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As Filed With the Securities and Exchange Commission on September 25, 1998
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON. D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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MICRO GENERAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 95-2621545
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
14711 Bentley Circle, Tustin, CA 92780-7226
(Address of Principal Executive Offices) (Zip Code)
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1998 STOCK INCENTIVE PLAN
1998 EMPLOYEE STOCK PURCHASE PLAN
(Full title of the plans)
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M'Liss Jones Kane
Vice President and Secretary
Micro General Corporation
14711 Bentley Circle, Tustin, CA 92780-7226
(Name and address of agent for service)
(714) 731-0557
(Telephone number, including area code, of agent for service)
Copies to:
J. Michael Vaughn, Esq.
Stradling Yocca Carlson & Rauth, a Professional Corporation
660 Newport Center Drive, Suite 1600, Newport Beach, California 92660
(949) 725-4000
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Proposed Maximum Proposed Maximum
Title of Securities Amount To Be Offering Aggregate Amount of
To Be Registered Registered(1) Price Per Share(2) Offering Price(2) Registration Fee
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
$.05 par value 1,227,250(3) shares $4.83 $5,923,345 $1,747.39
Common Stock,
$.05 par value 272,750(3) shares $3.75 $1,022,813 $ 301.73
Common Stock,
$.05 par value 800,000(4) shares $3.75 $3,000,000 $ 885.00
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</TABLE>
(1) Also registered hereunder are an indeterminate number of shares which may
become issuable pursuant to the anti-dilution adjustment provisions of the
Registrant's 1998 Stock Incentive Plan (the "Incentive Plan") and the 1998
Employee Stock Purchase Plan (the "Purchase Plan").
(2) In accordance with Rule 457(h), the aggregate offering price of the 272,750
shares of Common Stock and 800,000 shares of Common Stock registered hereby
is estimated, solely for purposes of calculating the registration fee, on
the basis of the price of securities of the same class, as determined in
accordance with Rule 457(c), using the average of the bid and the asked
prices reported by the over-the-counter market for the Common Stock on
September 18, 1998, which was $3.75 per share. The calculation of the
registration fee for the 1,227,250 shares of Common Stock already granted
under stock option agreements is based on the weighted average exercise
price at the date of grant which is $4.83.
(3) Issuable pursuant to the Incentive Plan.
(4) Issuable pursuant to the Purchase Plan.
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed by Micro General Corporation (the
"Registrant" or the "Company") with the Securities and Exchange Commission (the
"Commission") pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), are incorporated by reference in this registration statement:
(a) The Company's Annual Report on Form 10-K for the year ended
December 31, 1997, as amended;
(b) The Company's Quarterly Reports on Form 10-Q for the quarterly
periods ended March 31, 1998 and June 30, 1998;
(c) The Company's Current Report on Form 8-K dated May 14, 1998, as
amended; and
(d) The description of the Registrant's common stock, par value $.05
per share (the "Common Stock"), contained in the Registrant's
Registration Statement filed under Section 12 of the Exchange Act,
including any amendment or report filed for the purpose of updating
such description.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all securities offered have been
sold or which deregisters all of such securities then remaining unsold, shall be
deemed to be incorporated by reference in this Registration Statement and to be
a part hereof from the date of filing of such documents, except as to any
portion of any future annual or quarterly report to stockholders or document
that is not deemed filed under such provisions. For the purposes of this
Registration Statement, any statement in a document incorporated by reference
shall be deemed to be modified or superseded to the extent that a statement
contained in this Registration Statement modifies or supersedes a statement in
such document. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's Certificate of Incorporation eliminates the liability
of the Registrant's directors for monetary damages for breach of fiduciary duty
as directors to the maximum extent provided by Delaware Law. The Registrant's
Bylaws provide that the Registrant shall indemnify its officers, directors and
persons who are or were serving as officers or directors of another entity at
the request of the Corporation to the maximum extent permitted by Delaware Law.
Section 145 of the DGCL provides that a corporation may indemnify any
person made a party to an action (other than an action by or in the right of the
corporation) by reason of the fact that he or she was a director, officer,
employee or agent of the corporation or was serving at the request of the
corporation against expenses (including attorneys' fees), judgments, fines, and
amounts paid in settlement actually and reasonably incurred by him or her in
connection with such action if he or she acted in good faith and in a manner he
or she reasonably believed to be in, or not opposed to, the best interests of
the corporation and, with respect to any criminal action (other than an action
by or in the right of the corporation), has no reasonable cause to believe his
or her conduct was unlawful.
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ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
The following exhibits are filed as part of this Registration
Statement:
Number Description
------ -----------
4.1 1998 Stock Incentive Plan.
4.2 1998 Employee Stock Purchase Plan.
5.1 Opinion of Stradling Yocca Carlson & Rauth.
23.2 Consent of KPMG Peat Marwick LLP, independent auditors, with respect
to the financial statements of ACS Systems, Inc.
23.3 Consent of Stradling Yocca Carlson & Rauth (included in the Opinion
filed as Exhibit 5.1).
24.1 Power of Attorney (included on the signature page).
ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this
section do not apply if the information required to be included in a
post-effective amendment by these paragraphs is contained in periodic reports
filed with or furnished to the Commission by the Registrant pursuant to Section
13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.
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(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
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]
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Tustin, State of California, on the 23rd day of
September, 1998.
MICRO GENERAL CORPORATION
By: /s/ Patrick F. Stone
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Patrick F. Stone
Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of Micro General
Corporation, do hereby make, constitute and appoint William P. Foley, II,
Patrick F. Stone and S. Bruce Crair, and each of them acting individually, our
true and lawful attorneys-in-fact and agents, with power to act without any
other and with full power of substitution, to do any and all acts and things in
our name and behalf in our capacities as directors and officers, to sign any and
all amendments (including post-effective amendments) to this Registration
Statement, or any related Registration Statement that is to be effective upon
filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and
to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that each of said
attorneys-in-fact and agents, or his substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
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<S> <C> <C>
/s/ William P. Foley, II Chairman of the Board September 23, 1998
- --------------------------------
William P. Foley, II
/s/ Patrick F. Stone Chief Executive Officer
- --------------------------------- and Director September 23, 1998
Patrick F. Stone (Principal Executive Officer)
/s/ Anthony J. Park Vice President, Chief Financial
- --------------------------------- Officer and Treasurer
Anthony J. Park (Principal Financial Officer and September 23, 1998
Principal Accounting Officer)
- --------------------------------- Director September __, 1998
S. Bruce Crair
/s/ Thomas E. Pistilli
- --------------------------------- Director September 23, 1998
Thomas E. Pistilli
/s/ Richard F. Pickup
- --------------------------------- Director September 21, 1998
Richard F. Pickup
/s/ Carl A. Strunk
- --------------------------------- Director September 23, 1998
Carl A. Strunk
- --------------------------------- Director September __, 1998
George E. Olenik
- --------------------------------- Director September __, 1998
John R. Snedegar
</TABLE>
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EXHIBIT INDEX
Exhibit
Number Description
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4.1 1998 Stock Incentive Plan.
4.2 1998 Employee Stock Purchase Plan.
5.1 Opinion of Stradling Yocca Carlson & Rauth.
23.2 Consent of KPMG Peat Marwick LLP, independent auditors, with respect
to the financial statements of ACS Systems, Inc.
23.3 Consent of Stradling Yocca Carlson & Rauth (included in the Opinion
filed as Exhibit 5.1).
24.1 Power of Attorney (included on the signature page).
<PAGE> 1
EXHIBIT 4.1
MICRO GENERAL CORPORATION
1998 STOCK INCENTIVE PLAN
This 1998 STOCK INCENTIVE PLAN (the "Plan") is hereby established by Micro
General Corporation, a Delaware corporation (the "Company"), and adopted by its
Board of Directors as of the 3rd day of June, 1998 (the "Effective Date").
ARTICLE 1.
PURPOSES OF THE PLAN
1.1 Purposes. The purposes of the Plan are (a) to enhance the Company's
ability to attract and retain the services of qualified employees, officers and
directors (including non-employee officers and directors), and consultants and
other service providers upon whose judgment, initiative and efforts the
successful conduct and development of the Company's business largely depends,
and (b) to provide additional incentives to such persons or entities to devote
their utmost effort and skill to the advancement and betterment of the Company,
by providing them an opportunity to participate in the ownership of the Company
and thereby have an interest in the success and increased value of the Company.
ARTICLE 2.
DEFINITIONS
For purposes of this Plan, the following terms shall have the meanings
indicated:
2.1 Administrator. "Administrator" means the Board or, if the Board
delegates responsibility for any matter to the Committee, the term Administrator
shall mean the Committee.
2.2 Affiliated Company. "Affiliated Company" means any subsidiary of the
Company, any business venture which the Company has a significant interest, as
determined at the discretion of the Administrator. However, for purposes of
eligibility to receive Incentive Options, "Affiliated Company" means any "parent
corporation" or "subsidiary corporation" of the Company, whether now existing or
hereafter created or acquired, as those terms are defined in Sections 424(e) and
424(f) of the Code, respectively.
2.3 Board. "Board" means the Board of Directors of the Company.
2.4 Change in Control. "Change in Control" shall mean (i) the acquisition,
directly or indirectly, by any person or group (within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934, as amended) of the beneficial
ownership of securities of the Company possessing more than fifty percent (50%)
of the total combined voting power of all outstanding securities of the Company;
(ii) a merger or consolidation in which the Company is not the surviving entity,
except for a transaction in which the holders of the outstanding voting
securities of the Company immediately prior to such merger or consolidation
hold, in the aggregate, securities possessing more than fifty percent (50%) of
the total combined voting power of all outstanding voting securities of the
surviving entity immediately after such merger or consolidation; (iii) a reverse
merger in which the Company is the surviving entity but in which securities
possessing more than fifty percent (50%) of the total combined voting power of
all outstanding voting securities of the Company are transferred to or acquired
by a person or persons different from the persons holding those securities
immediately prior to such merger; (iv) the sale, transfer or other disposition
(in one transaction or a series of related transactions) of all or substantially
all of the assets of the Company; or (v) the approval by the shareholders of a
plan or proposal for the liquidation or dissolution of the Company.
2.5 Code. "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
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2.6 Committee. "Committee" means a committee of two or more members of the
Board appointed to administer the Plan, as set forth in Section 7.1 hereof.
2.7 Common Stock. "Common Stock" means the Common Stock, $.0001 par value
of the Company, subject to adjustment pursuant to Section 4.2 hereof.
2.8 Disability. "Disability" means permanent and total disability as
defined in Section 22(e)(3) of the Code. The Administrator's determination of a
Disability or the absence thereof shall be conclusive and binding on all
interested parties.
2.9 Effective Date. "Effective Date" means the date on which the Plan is
adopted by the Board, as set forth on the first page hereof.
2.10 Exercise Price. "Exercise Price" means the purchase price per share
of Common Stock payable upon exercise of an Option.
2.11 Fair Market Value. "Fair Market Value" on any given date means the
value of one share of Common Stock, determined as follows:
(a) If the Common Stock is then listed or admitted to trading on a
national stock exchange or a NASDAQ market system which reports closing
sale prices, the Fair Market Value shall be the closing sale price on the
date of valuation on the principal stock exchange or NASDAQ market system
on which the Common Stock is then listed or admitted to trading, or, if no
closing sale price is quoted on such day, then the Fair Market Value shall
be the closing sale price of the Common Stock on such exchange or NASDAQ
market system on the next preceding day for which a closing sale price is
reported.
(b) If the Common Stock is not then listed or admitted to trading on a
national stock exchange or NASDAQ market system which reports closing sale
prices, the Fair Market Value shall be the average of the closing bid and
asked prices of the Common Stock in the over-the-counter market on the date
of valuation.
(c) If neither (a) nor (b) is applicable as of the date of valuation,
then the Fair Market Value shall be determined by the Administrator in good
faith using any reasonable method of evaluation, which determination shall
be conclusive and binding on all interested parties.
2.12 Incentive Option. "Incentive Option" means any Option designated and
qualified as an "incentive stock option" as defined in Section 422 of the Code.
2.13 Incentive Option Agreement. "Incentive Option Agreement" means an
Option Agreement with respect to an Incentive Option.
2.14 NASD Dealer. "NASD Dealer" means a broker-dealer that is a member of
the National Association of Securities Dealers, Inc.
2.15 Nonqualified Option. "Nonqualified Option" means any Option that is
not an Incentive Option. To the extent that any Option designated as an
Incentive Option fails in whole or in part to qualify as an Incentive Option,
including, without limitation, for failure to meet the limitations applicable to
a 10% Shareholder or because it exceeds the annual limit provided for in Section
5.6 below, it shall to that extent constitute a Nonqualified Option.
2.16 Nonqualified Option Agreement. "Nonqualified Option Agreement" means
an Option Agreement with respect to a Nonqualified Option.
2.17 Offeree. "Offeree" means a Participant to whom a Right to Purchase
has been offered or who has acquired Restricted Stock under the Plan.
2.18 Option. "Option" means any option to purchase Common Stock granted
pursuant to the Plan.
2.19 Option Agreement. "Option Agreement" means the written agreement
entered into between the Company and the Optionee with respect to an Option
granted under the Plan.
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2.20 Optionee. "Optionee" means a Participant who holds an Option.
2.21 Participant. "Participant" means an individual or entity who holds an
Option, a Right to Purchase or Restricted Stock under the Plan.
2.22 Purchase Price. "Purchase Price" means the purchase price per share
of Restricted Stock payable upon acceptance of a Right to Purchase.
2.23 Restricted Stock. "Restricted Stock" means shares of Common Stock
issued pursuant to Article 6 hereof, subject to any restrictions and conditions
as are established pursuant to such Article 6.
2.24 Right to Purchase. "Right to Purchase" means a right to purchase
Restricted Stock granted to an Offeree pursuant to Article 6 hereof.
2.25 Service Provider. "Service Provider" means a consultant or other
person or entity who provides services to the Company or an Affiliated Company
and who the Administrator authorizes to become a Participant in the Plan.
2.26 Stock Purchase Agreement. "Stock Purchase Agreement" means the
written agreement entered into between the Company and the Offeree with respect
to a Right to Purchase offered under the Plan.
2.27 10% Shareholder. "10% Shareholder" means a person who, as of a
relevant date, owns or is deemed to own (by reason of the attribution rules
applicable under Section 424(d) of the Code) stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company or of an
Affiliated Company.
ARTICLE 3.
ELIGIBILITY
3.1 Incentive Options. Officers and other key employees of the Company or
of an Affiliated Company (including members of the Board if they are employees
of the Company or of an Affiliated Company) are eligible to receive Incentive
Options under the Plan.
3.2 Nonqualified Options and Rights to Purchase. Officers and other key
employees of the Company or of an Affiliated Company, members of the Board
(whether or not employed by the Company or an Affiliated Company), and Service
Providers are eligible to receive Nonqualified Options or Rights to Purchase
under the Plan.
3.3 Limitation on Shares. In no event shall any Participant be granted
Options or Rights to Purchase in any one calendar year pursuant to which the
aggregate number of shares of Common Stock that may be acquired thereunder
exceeds 1,500,000 shares. In no event shall the aggregate number of shares
subject to Incentive Options exceed 1,500,000.
ARTICLE 4.
PLAN SHARES
4.1 Shares Subject to the Plan. A total of 1,500,000 shares of Common
Stock, plus, on the date of each annual meeting of the stockholders an
additional 300,000 shares of Common Stock, may be issued under the Plan subject
to adjustment as to the number and kind of shares pursuant to Section 4.2
hereof. For purposes of this limitation, in the event that (a) all or any
portion of any Option or Right to Purchase granted or offered under the Plan can
no longer under any circumstances be exercised, or (b) any shares of Common
Stock are reacquired by the Company pursuant to an Incentive Option Agreement,
Nonqualified Option Agreement or Stock Purchase Agreement, the shares of Common
Stock allocable to the unexercised portion of such Option or such Right to
Purchase, or the shares so reacquired, shall again be available for grant or
issuance under the Plan.
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<PAGE> 4
4.2 Changes in Capital Structure. In the event that the outstanding shares
of Common Stock are hereafter increased or decreased or changed into or
exchanged for a different number or kind of shares or other securities of the
Company by reason of a recapitalization, stock split, combination of shares,
reclassification, stock dividend, or other change in the capital structure of
the Company, then appropriate adjustments shall be made by the Administrator to
the aggregate number and kind of shares subject to this Plan, and the number and
kind of shares and the price per share subject to outstanding Option Agreements,
Rights to Purchase and Stock Purchase Agreements in order to preserve, as nearly
as practical, but not to increase, the benefits to Participants.
ARTICLE 5.
OPTIONS
5.1 Option Agreement. Each Option granted pursuant to this Plan shall be
evidenced by an Option Agreement which shall specify the number of shares
subject thereto, the Exercise Price per share, and whether the Option is an
Incentive Option or Nonqualified Option. As soon as is practical following the
grant of an Option, an Option Agreement shall be duly executed and delivered by
or on behalf of the Company to the Optionee to whom such Option was granted.
Each Option Agreement shall be in such form and contain such additional terms
and conditions, not inconsistent with the provisions of this Plan, as the
Administrator shall, from time to time, deem desirable, including, without
limitation, the imposition of any rights of first refusal and resale obligations
upon any shares of Common Stock acquired pursuant to an Option Agreement. Each
Option Agreement may be different from each other Option Agreement.
5.2 Exercise Price. The Exercise Price per share of Common Stock covered
by each Option shall be determined by the Administrator, subject to the
following: (a) the Exercise Price of an Incentive Option shall not be less than
100% of Fair Market Value on the date the Incentive Option is granted, and (b)
if the person to whom an Incentive Option is granted is a 10% Shareholder on the
date of grant, the Exercise Price shall not be less than 110% of Fair Market
Value on the date the Option is granted.
5.3 Payment of Exercise Price. Payment of the Exercise Price shall be made
upon exercise of an Option and may be made, in the discretion of the
Administrator, subject to any legal restrictions, by: (a) cash; (b) check; (c)
the surrender of shares of Common Stock owned by the Optionee that have been
held by the Optionee for at least six (6) months, which surrendered shares shall
be valued at Fair Market Value as of the date of such exercise; (d) the
Optionee's promissory note in a form and on terms acceptable to the
Administrator; (e) the cancellation of indebtedness of the Company to the
Optionee; (f) the waiver of compensation due or accrued to the Optionee for
services rendered; (g) provided that a public market for the Common Stock
exists, a "same day sale" commitment from the Optionee and an NASD Dealer
whereby the Optionee irrevocably elects to exercise the Option and to sell a
portion of the shares so purchased to pay for the Exercise Price and whereby the
NASD Dealer irrevocably commits upon receipt of such shares to forward the
Exercise Price directly to the Company; (h) provided that a public market for
the Common Stock exists, a "margin" commitment from the Optionee and an NASD
Dealer whereby the Optionee irrevocably elects to exercise the Option and to
pledge the shares so purchased to the NASD Dealer in a margin account as
security for a loan from the NASD Dealer in the amount of the Exercise Price,
and whereby the NASD Dealer irrevocably commits upon receipt of such shares to
forward the Exercise Price directly to the Company; or (i) any combination of
the foregoing methods of payment or any other consideration or method of payment
as shall be permitted by applicable corporate law.
5.4 Term and Termination of Options. The term and provisions for
termination of each Option shall be as fixed by the Administrator, but no Option
may be exercisable more than ten (10) years after the date it is granted. An
Incentive Option granted to a person who is a 10% Shareholder on the date of
grant shall not be exercisable more than five (5) years after the date it is
granted.
5.5 Vesting and Exercise of Options. Each Option shall vest and become
exercisable in one or more installments at such time or times and subject to
such conditions, including without limitation the achievement of specified
performance goals or objectives, as shall be determined by the Administrator.
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<PAGE> 5
5.6 Annual Limit on Incentive Options. To the extent required for
"incentive stock option" treatment under Section 422 of the Code, the aggregate
Fair Market Value (determined as of the time of grant) of the Common Stock shall
not, with respect to which Incentive Options granted under this Plan and any
other plan of the Company or any Affiliated Company become exercisable for the
first time by an Optionee during any calendar year, exceed $100,000.
5.7 Nontransferability of Options. Except as otherwise provided by the
Administrator, no Option shall be assignable or transferable except by will or
the laws of descent and distribution, and during the life of the Optionee shall
be exercisable only by such Optionee.
5.8 Rights as Shareholder. An Optionee or permitted transferee of an
Option shall have no rights or privileges as a shareholder with respect to any
shares covered by an Option until such Option has been duly exercised and
certificates representing shares purchased upon such exercise have been issued
to such person.
ARTICLE 6.
RIGHTS TO PURCHASE
6.1 Nature of Right to Purchase. A Right to Purchase granted to an Offeree
entitles the Offeree to purchase, for a Purchase Price determined by the
Administrator, shares of Common Stock subject to such terms, restrictions and
conditions as the Administrator may determine at the time of grant ("Restricted
Stock"). Such conditions may include, but are not limited to, continued
employment or the achievement of specified performance goals or objectives.
6.2 Acceptance of Right to Purchase. An Offeree shall have no rights with
respect to the Restricted Stock subject to a Right to Purchase unless the
Offeree shall have accepted the Right to Purchase within ten (10) days (or such
longer or shorter period as the Administrator may specify) following the grant
of the Right to Purchase by making payment of the full Purchase Price to the
Company in the manner set forth in Section 6.3 hereof and by executing and
delivering to the Company a Stock Purchase Agreement. Each Stock Purchase
Agreement shall be in such form, and shall set forth the Purchase Price and such
other terms, conditions and restrictions of the Restricted Stock, not
inconsistent with the provisions of this Plan, as the Administrator shall, from
time to time, deem desirable. Each Stock Purchase Agreement may be different
from each other Stock Purchase Agreement.
6.3 Payment of Purchase Price. Subject to any legal restrictions, payment
of the Purchase Price upon acceptance of a Right to Purchase Restricted Stock
may be made, in the discretion of the Administrator, by: (a) cash; (b) check;
(c) the surrender of shares of Common Stock owned by the Offeree that have been
held by the Offeree for at least six (6) months, which surrendered shares shall
be valued at Fair Market Value as of the date of such exercise; (d) the
Offeree's promissory note in a form and on terms acceptable to the
Administrator; (e) the cancellation of indebtedness of the Company to the
Offeree; (f) the waiver of compensation due or accrued to the Offeree for
services rendered; or (g) any combination of the foregoing methods of payment or
any other consideration or method of payment as shall be permitted by applicable
corporate law.
6.4 Rights as a Shareholder. Upon complying with the provisions of Section
6.2 hereof, an Offeree shall have the rights of a shareholder with respect to
the Restricted Stock purchased pursuant to the Right to Purchase, including
voting and dividend rights, subject to the terms, restrictions and conditions as
are set forth in the Stock Purchase Agreement. Unless the Administrator shall
determine otherwise, certificates evidencing shares of Restricted Stock shall
remain in the possession of the Company until such shares have vested in
accordance with the terms of the Stock Purchase Agreement.
6.5 Restrictions. Shares of Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except as
specifically provided in the Stock Purchase Agreement. In the event of
termination of a Participant's employment, service as a director of the Company
or Service Provider status for any reason whatsoever (including death or
disability), the Stock Purchase Agreement may provide, in the discretion of the
Administrator, that the Company shall have the right, exercisable at the
discretion of
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the Administrator, to repurchase (i) at the original Purchase Price, any shares
of Restricted Stock which have not vested as of the date of termination, and
(ii) at Fair Market Value, any shares of Restricted Stock which have vested as
of such date, on such terms as may be provided in the Stock Purchase Agreement.
6.6 Vesting of Restricted Stock. The Stock Purchase Agreement shall
specify the date or dates, the performance goals or objectives which must be
achieved, and any other conditions on which the Restricted Stock may vest.
6.7 Dividends. If payment for shares of Restricted Stock is made by
promissory note, any cash dividends paid with respect to the Restricted Stock
may be applied, in the discretion of the Administrator, to repayment of such
note.
6.8 Nonassignability of Rights. No Right to Purchase shall be assignable
or transferable except by will or the laws of descent and distribution or as
otherwise provided by the Administrator.
ARTICLE 7.
ADMINISTRATION OF THE PLAN
7.1 Administrator. Authority to control and manage the operation and
administration of the Plan shall be vested in the Board, which may delegate such
responsibilities in whole or in part to a committee consisting of two (2) or
more members of the Board (the "Committee"). Members of the Committee may be
appointed from time to time by, and shall serve at the pleasure of, the Board.
As used herein, the term "Administrator" means the Board or, with respect to any
matter as to which responsibility has been delegated to the Committee, the term
Administrator shall mean the Committee.
7.2 Powers of the Administrator. In addition to any other powers or
authority conferred upon the Administrator elsewhere in the Plan or by law, the
Administrator shall have full power and authority: (a) to determine the persons
to whom, and the time or times at which, Incentive Options or Nonqualified
Options shall be granted and Rights to Purchase shall be offered, the number of
shares to be represented by each Option and Right to Purchase and the
consideration to be received by the Company upon the exercise thereof; (b) to
interpret the Plan; (c) to create, amend or rescind rules and regulations
relating to the Plan; (d) to determine the terms, conditions and restrictions
contained in, and the form of, Option Agreements and Stock Purchase Agreements;
(e) to determine the identity or capacity of any persons who may be entitled to
exercise a Participant's rights under any Option or Right to Purchase under the
Plan; (f) to correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any Option Agreement or Stock Purchase
Agreement; (g) to accelerate the vesting of any Option or release or waive any
repurchase rights of the Company with respect to Restricted Stock; (h) to extend
the exercise date of any Option or acceptance date of any Right to Purchase; (I)
to provide for rights of first refusal and/or repurchase rights; (j) to amend
outstanding Option Agreements and Stock Purchase Agreements to provide for,
among other things, any change or modification which the Administrator could
have provided for upon the grant of an Option or Right to Purchase or in
furtherance of the powers provided for herein; and (k) to make all other
determinations necessary or advisable for the administration of the Plan, but
only to the extent not contrary to the express provisions of the Plan. Any
action, decision, interpretation or determination made in good faith by the
Administrator in the exercise of its authority conferred upon it under the Plan
shall be final and binding on the Company and all Participants.
7.3 Limitation on Liability. No employee of the Company or member of the
Board or Committee shall be subject to any liability with respect to duties
under the Plan unless the person acts fraudulently or in bad faith. To the
extent permitted by law, the Company shall indemnify each member of the Board or
Committee, and any employee of the Company with duties under the Plan, who was
or is a party, or is threatened to be made a party, to any threatened, pending
or completed proceeding, whether civil, criminal, administrative or
investigative, by reason of such person's conduct in the performance of duties
under the Plan.
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ARTICLE 8.
CHANGE IN CONTROL
8.1 Change in Control. In order to preserve a Participant's rights in the
event of a Change in Control of the Company, (i) the time period relating to the
exercise or realization of all outstanding Options, Rights to Purchase and
Restricted Stock shall automatically accelerate immediately prior to the
consummation of such Change in Control, and (ii) with respect to Options and
Rights to Purchase, the Administrator in its discretion may, at any time an
Option or Right to Purchase is granted, or at any time thereafter, take one or
more of the following actions: (A) provide for the purchase or exchange of each
Option or Right to Purchase for an amount of cash or other property having a
value equal to the difference, or spread, between (x) the value of the cash or
other property that the Participant would have received pursuant to such Change
in Control transaction in exchange for the shares issuable upon exercise of the
Option or Right to Purchase had the Option or Right to Purchase been exercised
immediately prior to such Change in Control transaction and (y) the Exercise
Price of such Option or the Purchase Price under such Right to Purchase, (B)
adjust the terms of the Options and Rights to Purchase in a manner determined by
the Administrator to reflect the Change in Control, (C) cause the Options and
Rights to Purchase to be assumed, or new rights substituted therefor, by another
entity, through the continuance of the Plan and the assumption of outstanding
Options and Rights to Purchase, or the substitution for such Options and Rights
to Purchase of new options and new rights to purchase of comparable value
covering shares of a successor corporation, with appropriate adjustments as to
the number and kind of shares and Exercise Prices, in which event the Plan and
such Options and Rights to Purchase, or the new options and rights to purchase
substituted therefor, shall continue in the manner and under the terms so
provided, or (D) make such other provision as the Administrator may consider
equitable. If the Administrator does not take any of the forgoing actions, all
Options and Rights to Purchase shall terminate upon the consummation of the
Change in Control, unless the Common Stock remains listed or admitted to trading
on a national stock exchange or a NASDAQ market system. The Administrator shall
cause written notice of the proposed Change in Control transaction to be given
to all Participants not less than fifteen (15) days prior to the anticipated
effective date of the proposed transaction.
ARTICLE 9.
AMENDMENT AND TERMINATION OF THE PLAN
9.1 Amendments. The Board may from time to time alter, amend, suspend or
terminate the Plan in such respects as the Board may deem advisable. The Board
may alter or amend the Plan to comply with requirements under the Code relating
to Incentive Options or other types of options which give Optionees more
favorable tax treatment than that applicable to Options granted under this Plan
as of the date of its adoption. Upon any such alteration or amendment, any
outstanding Option granted hereunder may, if the Administrator so determines and
if permitted by applicable law, be subject to the more favorable tax treatment
afforded to an Optionee pursuant to such terms and conditions.
9.2 Plan Termination. Unless the Plan shall theretofore have been
terminated, the Plan shall terminate on the tenth (10th) anniversary of the
Effective Date and no Options or Rights to Purchase may be granted under the
Plan thereafter, but Option Agreements, Stock Purchase Agreements and Rights to
Purchase then outstanding shall continue in effect in accordance with their
respective terms.
ARTICLE 10.
TAX WITHHOLDING
10.1 Withholding. The Company shall have the power to withhold, or require
a Participant to remit to the Company, an amount sufficient to satisfy any
applicable Federal, state, and local tax withholding requirements with respect
to any Options exercised or Restricted Stock issued under the Plan. To the
extent permissible under applicable tax, securities and other laws, the
Administrator may, in its sole discretion and upon such terms and conditions as
it may deem appropriate, permit a Participant to satisfy his or her
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obligation to pay any such tax, in whole or in part, up to an amount determined
on the basis of the highest marginal tax rate applicable to such Participant, by
(a) directing the Company to apply shares of Common Stock to which the
Participant is entitled as a result of the exercise of an Option or as a result
of the purchase of or lapse of restrictions on Restricted Stock or (b)
delivering to the Company shares of Common Stock owned by the Participant. The
shares of Common Stock so applied or delivered in satisfaction of the
Participant's tax withholding obligation shall be valued at their Fair Market
Value as of the date of measurement of the amount of income subject to
withholding.
ARTICLE 11.
MISCELLANEOUS
11.1 Benefits Not Alienable. Other than as provided above, benefits under
the Plan may not be assigned or alienated, whether voluntarily or involuntarily.
Any unauthorized attempt at assignment, transfer, pledge or other disposition
shall be without effect.
11.2 No Enlargement of Employee Rights. This Plan is strictly a voluntary
undertaking on the part of the Company and shall not be deemed to constitute a
contract between the Company and any Participant to be consideration for, or an
inducement to, or a condition of, the employment of any Participant. Nothing
contained in the Plan shall be deemed to give the right to any Participant to be
retained as an employee of the Company or any Affiliated Company or to limit the
right of the Company or any Affiliated Company to discharge any Participant at
any time.
11.3 Application of Funds. The proceeds received by the Company from the
sale of Common Stock pursuant to Option Agreements and Stock Purchase
Agreements, except as otherwise provided herein, will be used for general
corporate purposes.
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EXHIBIT 4.2
MICRO GENERAL CORPORATION
(A DELAWARE CORPORATION)
1998 EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE OF PLAN.
The purpose of this 1998 Stock Purchase Plan (the "Plan") is to encourage a
sense of proprietorship on the part of employees of Micro General Corporation
(the "Company") and its subsidiary corporations (as defined below) by assisting
them in making regular purchases of shares of stock of the Company, and thus to
benefit the company by increasing such employee's interest in the growth of the
Company and subsidiary corporations and in such entities' financial success.
Participation in the Plan is entirely voluntary, and the Company makes no
recommendation to its employees as to whether they should participate.
2. DEFINITIONS.
2.1 "Base Earnings" shall mean the Employee's regular salary rate before
deductions required by law and deductions authorized by the Employee. Base
Earnings do not include: pay for overtime, extended workweek schedules, or any
other form of extra compensation; payments by the Company or subsidiary
corporations, as applicable, for social security, workmen's compensation,
unemployment compensation, any disability payments or other payments required by
statute; or contributions by the Company or subsidiary corporation, as
applicable, for insurance, annuity, or other employee benefits plans.
2.2 "Board" shall mean the Board of Directors of the Company.
2.3 "Broker" shall mean the financial institution designated to act as
Broker under the Plan pursuant to Paragraph 17 hereof.
2.4 "Brokerage Account" shall mean an account established on behalf of
each Participant pursuant to Paragraph 9.1 hereof.
2.5 "Committee" shall mean a Stock Purchase Committee appointed by the
Board.
2.6 "Common Stock" shall mean the Common Stock of the Company.
2.7 "Company" shall mean Micro General Corporation, a Delaware
corporation, or any successor.
2.8 "Company Account" shall mean the account established in the names of
the Company pursuant to Paragraph 7.2 hereof.
2.9 "Employee" shall mean any person who is currently employed the Company
or one of its subsidiary corporations for at least 20 hours per week and has
been so employed continuously during the preceding 90 days (provided that the
Board of the Committee may in its discretion waive such 90-day requirement),
excluding non-employees and persons on leave of absence. An Employee may also be
referred to herein as a Participant.
2.10 "Enrollment Form" shall mean the Employee Stock Purchase Plan
Enrollment Form.
2.11 "Interested Party" shall mean the persons described in Paragraph 16
hereof.
2.12 "Plan" shall mean this Employee Stock Purchase Plan.
2.13 "Subsidiary" shall mean a corporation, domestic or foreign, of which
not less than 50% of the voting shares are held by the Company or a subsidiary
corporation, whether or not such corporation now exists or is hereafter
organized or acquired by the Company or a subsidiary corporation.
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3. ADMINISTRATION.
The Plan shall be administered by the Board or, in the discretion of the
Board, by the Committee, which shall consist of not less that two persons to be
appointed by, and to serve at the pleasure of, the Board. No member of the Board
or Committee who is not an Employee shall be eligible to participate in the
Plan. An aggregate of 800,000 shares of Common Stock shall be subject to the
Plan, provided that such number shall be automatically adjusted to reflect any
stock split, reverse stock split, stock dividend, recapitalization, merger,
consolidation, combination, reclassification or similar corporate change. The
Board or the Committee shall have full authority to construe, interpret, apply
and administer the Plan and to establish and amend such rules and procedures as
it deems necessary or appropriate from time to time for the Proper
administration of the Plan. In addition, the Board or the Committee may engage
or hire such persons, including without limitation, the Broker, to provide
administrative, recordkeeping and other similar services in connection with its
administration of the Plan, as it may deem necessary or appropriate from time to
time. The members of the Board and the Committee and the officers of the Company
shall be entitled to rely upon all certificates and reports made by such
persons, including the Broker, and upon all opinions given by any legal counsel
or investment adviser selected or approved by the Board or the Committee. The
members of the Board and the Committee and the officers of the Company shall by
fully protected in respect of any action taken or suffered to be taken by them
in good faith in reliance upon any such certificates, reports, opinions or other
advice of any such person, and all action so taken or suffered shall be
conclusive upon each of then and upon all Participants. The company shall
indemnify each member of the Board and the Committee and any other officer or
employee of the company who is designated to carry out any responsibilities
under the Plan for any liability arising out of or connected with his or her
duties hereunder, except such liability as may arise from such person's gross
negligence or willful misconduct.
4. ELIGIBILITY.
Any Employee as defined in Paragraph 2.9 shall be eligible to participate
in the Plan. Any Employee participating in the Plan who, after the commencement
of a particular Offering Period, as defined in Paragraph 5, shall for any reason
fail to meet the standards of eligibility, shall be considered to have withdrawn
from the Plan, effective as of the date upon which the Participant from the Plan
shall include ineligibility as described in this Paragraph 4.
5. OFFERING PERIODS.
Shares shall be offered pursuant to this Plan in consecutive period
("Offering Periods") of three months duration each, commencing of the effective
date of the Plan pursuant to Paragraph 22 and continuing thereafter until
terminated in accordance with Paragraph 15. The Board shall have the power to
change the duration of Offering Periods if such change is announced at least 10
days prior to the scheduled beginning of the first Offering period to be
affected.
6. PARTICIPATION.
Participation in the Plan is optional. An eligible Employee may apply to
participate in the Plan by submitting to the Company's payroll office an
Enrollment Form authorizing a payroll deduction and purchase of shares. The
Enrollment Form shall be on a form provided by the Company and may be submitted
to the Company at any time. Participation shall not be effective until the
Enrollment Form is reviewed and accepted by the Company by written notice to the
Employee. Once the Enrollment Form has been reviewed and accepted by the
Company, participation in the Plan shall commence immediately.
7. PAYROLL DEDUCTIONS.
7.1 Election. At the time a Participant submits an Enrollment Form, the
Participant shall elect to have payroll deductions made on each payday during
the Offering Period at a whole percentage ranging from 5% to 15% of the Base
Earning which the Participant is to receive on such payday.
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7.2 Holding of Funds. All payroll deductions authorized by each
Participant shall be held in an interest-bearing account with the Broker in the
name of the Micro General Corporation Employee Stock Purchase Plan (the "Company
Account") until used to purchase Common Stock and shall not be used for any
other purpose. The Company shall maintain records reflecting the amount in the
Company Account for each Participant. Interest accruing on the payroll
deductions credited to the Company Account shall be used to defray costs
associated with the engagement of the Broker and will not be available to
purchase shares of Common Stock under Paragraph 9. All withholding taxes in
connection with a Participant's payroll deduction shall be deducted from the
remainder of the Base Earnings paid to the Participant and not from the amount
to be placed in the Company Account. A participant may not make any additional
payments into the Company Account except as provided in Paragraph 18. All
amounts in the Company Account derived from payroll deductions shall be referred
to as the "Participant Contribution".
7.3 Changes in Election. Participation in the Plan will continue until the
Participant withdraws from the Plan, is no longer eligible to participate or the
Plan is terminated. Such participation shall be on the basis of the payroll
deduction election submitted by such Employee to the Company and then currently
in effect. Each such election shall remain in effect until the effective date of
an change in the amount of payroll deduction as requested by the Participant and
accepted by the Company. To be effective in any Offering Period, a change in the
amount of payroll deduction must be requested in writing and submitted to the
Company. A Participant may change his withholding percentage at any time during
an Offering Period but only on e time during any on Offering Period. If a
Participant's Base Earnings change during an Offering Period, the amount of the
payroll deduction will be changed to the future reflecting the Participant's
previously elected deduction percentage applied to this or her new Base Earnings
(but will not in any event be in excess of 15% of the Participant's Base
Earnings).
8. CONTRIBUTION BY THE COMPANY OR A SUBSIDIARY.
The Company or a subsidiary shall make matching contributions (the
"Matching Contribution") as follows:
8.1 Officers and Directors as Participants. For each officer or director
of the Company or a Subsidiary who participates in the Plan and remains an
Employee of the Company or a Subsidiary for at least one year after the
termination of a particular Offering Period, the Company or subsidiary shall
make upon the one year anniversary date after such Offering Period a Matching
Contribution equal to one-half of the number of shares purchased on behalf of
such Participant during such one year earlier Offering Period subject to
Paragraph 8.3 Withholding taxes as and when required in connection with such
Matching Contribution shall be withheld based upon the Person's existing
withholding percentages or as otherwise required by law from the Participant's
Base Earnings. "Officer" shall mean president, secretary, vice president,
treasurer or assistant vice president and shall be determined as of the end of
an Offering Period.
8.2 Other Participants. For each Participant in the Plan (other than an
officer or director) who remains an Employee of the Company or a Subsidiary for
at least one year after the termination of a particular Offering Period, the
Company or Subsidiary shall make upon the one year anniversary date after such
Offering Period a Matching Contribution equal to one-third of the number of
shares purchased on behalf of such Participant during such one year earlier
Offering Period subject to Paragraph 8.3 Notwithstanding the foregoing, for each
Participant in the Plan (other than an officer or director) who has remained an
Employee of the Company or a Subsidiary for at least ten years prior to the
beginning of a particular Offering Period and who remains an Employee of the
company or a Subsidiary for at least one year after the termination of such
Offering period, the Company or Subsidiary shall make upon the one year
anniversary date after such Offering period a Matching Contribution equal to
one-half of the number of shares purchased on behalf of such Participant during
such one year earlier Offering period subject to Paragraph 8.3. Withholding
taxes as and when required in connection with such Matching Contribution shall
be withheld based upon the Person's existing withholding percentages or as
otherwise required by law from the Participant's Base Earnings.
8.3 Fractional Share Calculations. Fractional shares shall not be issued
regarding the Matching Contribution. If the above calculation results in an
incremental share calculation which is .5 or greater, an
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additional whole share shall be issued. If the above calculation results in an
incremental share calculation which is less than .5, no share shall be issued
regarding such fraction.
8.4 Timing of Withholding. The Company shall withhold taxes in two
subsequent pay periods or as otherwise required by law.
9. PURCHASE OF SHARES REGARDING PARTICIPANTS' CONTRIBUTION.
9.1 Brokerage Account. Following the acceptance by the company of a
Participant's Enrollment Form, the company shall direct the Broker to open and
maintain an account (the "Brokerage Account") in the name of such Participant
and to purchase shares of Common Stock on behalf of such Participant as
permitted under this Plan.
9.2 Delivery of Funds to Broker from Company. The Company, from time to
time during an Offering period, shall deliver to the Broker an amount equal to
the total of all Participant Contributions together with a list of the amount of
such Contributions from each Participant.
9.3 Broker's Purchase of Shares. From time to time, the Broker, as agent
for the Participants, shall purchase as many full shares or fractional shares of
common Stock as such Contributions will permit. The shares to be purchased shall
be purchased at the then current fair market value and may, at the election of
the company, be either treasury shares, shares authorized but unissued, or
shares purchased on the open market. The amount of Common Stock purchased by the
Broker pursuant to this Paragraph 9.3 shall be allocated to the respective
Brokerage Account of each Participant on the basis of the average cost of the
Common Stock so purchased, in proportion to the amount allocable to each
Participant. At the end of each Offering Period under the Plan, each Participant
shall acquire full ownership of all full shares and fractional share of Common
Stock purchased for his Brokerage Account. Unless otherwise requested by the
Participant, all such full shares and fractional shares so purchase shall be
registered in the name of the Broker and will remain so registered until
delivery is requested in accordance with Paragraph 9.5.
9.4 Fees and Commissions. The Company shall pay the Broker's
administrative charges for opening and maintaining the Brokerage Accounts for
active Participants and the brokerage commissions on purchases made for such
Brokerage Accounts which are attributable to participant Contributions and
Matching Contributions under the Plan. Such Brokerage Accounts may be utilized
for other transactions as described in Paragraph 9.5 below, but any fees,
commissions or other charges by the Broker in connection with such other
transactions shall, in certain circumstances described in Paragraph 9.5 be
payable directly to the Broker by the Participant.
9.5 Participant Accounts with Broker. Each Participant's Brokerage Account
shall be credited with all cash dividends paid with respect to full shares and
fractional shares of Common Stock purchased pursuant to Paragraphs 9.3 and 10
unless such shares are registered in the Participant's name. Unless otherwise
instructed by the Participant, dividends on such Common Stock shall
automatically be reinvested in Common Stock as soon as practicable following
receipt of such dividends by the Broker. Applicable fees and brokerage
commissions on the reinvestment of such dividends will be payable by the
participant. Any stock dividends or stock splits which are made with respect to
shares of Common Stock purchased pursuant to Paragraphs 9.3 and 10 shall be
credited to the Participant's Brokerage Account without charge. Any Participant
may request that a certificate for any or all of the full shares of common Stock
credited to this Brokerage Account be delivered to him at any time, provided,
however, the Participant shall be charged by the Broker for any fees applicable
to such requests. A Participant may request the Broker at any time to sell any
or all of the full shares or fractional shares of Common Stock credited to his
Brokerage Account. Unless otherwise instructed by the Participant, upon such
sale, the Broker will mail to the Participant a check for the proceeds, less any
applicable fees and brokerage commissions and any transfer taxes, registration
fees or other normal charges which shall be payable by the participant. Except
as provided in Paragraph 13, a request by the Participant to the Broker to sell
shares of Common Stock or for delivery of certificates shall not affect an
Employee's status as a Participant. A Participant who has a Brokerage Account
with the Broker may purchase additional shares of Common Stock of the Company
for his Brokerage Account at any time by separate purchases arranged through the
Broker. When any such purchases are made the Participant will be charged by the
Broker for any
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and all fees and brokerage commissions applicable to such transactions. In
addition, any subsequent transactions with respect to such shares acquired
including, but not limited to, purchased, sales, reinvestment of dividends,
requests for certificates and crediting of stock dividends or stock splits,
shall be at the expense of the Participant and the Broker shall charge the
Participant directly for any and all fees and brokerage commissions applicable
to such transactions.
10. ISSUANCE OF SHARES REGARDING MATCHING CONTRIBUTION.
Subject to Paragraph 15, on the 10th day after the first anniversary of an
Offering Period, each Participant's direct employer shall make the Matching
Contribution for each qualified Participant in an amount described in Paragraph
8 by delivering to the Broker an amount equal to the total funds necessary to
make the Matching Contribution described in Paragraph 8 together with a list of
the number of shares allocable to the Brokerage Account of each Participant. As
soon as practicable thereafter, the Broker shall purchase the number of shares
of Common Stock required in order to make the Matching Contributions. The shares
to be purchases shall be purchased at the then current fair market and may be
either treasury shares, shares authorized but unissued, or shares purchased on
the open market. At the time of such purchases, each Participant shall
immediately acquire full ownership of all full shares of Common Stock purchased.
Unless otherwise requested by the Participant, all such shares so purchases
shall be registered in the name of the Broker and will remain so registered
until delivery is requested in accordance with Paragraph 9.5.
11. VOTING AND SHARES.
All voting rights with respect to the full shares of Common Stock held in
the Brokerage Account of each Participant may be exercised by each Participant
and the Broker shall exercise such voting rights in accordance with the
Participant's signed proxy instruction duly delivered to the Broker. Fractional
shares cannot be voted.
12. STATEMENT OF ACCOUNT.
As soon as practicable after the end of each Offering period, the Broker
shall deliver to each Participant a statement regarding all activity in his or
her Brokerage Account, including his or her participation in the plan for such
Offering Period. Such statement will show the number of shares acquired or sold,
the price per share, the transaction date, stock splits, dividends paid,
dividends reinvested and the total number of shares held in the Brokerage
Account. The Broker shall also deliver to each participant as promptly as
practicable, by mail or otherwise, all notices of meetings, proxy statements and
other material distributed by the Company to its stockholders, including the
Company's annual report to its stockholders containing audited financial
statements.
13. WITHDRAWAL FROM THE PLAN.
A Participant may withdraw from the Plan, effective as of the end of any
Offering period, by giving written notice to the company not later than the 15th
day prior to the end of such Offering Period. Upon any such withdrawal, the
Participant shall be entitled to receive as promptly as possible from the
Company all the Participant's payroll deductions credited to the Company Account
in his or her name during the applicable Offering period, but shall not be
entitled to the benefit of any Matching Contributions. In the event a
Participant withdraws from the Plan pursuant to this Paragraph 13, the company
shall notify the Broker as soon as practicable and the Broker shall maintain or
close the Participant's Brokerage Account in accordance with the procedures set
forth in Paragraph 16. A Participant who withdraws from the Plan may not reenter
the Plan except by execution and delivery of a new Enrollment Form and payroll
deduction election, and his or her participation shall be effective upon
acceptance of the Enrollment Form by the Company by written notice to the
Employee not sooner than 30 days after receipt of the Enrollment From, provided
that the company may in its discretion accept and Enrollment From prior to the
expiration of such 30 days.
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14. TERMINATION OF EMPLOYEE.
In the event of the termination of a Participant's employment with the
company or a Subsidiary for any reason during an Offering period, including but
not limited to the death of a Participant, participation in the Plan shall
terminate as well as any rights to Matching Contributions. The Participant or
the personal representative of the Participant shall be entitled to receive an
amount of cash determined in the same manner and payable at the same time as if
the Participant had withdrawn from the Plan by giving notice of withdrawal
effective as of the date such termination occurs. Notwithstanding the foregoing,
termination of employment by one employer for the purpose of being re-employed
immediately by the Company or one of its Subsidiaries shall not be considered
termination under this Paragraph 14. Any reference in this Plan to withdrawal by
a Participant from the Plan shall include termination as described in the
Paragraph 14. In the event of the termination of a Participant's employment
pursuant to this Paragraph 14, the Company shall notify the Broker as soon as
practicable and the Broker shall maintain or close the Participant's Brokerage
Account in accordance with the procedures set forth in Paragraph 16.
15. AMENDMENT, SUSPENSION AND TERMINATION OF PLAN.
This Plan may be amended or terminated by the Board at any time and such
amendment or termination shall be communicated in writing to all Participants as
soon as practicable after the date of such Board actions. If the Plan is
terminated, each Participant shall be entitled to receive as promptly as
possible from the Company all payroll deductions attributable to him or her
which have not been used to purchase Common Stock pursuant to Paragraph 9,
together with the accrued interest on the Participant's funds held in the
Company Account (collectively, the "Account Balance"), but he or she shall not
be entitled to the benefit of any Matching Contributions with respect to such
deductions or interest otherwise for any past or present Offering Periods. In
any event this Plan shall terminate 20 years from the date the Plan is adopted
or the date the Plan is approved by the stockholder, whichever is earlier. In
the event that the Company terminates the Plan pursuant to this Paragraph 15,
the Broker shall maintain or close the Participant's Brokerage Accounts in
accordance with the procedures set forth in Paragraph 16. Notwithstanding any
other provision to the contrary, any provision of this Plan may be amended by
the Board or the Committee as required to obtain necessary approvals of
governmental agencies if such change does not materially alter the rights and
interest of stockholders of the Company. If there are any changes in the
capitalization of the Company, such as through mergers, consolidations,
reorganizations, recapitalization, stock splits or stock dividends, appropriate
adjustments will be made by the Company in the number of shares or its Common
Stock subject to purchase under the Plan.
16. DISPOSITION OF BROKERAGE ACCOUNT FOLLOWING WITHDRAWAL, DEATH, TERMINATION OF
EMPLOYMENT OR TERMINATION OF PLAN.
As soon as practicable following the notification of the withdrawal of a
Participant from the Plan, the notification of the termination of a
Participant's employment with the Company or a Subsidiary (which include the
death of the Participant) or of the notification that the Plan is terminated
pursuant to Paragraph 15 hereof, the Broker shall notify the former Participant,
or in the event of his death, his designated beneficiary, if any, or if no
designated beneficiary, the estate of the deceased Participant (collectively, an
"Interested Party"), regarding the disposition of the former Participant's or
deceased Participant's Brokerage Account. As soon as practicable following
receipt of the notification set forth in the preceding sentence, the Interested
Party may request the Broker to dispose of the former Participant's or deceased
Participant's Brokerage Account, at the Interested Party's expense, by any on of
the following means:
(a) The Interested Party may request the Broker to maintain the former
Participant's or deceased Participant's Brokerage Account for the Benefit
of the Interested Party or any other person. The Interested Party shall be
charged by the Broker for all maintenance fees and any and all other fees
in connection with the Brokerage Account.
(b) The Interested Party may request the Broker to sell all of the
full shares and fractional shares of Common Stock, if any, held in the
former Participant's or deceased Participant's Brokerage Account.
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Upon such sale, the Broker will mail to the Interested Party a check for
the proceeds, less any applicable fees and brokerage commissions and any
transfer taxes, registration fees or other charges which shall be payable
by the Interested Party.
(c) The Interested Party may request the Broker to provide a
certificate for all of the full shares of Common Stock, if any, together
with a check in am amount equal to the proceeds of the dale of any
fractional shares of Common Stock held in the former Participant's or
deceased Participant's Brokerage Account less any applicable fees and
brokerage commissions and any transfer taxes, registration fees or other
charges which are payable by the Participant.
17. BROKER.
The Broker shall be Merrill Lynch, Pierce, Fenner & Smith Incorporated
which has agreed to act as Broker for such period as is determined by the
Company. Either the Company or the Broker may terminate such designation at any
time upon 30 days' written notice. In the event of such termination of the
Broker, the Company may administer the Plan without the use of a Broker or may
appoint a successor Broker. Any successor Broker shall be vested with all the
powers, rights, duties and immunities of the Broker hereunder to the same extent
as if originally named as the Broker hereunder. The relationship between the
Broker and the Participant will be the normal relationship of a broker and its
client, and the Company assumes no responsibility in this respect.
18. INITIAL CONTRIBUTION.
Any Participant who files an Enrollment From prior to the first Offering
Period may elect to make an initial contribution ("Initial Contribution") to be
allocated to him or her in the Company Account, by check payable to the Company,
in any amount up to 15% of his or her Base Earnings for the period between
1, 1998 and the commencement of the first Offering Period. The amount
of the Initial Contribution shall be matched as provided in Paragraph 8, and
withholding taxes in connection with such Matching Contribution shall be
deducted in the same manner as provided in Paragraph 8.
18.1 Lump Sum Contribution. The Board and/or the Committee may from time
to time in its discretion allow any Participant in the Plan to make a lump sum
contribution ("Lump Sum Contribution") to be credited to him or her in the
Company account, by check payable to the Company, in any amount up to 15% of his
or her Base Earnings, for a period prescribed by the Board and/or the Committee.
The amount of the Lump Sum Contribution shall be matched as provided in
Paragraph 8, and withholding taxes in connection with such Matching Contribution
shall be deducted in the same manner as provided in Paragraph 8.
19. CONDITIONS TO ISSUANCE OF SHARES.
Shares shall not be issued under the Plan unless issuance and delivery of
such shares pursuant to the Plan shall comply with all applicable provisions of
law, domestic or foreign, including, without limitation, the Securities Act of
1933, as amended, the Securities Exchange Act of 1934, as amended, the rules and
regulations promulgated thereunder, the securities laws of the state in which
any Employee resides, NASD requirements and the requirements of any stock
exchange upon which the Common Stock may then be listed, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance. By execution of the Enrollment Form, the Participant covenants and
agrees that all shares are being purchased only for investment and without any
present intention to sell or distribute such shares.
20. NOTICE.
20.1 To Company or Subsidiaries. Any notice hereunder to the Company or to
its Subsidiaries shall be in writing and such notice shall be deemed made only
when delivered or three days after being mailed by certified mail return receipt
requested to the Company's principal office at 14711 Bentley Circle, Tustin,
California 92780-7226 or to such other address as the Company may designate by
notice to the Participants.
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20.2 To Participant. Any notice to a Participant hereunder shall be in
writing and any such communication and any delivery to a Participant shall be
deemed made if mailed or delivered to the Participant at such address as the
Participant may have on file with the Company.
21. MISCELLANEOUS.
21.1 No Limitation on Termination of Employment. Nothing in the Plan shall
in any manner be construed to limit in any way the right of the Company or any
of its Subsidiaries to terminate an Employee's employment at any time, without
regard to the effect of such termination on any right such Employee would
otherwise have under the Plan, or give any right to an Employee to remain
employed by the Company in any particular position or at any rate of
remuneration.
21.2 Liability. The Company, its Subsidiaries, any member of the Board or
Committee and any other person participating in any determination of any
question under the Plan, or in the interpretation, administration or application
of the Plan, shall have no liability to any party for any action taken or not
taken in good faith under the Plan, or based on or arising out of a
determination of any questions under the Plan or an interpretation,
administration or application of the Plan made in good faith.
21.3 Captions. The captions of the paragraphs of this Plan are for
convenience only and shall not control or affect the meaning or construction of
any of its provisions.
21.4 Assignment. Any rights of Employees hereunder shall be
nonforfeitable, and no Account Balance or contribution made by any employer may
revert or inure to the benefit of the Company or any Subsidiary, provided that
no Participant shall be entitled to sell, assign, pledge or hypothecate any
right or interest in his or her Account Balance.
21.5 Governing Law. Delaware law governs this Plan.
21.6 Severability. In case any provision of this Plan shall be held
illegal or invalid for any reason, said illegality or invalidity shall not
affect the remaining parts hereof, but this Plan shall be construed and enforced
as if such illegal and invalid provision had never been inserted herein.
21.7 Successors. The provisions of this Plan shall bind and inure to the
Benefit of the Company and its successor and assigns. The term "successors" as
used herein shall include any corporate or other business entity which shall be
merger, consolidation, purchase or otherwise acquire all or substantially all of
the business and assets of the Company, and successors of any such corporation
or business entity.
22. EFFECTIVE DATE OF PLAN.
The Plan shall become effective upon the first day of the month after which
the Board approves the Plan, subject to ratification by the stockholders of the
Company, and all necessary approval of governmental agencies have been received.
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EXHIBIT 5.1
STRADLING YOCCA CARLSON & RAUTH
A PROFESSIONAL CORPORATION
ATTORNEYS AT LAW
660 NEWPORT CENTER DRIVE, SUITE 1600
NEWPORT BEACH, CALIFORNIA 92660-6441
TELEPHONE (949) 725-4000
FACSIMILE (949) 725-4100
SAN FRANCISCO OFFICE
44 MONTGOMERY STREET,
SUITE 2950
SAN FRANCISCO, CALIFORNIA 94104
TELEPHONE (415) 765-9180
FACSIMILE (415) 765-9187
September 21, 1998
Micro General Corporation
14711 Bentley Circle
Tustin, California 92780-7226
RE: Registration Statement on Form S-8
Ladies and Gentlemen:
At your request, we have examined the form of Registration Statement on
Form S-8 (the "Registration Statement") being filed by Micro General
Corporation, a Delaware corporation (the "Company"), with the Securities and
Exchange Commission in connection with the registration under the Securities Act
of 1933, as amended, of an aggregate of 2,300,000 shares of the Company's common
stock, $.05 par value ("Common Stock"), issuable under the Company's 1998 Stock
Incentive Plan and 1998 Employee Stock Purchase Plan (collectively, the
"Plans").
We have examined the proceedings heretofore taken and are familiar with
the additional proceedings proposed to be taken by the Company in connection
with the authorization, issuance and sale of the securities referred to above.
Based on the foregoing, it is our opinion that the 2,300,000 shares of
Common Stock, when issued under the Plans and against full payment therefor in
accordance with the respective terms and conditions of the Plans, will be
legally and validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
STRADLING YOCCA CARLSON & RAUTH
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EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Micro General Corporation:
We consent to the inclusion of our report dated February 20, 1998, with respect
to the balance sheets of Micro General Corporation as of December 31, 1997 and
1996, and the related statements of operations, shareholders' equity
(deficiency), and cash flows for each of the years in the three-year period
ended December 31, 1997, which report appears in the 1997 Form 10-K of Micro
General Corporation dated March 31, 1998.
Our report dated February 20, 1998, contains an explanatory paragraph that
states that the Company has suffered recurring losses from operations and has
limited working capital resources, which raise substantial doubt about its
ability to continue as a going concern. The financial statements do not include
any adjustments that might result from the outcome of that uncertainty.
/s/ KPMG PEAT MARWICK LLP
Los Angeles, California
September 23, 1998
