter of Intent. No covenant, representation or condition not expressed in
this Agreement shall affect or be deemed to interpret, change or restrict the
express provisions hereof. The failure of any party to inspect this Agreement
or the documents referred to herein constitutes a waiver of any objection,
contention or claim that may be based upon such an inspection. Each party
acknowledges that it has had the opportunity to consult with independent legal
counsel with regard to the legal and other effects of this Agreement.
7.9 ASSIGNMENT. Licensor shall not assign or transfer any right, interest
or part of this Agreement. Licensee may freely assign or transfer its rights
and interest hereunder, or any part thereof.
7.10 RELATIONSHIP OF THE PARTIES. Neither Licensee nor Licensor, nor any
of their employees, customers or agents shall be deemed to be the
representative, agent or employee of the other for any purpose whatsoever, nor
shall they or any of them have any right or authority to assume or create an
obligation of any kind or nature, express or implied, on behalf of such other,
nor to accept service of any legal process addressed to or intended for such
other.
7.11 TITLES AND CAPTIONS. The article and section titles or captions of
this Agreement are for convenience only and shall not be deemed part of this
Agreement and in no way define, limit, augment, extend or describe the scope,
content or intent of any part or parts of this Agreement.
7.12 PRONOUNS AND PLURALS. Whenever the context may require, any pronoun
used herein shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns, pronouns and verbs shall include the plural and
vice versa. Each of the foregoing genders and plurals is understood to refer to
a corporation, partnership or other legal entity when the context so requires.
7.13 EXHIBITS. All Exhibits annexed to this Agreement are expressly made a
part of this Agreement as fully as though completely set forth in it. All
references to this Agreement, either in the Agreement itself or in any of such
writings, shall be deemed to refer to and include this Agreement and all such
Exhibits and writings.
7.14 AUTHORIZATION. Each individual executing this Agreement does thereby
represent and warrant to each other person so signing (and each other entity for
which another person may be signing) that he or she has been duly authorized to
execute this Agreement in the capacity and for the entity set forth where he or
she signs.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
"LICENSOR"
AUSTRALIAN SOFTWARE INNOVATIONS (SERVICE) PTY LTD,
a limited company organized under the laws of
Australia
By /s/ Mr. Eng H. Lee
-----------------------
Name: Mr. Eng H. Lee
-----------------------
Title: Managing Director
-----------------------
"LICENSEE"
SPIRE TECHNOLOGIES, INC.,
a Utah corporation
By /s/Robert Bench
------------------------
Name: Robert Bench
------------------------
Title: President
------------------------
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EXHIBIT A
to
Exclusive License and Technical Assistance Agreement
LETTER OF INTENT
[Attached]
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SPIRE INTERNATIONAL CORP.
311 North State Street
Orem, Utah 84057
(801) 226-3355
May 21, 1996
Australian Software Innovations (Services) Pty Ltd
Suite 301
51 Rawson Street
Epping NSW 2121
Attn: Eng Lee, Managing Director
LETTER OF INTENT
Dear Eng Lee:
In connection with our recent discussions, the purpose of this letter of
intent (the "LETTER") is to set forth certain understandings and agreements
between Spire International Corp., a Utah corporation ("LICENSEE"), and
Australian Software Innovations (Services) Pty Ltd ("LICENSOR") with respect to
the license by Licensor to Licensee of certain technology, intellectual property
and property of Licensor, on the terms and subject to the conditions set forth
in the following paragraphs. For ease of reference, all monetary amounts
expressed in this Letter shall be expressed in United States Dollars.
The following paragraphs of this Letter express our agreement and
understanding with respect to the matters described in them, but are expressly
understood not to constitute a complete statement of, or a legally binding
agreement or commitment on the part of Licensor or Licensee with respect to, the
matters described in them. The terms and conditions of our final agreement will
be set forth in a definitive license agreement to be executed by Licensor and
Licensee as contemplated by paragraph 4 below. Notwithstanding the foregoing,
Licensor and Licensee agree to negotiate in good faith toward the execution of a
binding agreement incorporating the substantive terms and conditions set forth
in this Letter.
1. GRANT OF LICENSE. On the terms and subject to the conditions to
be set forth in a definitive license agreement (the "LICENSE AGREEMENT") to be
negotiated by Licensor and Licensee, Licensor will grant to Licensee an
exclusive license (the "LICENSE") to use, market, modify (any such modification
to be approved by Licensor, provided, however, that Licensor will not
unreasonably withhold such approval) and grant sublicenses with respect to the
Proprietary Materials (as defined below) within North America during the Term
(as defined in paragraph 2 below). In exchange for Licensor's grant of the
License, Licensee will pay to Licensor a one-time license fee of Five Hundred
Fifty Thousand Dollars ($550,000), in addition to the royalties described in
paragraph 3 below. For purposes of this Letter, the "PROPRIETARY MATERIALS"
will include all technology, intellectual property (including,
<PAGE>
Australian Software Innovations
Page 2
May 21, 1996
without limitation, all software, source code, tradenames, trademarks, logos,
designs and artwork), documentation, inventions and products of Licensor,
whether now existing or hereafter developed by or for the benefit of Licensor.
2. TERM. The term of the License (the "TERM") will commence on the
effective date of the License Agreement and continue for a period of five years
thereafter; PROVIDED, HOWEVER, that if Licensee fails to meet or exceed the
following annual Gross Sales (as defined in paragraph 3 below) targets for two
consecutive years during the Term, Licensor may elect to terminate the exclusive
nature of the License and Licensee will continue to possess the License on a
non-exclusive basis throughout the remainder of the Term:
Year 1 Gross Sales of $2,000,000
Year 2 Gross Sales of $3,600,000
Year 3 Gross Sales of $4,320,000
Year 4 Gross Sales of $5,184,000
Year 5 (and each
year thereafter) Gross Sales of $6,220,000
The License Agreement will also provide that the Term will be extended
automatically for up to three additional two-year periods upon the expiration of
the initial five-year period of the Term or any extension thereof, unless
Licensor or Licensee affirmatively elects to terminate the License by notifying
the other party of such election not less than 120 days prior to the applicable
expiration date. In addition, Licensee may elect to terminate the License at
any time during the Term upon one hundred eighty days' prior notice to Licensor.
3. ROYALTY. As further consideration of the grant of the License,
Licensee will pay to Licensor annual royalty payments based upon Licensee's
Gross Sales. For purposes of this Letter, "GROSS SALES" will consist of two
components, "PRODUCT SALES," which are equal to the pro rata portion of
Licensee's gross revenues from products incorporating the Proprietary Materials,
and "MAINTENANCE REVENUES," which are equal to the pro rata portion of
Licensee's gross revenues derived from maintenance services relating to the
Proprietary Materials. Licensee's annual royalty payments under the License
Agreement will be calculated as follows:
(a) During the first year following the execution of the License
Agreement, Licensee will pay to Licensor royalties equal to the sum of
Forty Five Percent (45%) of Product Sales and Fifty Percent (50%) of
Maintenance Revenues;
(b) During the second year following the execution of the
License Agreement, Licensee will pay to Licensor royalties equal to
the sum of Forty Percent (40%) of Product Sales and Fifty Percent
(50%) of Maintenance Revenues;
(c) During the third year following the execution of the License
Agreement, Licensee will pay to Licensor royalties equal to the sum of
Thirty Five Percent (35%) of Product Sales and Fifty Percent (50%) of
Maintenance Revenues; and
<PAGE>
Australian Software Innovations
Page 4
May 21, 1996
Please sign this Letter in the spaces provided below to confirm our mutual
understandings and agreements as set forth in this Letter and return a signed
copy to the undersigned. If we do not receive a signed copy of this Letter
within ten (10) days of your receipt of this Letter, we will assume you have no
further interest in pursuing this matter.
Very truly yours,
LICENSEE:
SPIRE INTERNATIONAL CORP.,
a Utah corporation
By: /s/Robert K. Bench
-----------------------------
Robert K. Bench, President
ACKNOWLEDGED AND AGREED
TO AS OF THE DATE FIRST
ABOVE WRITTEN:
LICENSOR:
AUSTRALIAN SOFTWARE INNOVATIONS
(SERVICES) PTY LTD
By: /s/Eng Lee
-----------------------------
--------------------------
Its Managing Director
-------------------
<PAGE>
EXHIBIT B
to
Exclusive License and Technical Assistance Agreement
ASI PRODUCTS
[Attached]
13
<PAGE>
EXHIBIT B
to
Exclusive License and Technical Assistance Agreement
ASI PRODUCTS
1. Open Architecture SYSMON and all modules, including:
- User Interface GUI Module
- SYSMAPs Module
- Oracle Data Collector
- INGRES Data Collector
- INFORMIX Data Collector
- NT Data Collector (Partially Finished)
- Parametric Data Collector
- SYBASE Data Collector (Partially Finished)
- All associated network agents, daemons and files
- All associated user documentation
2. ASI-ACCOUNTING (User Resource Accounting Software)
- All associated user documentation
- All reporting templates and probes needed for various user shells
- All probes that could be used for Report Codes
3. LOGMON (Per User Inactivity Logout Monitor)
- All associated user documentation
4. ASI-MENU (Front End Menu-ing Software)
- All associated user documentation
<PAGE>
SPIRE INTERNATIONAL CORP.
STOCK INCENTIVE PLAN
<PAGE>
SPIRE INTERNATIONAL CORP.
STOCK INCENTIVE PLAN
TABLE OF CONTENTS
PAGE
----
1. INTRODUCTION ................................................. 1
2. ADMINISTRATION ............................................... 1
2.1 The Committee ........................................... 1
2.2 Disinterested Directors ................................. 1
2.3 Committee Responsibilities .............................. 1
3. LIMITATION ON AWARDS ......................................... 1
4. ELIGIBILITY .................................................. 2
4.1 General Rule ............................................ 2
4.2 Ten-Percent Stockholders ................................ 2
4.3 Attribution Rules ....................................... 2
5. OPTIONS ...................................................... 2
5.1 Stock Option Agreement .................................. 2
5.2 Options Nontransferable ................................. 2
5.3 Number of Shares ........................................ 3
5.4 Exercise Price .......................................... 3
5.5 Exercisability and Term ................................. 3
5.6 Effect of Change in Control ............................. 3
5.7 Modification, Extension and Renewal of Options .......... 3
i
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5.8 Termination of Employment ............................... 3
6. PAYMENT FOR OPTION SHARES .................................... 4
6.1 General Rule ............................................ 4
6.2 Surrender of Stock ...................................... 4
6.3 Exercise/Sale ........................................... 4
6.4 Exercise/Pledge ......................................... 5
6.5 Other Forms of Payment .................................. 5
7. STOCK APPRECIATION RIGHTS .................................... 5
7.1 Grant of SARs ........................................... 5
7.2 Manner of Exercise of SARs .............................. 5
7.3 Special Holding Period .................................. 5
7.4 Special Exercise Window ................................. 6
7.5 Limited SARs ............................................ 6
8. RESTRICTED SHARES AND STOCK UNITS ............................ 6
8.1 Time, Amount and Form of Awards ......................... 6
8.2 Payment for Awards ...................................... 6
8.3 Vesting Conditions ...................................... 6
8.4 Form of Settlement of Stock Units ....................... 6
8.5 Time of Settlement and Payment of Stock Units ........... 7
8.6 Death of Recipient ...................................... 7
9. VOTING RIGHTS AND DIVIDENDS OR DIVIDEND EQUIVALENTS .......... 7
9.1 Restricted Shares ....................................... 7
9.2 Stock Units ............................................. 7
10. PROTECTION AGAINST DILUTION .................................. 8
ii
<PAGE>
10.1 General ................................................. 8
10.2 Reorganizations ......................................... 8
10.3 Reservation of Rights ................................... 8
11. LIMITATION OF RIGHTS ......................................... 8
11.1 Employment Rights ....................................... 8
11.2 Stockholders' Rights .................................... 9
11.3 Creditors' Rights ....................................... 9
11.4 Government Regulations .................................. 9
12. LIMITATION ON PAYMENTS ....................................... 9
12.1 Basic Rule .............................................. 9
12.2 Reduction of Payments ................................... 10
12.3 Overpayments and Underpayments .......................... 10
12.4 Related Corporations .................................... 10
13. WITHHOLDING TAXES ............................................ 11
13.1 General ................................................. 11
13.2 Nonstatutory Options .................................... 11
14. ASSIGNMENT OR TRANSFER OF AWARD .............................. 11
15. FUTURE OF THE PLAN ........................................... 11
15.1 Term of the Plan ........................................ 11
15.2 Amendment or Termination ................................ 11
15.3 Effect of Amendment or Termination ...................... 11
16. DEFINITIONS .................................................. 12
17. EXECUTION .................................................... 14
iii
<PAGE>
SPIRE INTERNATIONAL CORP.
STOCK INCENTIVE PLAN
ARTICLE 1. INTRODUCTION.
The Plan was adopted by the Board on January 31, 1996, and was approved by
the Company's stockholders on April 18, 1996. The purpose of the Plan is to
promote the long-term success of the Company and the creation of incremental
stockholder value by (a) encouraging Key Employees and Directors to focus on
critical long-range objectives, (b) encouraging the attraction and retention of
Key Employees and Directors with exceptional qualifications, and (c) linking Key
Employees and Directors directly to stockholder interests through increased
stock ownership. The Plan seeks to achieve this purpose by providing for Awards
in the form of Restricted Shares, Stock Units, Options, which may constitute
incentive stock options or nonstatutory stock options, or SARs. The Plan shall
be governed by, and construed in accordance with, the laws of the State of Utah.
ARTICLE 2. ADMINISTRATION.
2.1 THE COMMITTEE. The Plan shall be administered by the Committee. The
Committee shall consist of two or more disinterested directors of the Company,
who shall be appointed by the Board. A member of the Committee shall not be
eligible to receive any Award under the Plan.
2.2 DISINTERESTED DIRECTORS. A director shall be deemed to be
"disinterested" only if he or she satisfies such requirements as the SEC may
establish for disinterested administrators acting under plans intended to
qualify for exemption under Rule 16b-3 (or its successor) under the Exchange
Act.
2.3 COMMITTEE RESPONSIBILITIES. The Committee shall select the Key
Employees and Directors who are eligible to receive Awards under the Plan,
determine the amount, vesting requirements and other conditions of such Awards,
interpret the Plan, and make all other decisions relating to the operation of
the Plan. The Committee may adopt such rules or guidelines as it deems
appropriate to implement the Plan. The Committee's determinations under the
Plan shall be final and binding on all persons.
ARTICLE 3. LIMITATION ON AWARDS.
The aggregate number of Restricted Shares, Stock Units and Options awarded
under the Plan shall not exceed 1,000,000. If any Restricted Shares, Stock
Units or Options are forfeited or if any Options terminate for any other reason
before being exercised, then such Restricted
1
<PAGE>
Shares, Stock Units or Options shall again become available for Awards under the
Plan. However, if Options are surrendered upon the exercise of related SARs,
then such Options shall not be restored to the pool available for Awards. Any
dividend equivalents distributed under the Plan shall not be applied against the
number of Restricted Shares, Stock Units or Options available for Awards,
whether or not such dividend equivalents are converted into Stock Units. In
addition, the maximum number of Restricted Shares, Stock Units and Options which
may be granted to any single Participant during any one (1) Award Year is
100,000. The limitations set forth in this Article 3 shall be subject to
adjustment pursuant to Article 10. Any Common Shares issued pursuant to the
Plan may be authorized but unissued shares or treasury shares.
ARTICLE 4. ELIGIBILITY.
4.1 GENERAL RULE. Only Key Employees and Directors shall be eligible for
designation as Participants by the Committee.
4.2 TEN-PERCENT STOCKHOLDERS. A Key Employee who owns more than 10% of
the total combined voting power of all classes of outstanding stock of the
Company or any of its Subsidiaries shall not be eligible for the grant of an ISO
unless (a) the Exercise Price under such ISO is at least 110% of the Fair Market
Value of a Common Share on the date of grant and (b) such ISO by its terms is
not exercisable after the expiration of five years from the date of grant.
4.3 ATTRIBUTION RULES. For purposes of Section 4.2, the number of shares
owned by a Key Employee shall be determined in accordance with the attribution
rules as set forth in the Code and the regulations promulgated thereunder, as
they may be amended or modified from time to time.
ARTICLE 5. OPTIONS.
5.1 STOCK OPTION AGREEMENT. Each grant of an Option under the Plan shall
be evidenced by a Stock Option Agreement between the Optionee and the Company.
Such Option shall be subject to all applicable terms and conditions of the Plan
and may be subject to any other terms and conditions which are not inconsistent
with the Plan and which the Committee deems appropriate for inclusion in a Stock
Option Agreement. The provisions of the various Stock Option Agreements entered
into under the Plan need not be identical. The Committee may designate all or
any part of an Option as an ISO; provided, however, that only Key Employees will
be eligible to receive an ISO, and the Stock Option Agreement evidencing the ISO
shall contain such terms and conditions as may be necessary in the opinion of
the Committee to qualify them as incentive stock options under Section 422 of
the Code.
5.2 OPTIONS NONTRANSFERABLE. No Option granted under the Plan shall be
transferable by the Optionee other than by will or by the laws of descent and
distribution, and no Option may be exercised during the lifetime of the Optionee
except by him or her. No option or interest therein may be transferred,
assigned, pledged or hypothecated by the Optionee during his or her
2
<PAGE>
lifetime, whether by operation of law or otherwise, or be made subject to
execution, attachment or similar process.
5.3 NUMBER OF SHARES. Each Stock Option Agreement shall specify the
number of Common Shares subject to the Option and shall provide for the
adjustment of such number in accordance with Article 10. The Stock Option
Agreement shall also specify whether the Option is an ISO or an NSO.
5.4 EXERCISE PRICE. Each Stock Option Agreement shall specify the
Exercise Price. Subject to the preceding two sentences, the Exercise Price
under any Option shall be determined by the Committee. In the case of an ISO,
the Exercise Price shall not be less than 100% of the Fair Market Value of a
Common Share on the date of grant. The Exercise Price shall be payable in
accordance with Article 6.
5.5 EXERCISABILITY AND TERM. Each Stock Option Agreement shall specify
the date when all or any installment of the Option is to become exercisable.
The Stock Option Agreement shall also specify the term of the Option. The term
of an ISO shall in no event exceed 10 years from the date of grant, and Section
4.2 may require a shorter term. Subject to Sections 5.8, 7.3 and 7.4 and the
preceding sentence, the Committee shall determine when all or any part of an
Option (and any SARs included therein) is to become exercisable and when such
Option is to expire. A Stock Option Agreement may provide for accelerated
exercisability in the event of the Optionee's death, disability or retirement.
NSOs may also be awarded in combination with Restricted Shares or Stock Units,
and such an Award may provide that the NSOs will not be exercisable unless the
related Restricted Shares or Stock Units are forfeited.
5.6 EFFECT ON CHANGE IN CONTROL. The Committee (at its sole discretion)
may determine, at the time of granting an Option or thereafter, that such Option
(and any SARs included therein) shall become fully exercisable as to all Common
Shares subject to such Option in the event that a Change in Control occurs with
respect to the Company. If the Committee finds that there is a reasonable
possibility that, within the succeeding six months, a Change in Control will
occur with respect to the Company, then the Committee may determine that all
outstanding Options (and any SARs included therein) shall become fully
exercisable as to all Common Shares subject to such Options.
5.7 MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Within the
limitations of the Plan, the Committee may modify, extend or renew outstanding
Options or may accept the cancellation of outstanding Options (to the extent not
previously exercised) in return for the grant of new Options at the same or a
different price. The foregoing notwithstanding, no modification of an Option
shall, without the consent of the Optionee, alter or impair his or her rights or
obligations under such Option.
5.8 TERMINATION OF EMPLOYMENT. Except as otherwise expressly provided by
the Committee in a Stock Option Agreement, or amendment thereto:
3
<PAGE>
(i) If an Optionee's service as a Director or employment with the
Company or a Subsidiary terminates for any reason other than Cause, the
Optionee may for a period of ninety (90) days after such termination
exercise his or her Options to the extent, and only to the extent, that
such Options or portion thereof were vested and exercisable as of the date
the Optionee's service as a Director or employment with the Company or a
Subsidiary terminated, after which time the unexercised portion of any
Options shall automatically terminate in full.
(ii) If an Optionee's service as a Director or employment with the
Company or a Subsidiary terminates for Cause, the unexercised portion of
any Options granted to the Optionee hereunder shall immediately terminate
in full and no rights or Options thereunder may be exercised.
This Section 5.8 shall not be construed to extend the term of any Option or to
permit anyone to exercise any Option after the expiration of its term, nor shall
it be construed to increase the number of Common Shares as to which any Option
is exercisable from the amount exercisable on the date of termination of the
Optionee's service as a Director or employment with the Company or a Subsidiary.
ARTICLE 6. PAYMENT FOR OPTION SHARES.
6.1 GENERAL RULE. The entire Exercise Price of Common Shares issued upon
exercise of Options shall be payable in cash at the time when such Common Shares
are purchased, except as follows:
(a) In the case of an ISO granted under the Plan, payment shall be
made only pursuant to the express provisions of the applicable Stock Option
Agreement. However, the Committee may specify in the Stock Option
Agreement that payment may be made pursuant to Section 6.2, 6.3, 6.4 or
6.5.
(b) In the case of an NSO, the Committee may at any time accept
payment pursuant to Section 6.2, 6.3, 6.4 or 6.5.
6.2 SURRENDER OF STOCK. To the extent that this Section 6.2 is
applicable, payment for all or any part of the Exercise Price may be made with
Common Shares which have already been owned by the Optionee for more than six
months and which are surrendered to the Company. Such Common Shares shall be
valued at their Fair Market Value on the date when the new Common Shares are
purchased under the Plan. In the event that the Common Shares being surrendered
are Restricted Shares that have not yet become vested, the same restrictions
shall be imposed upon the new Common Shares being purchased.
6.3 EXERCISE/SALE. To the extent this Section 6.3 is applicable, payment
may be made by the delivery (on a form prescribed by the Company) of an
irrevocable direction to a securities broker approved by the Company to sell
Common Shares and to deliver all or part of the sales
4
<PAGE>
proceeds to the Company in payment of all or part of the Exercise Price and any
withholding taxes. This Section 6.3 shall be inapplicable to a person who is
considered a director or officer of the Company, to the extent required by
Section 16 of the Exchange Act or any rule thereunder.
6.4 EXERCISE/PLEDGE. To the extent that this Section 6.4 is applicable,
payment may be made by the delivery (on a form prescribed by the Company) of an
irrevocable direction to pledge Common Shares to a securities broker or lender
approved by the Company as security for a loan and to deliver all or part of the
loan proceeds to the Company in payment of all or part of the Exercise Price and
any withholding taxes.
6.5 OTHER FORMS OF PAYMENT. To the extent that this Section 6.5 is
applicable, payment may be made in any other form approved by the Committee,
consistent with applicable laws, regulations and rules.
ARTICLE 7. STOCK APPRECIATION RIGHTS.
7.1 GRANT OF SARS. Each Option granted under Article 5 of the Plan may,
at the discretion of the Committee, include a SAR. Such SAR shall entitle the
Optionee (or any person having the right to exercise the Option after his or her
death) to surrender to the Company, unexercised, all or any part of that portion
of the Option which then is exercisable and to receive from the Company Common
Shares and cash, or a combination of Common Shares and cash, as the Committee
shall determine. If a SAR is exercised, the number of Common Shares remaining
subject to the related Option shall be reduced accordingly, and vice versa. The
amount of cash and/or the Fair Market Value of Common Shares received upon
exercise of a SAR shall, in the aggregate, be equal to the amount by which the
Fair Market Value (on the date of surrender) of the Common Shares subject to the
surrendered portion of the Option exceeds the Exercise Price. In no event shall
any SAR be exercised if such Fair Market Value does not exceed the Exercise
Price. The discretion of the Committee to include a SAR in an ISO may be
exercised only at the time of the grant of such ISO. The discretion of the
Committee to include a SAR in an NSO may be exercised at the time of the grant
of such NSO or at any subsequent time, but not later than six months before the
expiration of such NSO.
7.2 MANNER OF EXERCISE OF SARS. A SAR may be exercised by written notice
to the Company. Subject to Sections 7.3 and 7.4, a SAR may be exercised to the
extent, and only to the extent, that the Option in which it is included is
exercisable. If, on the date when an Option expires, the Exercise Price under
such Option is less than the Fair Market Value on such date but any portion of
such Option has not been exercised or surrendered, then any SAR included in such
Option shall automatically be deemed to be exercised as of such date with
respect to such portion.
7.3 SPECIAL HOLDING PERIOD. To the extent required by Section 16 of the
Exchange Act or any rule thereunder, a SAR shall not be exercised for cash
unless both it and the related
5
<PAGE>
Option have been outstanding for more than six months. If the Stock Option
Agreement so provides, this Section 7.3 shall not apply in the event of the
Optionee's death or disability.
7.4 SPECIAL EXERCISE WINDOW. To the extent required by Section 16 of the
Exchange Act or any rule thereunder, a SAR may only be exercised for cash during
a period which (a) begins on the third business day following a date when the
Company's quarterly summary statement of sales and earnings is released to the
public and (b) ends on the 12th business day following such date. This Section
7.4 shall not apply if the exercise occurs automatically on the date when the
related Option expires, and the Committee may determine that it shall not apply
to limited SARs granted under Section 7.5.
7.5 LIMITED SARS. An Option granted under the Plan may, at the discretion
of the Committee, provide that it will be exercisable as a SAR only in the event
of a Change in Control.
ARTICLE 8. RESTRICTED SHARES AND STOCK UNITS.
8.1 TIME, AMOUNT AND FORM OF AWARDS. The Committee may grant Restricted
Shares or Stock Units with respect to an Award Year during such Award Year or at
any time thereafter. The amount of each Award of Restricted Shares or Stock
Units shall be determined by the Committee. Awards under the Plan may be
granted in the form of Restricted Shares, in the form of Stock Units, or in any
combination of both, as the Committee shall determine at its sole discretion at
the time of the grant. Restricted Shares or Stock Units may also be awarded in
combination with NSOs, and such an Award may provide that the Restricted Shares
or Stock Units will be forfeited in the event that the related NSOs are
exercised.
8.2 PAYMENT FOR AWARDS. To the extent that an Award is granted in the
form of Restricted Shares, the Committee may require the Award recipient, as a
condition to the grant of such Award, to pay the Company in cash an amount equal
to the par value of such Restricted Shares. To the extent that an Award is
granted in the form of Stock Units, no cash consideration shall be required of
Award recipients.
8.3 VESTING CONDITIONS. Each Award of Restricted Shares or Stock Units
shall become vested, in full or in installments, upon satisfaction of the
conditions specified in the Stock Award Agreement. The Committee shall select
the vesting conditions, which may be based upon the Participant's service, the
Participant's performance, the Company's performance or such other criteria as
the Committee may adopt. A Stock Award Agreement may also provide for
accelerated vesting in the event of the Participant's death, disability or
retirement. The Committee (at its sole discretion) may determine, at the time
of making an Award or thereafter, that such Award shall become fully vested in
the event that a Change in Control occurs with respect to the Company.
8.4 FORM OF SETTLEMENT OF STOCK UNITS. Settlement of vested Stock Units
may be made in the form of cash, in the form of Common Shares, or in any
combination of both, as the
6
<PAGE>
Committee shall determine at or before the time when distribution commences.
The Committee may designate a method of converting Stock Units into cash,
including (without limitation) a method based on the Fair Market Value of Common
Shares over a series of trading days. Until an Award of Stock Units is settled,
the number of such Stock Units shall be subject to adjustment pursuant to
Article 10.
8.5 TIME OF SETTLEMENT AND PAYMENT OF STOCK UNITS. Settlement of vested
Stock Units shall be made on the date or dates set forth in the applicable Stock
Award Agreement and may be settled in a lump sum or in installments. Subject to
the provisions set forth below in this Section 8.5, the Committee shall
determine when all or any part of a settlement of Stock Units is to be paid, and
it may modify its original determination with respect to the time of payment at
any time before settlement of the Stock Units is completed. If Stock Units, or
any portion thereof, are settled in the form of cash, payment may occur or
commence on the Settlement Date, or it may be deferred to any later date and may
be paid in a lump sum or in installments. If the Stock Units, or any portion
thereof, are settled in the form of Common Shares, a certificate representing
the applicable number of Common Shares shall be issued to the Participant within
a reasonable time following the Settlement Date. The Committee may also permit
Participants to request a deferral of any payment under this Section 8.5. In
the case of any deferred payment, the Committee may increase the amount of such
payment by an interest factor or by dividend equivalents, as it deems
appropriate.
8.6 DEATH OF RECIPIENT. Any Stock Units which become payable after the
recipient's death shall be delivered or distributed to the recipient's
beneficiary of beneficiaries. Each recipient of Stock Units under the Plan
shall designate one or more beneficiaries for this purpose by filing the
prescribed form with the Company. A beneficiary designation may be changed by
filing the prescribed form with the Company at any time before the Award
recipient's death. If no beneficiary was designated or if no designated
beneficiary survives the Award recipient, then any Stock Units which become
payable after the recipient's death shall be delivered or distributed to the
recipient's estate. The Committee, at its sole discretion, shall determine the
form and time of any distribution(s) to a recipient's beneficiary or estate.
ARTICLE 9. VOTING RIGHTS AND DIVIDENDS OR DIVIDEND EQUIVALENTS.
9.1 RESTRICTED SHARES. The holders of Restricted Shares awarded under the
Plan shall have the same voting, dividend and other rights as the Company's
other stockholders.
9.2 STOCK UNITS. The holders of Stock Units shall have no voting rights.
Prior to settlement or forfeiture, any Stock Unit awarded under the Plan shall
carry with it a right to dividend equivalents. Such right entitles the holder
to be credited with an amount equal to all cash dividends paid on one Common
Share while the Stock Unit is outstanding. Dividend equivalents may be
converted into additional Stock Units. The Committee shall determine at what
time(s) any dividend equivalents are to be paid. Payment of dividend
equivalents may be made in the form of cash, in the form of Common Shares, or in
a combination of both. Prior to payment, any dividend equivalents which are not
paid on or about the date when dividends
7
<PAGE>
on Common Shares are paid shall be subject to the same conditions and
restrictions (including, without limitation, any forfeiture conditions) as the
Stock Units to which they attach. The Committee, at its sole discretion, shall
make all determinations relating to dividend equivalents.
ARTICLE 10. PROTECTION AGAINST DILUTION.
10.1 GENERAL. In the event of a subdivision of the outstanding Common
Shares, a declaration of a dividend payable in Common Shares, a declaration of a
dividend payable in a form other than Common Shares in an amount that has a
material effect on the price of Common Shares, a combination or consolidation of
the outstanding Common Shares (by reclassification or otherwise) into a lesser
number of Common Shares, a recapitalization or a similar occurrence, the
Committee shall make appropriate adjustments in one or more of (a) the number of
Options, Restricted Shares and Stock Units available for future Awards under
Section 3.1, (b) the number of Stock Units included in any prior Award which has
not yet been settled, (c) the number of Common Shares covered by each
outstanding Option or (d) the Exercise Price under each outstanding Option.
10.2 REORGANIZATIONS. In the event that the Company is a party to a merger
or other reorganization, outstanding Options, Restricted Shares and Stock Units
shall be subject to the agreement of merger or reorganization. Such agreement
may provide, without limitation, for the assumption of outstanding Awards by the
surviving corporation or its parent, for their continuation by the Company (if
the Company is a surviving corporation), for accelerated vesting or for
settlement in cash.
10.3 RESERVATION OF RIGHTS. Except as provided in this Article 10, a
Participant shall have no rights by reason of any subdivision or consolidation
of shares of stock of any class, the payment of any stock dividend or any other
increase or decrease in the number of shares of stock of any class. Any issue
by the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or Exercise Price of Common
Shares subject to an Option. The grant of an Award pursuant to the Plan shall
not affect in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure, to merge or consolidate or to dissolve, liquidate, sell or transfer
all or any part of its business or assets.
ARTICLE 11. LIMITATION OF RIGHTS.
11.1 EMPLOYMENT RIGHTS. Neither the Plan nor any Award granted under the
Plan shall be deemed to give any individual a right to remain employed by the
Company or a Subsidiary. The Company and its Subsidiaries reserve the right to
terminate the employment of any employee at any time, with or without cause,
subject only to a written employment agreement (if any).
8
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11.2 STOCKHOLDERS' RIGHTS. A Participant shall have no dividend rights,
voting rights or other rights as a stockholder with respect to any Common Shares
covered by his or her Award prior to the issuance of a stock certificate for
such Common Shares. No adjustment shall be made for cash dividends or other
rights for which the record date is prior to the date when such certificate is
issued, except as expressly provided in Articles 8, 9 and 10.
11.3 CREDITORS' RIGHTS. A holder of Stock Units shall have no rights other
than those of a general creditor of the Company. Stock Units represent an
unfunded and unsecured obligation of the Company, subject to the terms and
conditions of the applicable Stock Award Agreement.
11.4 GOVERNMENT REGULATIONS. Any other provision of the Plan
notwithstanding, the obligations of the Company with respect to Common Shares to
be issued pursuant to the Plan shall be subject to all applicable laws, rules
and regulations and such approvals by any governmental agencies as may be
required. The Company reserves the right to restrict, in whole or in part, the
delivery of Common Shares pursuant to any Award until such time as:
(a) Any legal requirements or regulations have been met relating to
the issuance of such Common Shares or to their registration, qualification
or exemption from registration or qualification under the Securities Act of
1933, as amended, or any applicable state securities laws; and
(b) Satisfactory assurances have been received that such Common
Shares, when issued, will be duly listed or quoted on The NASDAQ Stock
Market (National Market System) or any other securities exchange or
quotation system on which Common Shares are then listed or quoted.
ARTICLE 12. LIMITATION ON PAYMENTS.
12.1 BASIC RULE. Any provision of the Plan to the contrary
notwithstanding, in the event that the independent auditors most recently
selected by the Board (the "Auditors") determine that any payment or transfer
by the Company to or for the benefit of a Key Employee, whether paid or
payable (or transferred or transferable) pursuant to the terms of this Plan
or otherwise (a "Payment"), would be nondeductible by the Company for federal
income tax purposes because of the provisions concerning "excess parachute
payments" in section 280G of the Code, then the aggregate present value of
all Payments shall be reduced (but not below zero) to the Reduced Amount;
provided, that the Committee, at the time of making an Award under this Plan
or at any time thereafter, may specify in writing that such Award shall not
be so reduced and shall not be subject to this Article 12. For purposes of
this Article 12, the "Reduced Amount" shall be the amount, expressed as a
present value, which maximizes the aggregate present value of the Payments
without causing any Payment to be nondeductible by the Company because of
section 280G of the Code.
9
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12.2 REDUCTION OF PAYMENTS. If the Auditors determine that any Payment
would be nondeductible by the Company because of section 280G of the Code, then
the Company shall promptly give the Key Employee notice to that effect and a
copy of the detailed calculation thereof and of the Reduced Amount, and the Key
Employee may then elect, in his or her sole discretion, which and how much of
the Payments shall be eliminated or reduced (as long as after such election the
aggregate present value of the Payments equals the Reduced Amount) and shall
advise the Company in writing of his or her election within 10 days of receipt
of notice. If no such election is made by the Key Employee within such 10-day
period, then the Company may elect which and how much of the Payments shall be
eliminated or reduced (as long as after such election the aggregate present
value of the Payments equals the Reduced Amount) and shall notify the Key
Employee promptly of such election. For purposes of this Article 12, present
value shall be determined in accordance with section 280G(d)(4) of the Code.
All determinations made by the Auditors under this Article 12 shall be binding
upon the Company and the Key Employee and shall be made within 60 days of the
date when a payment becomes payable or transferable. As promptly as practicable
following such determination and the elections hereunder, the Company shall pay
or transfer to or for the benefit of the Key Employee such amounts as are then
due to him or her under the Plan and shall promptly pay or transfer to or for
the benefit of the Key Employee in the future such amounts as become due to him
or her under the Plan.
12.3 OVERPAYMENTS AND UNDERPAYMENTS. As a result of uncertainty in the
application of section 280G of the Code at the time of an initial determination
by the Auditors hereunder, it is possible that Payments will have been made by
the Company which should not have been made (an "Overpayment") or that
additional Payments which will not have been made by the Company could have been
made (an "Underpayment"), consistent in each case with the calculation of the
Reduced Amount hereunder. In the event that the Auditors, based upon the
assertion of a deficiency by the Internal Revenue Service against the Company or
the Key Employee which the Auditors believe has a high probability of success,
determine that an Overpayment has been made, such Overpayment shall be treated
for all purposes as a loan to the Key Employee which he or she shall repay to
the Company, together with interest at the applicable federal rate provided in
section 7872(f)(2) of the Code; provided, however, that no amount shall be
payable by the Key Employee to the Company if and to the extent that such
payment would not reduce the amount which is subject to taxation under section
4999 of the Code. In the event that the Auditors determine that an Underpayment
has occurred, such Underpayment shall promptly be paid or transferred by the
Company to or for the benefit of the Key Employee, together with interest at the
applicable federal rate provided in section 7872(f)(2) of the Code.
12.4 RELATED CORPORATIONS. For purposes of this Article 12, the term
"Company" shall include affiliated corporations to the extent determined by the
Auditors in accordance with section 280G(d)(5) of the Code.
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ARTICLE 13. WITHHOLDING TAXES.
13.1 GENERAL. To the extent required by applicable federal, state, local
or foreign law, the recipient of any payment or distribution under the Plan
shall make arrangements satisfactory to the Company for the satisfaction of any
withholding tax obligations that arise by reason of such payment or
distribution. The Company shall not be required to make such payment or
distribution until such obligations are satisfied.
13.2 NONSTATUTORY OPTIONS. The Committee may permit an Optionee who
exercises NSOs to satisfy all or part of his or her withholding tax obligations
by having the Company withhold a portion of the Common Shares that otherwise
would be issued to him or her under such NSOs. Such Common Shares shall be
valued at their Fair Market Value on the date when taxes otherwise would be
withheld in cash. The payment of withholding taxes by surrendering Common
Shares to the Company, if permitted by the Committee, shall be subject to such
restrictions as the Committee may impose, including any restrictions required by
rules of the Securities and Exchange Commission.
ARTICLE 14. ASSIGNMENT OR TRANSFER OF AWARD.
Any Award granted under the Plan shall not be anticipated, assigned,
attached, garnished, optioned, transferred or made subject to any creditor's
process, whether voluntarily, involuntarily or by operation of law. Any act in
violation of this Article 14 shall be void. However, this Article 14 shall not
preclude a Participant from designating a beneficiary who will receive any
undistributed Awards in the event of the Participant's death, nor shall it
preclude a transfer by will or by the laws of descent and distribution.
ARTICLE 15. FUTURE OF THE PLAN.
15.1 TERM OF THE PLAN. The Plan, as set forth herein, became effective on
January 31, 1996, subject to receipt of shareholder approval. The Plan shall
remain in effect until it is terminated under Section 16.2, except that no ISOs
shall be granted after January 31, 2006.
15.2 AMENDMENT OR TERMINATION. The Board may, at any time and for any
reason, amend or terminate the Plan. However, any amendment of the Plan shall
be subject to the approval of the Company's stockholders to the extent required
by applicable laws, regulations or rules.
15.3 EFFECT OF AMENDMENT OR TERMINATION. No Awards shall be made under the
Plan after the termination thereof. The termination of the Plan, or any
amendment thereof, shall not affect any Option, Restricted Share or Stock Unit
previously granted under the Plan.
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ARTICLE 16. DEFINITIONS.
16.1 "AWARD" means any award of an Option (with or without a related SAR),
a Restricted Share or a Stock Unit under the Plan.
16.2 "AWARD YEAR" means a calendar year with respect to which an Award may
be granted.
16.3 "BOARD" means the Company's Board of Directors, as constituted from
time to time.
16.4 "CAUSE" means the commission of an act of fraud or intentional
misrepresentation or an act of embezzlement, misappropriation or conversion of
assets or opportunities of the Company or any direct or indirect majority-owned
subsidiary of the Company.
16.5 "CHANGE IN CONTROL" means the occurrence of any of the following
events:
(a) A change in control required to be reported pursuant to Item 6(e)
of Schedule 14A of Regulation 14A under the Exchange Act;
(b) A change in the composition of the Board, as a result of which
fewer than two-thirds of the incumbent directors are directors who either
(i) had been directors of the Company 24 months prior to such change, or
(1i) were elected, or nominated for election, to the Board with the
affirmative votes of at least a majority of the directors who had been
directors of the Company 24 months prior to such change and who were still
in office at the time of the election or nomination; or
(c) Any "person" (as such term is used in sections 13(d) of the
Exchange Act) is or becomes the beneficial owner, directly or indirectly,
of securities of the Company representing 20% or more of the combined
voting power of the Company's then outstanding securities ordinarily (and
apart from rights accruing under special circumstances) having the right to
vote at elections of directors (the "Base Capital Stock"); provided,
however, that any change in the relative beneficial ownership of securities
of any person resulting solely from a reduction in the aggregate number of
outstanding shares of Base Capital Stock, and any decrease thereafter in
such person's ownership of securities, shall be disregarded until such
person increases in any manner, directly or indirectly, such person's
beneficial ownership of any securities of the Company.
16.6 "CODE" means the Internal Revenue Code of 1986, as amended.
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16.7 "COMMITTEE" means the Compensation Committee of the Board, as
constituted from time to time.
16.8 "COMMON SHARE" means one share of the common stock of the Company.
16.9 "COMPANY" means Spire International Corp., a Utah corporation.
16.10 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
16.11 "EXERCISE PRICE" means the amount for which one Common Share may be
purchased upon exercise of an Option, as specified by the Committee in the
applicable Stock Option Agreement.
16.12 "FAIR MARKET VALUE" shall mean the closing price of a Common Share on
the trading day immediately preceding the day in question, as reported by The
Nasdaq Stock Market (National Market System) or by such other exchange or
quotation system on which the Common Shares are listed or quoted.
16.13 "FISCAL YEAR" means the fiscal year of the Company.
16.14 "ISO" means an incentive stock option described in section 422 of the
Code.
16.15 "KEY EMPLOYEE" means a key employee of the Company or any Subsidiary,
as determined by the Committee.
16.16 "NSO" means an employee stock option not described in sections 422
through 424 of the Code.
16.17 "OPTION" means an ISO or NSO granted under the Plan and entitling the
holder to purchase one Common Share.
16.18 "OPTIONEE" means an individual who holds an Option.
16.19 "PARTICIPANT" means a Key Employee who has received an Award.
16.20 "PLAN" means this Spire International Corp. Stock Incentive Plan, as
it may be amended from time to time.
16.21 "RESTRICTED SHARE" means a Common Share awarded to a Participant
under the Plan subject to vesting conditions.
16.22 "SAR" means a stock appreciation right granted under the Plan as part
of an Option or as a subsequent addition to an Option.
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16.23 "STOCK AWARD AGREEMENT" means the agreement between the Company and
the recipient of a Restricted Share or Stock Unit which contains the terms,
conditions and restrictions pertaining to such Restricted Share or Stock Unit.
16.24 "STOCK OPTION AGREEMENT" means the agreement between the Company and
an Optionee which contains the terms, conditions and restrictions pertaining to
his or her Option.
16.25 "STOCK UNIT" means a bookkeeping entry representing the equivalent of
one Common Share and awarded to a Participant under the Plan.
16.26 "SUBSIDIARY" means any corporation, if the Company and/or one or more
other Subsidiaries own not less than 50% of the total combined voting power of
all classes of outstanding stock of such corporation. A corporation that
attains the status of a Subsidiary on a date after the adoption of the Plan
shall be considered a Subsidiary commencing as of such date.
ARTICLE 17. EXECUTION.
To record the adoption of the Plan by the Board and approval by the
stockholders, the Company has caused its duly authorized officer to affix the
corporate name and seal hereto.
SPIRE INTERNATIONAL CORP.
By /s/ Robert K. Bench
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SUBSIDIARIES OF THE REGISTRANT
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Name State of Incorporation
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Spire Technologies, Inc. Utah
Spire Technologies Systems Division, Inc. Utah
Amacan Industries, Inc. Utah
