PROXY STATEMENT
PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. ______)
Filed by the Registrant x
Filed by a Party other than the Registrant
Check the appropriate box:
_____ Preliminary Proxy Statement
_____ Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)
_x___ Definitive Proxy Statement
_____ Definitive Additional Materials
_____ Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
ACCELR8 TECHNOLOGY CORPORATION
------------------------------
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
_____ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2).
_____ $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
_____ Fee computed on table below per Exchange Act Rules 14a-6(i)(4)and 0-11.
(1) Title of each class of securities to which transaction applies:
________ .
(2) Aggregate number of securities to which transaction applies:
________ .
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it was
determined):
________ .
(4) Proposed maximum aggregate value of transaction:
________ .
(5) Total fee paid:
________ .
_x__ Fee paid previously with preliminary materials.
_____ Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of
its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
ACCELR8 TECHNOLOGY CORPORATION
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 8, 1996
Notice is hereby given that a Special Meeting of the Shareholders (the
"Meeting") of Accelr8 Technology Corporation, a Colorado corporation (the
"Company"), will be held at 2:30 P.M. on November 8, 1996, at the Warwick Hotel
at 1776 Grant Street, Denver, Colorado 80203, and any adjournments or
postponements thereof (the "Special Meeting") for the following purposes:
1. To adopt an amendment (the "Amendment") to the Company's Articles of
Incorporation, as amended, (the "Articles"), which would effect a
reduction in the number of authorized shares of Common Stock from
55,000,000 shares to 11,000,000 shares, without having any effect upon
the authorized, issued and outstanding shares of Common Stock.
2. To authorize the Board of Directors to effect a reverse stock split
(the "Reverse Stock Split") (any one falling within a range between
and including a one-for-three and a one-for-seven Reverse Stock Split)
of the Company's outstanding Common Stock, depending upon a
determination by the Board of Directors that a Reverse Stock Split is
in the best interests of the Company and its Shareholders with such
post-split shares of Common Stock being referred to herein as the "New
Common Stock."
3. To approve and adopt an Incentive Stock Option Plan of the Corporation
pursuant to which options to purchase Common Stock may be granted to
certain personnel of the Corporation.
4. To approve and adopt a Nonqualified Stock Option Plan of the
Corporation pursuant to which options to purchase Common Stock may be
granted to certain personnel of the Corporation and others who are not
employed by the Corporation.
5. To act upon such other matters as may properly come before the Meeting
or any adjournments thereof.
Only Shareholders of record at the close of business on October 21, 1996,
shall be entitled to notice of and to vote at the meeting or any adjournments
thereof. All Shareholders are cordially invited to attend the Meeting in person.
By Order of the Board of Directors
Thomas V. Geimer, Chairman of the Board
October 21, 1996
Denver, Colorado
IF YOU DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WISH YOUR SHARES OF COMMON
STOCK TO BE VOTED, YOU ARE REQUESTED TO SIGN AND MAIL PROMPTLY THE ENCLOSED
PROXY WHICH IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. A RETURN
ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES IS ENCLOSED
FOR THAT PURPOSE.
2
<PAGE>
ACCELR8 TECHNOLOGY CORPORATION
303 East Seventeenth Avenue, Suite 108
Denver, Colorado 80203
PROXY STATEMENT
Dated October 21, 1996
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 8, 1996
GENERAL
-------
This Proxy Statement is being furnished to the shareholders of Accelr8
Technology Corporation, a Colorado corporation (the "Company"), in connection
with the solicitation of proxies by the Board of Directors of the Company (the
"Board of Directors") from holders (the "Shareholders") of outstanding shares of
common stock, no par value, of the Company (the "Common Stock"), for use at the
Special Meeting of the Shareholders to be held at 2:30 P.M. on November 8, 1996,
at the Warwick Hotel at 1776 Grant Street, Denver, Colorado 80203, and any
adjournments or postponements thereof (the "Special Meeting"). This Proxy
Statement, Notice of Special Meeting of Shareholders and the accompanying Proxy
Card are first being mailed to shareholders on or about October 23, 1996.
VOTING SECURITIES AND VOTE REQUIRED
-----------------------------------
Only Shareholders of record at the close of business on October 21 1996,
(the "Record Date") are entitled to notice of and to vote the shares of Common
Stock, no par value, of the Company held by them on such date at the Meeting or
any and all adjournments thereof. As of the Record Date, 21,970,000 shares of
Common Stock were outstanding. There was no other class of voting securities
outstanding at that date.
Each share of Common Stock held by a Shareholder entitles such Shareholder
to one vote on each matter that is voted upon at the Meeting or any adjournments
thereof.
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock is necessary to constitute a quorum at the
Meeting. Assuming that a quorum is present, (i) the affirmative vote of the
holders of a majority of the shares of Common Stock outstanding will be required
to approve the amendment to the Company's Articles of Incorporation in which the
number of authorized shares of Common Stock is reduced from 55,000,000 to
11,000,000; (ii) the affirmative vote of the holders of a majority of the shares
of Common Stock outstanding will be required to authorize the Board of Directors
to effect the Reverse Stock Split; (iii) the affirmative vote of the holders of
a majority of the shares of Common Stock voting at the Meeting will be required
to approve and adopt the proposed Incentive Stock Option Plan ; (iv) the
affirmative vote of the holders of a majority of the shares of Common Stock
voting at the Meeting will be required to approve and adopt the proposed
Nonqualified Stock Option Plan.
Abstentions and broker "non-votes" will be counted toward determining the
presence of a quorum for the transaction of business; however, abstentions will
have the effect of a negative vote on the proposals being submitted. Abstentions
may be specified on all proposals. A broker "non-vote" will have no effect on
the outcome of any of the proposals.
If the accompanying proxy is properly signed and returned to the Company
and not revoked, it will be voted in accordance with the instructions contained
therein. Unless contrary instructions are given, the persons designated as proxy
holders in the accompanying Proxy will vote "FOR" the amendment to the Company's
-1-
<PAGE>
Articles of Incorporation to reduce the number of authorized shares of Common
Stock, "FOR" the Reverse Stock Split, "FOR" approval of the Incentive Stock
Option Plan, "FOR" approval of the Nonqualified Stock Option Plan, and as
recommended by the Board of Directors with regard to any other matters or if no
such recommendation is given, in their own discretion. The Company's officers
and directors have advised the Company that they intend to vote their shares
(including those shares over which they hold voting power), representing
approximately 30.81% of the outstanding shares of Common Stock, in favor of each
of the proposals above. Each Proxy granted by a Shareholder may be revoked by
such Shareholder at any time thereafter by writing to the Secretary of the
Company prior to the Meeting, or by execution and delivery of a subsequent Proxy
or by attendance and voting in person at the Meeting, except as to any matter or
matters upon which, prior to such revocation, a vote shall be been cast pursuant
to the authority conferred by such Proxy.
The cost of soliciting these Proxies, consisting of the printing, handling,
and mailing of the Proxy and related material, and the actual expense incurred
by brokerage houses, custodians, nominees and fiduciaries in forwarding proxy
materials to the beneficial owners of the shares of Common Stock, will be paid
by the Company.
In order to assure that there is a quorum, it may be necessary for certain
officers, directors, regular employees and other representatives of the Company
to solicit Proxies by telephone or telegraph or in person. These persons will
receive no extra compensation for their services.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
----------------------------------------
OWNERS AND MANAGEMENT
---------------------
The following table sets forth information as of the Record Date
concerning: (i) each person who is known by the Company to own beneficially more
than 5% of the Company's outstanding Common Stock; (ii) each of the Company's
executive officers, directors and key employees; and (iii) all executive
officers and directors as a group. Common Stock not outstanding but deemed
beneficially owned by virtue of the right of an individual to acquire shares
within 60 days is treated as outstanding only when determining the amount and
percentage of Common Stock owned by such individual. Except as noted, each
person or entity has sole voting and sole investment power with respect to the
shares shown.
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<PAGE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
-------------------------
Amount and Nature of Percent of
Name Position Beneficial Ownership Ownership
- ---- -------- -------------------- ---------
<S> <C> <C> <C>
Thomas V. Geimer(1), (2) Director and 5,000,000 18.68%
Executive Officer
Harry J. Fleury(1), (3) Executive Officer 575,000 2.59%
Timothy Fitzpatrick(1),(4) Key Employee 500,000 2.23%
Dr. Franz Huber(1),(4) Key Employee 500,000 2.23%
Ken Haxby(1) Key Employee -- --
A. Alexander Arnold III(5) Director 4,900,000 22.30%
845 Third Ave., 6th Flr
New York, NY 10021
David C. Wilhelm(6) Director 1,295,000 5.89%
3130 E. Exposition Street
Denver, CO 80209
Solar Satellite Shareholder 2,110,600 9.61%
Communication, Inc.
5650 Greenwood Plaza
Boulevard #107
Englewood, CO 80111
Officers and Directors 11,770,000 43.64%
as a Group (4 persons)
</TABLE>
- ---------------------------------
(1) The address for Messrs. Geimer, Fleury, Fitzpatrick, Haxby and Huber is 303
E. 17th Ave., #108, Denver, CO 80203.
(2) Includes 4,800,000 shares which may be purchased by Mr. Geimer upon
exercise of his warrants and options.
(3) Includes 200,000 shares which may be purchased by Mr. Fleury upon exercise
of certain options that he holds, and does not include options to purchase
an additional 200,000 shares which will vest at the time that the Company
completes its pending public offering or in the future if the pending
public offering is not completed.
(4) Represents 500,000 shares which may be purchased by each of Messrs.
Fitzpatrick and Huber upon exercise of the options that they hold.
(5) Represents 4,900,000 shares held by four trusts. Mr. Arnold merely serves
as trustee for each of those trusts but is not a beneficiary of and has no
pecuniary interest in any of those trusts.
(6) Represents 1,295,000 shares held by the Jean C. Wilhelm Trust, of which Mr.
Wilhelm is the lifetime beneficiary and trustee.
BOARD COMMITTEES
The Board of Directors maintains a Compensation Committee and an Audit
Committee. The Compensation Committee is composed of Messrs. Arnold and Wilhelm,
the Company's non-management directors. The primary function of the Compensation
Committee is to review and make recommendations to the Board with respect to the
compensation, including bonuses, of the Company's officers and to administer the
Company's stock option plan. The Audit Committee is comprised of Messrs. Arnold
and Wilhelm. The function of the Audit Committee is to review and approve the
scope of audit procedures employed by the Company's independent auditors, to
review and approve the audit reports rendered by the Company's independent
auditors and to approve the audit fee charged by the independent auditors. The
Audit committee reports to the Board of Directors with respect to such matters
and recommends the selection of independent auditors.
-3-
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth the annual
and long-term compensation for services in all capacities to the Company in the
three fiscal years ended July 31, 1996, of Thomas V. Geimer and Harry J. Fleury,
who are the Company's most highly compensated executive officers, and Timothy
Fitzpatrick, a key employee of the Company.
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
-------------------------------------------------------- -------------
Other Number of
Name and Fiscal Annual Options
Principal Position Year Salary Bonus Compensation Awarded
- ------------------ ---- ------ ----- ------------ -------------
<S> <C> <C> <C> <C> <C>
Thomas V. Geimer, 1996 $70,458 $37,500(1) $ -- 4,800,000(2)
Chief Executive Officer 1995 $64,250 $ -- $ -- --
and Chief Financial 1994 $62,130 $ -- $ -- --
Officer
Harry J. Fleury 1996 $61,000(3) $10,331 $ -- --
President 1995 $50,846(3) $ 6,685 400,000(4)
1994 $20,961 $ 755
Timothy Fitzpatrick 1996 $57,885 $44,030(5) $ --
Vice President 1995 $55,000 $23,657
Sales and Marketing 1994 $55,000 $17,832
</TABLE>
- ----------------------------
(1) Represents deferred compensation for Mr. Geimer pursuant to the Company's
deferred compensation plan, $37,500 of which vested during the last fiscal
year, and $37,500 of which will vest during the current fiscal year.
(2) Represents stock options and warrants to purchase an aggregate of 4,800,000
shares at an exercise price of $0.06 per share that were extended until
December 31, 1997.
(3) Includes sales commissions earned by Mr. Fleury on revenues from certain
international sales.
(4) Grant of employee stock option to purchase 400,000 shares at an exercise
price of $0.09 per share, 200,000 of which are vested and the remaining
200,000 of which will vest upon completion of the pending public offering
or in the future if that offering is not completed.
(5) Represents sales commissions earned by Mr. Fitzpatrick on revenues from
certain domestic sales.
Option/Warrant Values. The following table provides certain information
concerning the fiscal year end value of unexercised options or warrants held by
Mr. Fleury and Mr. Geimer, each of whom served as the Company's chief executive
officer during a portion of 1996, and for Mr. Fitzpatrick.
-4-
<PAGE>
<TABLE>
<CAPTION>
Aggregated Option Exercises in 1996 Fiscal Year
and Fiscal Year End Option Values
Number of Unexercised Value of Unexercised
Acquired on Value Options at Fiscal Year In-the-Money Options
Name Exercise Realized End at Fiscal Year End (1)
- ---- ----------- ---------- -------------------------- -----------------------
Exer- Unexer- Exer- Unexer-
cisable cisable cisable cisable
<S> <C> <C> <C> <C> <C> <C>
Harry J. Fleury __ __ 200,000(2) 200,000(2) $ 382,000 $382,000
Thomas V. Geimer __ __ 4,800,000 0 $9,312,000 0
Timothy Fitzpatrick __ __ 500,000 0 $ 955,000 0
</TABLE>
- ------------------------------------
(1) Value calculated by determining the difference between the closing price of
the Common Stock on October 21, 1996 of $2.00 per share and the exercise
price of the options or warrants. Fair market value was not discounted for
restricted nature of any stock purchased on exercise of these options or
warrants.
(2) Mr. Fleury's options were granted on June 1, 1995. A total of 200,000 (or
50%) of the options have vested and, subject to his continued employment
with the Company, the remainder of his options will vest upon completion of
the pending public offering or if that offering is not completed in the
future.
COMPENSATION PURSUANT TO PLANS
Employee Retirement Plan. During fiscal year 1996, the Company established
a SARSEP-IRA employee pension plan that covers substantially all full-time
employees. Under the plan, employees have the option to contribute up to the
lesser of 15% of their compensation or $9,240. The Company may make
discretionary contributions to the plan based on recommendations from the Board
of Directors. For the year ended July 31, 1996, the Board did not authorize any
contributions.
Deferred Compensation Plan. In January of 1996, the Company established a
deferred compensation plan for the Company's employees. The Company may make
discretionary contributions to the plan based upon recommendations from the
Board of Directors.
Options and Warrants. A total of 1,900,000 shares of the Company's Common
Stock, no par value, have been issued and reserved for issuance to employees
pursuant to the Company's existing non-qualified stock option plan. Options
currently outstanding held by certain of the Company's current and former
employees allow for the purchase of the Company's restricted Common Stock at a
price of $.09 per share. According to the governing option agreements, the
options vest every 12 months in one-quarter increments of the total amount
granted, over a four-year period beginning on the date they are granted, and
remain exercisable for three years following the original date they vest.
Notwithstanding the foregoing, the Company's Board of Directors during the 1994
fiscal year adopted a resolution providing that for so long as a recipient of an
option grant remains in the employ of the Company, the options held will not
expire and if the recipient's employment is terminated, the holder will have up
to 90 days after termination to exercise any vested but previously unexercised
options. All of the currently outstanding options have vested, except 200,000
options held by Mr. Fleury, the Company's current president, and 50,000 options
held by Joseph Steger, which will fully vest upon completion of the Company's
pending public offering or if that offering is not completed in the future. All
options previously granted are administered by the Company's Board of Directors.
The options provide for adjustment of the number of shares issuable in the case
of stock dividends or stock splits or combinations and adjustments in the case
of recapitalization, merger or sale of assets.
5
<PAGE>
CERTAIN TRANSACTIONS
During fiscal year 1996, the Company established a deferred compensation
plan for the Company's employees. The Company may make discretionary
contributions to the plan based on recommendations from the Board of Directors.
As of July 31, 1996, the deferred compensation agreement was funded in the
amount of $75,000 for Thomas V. Geimer, and Mr. Geimer was vested in $37,500 of
this amount. The balance of $37,500 will vest during the current fiscal year.
There were no other transactions or series of transactions for the fiscal
year ended July 31, 1996 nor are there any currently proposed transactions, or
series of the same to which the Company is a party, in which the amount involved
exceeds $60,000 and in which, to the knowledge of the Company, any director,
executive officer, nominee, five percent shareholder or any member of the
immediate family of the foregoing persons, have or will have a direct or
indirect material interest.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Mr. Wilhelm, a director of the Company, failed to file Form 4's for the
months of April, May and July to report purchases of an aggregate of 85,300
shares in the open market. The Company has received representations from each
other person that served during fiscal 1996 as an officer or director of the
Company confirming that there were no transactions that occurred during the
Company's most recent fiscal year end which required the filing of a Form 5.
PROPOSAL 1
PROPOSED AMENDMENT TO THE ARTICLES OF
INCORPORATION TO DECREASE THE AUTHORIZED
SHARES OF COMMON STOCK
The Board of Directors has approved a resolution, subject to Shareholder
approval, to amend the Company's Articles of Incorporation to decrease the total
number of authorized shares of Common Stock from 55,000,000 shares of Common
Stock to 11,000,000 shares of Common Stock. The form of amendment (the
"Amendment") to the Articles of Incorporation is attached as Exhibit A, and
reference is made to the Amendment for the complete terms thereof.
The Company's Articles of Incorporation currently authorize the issuance of
55,000,000 shares of Common Stock, no par value. As of September 30, 1996,
21,970,000 shares of Common Stock were issued and outstanding. The Amendment
will not affect the number of shares of Common Stock issued and outstanding, but
will only affect the total number of shares of Common Stock authorized for
issuance by the Company. The Board of Directors believes that adoption of this
Proposal will increase acceptance of the Company's Common Stock by the financial
community and the investing public and, accordingly, should enhance shareholder
value.
If approved by the Shareholders, the Amendment to the Articles of
Incorporation will decrease the Company's authorized capital stock to 11,000,000
shares of Common Stock from 55,000,000 shares of Common Stock.
Approval of the Amendment requires the affirmative vote of the holders of a
majority of the outstanding shares of Common Stock entitled to notice of, and to
vote at, the Special Meeting. If the Amendment is approved by the Shareholders,
it will become effective as of the date and time it is filed with the office of
the Secretary of State of Colorado. The filing will be made as soon as
practicable following the approval of the Amendment by the Shareholders.
6
<PAGE>
Board Recommendation
The Board recommends a vote FOR the adoption of the Amendment to the
Company's Articles of Incorporation to decrease the authorized shares of Common
Stock from 55,000,000 shares to 11,000,000 shares, and each of the Resolutions
with respect thereto set forth in Exhibit A hereto.
PROPOSAL 2
PROPOSED REVERSE STOCK SPLIT
The Board of Directors has authorized, subject to Shareholder approval, a
Reverse Stock Split (any one falling within a range between and including a
one-for-three and a one-for-seven Reverse Stock Split) of the Company's
outstanding Common Stock that may be effected by the Board depending on market
conditions. The intent of the Reverse Stock Split is to increase the
marketability and liquidity of the Common Stock.
If the Reverse Stock Split is approved by the Shareholders at the Meeting,
it will be effected only upon a determination by the Board of Directors that the
Reverse Stock Split is in the best interests of the Company and the
Shareholders. In connection with any determination by the Board of Directors to
such effect, the Board will select in its discretion the ratio for the Reverse
Stock Split which falls within a range between and including a one-for-three and
a one-for-seven Reverse Stock Split which, in the Board's judgment, would result
in the greatest marketability and liquidity of the Common Stock, based upon
prevailing market conditions, the proposed public offering described below, on
the likely effect on the market price of the Common Stock and other relevant
factors.
If approved by the Shareholders, the Reverse Stock Split will become
effective on any date (the "Effective Date") selected by the Board of Directors
on or prior to December 31, 1997, upon filing the appropriate amendment to the
Company's Articles of Incorporation with the Colorado Secretary of State. If no
Reverse Stock Split is effected by such date, the Board of Directors will take
action to abandon the Reverse Stock Split without further Shareholder action.
The procedures for consummation of the Reverse Stock Split are attached hereto
as Exhibit B.
Purposes And Effects Of The Reverse Stock Split
Consummation of the Reverse Stock Split will not alter the number of
authorized shares of Common Stock, which will remain 11,000,000 shares (assuming
approval of Proposal 1 to reduce the authorized shares of Common Stock from
55,000,000 shares to 11,000,000 shares).
On or about June 24, 1996, the Company entered into a letter of intent with
Janco Partners, Inc. (the "Representative") indicating the Representative's
willingness to act on a firm commitment basis, and as managing underwriter, in a
proposed public offering by the Company (the "Public Offering"). The letter of
intent contemplated that approximately 1,000,000 shares of Common Stock would be
sold by the Company at an offering price expected to be in a range of $5.50 to
$6.50 per share and, in an effort to establish a price within that range, it was
further contemplated that, prior to or concurrent with the effective date of the
registration statement, the Company would complete a Reverse Stock Split of all
the issued and outstanding shares of Common Stock.
7
<PAGE>
The Common Stock is listed for trading on the Nasdaq Electronic Bulletin
Board under the symbol ACLY. On the Record Date, the reported closing price of
the Common Stock on the Nasdaq Electronic Bulletin Board was $2.00 per share.
The Company also agreed with the Representative to use its best efforts to cause
its shares of Common Stock to be approved for trading on the Nasdaq National
Market System ("NMS") and, if not approved for trading on NMS, then the Company
would be required to be approved for trading on The Nasdaq SmallCap Market (the
"SmallCap Market"). The Company currently does not qualify for admission to
either the SmallCap Market or NMS because its per-share price of $2.00 (as of
the close of trading on October 21, 1996) is below the $3.00 level required for
admission to the SmallCap Market or the $5.00 level required for admission to
NMS. Further, the Company's net tangible assets and shareholders' equity are
below the minimum requirements of $4,000,000 and $2,000,000, respectively, for
inclusion on the SmallCap Market. The net tangible asset requirement for NMS is
$4,000,000, and the Company does not meet this requirement at this time.
Although, the Company met the additional NMS requirements of pre-tax income
equal to or greater than $750,000 and net income equal to or greater than
$400,000 as of the end of its last fiscal year, the Company does not meet the
minimum trading price requirement of $5.00 per share. Management believes that,
assuming the Public Offering is successfully completed under substantially the
terms set forth in the letter of intent, the net proceeds realized by the
Company will be such that the Company will immediately meet the net tangible
assets requirement imposed by both the SmallCap Market and NMS and the
shareholder equity requirement imposed by the SmallCap Market. Management
intends to effect a Reverse Stock Split at a level that is sufficient to enable
the Company to meet all requirements for admission into the SmallCap Market or
NMS. However, the Board will have the discretion to select the Reverse Stock
Split ratio, and it is expected that they will select a ratio that will likely
result in attaining both of its goals of achieving a per-share price in excess
of $5.00 and increasing the marketability and liquidity of the Company's Common
Stock.
Additionally, the Board believes that the current per-share price of the
Common Stock has limited the effective marketability of the Common Stock because
of the reluctance of many brokerage firms and institutional investors to
recommend lower-priced stocks to their clients or to hold them in their own
portfolios. Certain policies and practices of the securities industry may tend
to discourage individual brokers within those firms from dealing in lower-priced
stocks. Some of those policies and practices involve time-consuming procedures
that make the handling of lower priced stocks economically unattractive. The
brokerage commission on a sale of lower-priced stock may also represent a higher
percentage of the sale price than the brokerage commission on a higher priced
issue. Any reduction in brokerage commissions resulting from the Reverse Stock
Split may be offset, however, in whole or in part, by increased brokerage
commissions required to be paid by stockholders selling "odd lots" created by
such Reverse Stock Split.
On the Record Date the number of record holders of the Common Stock was 139
and the number of beneficial holders of Common Stock was estimated to be
approximately 423. The Company does not anticipate that any Reverse Stock Split
will result in a significant reduction in the number of such holders, and does
not currently intend to effect any Reverse Stock Split that would result in a
reduction in the number of holders large enough to jeopardize listing of the
Common Stock on either the SmallCap Market or NMS, or the Company's being
subject to the periodic reporting requirements of the Securities and Exchange
Commission.
The Reverse Stock Split would have the following effects upon the number of
shares of Common Stock outstanding (21,970,000 shares as of the Record Date) and
the number of authorized and unissued shares of Common Stock (assuming that no
additional shares of Common Stock are issued by the Company after the Record
Date and that the Reverse Stock Split is effected and without taking into
account (i) any issuances of shares of Common Stock contemplated by the Public
Offering or (ii) any increase in the number of outstanding shares resulting from
8
<PAGE>
the exercise of outstanding options and warrants). The Common Stock will
continue to be no par value common stock following any Reverse Stock Split, and
the number of shares of Common Stock outstanding will be reduced. The following
examples are not exhaustive of all possible Reverse Stock Splits that fall with
the Board approved range, and are only intended for illustrative purposes.
Reverse Stock Common Stock Authorized and
Split Outstanding Unissued Common Stock
1 for 3 7,323,333 3,676,667
1 for 5 4,394,000 6,606,000
1 for 7 3,138,572 7,861,428
At the Effective Date, each share of the Common Stock issued and
outstanding immediately prior thereto (the "Old Common Stock"), will be
reclassified as and changed into the appropriate fraction of a share of the
Company's Common Stock, no par value per share (the "New Common Stock"), subject
to the treatment of fractional share interests as described below. Shortly after
the Effective Date, the Company will send transmittal forms to the holders of
the Old Common Stock to be used in forwarding their certificates formerly
representing shares of Old Common Stock for surrender and exchange for
certificates representing whole shares of New Common Stock. No certificates or
scrip representing fractional share interests in the New Common Stock will be
issued, and no such fractional share interest will entitle the holder thereof to
vote, or to any rights of a shareholder of the Company. In lieu of any such
fractional share interest, each holder of Old Common Stock who would otherwise
be entitled to receive a fractional share of New Common Stock will in lieu
receive one full share upon surrender of certificates formerly representing Old
Common Stock held by such holder.
Federal Income Tax Consequences of the Reverse Stock Split
The following is a summary of the material federal income tax consequences
of the proposed Reverse Stock Split. This summary does not purport to be
complete and does not address the tax consequences to holders that are subject
to special tax rules, such as banks, insurance companies, regulated investment
companies, personal holding companies, foreign entities, nonresident alien
individuals, broker-dealers and tax-exempt entities. This summary is based on
the Internal Revenue Code of 1986, as amended (the "Code"), Treasury regulations
and proposed regulations, court decisions and current administrative rulings and
pronouncements of the Internal Revenue Service ("IRS"), all of which are subject
to change, possibly with retroactive effect, and assumes that the New Common
Stock will be held as a "capital asset" (generally, property held for
investment) as defined in the Code. Holders of Old Common Stock are advised to
consult their own tax advisers regarding the federal income tax consequences of
the proposed Reverse Stock Split in light of their personal circumstances and
the consequences under state, local and foreign tax laws.
1. The reverse split will qualify as a recapitalization described in
Section 368(a)(1)(E) of the Code.
2. No gain or loss will be recognized by the Company in connection with
the reverse split.
3. No gain or loss will be recognized by a shareholder who exchanges all
of his shares of Old Common Stock solely for shares of New Common
Stock.
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4. The aggregate basis of the shares of New Common Stock to be received
in the reverse split (including any whole shares received in lieu of
fractional shares) will be the same as the aggregate basis of the
shares of Old Common Stock surrendered in exchange therefor.
5. The holding period of the shares of New Common Stock to be received in
the reverse split (including any whole shares received in lieu of
fractional shares) will include the holding period of the shares of
Old Common Stock surrendered in exchange therefor.
THE FOREGOING SUMMARY IS INCLUDED FOR GENERAL INFORMATION ONLY. ACCORDINGLY,
EACH HOLDER OF COMMON STOCK OF THE COMPANY IS URGED TO CONSULT WITH HIS OWN TAX
ADVISER WITH RESPECT TO THE TAX CONSEQUENCES OF THE PROPOSED REVERSE STOCK
SPLIT, INCLUDING THE APPLICATION AND EFFECT OF THE LAWS OF ANY STATE, MUNICIPAL,
FOREIGN OR OTHER TAXING JURISDICTION.
Board Recommendation
The Board recommends a vote FOR the adoption of the Reverse Stock Split and
each of the resolutions with respect thereto set forth in Exhibit B hereto.
PROPOSAL 3
THE INCENTIVE STOCK OPTION PLAN PROPOSAL
The Board of Directors believes that it is in the best interests of the
Company to adopt an Incentive Stock Option Plan (the "ISOP") in the form
included in Exhibit C attached hereto, which provides for the granting to
members of management and employees of the Company of incentive stock options
(within the meaning of Section 422 of the Internal Revenue Code) to purchase an
aggregate of not more than 700,000 shares (on a post Reverse Stock Split basis)
of the Common Stock for the purpose of providing members of management and
employees of the Company with a more direct stake in the future of the Company
and to encourage them to remain with the Company. The following summary of the
provisions of the ISOP is qualified in its entirety by express reference to the
text of the ISOP attached as Exhibit C hereto. Terms not otherwise defined in
this summary shall have the meaning given to them in the text of the ISOP.
Eligible Employees and Reservation of Stock. All officers and employees of
the Company shall be eligible to participate in the ISOP. The Board shall
reserve seven hundred thousand (700,000 on a Post-Reverse Stock Split Basis) of
the authorized but unissued shares of the Common Stock for issuance upon the
exercise of the options. Such number of shares shall be the aggregate number of
shares which may be issued under options granted pursuant to this ISOP; provided
that seven hundred thousand shares shall be the number of shares available for
issuance under the ISOP after the Effective Date of the Reverse Stock Split set
forth in Proposal 2 above or if the Reverse Stock Split is abandoned by the
Board.
Administration. The ISOP shall be administered by the Compensation
Committee of the Board or any committee of the Board performing similar
functions, as appointed from time to time by the Board (the "Committee"). The
Committee shall be constituted so as to permit the ISOP to comply with Rule
16b-3 promulgated by the Securities and Exchange Commission (the "Commission")
under the Securities Exchange Act of 1934, as amended ("Rule 16b-3"). The ISOP
is intended to qualify and operate pursuant to the provisions of Rule 16b-3 as
in effect at this time or in compliance with any amendments adopted to that Rule
in the future or in compliance with any successor rule adopted by the
Commission.
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The Committee shall administer the ISOP, and shall have discretionary
authority to (a) determine the persons to whom options shall be granted, (b)
determine the quantity of shares to be included in each option, (c) interpret
the ISOP, and (d) promulgate such rules and regulations under the ISOP as they
may deem necessary and proper. Decisions made by the Committee within their
discretionary authority shall be final and conclusive as to all parties and
shall not be subject to review.
Options, Grants, Term and Exercise. Upon the terms and conditions set forth
in the ISOP, the Committee may grant on behalf of the Company options to
purchase shares of Common Stock to eligible employees ("Optionees"). The
exercise price of each option shall be not less than the fair market value of
the Common Stock on the date of grant; provided, however, that if the amount of
stock owned by the Optionee is more than ten percent (10%) of the total combined
voting power of all classes of capital stock of the Company as of the date of
grant, the exercise price of each such option shall be not less than one hundred
ten percent (110%) of the fair market value of the Common Stock on the date of
grant. Fair market value for purposes of ISOP shall be defined as the closing
bid price on the date of grant, or if there was no trading on the date of grant,
then the closing bid price on the last trading date prior to the date of grant,
or, if none, then the price of the last sale of stock, or as determined by the
Committee.
The term of an option shall be for a period of no more than ten (10) years
from the date of grant of such option, provided, however, that if the amount of
stock owned by the Optionee is more than ten percent (10%) of the total combined
voting power of all classes of capital stock of the Company as of the date of
grant the term of an Option shall be for a period of no more than five (5) years
from the date of grant of such Option.
An Option shall be exercisable in whole or in part by written notice
delivered to and received by the Secretary of the Company at its principal
office, any time during the term of the option. In no case, however, may an
option under this ISOP be exercised if there remains on the date of exercise an
incentive stock option which was granted before the granting of such option to
such Optionee to purchase stock in the Company or in a corporation which (at the
time of the granting of such option) is a parent or subsidiary corporation of
the Company, or in a predecessor corporation of any such corporations.
The notice shall among other things state the number of shares with respect
to which the option is being exercised, and shall be signed by the Optionee. The
option price shall be paid in cash, cash equivalents or secured notes acceptable
to the Committee, by arrangement with a broker which is acceptable to the
Committee where payment of the option price is made pursuant to an irrevocable
direction to the broker to deliver all or part of the proceeds from the sale of
the option shares to the Company, by the surrender of shares of common stock
owned by the Optionee exercising the option and having a fair market value on
the date of exercise equal to the option price, or by the surrender of options
to purchase Common Stock having a fair market value on the date of exercise
equal to the option price or in any combination of the foregoing.
In the event the Company or the shareholders of the Company enter into an
agreement to dispose of all or substantially all of the assets or stock of the
Company by means of a sale, reorganization or liquidation, or otherwise, an
option shall become immediately exercisable with respect to the full number of
shares subject to that option, during the period commencing as of the date of
such agreement and ending when the disposition of assets or stock contemplated
by the agreement is consummated or the agreement is terminated. The Company
shall seek to notify Optionees in writing of any event which may constitute such
sale, reorganization, liquidation or otherwise.
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The option shall not be exercised at any time when its exercise, or the
delivery of shares referred to in the notice, would, in the opinion of the
Company, constitute the violation of any law, governmental regulation or ruling.
During the Optionee's lifetime, the option shall be exercisable only by the
Optionee or, in the event of the Optionee's incapacity, by his guardian or other
legal representative.
The exercise price of all incentive stock options granted under the ISOP
must be equal to the fair market value of such shares on the date of grant as
determined by the Committee, based on guidelines set forth in the ISOP. The
exercise price may be paid in cash or (if the ISOP shall meet the requirements
of rules adopted under the Securities Exchange Act of 1934) in Common Stock or a
combination of cash and Common Stock. The term of each option and the manner in
which it may be exercised will be determined by the Committee, subject to the
requirement that no option may be exercisable more than 10 years after the date
of grant. With respect to an incentive stock option granted to a participant who
owns more than 10% of the voting rights of the Company's outstanding capital
stock on the date of grant, the exercise price of the option must be at least
equal to 110% of the fair market value on the date of grant and the option may
not be exercisable more than five years after the date of grant.
Options not Transferable. No option may be assigned or transferred other
than by will or under the laws of descent and distribution, and no option shall
be pledged or otherwise encumbered or subject to execution, attachment or
similar legal process. In the event of the death of an Optionee, his option may
be exercised during its term by the person designated in the will of the
Optionee, or, if no testamentary disposition was made, by the legal
representative of the Optionee, within one (1) year following his death;
provided, however, such option shall only be exercisable if it was exercisable
according to the terms hereof on the date of the Optionee's death. Any attempted
assignment, transfer, pledge, hypothecation or other disposition of the option,
contrary to the provisions of this Agreement, or the levy of any execution,
attachment or similar process upon the option, shall void the option.
Notwithstanding the above, any "derivative security," as such term is defined
under Rule 16b-3, issued under the ISOP shall be transferable by the Optionee
only to the extent such transfer is not or would not be prohibited by Rule
16b-3. In addition, the shares of Common Stock acquired upon exercise of options
granted pursuant to the ISOP shall not be transferable by the Optionee until six
months after the date of grant, unless the Committee consents to such transfer.
Certain Federal Income Tax Consequences
The following summary generally describes the principal federal (and not
state and local) income tax consequences of options granted under the ISOP. It
is general in nature and is not intended to cover all tax consequences that may
apply to an ISOP participant or to the Company. The provisions of the Code and
the regulations thereunder relating to these matters ("Treasury Regulations")
are complex, and their impact in any case may depend upon the particular
circumstances. Each holder of an option under the ISOP should consult the
holder's own accountant, legal counsel or other financial advisor regarding the
tax consequences of participation in the ISOP. This discussion is based on the
Code as currently in effect.
If an option (whether under the ISOP or the NQSOP) is granted to a
participant in accordance with the terms of the ISOP or the NQSOP, no income
will be recognized by such participant at the time the option is granted.
Generally, on exercise of a non-statutory option (i.e., an option granted
under the NQSOP), the amount by which the fair market value of the shares of the
Common Stock on the date of exercise exceeds the purchase price of such shares
will be taxable to the participant as ordinary income, and, in the case of any
employee, the Company will be required to withhold tax on the amount of income
recognized by the employee upon exercise of a non-statutory option. Such amount
will be deductible for tax purposes by the Company in the year in which the
participant recognizes the ordinary income. The disposition of shares acquired
upon exercise of a non-statutory option will result in capital gain or loss
(long-term or short-term depending on the applicable holding period) in an
amount equal to the difference between the amount realized on such disposition
and the sum of the purchase price and the amount or ordinary income recognized
in connection with the exercise of the non-statutory option.
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<PAGE>
Generally, on exercise of an option granted under the ISOP, an employee
will not recognize any income and the Company will not be entitled to a
deduction for tax purposes. However, the difference between the purchase price
and the fair market value of the shares of Common Stock received ("ISO shares")
on the date of exercise will be treated as a positive adjustment in determining
alternative minimum taxable income, which may subject the employee to the
alternative minimum tax ("AMT"). Upon the disposition of the ISO shares, the
employee will recognize long-term or short-term capital gain or loss (depending
on the applicable holding period) in an amount equal to the difference between
the amount realized on such disposition and the purchase price of such shares.
Generally, however, if the employee disposes of the ISO shares within two years
after the date of option grant or within one year after the date of option
exercise (a "disqualifying disposition"), the employee will recognize ordinary
income, and the Company will be entitled to a deduction for tax purposes for the
taxable year in which the disqualifying disposition occurs, in the amount of the
excess of the fair market value of the shares on the date of exercise over the
purchase price (or, if less, the amount of the gain on sale). Any excess of the
amount realized by the holder on the disqualifying disposition over the fair
market value of the shares on the date of exercise of the ISO will ordinarily
constitute capital gain. If an option is exercised through the use of Common
Stock previously owned by the employee, such exercise generally will not be
considered a taxable disposition of the previously owned shares and, thus, no
gain or loss will be recognized with respect to such shares upon such exercise.
However, proposed Treasury Regulations would provide that, if the previously
owned shares are ISO shares and the holding period requirement for those shares
was not satisfied at the time they were used to exercise an option, such use
would constitute a disqualifying disposition of such previously owned ISO
shares, resulting in the recognition of ordinary income (but not any additional
capital gain) in the amount described above. If an otherwise qualifying ISO
first becomes executable in any one year for shares having a fair market value,
determined as of the date of the grant, in excess of $100,000, the portion of
the option in respect of such excess shares will be treated as a non-statutory
option.
Section 16(b) of the Securities Exchange Act of 1934, as amended, generally
requires officers, directors and 10% stockholders of the Company to disgorge
profits realized by buying and selling the Company's Common Stock within a six
month period. Consequently, by application of Code Section 83 to these
participants who are subject to Section 16, generally the relevant date for
recognizing and measuring the amount of ordinary income in connection with an
exercise of a non-statutory option (or AMT in the case of an ISO), as well as
the relevant date for recognizing and measuring the amount of an employee's
ordinary income and the Company's tax deduction in connection with a
disqualifying disposition of ISO shares as discussed above, will be the later
of: (i) six months following the date of grant, and (ii) the date of exercise of
the option unless such participants elect otherwise under Code Section 83(b).
As of the date of this Proxy Statement, no options have been granted under
the ISOP.
Board Recommendation
The Board recommends a vote FOR the adoption of the ISOP as included in
Exhibit C.
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PROPOSAL 4
NON-QUALIFIED STOCK OPTION PLAN PROPOSAL
The Board of Directors also believes that it is in the best interests of
the Company to adopt a Non-Qualified Stock Option Plan (the "NQSOP") in the form
included in Exhibit D attached hereto, which provides for the grant of options
not considered incentive stock options within the meaning of Section 422 of the
Internal Revenue Code to purchase an aggregate of not more than 300,000 shares
(on a post Reverse Stock Split basis) of the Common Stock of the Company for the
purpose of providing certain key employees, independent contractors, technical
advisors and directors of the Company with options as additional rewards and
incentives for contributing to the success of the Company. The following summary
of the provisions of the NQSOP is qualified in its entirety by express reference
to the text of the ISOP attached as Exhibit D hereto. Terms not otherwise
defined in this summary shall have the meaning given to them in the text of the
NQSOP.
Eligible Persons and Reservation of Stock. Key employees, independent
contractors, technical advisors and directors of the Company with the incentive
to contribute to the success of the Company shall be eligible to participate in
the NQSOP. The Board shall reserve 300,000 (on a Post-Reverse Stock Split Basis)
of the authorized but unissued shares of the Common Stock for issuance upon the
exercise of the options. Such number of shares shall be the aggregate number of
shares which may be issued under options granted pursuant to this NQSOP;
provided that 300,000 shares shall be the number of shares available for
issuance under the NQSOP after the Effective Date of the Reverse Stock Split set
forth in Proposal 2 above or if the Reverse Stock Split is abandoned by the
Board.
Administration. The NQSOP shall be administered by the Compensation
Committee of the Board or any committee of the Board performing similar
functions, as appointed from time to time by the Board (the "Committee"). The
Committee shall be constituted so as to permit the NQSOP to comply with Rule
16b-3 promulgated by the Securities and Exchange Commission (the "Commission")
under the Securities Exchange Act of 1934, as amended ("Rule 16b-3"). The NQSOP
is intended to qualify and operate pursuant to the provisions of Rule 16b-3 as
in effect at this time or in compliance with any amendments adopted to that Rule
in the future or in compliance with any successor rule adopted by the
Commission.
The Committee shall administer the NQSOP, and shall have discretionary
authority to (a) determine the persons to whom options shall be granted, (b)
determine the quantity of shares to be included in each option, (c) interpret
the NQSOP, and (d) promulgate such rules and regulations under the NQSOP as they
may deem necessary and proper. Decisions made by the Committee within their
discretionary authority shall be final and conclusive as to all parties and
shall not be subject to review.
Options, Grants, Term and Exercise. Upon the terms and conditions set forth
in the NQSOP, the Committee may grant on behalf of the Company, options to
purchase shares of the Company's common stock to any key employee, independent
contractor, technical advisor or director of the Company or any of its
subsidiaries hereinafter organized or acquired (the "Optionees"). The option
price for the Common Stock to be issued under the NQSOP may be greater than,
less than or equal to the market value of the stock at the date of grant in the
discretion of the Committee ("Option Price").
The NQSOP shall become effective upon its adoption by the Company's Board
of Directors and by a majority of the outstanding security holders of the
Company. It shall continue in effect for a term of ten (10) years unless sooner
terminated.
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The number of shares optioned to an Optionee shall be exercisable in whole
or in part at any time during the term of the option. An option may not be
exercised for fractional shares of the stock of the Company.
In the event the Company or the Shareholders of the Company enter into an
agreement to dispose of all or substantially all of the assets or stock of the
Company by means of a sale, reorganization, liquidation or otherwise, an Option
shall become immediately exercisable with respect to the full number of shares
subject to that option, during the period commencing as of the date of such
agreement and ending when the disposition of assets or stock contemplated by the
agreement is consummated or the agreement is terminated. The Company shall seek
to notify Optionees in writing of any event which may constitute such sale,
reorganization, liquidation or otherwise.
An option may only be exercised when written notice of such exercise has
been given to the Company at its principal business office by the person
entitled to exercise the option and full payment for the shares with respect to
which the option is exercised has been received by the Company. The notice shall
state the number of shares with respect to which the option is being exercised,
and shall among other things be signed by the Optionee. The Option Price shall
be paid in cash, cash equivalents or secured notes acceptable to the Committee,
by arrangement with a broker which is acceptable to the Committee where payment
of the Option Price is made pursuant to an irrevocable direction to the broker
to deliver all or part of the proceeds from the sale of the option shares to the
Company, by the surrender of shares of common stock owned by the Optionee
exercising the option and having a fair market value on the date of exercise
equal to the option price, or by the surrender of options to purchase common
stock having a fair market value on the date of exercise equal to the option
price or in any combination of the foregoing. Until the issuance of stock
certificates, no right to vote or receive dividends or any other rights as a
Shareholder shall exist with respect to the optioned shares notwithstanding the
exercise of the Option. Generally, no adjustment will be made for a dividend or
other rights for which the record date is prior to the date the stock
certificate is issued.
An option may be exercised by the Optionee only while he is, and has
continually been since the date of the grant of the option, an employee,
independent contractor, technical advisor or director of the Company, its
subsidiaries, its parent or its successor companies, except that to the extent
that installments have accrued and remain unexercised on the date of the
Optionee's death, such option of the deceased Optionee may be exercised within
one year after the death of such Optionee, but in no event later than five years
after the date of grant of such option, by (and only by) the person or persons
to whom his rights under such option shall have passed by will or by laws of
descent and distribution. An option may be exercised in accordance with this the
NQSOP as to all or any portion of the shares subject to the Option from time to
time, but shall not be exercisable with respect to fractions of a share.
Options not Transferable. Options under the NQSOP may not be sold, pledged,
assigned or transferred in any manner otherwise than by will or the laws of
descent or distribution, and may be exercised during the lifetime of an Optionee
only by such Optionee. Further, no option shall be pledged or otherwise
encumbered or subject to execution, attachment or similar legal process. Any
attempted assignment, transfer, pledge, hypothecation or similar disposition of
the option, contrary to the provisions of this Agreement, or the levy of any
execution, attachment or similar process upon the option, shall void the option.
Notwithstanding the above, any "derivative security," as such term is defined
under Rule 16b-3, issued under the NQSOP shall be transferable by the Optionee
only to the extent such transfer is not or would not be prohibited by Rule
16b-3. In addition, the shares of Common Stock acquired upon exercise of options
granted pursuant to the NQSOP shall not be transferable by the Optionee until
six months after the date of grant, unless the Committee consents to such
transfer.
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<PAGE>
Tax Consequences. For a description of the federal income tax consequences
associated with options under the NQSOP, please see "Certain Federal Income Tax
Consequences above under Proposal 3.
As of the date of this Proxy Statement, no options have been granted under
the NQSOP.
Board Recommendation
The Board recommends a vote FOR the adoption of the NQSOP as included in
Exhibit D hereto.
GENERAL
Other Matters
The Board of Directors does not know of any matters that are to be
presented at the Special Meeting other than those stated in the Notice of
Special Meeting and referred to in this Proxy Statement. If any other matters
should properly come before the Meeting, it is intended that the proxies in the
accompanying form will be voted as the persons named therein may determine in
their discretion.
Shareholders Proposals
If any shareholder of the Company intends to present a proposal for
consideration at the 1997 Annual Meeting of Shareholders and desires to have
such proposal included in the proxy statement and form of proxy distributed by
the Board of Directors with respect to such meeting, such proposal must be
received at the Company's offices, 303 East Seventeenth Avenue, Suite 108,
Denver, Colorado 80203, Attention: Secretary, not later than July 31, 1997.
By Order of the Board of Directors
Thomas V. Geimer
Chairman of the Board
<PAGE>
EXHIBIT A
ARTICLES OF AMENDMENT OF THE ARTICLES OF INCORPORATION
OF
ACCELR8 TECHNOLOGY CORPORATION
FIRST: The name of the Corporation is Accelr8 Technology Corporation.
SECOND: Immediately upon the effectiveness of this amendment to the
Corporation's Articles of Incorporation pursuant to the Colorado Business
Corporation Act (the "Effective Time"), the number of authorized shares of
Common Stock shall be decreased from 55,000,000 no par value common shares to
11,000,000 no par value common shares. This Amendment shall not affect the
outstanding and issued shares of Common Stock in any way. This amendment
authorizes the officers of the Corporation to reduce the stated capital of the
Corporation to reflect the change in outstanding shares of the Corporation.
This amendment shall be effectuated by striking in its entirety Subsection
1 of Article V and by substituting in lieu thereof the following:
1. Authorized Shares. The aggregate number of shares which the Corporation
shall have authority to issue is eleven million (11,000,000) shares of common
stock, each having no par value, which shares shall be designated "Common
Stock".
THIRD: By written informal action, unanimously taken by the Board of
Directors of the Corporation effective the 19th day of September, 1996, pursuant
to and in accordance with Sections 7-108-202 and 7-110-103 of the Colorado
Business Corporation Act, the Board of Directors of the Corporation duly adopted
and recommended the amendment described above to the Corporation's Shareholders
for their approval.
FOURTH: Notice having been properly given to the Shareholders in accordance
with Sections 7-107-105 and 7-110-103, at a meeting of Shareholders held on
November 8, 1996, the number of votes cast for the amendment by the each voting
group entitled to vote on the amendment was sufficient for approval by that
voting group.
IN WITNESS WHEREOF, Accelr8 Technology Corporation has caused these
presents to be signed in its name and on its behalf by Harry J. Fleury, its
President, and its corporate seal to be hereunder affixed and attested by Thomas
V. Geimer, its Secretary, on this _______ day of _________________, 1996, and
its President acknowledges that these Articles of Amendment are the act and deed
of Accelr8 Technology Corporation and, under the penalties of perjury, that the
matters and facts set forth herein with respect to authorization and approval
are true in all material respects to the best of his knowledge, information and
belief.
ATTEST: ACCELR8 TECHNOLOGY CORPORATION
By: By:
------------------------------ -----------------------------
Thomas V. Geimer, Secretary Harry J. Fleury, President
17
<PAGE>
EXHIBIT B:
THE REVERSE STOCK SPLIT
RESOLVED, that the Board of Directors be, and it hereby is, authorized to
effect a Reverse Stock Split in accordance with the following Resolutions if the
Board determines in the exercise of their discretion that a Reverse Stock Split
is in the best interests of the Company and the Shareholders and that a Reverse
Stock Split is likely to result in an increase in the marketability and
liquidity of the Common Stock.
FURTHER RESOLVED, that, prior to December 31, 1997, and on the condition
that no other amendment to the Company's Articles of Incorporation shall have
been filed subsequent to November 8, 1996, effecting a reverse stock split of
the Common Stock, Article V of the Company's Articles of Incorporation be
amended by the addition of the following provision:
Simultaneously with the effective date of this amendment (the "Effective
Date"), each share of the Company's Common Stock, no par value, issued and
outstanding immediately prior to the Effective Date (the "Old Common Stock")
shall automatically and without any action on the part of the holder thereof be
reclassified as and changed, pursuant to a reverse stock split, into any
fraction thereof falling within a range between and including one-third (1/3)
and one-seventh (1/7) of a share of the Company's outstanding Common Stock, no
par value (the "New Common Stock"), depending upon a determination by the Board
that a Reverse Stock Split is in the best interests of the Company and the
Shareholders, subject to the treatment of fractional share interests as
described below. Each holder of a certificate or certificates which immediately
prior to the Effective Date represented outstanding shares of Old Common Stock
(the "Old Certificates," whether one or more) shall be entitled to receive upon
surrender of such Old Certificates to the Company's Transfer Agent for
cancellation, a certificate or certificates (the "New Certificates," whether one
or more) representing the number of whole shares of the New Common Stock into
which and for which the shares of the Old Common Stock formerly represented by
such Old Certificates so surrendered, are reclassified under the terms hereof.
From and after the Effective Date, Old Certificates shall represent only the
right to receive New Certificates pursuant to the provisions hereof. No
certificates or scrip representing fractional share interests in New Common
Stock will be issued, and no such fractional share interest will entitle the
holder thereof to vote, or to any rights of a shareholder of the Company. Any
fraction of a share of New Common Stock to which the holder would otherwise be
entitled will be adjusted upward to the nearest whole share. If more than one
Old Certificate shall be surrendered at one time for the account of the same
Shareholder, the number of full shares of New Common Stock for which New
Certificates shall be issued shall be computed on the basis of the aggregate
number of shares represented by the Old Certificates so surrendered. In the
event that the Company's Transfer Agent determines that a holder of Old
Certificates has not tendered all his certificates for exchange, the Transfer
Agent shall carry forward any fractional share until all certificates of that
holder have been presented for exchange such that payment for fractional shares
to any one person shall not exceed the value of one share. If any New
Certificate is to be issued in a name other than that in which the Old
Certificates surrendered for exchange are issued, the Old Certificates so
surrendered shall be properly endorsed and otherwise in proper form for
transfer. From and after the Effective Date the amount of capital represented by
the shares of the New Common Stock into which and for which the shares of the
Old Common Stock are reclassified under the terms hereof shall be the same as
the amount of capital represented by the shares of Old Common Stock so
reclassified, until thereafter reduced or increased in accordance with
applicable law.
FURTHER RESOLVED, that at any time prior to the filing of the foregoing
amendment to the Company's Articles of Incorporation effecting a Reverse Stock
Split, notwithstanding authorization of the proposed amendment by the
Shareholders of the Company, the Board of Directors may abandon such proposed
amendment without further action by the Shareholders.
18
<PAGE>
EXHIBIT C
THE ISOP ADOPTION PROPOSAL
--------------------------
RESOLVED, that the Incentive Stock Option Plan in the form set forth
hereinbelow be, and it hereby is, adopted as the Incentive Stock Option Plan of
the Company:
ACCELR8 TECHNOLOGY CORPORATION
INCENTIVE STOCK OPTION PLAN
1. Purpose of the Plan. The Accelr8 Technology Corporation Incentive Stock
Option Plan (the "Plan") is intended to provide additional incentive to key
employees of Accelr8 Technology Corporation (the "Company") and encourage their
stock ownership.
2. Eligible Employees. All officers and employees of the Company shall be
eligible to participate in the Plan.
3. Reservation of Option Stock. The Board of Directors of the Company (the
"Board") shall reserve seven hundred thousand (700,000) of the authorized but
unissued shares of the Company's no par value common stock (the "Common Stock")
for issuance upon the exercise of the options (the "Option Stock"). Such number
of shares shall be the aggregate number of shares which may be issued under
Options granted pursuant to this Plan; provided that seven hundred thousand
shares shall be the number of shares available for issuance under this Plan
either after the Effective Date of the Reverse Stock Split which is contemplated
in connection with the Company's proposed public offering or if the Reverse
Stock Split is abandoned by the Board.
4. Administration and Operation of the Plan. The Plan shall be administered
by the Compensation Committee of the Board or any committee of the Board
performing similar functions, as appointed from time to time by the Board (the
"Committee"). The Committee shall be constituted so as to permit the Plan to
comply with Rule 16b-3 promulgated by the Securities and Exchange Commission
(the "Commission") under the Securities Exchange Act of 1934, as amended ("Rule
16b-3"). The Plan is intended to qualify and operate pursuant to the provisions
of Rule 16b-3 as in effect at this time or in compliance with any amendments
adopted to that Rule in the future or in compliance with any successor rule
adopted by the Commission.
The Committee shall administer the Plan, and shall have discretionary
authority to (a) determine the persons to whom Options shall be granted, (b)
determine the quantity of shares to be included in each Option, (c) interpret
the Plan, and (d) promulgate such rules and regulations under the Plan as they
may deem necessary and proper. Decisions made by the Committee within their
discretionary authority shall be final and conclusive as to all parties and
shall not be subject to review.
5. Options. Upon the terms and conditions hereinafter set forth, the
Committee may grant on behalf of the Company options (the "Options" or,
individually, an "Option") to purchase shares of Common Stock to eligible
employees (the "Optionees" or, individually, the "Optionee"). The Options shall
be substantially in form and substance as set forth in Exhibit A.
6. Exercise Price. The exercise price of each Option shall be not less than
the fair market value of the Common Stock on the date of grant; provided,
however, that if the amount of stock owned by the Optionee is more than ten
percent (10%) of the total combined voting power of all classes of capital stock
of the Company as of the date of grant, the exercise price of each Option shall
be not less than one hundred ten percent (110%) of the fair market value of the
Common Stock on the date of grant. Fair market value for purposes of this
Section 6 shall be defined as the closing bid price on the date of grant, or if
there was no trading on the date of grant, then the closing bid price on the
last trading date prior to the date of grant, or, if none, then the price of the
last sale of stock, or as determined by the Committee.
19
<PAGE>
7. Terms of Options. The term of an Option shall be for a period of no more
than ten (10) years from the date of grant of such Option, provided, however,
that if the amount of stock owned by the Optionee is more than ten percent (10%)
of the total combined voting power of all classes of capital stock of the
Company as of the date of grant the term of an Option shall be for a period of
no more than five (5) years from the date of grant of such Option.
8. Exercise of Options. Subject to Section 14 hereof, an Option shall be
exercisable in whole or in part by written notice delivered to and received by
the Secretary of the Company at its principal office, any time during the term
of the Option. In no case, however, may an Option under this Plan be exercised
if there remains on the date of exercise an incentive stock option which was
granted before the granting of such Option to such Optionee to purchase stock in
the Company or in a corporation which (at the time of the granting of such
option) is a parent or subsidiary corporation of the Company, or in a
predecessor corporation of any such corporations.
The notice shall state the number of shares with respect to which the
Option is being exercised, shall contain a representation and agreement by the
Optionee substantially in the form and substance as set forth in the investment
letter attached hereto as Exhibit B, and shall be signed by the Optionee. The
option price shall be paid in cash, cash equivalents or secured notes acceptable
to the Committee, by arrangement with a broker which is acceptable to the
Committee where payment of the option price is made pursuant to an irrevocable
direction to the broker to deliver all or part of the proceeds form the sale of
the option shares to the Company by the surrender of shares of common stock
owned by the Optionee exercising the Option and having a fair market value on
the date of exercise equal to the option price, or by the surrender of options
to purchase common stock having a fair market value on the date of exercise
equal to the option price or in any combination of the foregoing.
In the event the Company or the shareholders of the Company enter into an
agreement to dispose of all or substantially all of the assets or stock of the
Company by means of a sale, reorganization or liquidation, or otherwise, an
Option shall become immediately exercisable with respect to the full number of
shares subject to that Option, notwithstanding the preceding provisions of this
Section 8, during the period commencing as of the date of such agreement and
ending when the disposition of assets or stock contemplated by the agreement is
consummated or the agreement is terminated. The Company shall seek to notify
Optionees in writing of any event which may constitute such sale,
reorganization, liquidation or otherwise.
The Option shall not be exercised at any time when its exercise, or the
delivery of shares referred to in the notice, would, in the opinion of the
Company, constitute the violation of any law, governmental regulation or ruling.
During the Optionee's lifetime, the Option shall be exercisable only by the
Optionee or, in the event of the Optionee's incapacity, by his guardian or other
legal representative.
9. Securities to be Unregistered. The Company shall be under no obligation
to register or assist the Optionee in registering either the Options or the
Option Stock under the federal securities law or any state securities law and
both the Options and all Option Stock shall be "restricted securities" as
defined in Rule 144 of the General Rules and Regulations of the Securities Act
of 1933 (the "Act"), and may not be offered for sale, sold or otherwise
transferred except pursuant to an effective registration statement under the
Act, or pursuant to an exemption from registration under the Act, the
availability of which is to be established to the satisfaction of the Company.
Accordingly, all certificates evidencing shares covered by the Option, and any
securities issued and replaced or exchanged therefor, shall bear a restrictive
legend to this effect.
20
<PAGE>
10. Assignment or Transfer. No Option may be assigned or transferred other
than by will or under the laws of descent and distribution, and no Option shall
be pledged or otherwise encumbered or subject to execution, attachment or
similar legal process. In the event of the death of an Optionee, his Option may
be exercised during its term by the person designated in the will of the
Optionee, or, if no testamentary disposition was made, by the legal
representative of the Optionee, within one (1) year following his death;
provided, however, such Option shall only be exercisable if it was exercisable
according to the terms hereof on the date of the Optionee's death. Any attempted
assignment, transfer, pledge, hypothecation or other disposition of the Option,
contrary to the provisions of this Agreement, or the levy of any execution,
attachment or similar process upon the Option, shall void the Option.
Notwithstanding the above, any "derivative security," as such term is defined
under Rule 16b-3, issued under the Plan shall be transferable by the Optionee
only to the extent such transfer is not or would not be prohibited by Rule
16b-3. In addition, the shares of Common Stock acquired upon exercise of Options
granted pursuant to this Plan shall not be transferable by the Optionee until
six months after the date of grant, unless the Committee consents to such
transfer.
11. Optionee as Shareholder. An Optionee shall have no rights as a
shareholder of the Company with respect to the shares of Option Stock covered by
an Option until the date of the issuance of stock certificate(s) to him. No
adjustment will be made for dividends or other rights with respect to which the
record date is prior to the date of such stock certificate or certificates.
12. Adjustment for Changes in Capital Structure. In the event of a change
in the capital structure of the Company as a result of any stock dividend, stock
split, combination or reclassification of shares, recapitalization, merger,
consolidation or reorganization, the number of shares covered by the Options
granted pursuant to this Plan shall be appropriately adjusted by the Committee,
whose determination shall be final.
13. Employment of Optionee. Except as otherwise provided in this Agreement,
the Optionee may not exercise any Option unless the Optionee has been
continuously employed with the Company, a parent or subsidiary, from the date of
grant to and including the later of the date of exercise or three months
following the termination of the employee's employment.
The existence of this Plan shall not impose or be construed as imposing
upon the Company, or any parent or subsidiary of the Company, any obligation to
employ the Optionee for any period of time, and shall not supersede or in any
way increase the obligations of the Company, or any parent or subsidiary of the
Company, under any employment contract now or hereafter existing with any
Optionee.
14. Termination. The Plan may be terminated at any time by action of the
Committee, but in all events this Plan shall terminate ten (10) years from the
date of its approval by the shareholders of the Company, or from its adoption by
the Board, whichever is earlier, and no Options shall be granted under the Plan
after such termination, although Options granted prior to such termination may
continue to be exercised after such date in accordance with the terms hereof.
The Plan shall also terminate upon (a) the merger or consolidation of the
Company with one or more other corporations in which the Company is not the
surviving corporation, (b) the dissolution or liquidation of the Company, (c)
the appointment of a receiver for all, or substantially all, of the assets or
business of the Company, (d) the appointment of a trustee for the Company after
a petition has been filed for the Company's liquidation under applicable
statutes, (e) the filing of a petition in bankruptcy on behalf of the Company
under applicable statutes, or (f) the sale, lease or exchange of all, or
substantially all, of the assets or business of the Company. The Company shall
notify an Optionee in writing thirty (30) days prior to the happening of any of
the events described in clauses (a) through (f) of the preceding sentence.
21
<PAGE>
15. Limitation. The aggregate fair market value (determined on the date the
Option is granted) of stock subject to an Option granted to an Optionee in any
calendar year shall not exceed $100,000.
16. Amendment. No material change or modification of this Plan shall be
valid unless in writing and approved by the Committee, the Company's
shareholders and each Optionee affected by such change.
17. Governing Law. This Plan shall be governed and construed in accordance
with the laws of the State of Colorado.
IN WITNESS WHEREOF, the Board of Directors has adopted this Plan this ____
day of September, 1996.
ACCELR8 TECHNOLOGY CORPORATION
(The "Company")
By:
-------------------------------
Harry J. Fleury, President
ATTEST:
- ---------------------------
Thomas V. Geimer. Secretary
The Shareholders approved this Plan on ____________, 1996.
22
<PAGE>
EXHIBIT A
TO INCENTIVE STOCK OPTION PLAN
OF
ACCELR8 TECHNOLOGY CORPORATION
STOCK OPTION GRANT FORM
Accelr8 Technology Corporation, a Colorado corporation (the "Company"),
hereby grants to ____________________________________________ the right and
option to purchase ____________ (______) shares of the Common Stock, no par
value, of the Company at the exercise price of $_________________ per share.
This option is granted as of the date set forth below and shall expire _______
years from such date. This Option is subject to all the terms and conditions of
the Accelr8 Technology Corporation Incentive Stock Option Plan, which are
incorporated herein by this reference, and may not be assigned or transferred
except as provided therein. Further, the recipient of this Option hereby
acknowledges that if the shares of Common Stock acquired upon exercise of this
Option are not held for at least six months from the date of grant, the grant of
the Option will be deemed a purchase that may be matched against any sales of
Company securities occurring within six months of the grant and may create
liability for the recipient pursuant to Section 16(b) of the Securities Exchange
Act of 1934, as amended.
Common Stock acquired pursuant to this Option may be subject to special tax
treatment under Internal Revenue Code Section 422 if held for at least two years
from the date set forth below and for at least one year from the date of
exercise of this Option.
Dated:______________________, 19____.
ACCELR8 TECHNOLOGY CORPORATION
(The "Company")
By:
----------------------------------
Harry J. Fleury, President
ATTEST:
- ------------------------------------
Thomas V. Geimer. Secretary
The option represented by this certificate and the shares of common stock
underlying this option have not been registered under the Securities Act of 1933
(the "Act") and are "restricted securities" as that term is defined in Rule 144
under the Act. Neither the option nor the shares underlying the option may be
offered for sale, sold or otherwise transferred except pursuant to an effective
registration statement under the Act, or pursuant to an exemption from
registration under the Act, the availability of which is to be established to
the satisfaction of the Company.
23
<PAGE>
EXHIBIT B
TO
INCENTIVE STOCK OPTION PLAN
OF
ACCELR8 TECHNOLOGY CORPORATION
OPTION EXERCISE FORM
Accelr8 Technology Corporation
Gentlemen:
I hereby elect to exercise Options to purchase __________ shares of Accelr8
Technology Corporation (the "Company") Common Stock, no par value (the
"Securities"), pursuant to the Company's Incentive Stock Option Plan, dated
_________________, 1996, and as subsequently amended.
I acknowledge to the Company that (1) the Securities to be issued to me are
being acquired for investment and not with a view to the distribution thereof,
(2) I will not offer, sell, transfer or otherwise dispose of the Securities
except in a transaction which does not violate the Securities Act of 1933, as
amended (the "Act"), and (3) the Securities are "restricted securities" as that
term is defined in Rule 144 of the General Rules and Regulations under the Act.
I acknowledge and understand that the Securities are unregistered and must
be held indefinitely unless they are subsequently registered under the Act or an
exemption from such registration is available. I also understand that the
Company is the only person which may register its securities under the Act.
Furthermore, the Company has not made any representations, warranties or
covenants to me regarding the registration of the Securities or compliance with
Regulation A or some other exemption under the Act.
I further acknowledge that I am fully aware of the applicable limitations
on the resale of the Securities. Rule 144 permits sales of "restricted
securities" upon compliance with certain requirements. If Rule 144 is available
for the resale of the securities, I may resell the Securities only in accordance
with its limitations.
I further acknowledge that I understand that the Company is subject to the
so called "short swing" profit provisions of Section 16(b) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and that if this exercise is
found to be in violation of those provisions, I will be obligated to make
payment to the Company of any profits which I derive as a result of the matching
of sales and purchases within the statutory period. I also understand that if
the shares of Common Stock to be acquired upon exercise of this Option have not
been held for at least six months from the date of grant, the grant of the
Option will be deemed a purchase that may be matched against any sales of
Company securities occurring within six months of the grant and may create
liability for me pursuant to Section 16(b) of the 1934 Act.
I acknowledge that I am liable for all withholding taxes if the shares
issued pursuant to this Option are disposed of within one year of issuance or
two years of the date of grant of the Option.
Any and all certificates representing the Securities, and any securities
issued in replacement or exchange therefor, shall bear substantially the
following legend, which I have read and understood.
24
<PAGE>
The shares represented by this certificate have not been registered
under the Securities Act of 1933 (the "Act") and are "restricted
securities" as that term is defined in Rule 144 under the Act. The
shares may not be offered for sale, sold or otherwise transferred
except pursuant to an effective registration statement under the Act,
or pursuant to an exemption from registration under the Act, the
availability of which is to be established to the satisfaction of the
Company.
I further agree that the Company shall have the right to issue stop
transfer instructions to its transfer agent to bar the transfer or for failure
to pay necessary withholding taxes in the case of disposition of the shares
within one year of issuance of the shares or two years of the date of grant of
the Option of any of my certificates except in accordance with the Act. I
acknowledge that the Company has informed me of its intention to issue such
instructions.
Dated: ______________________, 19_____.
Very truly yours,
--------------------------------------
Optionee
--------------------------------------
(Please print or type name)
25
<PAGE>
EXHIBIT D
THE NONQUALIFIED PLAN ADOPTION PROPOSAL
---------------------------------------
RESOLVED, that the Nonqualified Stock Option Plan in the form set forth
hereinbelow be, and it hereby is, adopted as the Nonqualified Stock Option Plan
of the Company:
ACCELR8 TECHNOLOGY CORPORATION
NON-QUALIFIED STOCK OPTION PLAN
1. Purpose. The purpose of the Accelr8 Technology Corporation Non-Qualified
Stock Option Plan (the "Plan") is to promote the growth and general prosperity
of Accelr8 Technology Corporation (herein called the "Company") and its
subsidiaries by permitting the Company to grant options to purchase shares of
its Common Stock ("Options"), to attract and retain the best available personnel
for positions of substantial responsibility and to provide certain key
employees, independent contractors, technical advisors and directors of the
Company with an additional incentive to contribute to the success of the
Company.
2. Administration and Operation of the Plan. The Plan shall be administered
by the Compensation Committee of the Board or any committee of the Board
performing similar functions, as appointed from time to time by the Board (the
"Committee"). The Committee shall be constituted so as to permit the Plan to
comply with Rule 16b-3 promulgated by the Securities and Exchange Commission
(the "Commission") under the Securities Exchange Act of 1934, as amended ("Rule
16b-3"). The Plan is intended to qualify and operate pursuant to the provisions
of Rule 16b-3 as in effect at this time or in compliance with any amendments
adopted to that Rule in the future or in compliance with any successor rule
adopted by the Commission.
The Committee shall administer the Plan, and shall have discretionary
authority to (a) determine the persons to whom Options shall be granted, (b)
determine the quantity of shares to be included in each Option, (c) interpret
the Plan, and (d) promulgate such rules and regulations under the Plan as they
may deem necessary and proper. Decisions made by the Committee within their
discretionary authority shall be final and conclusive as to all parties and
shall not be subject to review.
3. Eligibility. Upon the terms and conditions hereafter set forth, the
Committee may grant on behalf of the Company, options (the "Options" or,
individually, an "Option") to purchase shares of the Company's common stock to
any key employee, independent contractor, technical advisor or director of the
Company or any of its subsidiaries hereinafter organized or acquired. The
Options shall be substantially in form and substance as set forth in Exhibit A.
4. Stock to be Optioned. Subject to the provisions of Section 10, the
maximum number of shares which may be optioned and sold under the Plan is Three
Hundred Thousand (300,000) shares of no par value authorized, but unissued, or
reacquired Common Stock of the Company; provided that three hundred thousand
shares shall be the number of shares available for issuance under this Plan
either after the Effective Date of the Reverse Stock Split which is contemplated
in connection with the Company's proposed public offering or if the Reverse
Stock Split is abandoned by the Board.
5. Term. The Plan shall become effective upon its adoption by the Company's
Board of Directors and by a majority of the outstanding security holders of the
Company. It shall continue in effect for a term of ten (10) years unless sooner
terminated under Section 9.
6. Option Price. The option price for the Common Stock to be issued under
the Plan may be greater than, less than or equal to the market value of the
stock at the date of grant in the discretion of the Committee.
7. Exercise of Option.
(a) The number of shares optioned to an employee or director shall be
exercisable in whole or in part at any time during the term of the Option.
An Option may not be exercised for fractional shares of the stock of the
Company.
In the event the Company or the Shareholders of the Company enter into
an agreement to dispose of all or substantially all of the assets or stock
of the Company by means of a sale, reorganization, liquidation or
otherwise, an Option shall become immediately exercisable with respect to
the full number of shares subject to that Option, notwithstanding the
preceding provisions of this Section 7(a), during the period commencing as
of the date of such agreement and ending when the disposition of assets or
stock contemplated by the agreement is consummated or the agreement is
terminated. The Company shall seek to notify Optionees in writing of any
event which may constitute such sale, reorganization, liquidation or
otherwise.
(b) An Option may only be exercised when written notice of such
exercise has been given to the Company at its principal business office by
the person entitled to exercise the Option and full payment for the shares
with respect to which the Option is exercised has been received by the
Company. The notice shall state the number of shares with respect to which
the Option is being exercised, shall contain a representation and agreement
by the Optionee substantially in the form and substance as set forth in the
investment letter attached hereto as Exhibit B, and shall be signed by the
Optionee. The Option Price shall be paid in cash, cash equivalents or
secured notes acceptable to the Committee, by arrangement with a broker
which is acceptable to the Committee where payment of the Option Price is
made pursuant to an irrevocable direction to the broker to deliver all or
part of the proceeds form the sale of the option shares to the Company by
the surrender of shares of common stock owned by the Optionee exercising
the Option and having a fair market value on the date of exercise equal to
the option price, or by the surrender of options to purchase common stock
having a fair market value on the date of exercise equal to the option
price or in any combination of the foregoing. Until the issuance of stock
certificates, no right to vote or receive dividends or any other rights as
a Shareholder shall exist with respect to the optioned shares
notwithstanding the exercise of the Option. No adjustment will be made for
a dividend or other rights for which the record date is prior to the date
the stock certificate is issued except as provided in Section 10.
(c) An Option may be exercised by the Optionee only while he is, and
has continually been since the date of the grant of the Option, an
employee, independent contractor, technical advisor or director of the
Company, its subsidiaries, its parent or its successor companies, except
that to the extent that installments have accrued and remain unexercised on
the date of the Optionee's death, such Option of the deceased Optionee may
be exercised within one year after the death of such Optionee, but in no
event later than five years after the date of grant of such Option, by (and
only by) the person or persons to whom his rights under such Option shall
have passed by will or by laws of descent and distribution.
(d) An Option may be exercised in accordance with this Section 7 as to
all or any portion of the shares subject to the Option from time to time,
but shall not be exercisable with respect to fractions of a share.
27
<PAGE>
8. Options not Transferable. Options under this Plan may not be sold,
pledged, assigned or transferred in any manner otherwise than by will or the
laws of descent or distribution, and may be exercised during the lifetime of an
Optionee only by such Optionee. Further, no Option shall be pledged or otherwise
encumbered or subject to execution, attachment or similar legal process. Any
attempted assignment, transfer, pledge, hypothecation or similar disposition of
the Option, contrary to the provisions of this Agreement, or the levy of any
execution, attachment or similar process upon the Option, shall void the Option.
Notwithstanding the above, any "derivative security," as such term is defined
under Rule 16b-3, issued under the Plan shall be transferable by the Optionee
only to the extent such transfer is not or would not be prohibited by Rule
16b-3. In addition, the shares of Common Stock acquired upon exercise of Options
granted pursuant to this Plan shall not be transferable by the Optionee until
six months after the date of grant, unless the Committee consents to such
transfer.
9. Amendment or Termination of the Plan.
(a) The Committee, with approval by a majority of the outstanding
security holders and by each Optionee affected by such change, may amend
the Plan from time to time in such respects as the Committee and the
Company's security holders may deem advisable.
(b) The Committee may at any time terminate the Plan. Any such
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
terminated.
10. Adjustments Upon Changes In Capitalization. If all or any portion of an
Option is exercised subsequent to any stock dividend, split-up,
recapitalization, combination or exchange of shares, merger, consolidation,
acquisition of property or stock, separation, reorganization or liquidation, as
a result of which shares of any class shall be issued in respect of outstanding
shares of Common Stock or shares of Common Stock shall be changed into the same
or a different number of shares of the same or another class or classes, the
person or persons so exercising such an Option shall receive, for the aggregate
price payable upon such exercise of the Option, the aggregate number and class
of shares which, if shares of Common Stock (as authorized at the date of the
granting of such Option) had been purchased at the date of granting of the
Option for the same aggregate price (on the basis of the price per share
provided in the Option) and had not been disposed of, such person or persons
would be holding at the time of such exercise, as a result of such purchase and
any such stock dividend, split-up, recapitalization, combination or exchange of
shares, merger, consolidation, acquisition of property or stock, separation,
reorganization or liquidation; provided, however, that no fractional share shall
be issued upon any such exercise, and the aggregate price paid shall be
appropriately reduced on account of any fractional share not issued. In the
event of any such change in the outstanding Common Stock of the Company, the
aggregate number of and class of shares remaining available under the Plan shall
be that number and class which a person, to whom an Option had been granted for
all of the available shares under the Plan on the date preceding such change,
would be entitled to receive as provided in the first sentence of this Section
10.
11. Optionee as Shareholder. An Optionee shall have no rights as a
shareholder of the Company with respect to the shares of the Company' Common
Stock covered by such Option until the date of the issuance of stock
certificate(s) to him. No adjustment will be made for dividends or other rights
with respect to which the record date is prior to the date of such stock
certificate or certificates.
12. Employment of Optionee. The existence of this Plan shall not impose or
be construed as imposing upon the Company, or any parent or subsidiary of the
Company, any obligation to employ or contract for services with the Optionee for
any period of time, and shall not supersede or in any way increase the
obligations of the Company, or any parent or subsidiary of the Company, under
any employment or other contract now or hereafter existing with any Optionee.
28
<PAGE>
13. Agreement and Representations of Optionee. As a condition to the
exercise of any portion of an Option, the Company may require the person
exercising such Option to represent and warrant at the time of any such exercise
that the shares are being purchased only for investment and without any present
intention to sell or distribute such shares if, in the opinion of counsel for
the Company, such a representation is required under the Securities Act of 1933
or any other applicable law, regulation or rule of any government agency.
14. Securities to be Unregistered. The Company shall be under no obligation
to register or assist the Optionee in registering either the Options or the
Common Stock covered by an Option under the federal securities law or any state
securities law, and both the Options and all Common Stock issuable thereunder
shall be "restricted securities" as defined in Rule 144 of the General Rules and
Regulations of the Securities Act of 1933 (the "Act"), and may not be offered
for sale, sold or otherwise transferred except pursuant to an effective
registration statement under the Act, or pursuant to an exemption from
registration under the Act, the availability of which is to be established to
the satisfaction of the Company. Accordingly, all certificates evidencing shares
covered by the Option, and any securities issued and replaced or exchanged
therefor, shall bear a restrictive legend to this effect.
15. Reservation of Shares of Common Stock. The Company, during the term of
this Plan, will at all times reserve and keep available, and will seek or obtain
from any regulatory body having jurisdiction, any requisite authority in order
to issue and sell such number of shares of its Common Stock as shall be
sufficient to satisfy the requirements of the Plan. Inability of the Company to
obtain from any regulatory body having jurisdiction authority deemed by the
Company's counsel to be necessary to the lawful issuance and sale of any shares
of its stock hereunder, shall relieve the Company of any liability in respect of
the non-issuance or sale of such stock as to which such requisite authority
shall not have been obtained.
16. Governing Law. This Plan shall be governed and construed in accordance
with the laws of the State of Colorado.
17. Definitions. As used herein, the following definitions shall apply:
(a) "Common Stock" shall mean Common Stock, no par value of the
Company.
(b) "Continuous Employment" shall mean employment without
interruption, by any one or more of the Company, its parent, its
subsidiaries and its successor companies. Employment shall not be
considered interrupted in the case of sick leave, military leave or any
other leave of absence approved by the Company or in the case of transfers
between payroll locations of the Company or among the Company, its parent,
its subsidiaries or its successor companies.
(c) "Internal Revenue Code" shall mean the Internal Revenue Code of
1986, as amended.
(d) "Option" shall mean a stock option granted pursuant to the Plan.
(e) "Parent" shall mean a "parent corporation" as defined in Section
425(e) and (g) of the Internal Revenue Code.
(f) "Plan" shall mean the Nonstatutory Stock Option Plan of the
Company.
29
<PAGE>
(g) "Shareholders" shall mean the holders of outstanding shares of the
Company's Common Stock.
(h) "Subsidiary" shall mean a "subsidiary corporation" as defined in
Section 425(f) and (g) of the Internal Revenue Code.
(i) "Successor Company" means any company which acquires all or
substantially all of the stock or assets of the Company.
IN WITNESS WHEREOF, the Board of Directors has adopted this Plan this ___
day of September, 1996.
ACCELR8 TECHNOLOGY CORPORATION
(The "Company")
By:__________________________________
Harry J. Fleury, President
ATTEST:
- ------------------------------------
Thomas V. Geimer. Secretary
The Shareholders approved this Plan on ________________, 1996.
30
<PAGE>
EXHIBIT A
TO
ACCELR8 TECHNOLOGY CORPORATION
NON-QUALIFIED STOCK OPTION PLAN
STOCK OPTION GRANT FORM
Acccelr8 Technology Corporation (the "Company") hereby grants to
__________________________________________________ the right and option to
purchase ____________ shares of the Common Stock, no par value, of the Company
at the exercise price of $______________ per share. This Option is granted as of
the date set forth below and shall expire _______ years from such date. This
Option is subject to all the terms and conditions of the Company Non-Qualified
Stock Option Plan which are incorporated herein by this reference, and may not
be assigned or transferred except as provided therein. Further, the recipient of
this Option hereby acknowledges that if the shares of Common Stock acquired upon
exercise of this Option are not held for at least six months from the date of
grant, the grant of the Option will be deemed a purchase that may be matched
against any sales of Company securities occurring within six months of the grant
and may create liability for the recipient pursuant to Section 16(b) of the
Securities Exchange Act of 1934, as amended.
Dated:______________________, 19____.
ACCELR8 TECHNOLOGY CORPORATION
(The "Company")
By:
----------------------------------
Harry J. Fleury, President
ATTEST:
- ------------------------------------
Thomas V. Geimer. Secretary
The option represented by this certificate and the shares of common stock
underlying this option have not been registered under the Securities Act of 1933
(the "Act") and are "restricted securities" as that term is defined in Rule 144
under the Act. Neither the option nor the shares underlying the option may be
offered for sale, sold or otherwise transferred except pursuant to an effective
registration statement under the Act, or pursuant to an exemption from
registration under the Act, the availability of which is to be established to
the satisfaction of the Company.
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EXHIBIT B
TO
ACCELR8 TECHNOLOGY CORPORATION
NON-QUALIFIED STOCK OPTION PLAN
OPTION EXERCISE FORM
Accelr8 Technology Corporation
Gentlemen:
I hereby elect to exercise Options to purchase __________ shares of Accelr8
Technology Corporation (the "Company") Common Stock, no par value (the
"Securities"), pursuant to the Company's Non-Qualified Stock Option Plan, dated
__________, 1996, and as subsequently amended.
I acknowledge to the Company that (1) the Securities to be issued to me are
being acquired for investment and not with a view to the distribution thereof,
(2) I will not offer, sell, transfer or otherwise dispose of the Securities
except in a transaction which does not violate the Securities Act of 1933, as
amended (the "Act"), and (3) the Securities are "restricted securities" as that
term is defined in Rule 144 of the General Rules and Regulations under the Act.
I acknowledge and understand that the Securities are unregistered and must
be held indefinitely unless they are subsequently registered under the Act or an
exemption from such registration is available. I also understand that the
Company is the only person which may register its securities under the Act.
Furthermore, the Company has not made any representations, warranties or
covenants to me regarding the registration of the Securities or compliance with
Regulation A or some other exemption under the Act.
I further acknowledge that I am fully aware of the applicable limitations
on the resale of the Securities. Rule 144 permits sales of "restricted
securities" upon compliance with certain requirements. If Rule 144 is available
for the resale of the securities, I may resell the Securities only in accordance
with its limitations.
I further acknowledge that I understand that the Company is subject to the
so called "short swing" profit provisions of Section 16(b) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and that if this exercise is
found to be in violation of those provisions, I will be obligated to make
payment to the Company of any profits which I derive as a result of the matching
of sales and purchases within the statutory period. I also understand that if
the shares of Common Stock to be acquired upon exercise of this Option have not
been held for at least six months from the date of grant, the grant of the
Option will be deemed a purchase that may be matched against any sales of
Company securities occurring within six months of the grant and may create
liability for me pursuant to Section 16(b) of the 1934 Act.
Any and all certificates representing the Securities, and any securities
issued in replacement or exchange therefor, shall bear substantially the
following legend, which I have read and understood.
The shares represented by this certificate have not been registered
under the Securities Act of 1933 (the "Act")) and are "restricted
securities" as that term is defined in Rule 144 under the Act. The
shares may not be offered for sale, sold or otherwise transferred
except pursuant to an effective registration statement under the Act,
or pursuant to an exemption from registration under the Act, the
availability of which is to be established to the satisfaction of the
Company.
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I agree that the Company shall have the right to issue stop transfer
instructions to its transfer agent to bar the transfer except in accordance with
the Act. I acknowledge that the Company has informed me of its intention to
issue such instructions.
I further agree that the Company shall have the right to take such action
as it deems necessary to make appropriate federal and state withholding payments
on my behalf.
Dated: ______________________, 19_____.
Very truly yours,
--------------------------------------
Optionee
--------------------------------------
(Please print or type name)
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EXHIBIT 1
ACCELR8 TECHNOLOGY CORPORATION
SPECIAL MEETING OF SHAREHOLDERS
November 8, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of ACCELR8 TECHNOLOGY CORPORATION, a Colorado
corporation (the "Company"), acknowledges receipt of the Notice of Special
Meeting of Shareholders and Proxy Statement, dated October 21, 1996, and hereby
appoints Harry J. Fleury and Thomas V. Geimer or either of them, each with the
power of substitution, as Attorneys and Proxies to represent and vote all shares
of Common Stock of the Company which the undersigned would be entitled to vote
at the Special Meeting of Shareholders, and at any adjournment or adjournments
thereof, hereby revoking any proxy or proxies heretofore given and ratifying and
confirming all that said Attorneys and Proxies may do or cause to be done by
virtue thereof with respect to the following matters:
1. Approval of the Proposal to amend (the "Amendment") the Company's Articles
of Incorporation, as amended, which would effect a reduction in the number
of authorized shares of no par value Common Stock from 55,000,000 shares to
11,000,000 shares, without having any effect upon the authorized, issued
and outstanding shares of Common Stock or upon the par value of the Common
Stock.
FOR /___/ AGAINST /___/ ABSTAIN /___/
2. Approval of the Proposal to authorize the Board of Directors to effect a
Reverse Stock Split (any one falling within a range between and including a
one-for-three and a one-for-seven Reverse Stock Split) of the Company's
outstanding Common Stock, depending upon a determination by the Board of
Directors that a Reverse Stock Split is in the best interests of the
Company and its Shareholders.
FOR /___/ AGAINST /___/ ABSTAIN /___/
3. Approval of the Proposal to approve and adopt an Incentive Stock Option
Plan of the Corporation pursuant to which options to purchase Common Stock
may be granted to certain personnel of the Corporation.
FOR /___/ AGAINST /___/ ABSTAIN /___/
4. Approval of the Proposal to approve and adopt a Nonqualified Stock Option
Plan of the Corporation pursuant to which options to purchase Common Stock
may be granted to certain personnel of the Corporation and others who are
not employed by the Corporation.
FOR /___/ AGAINST /___/ ABSTAIN /___/
5. To act upon such other matters as may properly come before the Meeting or
any adjournments thereof.
This Proxy, when properly executed, will be voted as directed. If no direction
is indicated, the Proxy will be voted FOR each of the above proposals.
Dated:________________________, 1996 ----------------------------------
----------------------------------
Please sign your name exactly as it appears hereon. When signing as attorney,
executor, administrator, trustee or guardian, please give your full title as it
appears hereon. When signing as joint tenants, all parties in the joint tenancy
must sign. When a proxy is given by a corporation, it should be signed by an
authorized officer and the corporate seal affixed. No postage is required if
returned in the enclosed envelope and mailed in the United States.
PLEASE SIGN, DATE AND MAIL THIS PROXY IMMEDIATELY IN THE ENCLOSED ENVELOPE.
34
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